<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) FEBRUARY 13, 1998
AMERICAN GENERAL HOSPITALITY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MARYLAND 1-11903 75-2648842
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5605 MACARTHUR BLVD., SUITE 1200, IRVING, TEXAS 75038
(Address of principal executive offices) (Zip Code)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 550-6800
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 13, 1998 (i) American General Hospitality Operating
Partnership, L.P. (the "Operating Partnership"), a subsidiary of American
General Hospitality Corporation (the "Company" or "Registrant"), acquired
thirteen hotels in a fourteen hotel portfolio (the "FSA Portfolio Acquisition")
from trusts managed by Financial Security Assurance ("FSA"), an entity
unaffiliated with the Company, the Operating Partnership or its subsidiaries.
The aggregate purchase price of the FSA Portfolio Acquisition was approximately
$267 million, which was paid in cash. The aggregate purchase price of the FSA
Portfolio Acquisition was arrived at through arms-length negotiations. The
location and a description of the hotels is as follows:
. CENTURY CITY, CALIFORNIA -- This 134-room Courtyard by Marriott full-
service hotel is located on the western edge of Century City, two
miles from UCLA, ten miles from the Los Angeles International Airport
and ten miles from the Los Angeles central business district.
. CLEARWATER BEACH, FLORIDA -- This 426-room DoubleTree Resort full-
service hotel is located directly on Clearwater Beach, a resort island
approximately one mile west of downtown Clearwater.
. CLEARWATER BEACH, FLORIDA -- This 289-room Ramada Inn full-service
hotel consists of two guest room towers; one with nine stories and one
with seven stories in Clearwater Beach, a resort island approximately
one mile west of Clearwater.
. FORT LAUDERDALE BEACH, FLORIDA -- This 240-room Holiday Inn full-
service hotel is a 13-story hotel with penthouse meeting rooms.
. KEY LARGO, FLORIDA -- This 100-room Howard Johnson hotel is located on
Florida Bay in Key Largo, the key entrance from mainland Florida to
the Florida Keys.
. LAKE BUENA VISTA (WALT DISNEY VILLAGE), FLORIDA -- This 323-room
Courtyard by Marriott full-service hotel is located in Walt Disney
Village and is within walking distance of the Disney Village Market
Place, Planet Hollywood and Pleasure Island.
. MADEIRA BEACH, FLORIDA -- This 149-room Holiday Inn full-service hotel
is located in Madeira Beach, a leisure oriented destination area on
the world famous white sand Gulf beaches of Pinellas County, Florida.
. MARINA DEL REY, CALIFORNIA -- This 276-room Courtyard by Marriott
full-service hotel is within walking distance of Chase Harbor, the
social, entertainment and retail center of Marina del Rey.
. MYSTIC, CONNECTICUT -- This 77-room Lodge at the Seaport limited-
service hotel is proximate to both the Mystic area attractions and the
Foxwoods Casino.
. RICHMOND, VIRGINIA -- This 280-room Holiday Inn full-service hotel is
located in Richmond, Virginia in a commercial neighborhood which
includes both office and retail properties.
. ROCHESTER, NEW YORK -- This 171-room Radisson Inn full-service hotel
is adjacent to the Rochester Institute of Technology three miles from
Rochester Airport.
. ST. LOUIS (FOREST PARK), MISSOURI -- This 120-room Holiday Inn full-
service hotel is located in an area known as Midtown in St. Louis. The
hotel is six miles from downtown St. Louis
2
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and one mile from Forest Park, which is home to the St. Louis Zoo,
Science Center, Art Museum, Missouri Historical Museum and MUNY Opera.
. TAMPA (TAMPA AIRPORT), FLORIDA -- This 496-room DoubleTree full-
service hotel is located adjacent to Tampa International Airport, a
primary source of commercial and air crew demand.
Each of the FSA Portfolio Acquisition hotels is leased by the Operating
Partnership to AGH Leasing, L.P. (the "Lessee") pursuant to separate twelve-year
participating leases which are substantially similar in form to the Operating
Partnership's other hotel leases with the Lessee. In turn, the Lessee has
entered into separate twelve-year management agreements, also on terms
substantially similar to the Lessee's other management agreements with American
General Hospitality, Inc. ("AGHI") to manage the hotels on behalf of the Lessee
and subject to its supervision.
The cash required to purchase the FSA Portfolio hotels was provided by
borrowings under the Operating Partnership's Credit Facilities (as defined
below) from its credit facility lenders led by Societe Generale, Southwest
Agency, Bank One, Texas, N.A., Bank of Nova Scotia and Wells Fargo Bank,
National Association, as agents.
The remaining FSA Portfolio Acquisition hotel, the 148-room Select Inn in
Bloomington, Minnesota, is expected to close in mid-April. The closing is
subject to various closing conditions and no assurance can be given that the
acquisition will be completed. The Company expects that this hotel will
continue to be leased to and managed by its current independent operator. In
addition, the Company intends to dispose of five of the FSA Portfolio
Acquisition hotels either as a group or individually.
The Company currently owns an approximate 86.2% interest in the Operating
Partnership. AGH GP, Inc., a wholly owned subsidiary of the Company, is the
sole general partner of the Operating Partnership and owns a 1.0% interest in
the Operating Partnership. AGH LP, Inc., also a wholly owned subsidiary of the
Company, owns an 85.2% limited partnership interest in the Operating
Partnership. The remaining 13.8% interest is held by the former owners of the
hotels acquired by the Operating Partnership.
ITEM 5. OTHER EVENTS
CREDIT FACILITIES - On February 13, 1998 the Company replaced its $300
million secured line of credit with two new unsecured credit facilities in the
aggregate principal amount of $600 million (collectively, the "Credit
Facilities"). The Credit Facilities have a three-year term and bear interest
based upon the 30-day, 60-day or 90-day LIBOR (5.625%, 5.625% and 5.64063% as of
February 24, 1998) at the option of the Company, plus an applicable margin for
all or part of the Facilities (the "Margins"). The Margins, which are adjusted
on a quarterly basis, range from a minimum of 1.40% per annum to a maximum of 2%
per annum, based upon certain leverage ratios. As of February 24, 1998 the
Margins were 1.875% per annum. The financial covenants contained in the Credit
Facilities require the Company to maintain the debt service coverage ratio of at
least 2.0 to 1.0, and an interest coverage ratio of not less than 2.15 to 1.0
through December 31, 1998 and not less than 2.50 to 1.0 thereafter and to
maintain a minimum net worth of $450 million plus 75% of the net proceeds from
stock offerings and offerings of partnership interests in the Operating
Partnership. In addition, the Credit Facilities contain limits on total
indebtedness based on a multiple of EBITDA (earnings before interest, taxes,
depreciation and amortization) that adjust downward as of December 31, 1998. As
a result of the adjustment of certain financial covenants that occur on December
31, 1998, the Company expects that it would be required to repay or refinance a
portion of the Credit Facilities at that time.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired ***
(b) Unaudited Pro Forma Financial Information ***
*** In response to Items 7(a) and 7(b), the FSA Acquisition Hotels
Financial Statements and the Unaudited Pro Forma Financial Information,
attached hereto as Exhibits 99.1 and 99.2, respectively, are hereby
incorporated by reference from the Registrant's Form 8-K, dated January 8,
1998 and filed with the Securities and Exchange Commission on January 23,
1998.
(c) The following are filed as Exhibits to this Report.
<TABLE>
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Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Contract for Purchase and Sale of Hotels, dated November 26,
1997, between Clearwater Surfside Hotel Trust, FSA Zeta LBV
Hotel, Inc., Tampa Airport Hotel Trust, Marina del Rey Hotel
Trust, Ft. Lauderdale Beach Hotel Trust, Clearwater-Gulfview
Hotel Trust, Century City Hotel Management, Inc., Madeira
Beach Hotel Trust, Zeta Key Largo Hotel, Inc., Richmond Hotel
Trust, Zeta St. Louis Hotel, Inc., Zeta Rochester Hotel,
Inc., and the Operating Partnership
2.2 Contract for Purchase and Sale of Hotel, dated November 26,
1997, between Zeta Mystic Hotel, Inc. and the Operating
Partnership
10.1 Amended and Restated Senior Unsecured Credit Agreement, dated
February 13, 1998, between the credit facility lenders and
the Operating Partnership
10.2 Subordinate Unsecured Credit Agreement, dated February 13,
1998, between the credit facility lenders and the Operating
Partnership
99.1 FSA Acquisition Hotels Financial Statements
99.2 Unaudited Pro Forma Financial Statements
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 27, 1998
American General Hospitality Corporation
(Registrant)
By: /s/ Kenneth E. Barr
--------------------------------------
Kenneth E. Barr
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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EXHIBIT 2.1
EXECUTION COPY
--------------
================================================================================
CONTRACT FOR PURCHASE AND SALE OF HOTELS
By and Among
THOSE ENTITIES IDENTIFIED
ON SCHEDULE A,
as Sellers
and
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as Buyer
Dated November 26, 1997
================================================================================
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TABLE OF CONTENTS
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ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions............................................... 1
SECTION 1.02. Definitions Generally..................................... 9
ARTICLE II
Purchase and Sale; Assumption of Liabilities
--------------------------------------------
SECTION 2.01. Purchase and Sale......................................... 9
SECTION 2.02. Assumed Liabilities....................................... 10
ARTICLE III
Purchase Price
--------------
SECTION 3.01. Deposit................................................... 11
SECTION 3.02. Cash to Close............................................. 11
SECTION 3.03. Allocations............................................... 11
ARTICLE IV
Sellers' Deliveries; Buyer's Due Diligence
------------------------------------------
SECTION 4.01. Property Records.......................................... 12
SECTION 4.02. Inspection of Hotels;
Confidentiality Agreements.............................. 12
SECTION 4.03. Access to Hotels.......................................... 15
ARTICLE V
Sellers' Representations
------------------------
SECTION 5.01. Representations of Sellers................................ 18
SECTION 5.02. Survival of Representations and
Covenants................................................. 22
SECTION 5.03. No Reliance on Documents.................................. 22
</TABLE>
The schedules and exhibits hereto shall be provided to the Securities and
Exchange Commission upon request.
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SECTION 5.04. Disclaimers............................................... 22
SECTION 5.05. Effect of Disclaimers..................................... 24
ARTICLE VI
Covenants and Affirmative Obligations
-------------------------------------
SECTION 6.01. Maintenance of Property................................... 24
SECTION 6.02. Assumed Contracts......................................... 24
SECTION 6.03. No Further Encumbrances................................... 25
SECTION 6.04. Compliance with Obligations............................... 25
SECTION 6.05. Notice of Change in Governmental
Requirements.............................................. 25
SECTION 6.06. Insurance................................................. 25
SECTION 6.07. Liquor Licenses........................................... 25
SECTION 6.08. Franchise and Management Agreements....................... 26
SECTION 6.09. Leases.................................................... 27
SECTION 6.10. Cooperation............................................... 28
SECTION 6.11. Sellers' Indemnity........................................ 28
SECTION 6.12. Buyer's Indemnity......................................... 28
SECTION 6.13. Indemnity Procedures Relating to Third Party Claims;
Exclusivity............................................. 28
SECTION 6.14. Indemnity Fund............................................ 29
SECTION 6.15 Hotel Employees........................................... 30
ARTICLE VII
Conditions
----------
SECTION 7.01. Conditions to Buyer's Obligation to Close................. 32
SECTION 7.02. Failure of Buyer's Conditions............................. 32
SECTION 7.03. Conditions to Sellers' Obligations to Close............... 33
SECTION 7.04. Failure of Sellers' Conditions............................ 34
ARTICLE VIII
Closing................................................................... 35
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ARTICLE IX
Closing Documents
-----------------
SECTION 9.01. Sellers' Closing Documents.............................. 35
SECTION 9.02. Buyer's Closing Documents............................... 36
ARTICLE X
Closing Procedure
----------------
SECTION 10.01. Transfer of Funds....................................... 37
SECTION 10.02. Delivery of Documents................................... 37
SECTION 10.03. Disbursement of Funds and Documents..................... 37
ARTICLE XI
Prorations and Closing Costs
----------------------------
SECTION 11.01. Prorations.............................................. 37
SECTION 11.02. Sellers' Closing Costs.................................. 42
SECTION 11.03. Buyer's Closing Costs................................... 42
SECTION 11.04. Accounts Payable........................................ 42
ARTICLE XII
Possession; Risk of Loss................................................. 43
ARTICLE XIII
Condemnation and Damage by Casualty
-----------------------------------
SECTION 13.01. Condemnation............................................ 43
SECTION 13.02. Damage by Casualty...................................... 43
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ARTICLE XIV
Default
-------
SECTION 14.01. Buyer's Default; Liquidated Damages...................... 45
SECTION 14.02. Sellers' Default......................................... 45
ARTICLE XV
Real Estate and Other Commissions and Fees................................ 46
ARTICLE XVI
Notices................................................................... 46
ARTICLE XVII
Assignment................................................................ 47
ARTICLE XVIII
Escrow Agent
------------
SECTION 18.01. Duties and Authorization................................. 47
SECTION 18.02. Liability................................................ 48
SECTION 18.03. Hold Harmless............................................ 48
SECTION 18.04. FDIC Coverage............................................ 49
ARTICLE XIX
Buyer's Representations
-----------------------
SECTION 19.01. Organization and Authority............................... 49
SECTION 19.02. Resources................................................ 49
ARTICLE XX
Provisions Relating to Certain Hotels
-------------------------------------
SECTION 20.01. Florida Radon Gas Disclosure............................. 50
SECTION 20.02. Tampa Hotel.............................................. 50
SECTION 20.03. Key Largo Property....................................... 51
SECTION 20.04 Rochester Property....................................... 51
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ARTICLE XXI
Miscellaneous
-------------
SECTION 21.01. Counterparts............................................ 51
SECTION 21.02. Section and Paragraph Headings.......................... 51
SECTION 21.03. Amendment............................................... 52
SECTION 21.04. Attorneys' Fees......................................... 52
SECTION 21.05. Governing Law........................................... 52
SECTION 21.06. Entire Contract......................................... 52
SECTION 21.07. Time of the Essence..................................... 52
SECTION 21.08. Computation of Time..................................... 52
SECTION 21.09. Successors and Assigns.................................. 52
SECTION 21.10. No Party Draftsman...................................... 52
SECTION 21.11. No Third Party Benefitted............................... 52
SECTION 21.12. Public Announcements.................................... 53
SECTION 21.13. Recordation............................................. 53
</TABLE>
SCHEDULE A Sellers and Hotels
SCHEDULE B Franchise Agreements and Franchisors
SCHEDULE C Management Agreements and Managers
EXHIBIT A Title Descriptions
EXHIBIT B Intentionally Omitted
EXHIBIT C Assumed Contracts
EXHIBIT D Ground Leases
EXHIBIT E Rights of First Refusal
EXHIBIT F Litigation
EXHIBIT G Franchise Agreement Disclosure
EXHIBIT H Form of Letter of Credit
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This CONTRACT FOR PURCHASE AND SALE OF HOTELS (this
"Contract") is made and entered into as of November 26, 1997 (the
"Effective Date"), by and among THOSE ENTITIES IDENTIFIED ON
SCHEDULE A HERETO (each, a "Seller", and collectively, the
"Sellers"), and AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P. a Delaware limited partnership (the "Buyer").
In consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions. The following terms when used in this
------------
Contract shall have the following meanings:
Affiliate. With respect to any Person, means any other Person
----------
directly or indirectly controlling, controlled by or under common control with
such specified Person or which is a director, officer, general partner or
managing member of such specified Person.
AGH Hotels. Collectively, the Hotels currently managed by American
-----------
General Hospitality, Inc. or Affiliates thereof (collectively, "AGHI") as
identified on Schedule A hereto.
Assignment. With respect to any given Seller, the Assignment and Bill
-----------
of Sale which conveys all of such Seller's right, title and interest in and to
such Seller's Assumed Contracts (other than those terminated at Buyer's request
pursuant to Section 2.02(a)) and Personal Property to Buyer or its designee,
subject only to Permitted Exceptions and Permitted Liens. All such Assignments
and Bills of Sale are herein sometimes collectively referred to as the
"Assignments".
Assignment of Lease. With respect to each Seller that is a lessee
--------------------
with respect to its Land (or any portion thereof) under one of the Ground
Leases, as identified on Schedule A hereto, the Assignment and Assumption of
Lease by which such Seller assigns to Buyer all of such Seller's right, title
and interest in and to such Ground Lease to
<PAGE>
2
Buyer, and Buyer assumes from such Seller all of such Seller's obligations and
liabilities under such Ground Lease arising from and after the date of such
assignment, subject only to Permitted Liens and Permitted Exceptions. All such
Assignments and Assumptions of Lease are herein sometimes collectively referred
to as the "Assignments of Leases".
Assumed Contracts. With respect to any given Seller, all service
------------------
contracts, real property leases (including, if applicable, such Seller's Ground
Lease), equipment, vehicle or other personal property leases, installment sales
contracts, sales and purchase orders, maintenance agreements and other
agreements relating to such Seller's Property or the use and operation of such
Seller's Hotel to the extent listed on the attached Exhibit C (as such Exhibit
may be supplemented from time to time in accordance with Section 4.01) and
Exhibit D, but excluding such Seller's Franchise Agreement, if any (except as
may be otherwise provided in Section 6.08(a)) and Management Agreement.
Attorneys' Fees. All reasonable fees and disbursements charged by
----------------
attorneys or law firms for legal services and the services of any paralegals,
legal assistants or law clerks, including without limitation fees charged for
representation in negotiations, at the trial level and in all appeals.
Buyer's Address. American General Hospitality Operating Partnership,
----------------
L.P., 5605 MacArthur Boulevard, Suite 1200, Irving, Texas 75038 (Telephone:
(972) 550-6800; Telecopy: (972) 550-6895); Attention: Steven D. Jorns and Bruce
G. Wiles.
Buyer's Attorney. Douglas A. Raelson at the following address:
-----------------
Battle Fowler LLP, Park Avenue Tower, 75 East 55th Street, New York, NY 10022
(Telephone: (212) 856-7189; Telecopy: (212) 856-7806).
Cash to Close. The Purchase Price plus all of Buyer's closing costs
--------------
specified herein, subject to the adjustments and prorations set forth herein;
provided, however, that the Cash to Close shall be reduced by the allocated
- -------- -------
Purchase Price determined in accordance with Section 3.03 for any Hotels as to
which the Closing has been deferred in accordance with this Contract.
Closing. The delivery of the Deeds, Assignments of Leases and
--------
Assignments to Buyer concurrently with the delivery of the Purchase Price to
Sellers and the consummation of the other transactions contemplated hereby.
<PAGE>
3
Closing Date. The date of consummation of the transactions
-------------
contemplated hereby in accordance with the terms of this Contract; provided,
--------
however, that in no event shall the Closing Date occur later than the date set
- -------
forth in Article VIII hereof; provided further, however, that the Closing Date
-------- ------- -------
with respect to a particular Hotel may be extended as provided in Section 13.02
or 20.02.
Commission. The U.S. Securities and Exchange Commission.
----------
Control. With respect to any Person, the power to direct the
--------
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have correlative meanings.
- ------------ ----------
Deed. With respect to each Seller that holds fee simple title to its
-----
Land, as identified on Schedule A hereto, the special warranty deed (or
equivalent) by which such Seller conveys such interest in such Land, together
with the related Improvements thereon, to Buyer, subject to Permitted Exceptions
and Permitted Liens. All such deeds are herein sometimes collectively referred
to as the "Deeds".
Deposit. At Buyer's sole option, and subject to any election of Buyer
--------
to increase the Deposit pursuant to Article VIII, either (i) a Letter of Credit
in the face amount of $9,800,000 or (ii) the sum of $9,800,000 cash, together
with all interest earned on said sum while it is held in escrow by Escrow Agent
in accordance with this Contract. Except as specifically provided herein, any
interest earned on the Deposit shall be paid to Buyer at Closing.
Effective Date. The date of this Contract as set forth in the
---------------
preamble hereof.
ERISA. Employee Retirement Income Security Act of 1974, as amended
------
from time to time.
Escrow Agent. The Title Company.
-------------
Franchisor. With respect to any given Seller, the hotel franchising
-----------
or licensing company under such Seller's Franchise Agreement, if any, as
identified on Schedule B hereto. All such companies are herein sometimes
collectively referred to as the "Franchisors".
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4
Franchise Agreement. With respect to any given Seller, the franchise
--------------------
or license agreement relating to such Seller's Hotel, if any, collectively with
any other agreements ancillary thereto, in each case as in effect on the date
hereof, as identified on Schedule B hereto. All such agreements, including any
such other agreements ancillary thereto, are herein sometimes collectively
referred to as the "Franchise Agreements".
Governmental Authority. Any Federal, state, county, municipal or
-----------------------
other governmental department, entity, authority, commission, board, bureau,
court, agency or any instrumentality of any of them.
Governmental Requirement. Any law, statute, code, ordinance, rule,
-------------------------
regulation, permit, certificate, license, authorization, agreement or
requirement now existing of any Governmental Authority.
Ground Lease. With respect to each Seller that is a lessee with
-------------
respect to its Land (or any portion thereof), as identified on Schedule A
hereto, the lease pursuant to which such Seller is such lessee, as amended
through the date hereof, as described on Exhibit D hereto. All such leases are
herein sometimes collectively referred to as the "Ground Leases".
Hazardous Material. Any flammable or explosive materials, petroleum
-------------------
or petroleum products, oil, crude oil, natural gas or synthetic gas usable for
fuel, radioactive materials, asbestos, polychlorinated biphenyls (PCB's),
dioxin, urea formaldehyde, hazardous wastes or substances or toxic wastes or
substances, including, without limitation, any substances now or hereafter
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "toxic materials" or "toxic substances" under
any applicable Governmental Requirement.
Hotel. With respect to any given Seller, the hotel identified as such
------
Seller's hotel on Schedule A hereto, consisting of all right, title and interest
of such Seller in and to its Land, Improvements and Personal Property. All such
hotels are herein sometimes collectively referred to as the "Hotels".
Improvements. With respect to any given Seller, all structures,
-------------
fixtures or other improvements on, over or beneath its Land.
I.R.C. The Internal Revenue Code of 1986, as amended from time to
------
time.
<PAGE>
5
Land. With respect to any given Seller, the real property upon which
-----
such Seller's Hotel is located, as more particularly described in Exhibit A.
Letter of Credit. An irrevocable letter of credit naming Sellers as
-----------------
joint payees, in substantially the form of Exhibit H.
Management Agreement. With respect to any given Seller, the
---------------------
management agreement relating to such Seller's Hotel, as in effect on the date
hereof, as generally identified on Schedule C hereto. All such agreements are
herein sometimes collectively referred to as the "Management Agreements".
Manager. With respect to any given Seller, the hotel management
--------
company under such Seller's Management Agreement, as identified on Schedule C
hereto. All such companies are herein sometimes collectively referred to as the
"Managers".
Material Damage. Unrepaired damage as a result of fire or other
----------------
casualty to any Hotel with an aggregate cost to repair of 15% of the value of
such Hotel (such value to equal the portion of the Purchase Price allocated
thereto pursuant to Section 3.03).
Material Portion. Any portion of any Hotel which, if removed, would
-----------------
result in a decrease of more than 15% of the value of such Hotel (such value to
equal the portion of the Purchase Price allocated thereto pursuant to Section
3.03).
Mystic Agreement. The Contract for Purchase and Sale of Hotel dated
-----------------
as of the date hereof between ZETA Mystic Hotel, Inc. and Buyer relating to the
hotel known as "The Lodge at the Seaport" located in Mystic, Connecticut.
Permitted Exceptions. The title exceptions described in the title
---------------------
reports delivered as part of the Property Records if not objected to in writing
by Buyer prior to the end of the Review Period, subject to the provisions of
Section 4.02(b).
Permitted Investments. Investments in (i) United States government
----------------------
securities or securities of agencies of the United States government which are
guaranteed by the United States government and having a maturity of one year or
less; (ii) certificates of deposit, banker's acceptances and time deposits and
money market deposit accounts issued or offered by commercial banks
<PAGE>
6
having a combined capital and surplus in excess of $1 billion organized under
the laws of the United States or any political subdivision thereof and having a
maturity of one year or less; (iii) commercial or finance company paper of
companies organized under the laws of any state of the United States or any
political subdivision thereof having a rating assigned to such commercial paper
of one of the two highest unsecured debt ratings by Standard & Poor's
Corporation or Moody's Investors Service, Inc. and having a maturity of one year
or less; (iv) repurchase obligations with respect to any security described in
clause (i) above entered into with a depository or trust company; or (v) such
other investments upon such terms as the Buyer and Sellers may agree upon in
writing.
Permitted Liens. To the extent not included in the definition of
----------------
Permitted Exceptions, all liens, security interests, claims, charges and
encumbrances (i) pertaining to the Assumed Contracts or (ii) for Taxes which are
not due and payable or which may thereafter be paid without penalty.
Person. Any individual, trustee, corporation, general or limited
-------
partnership, limited liability partnership, limited liability company, joint
venture, joint stock company, bank, firm, governmental agency, trust,
association, organization or unincorporated entity of any kind or nature
whatsoever.
Personal Property. With respect to any given Seller, all items of
------------------
personal property located on its Land or owned by such Seller and used in
connection with the operation of its Hotel, but excluding therefrom any Third
Party Property. Such items of personal property shall include, but not be
limited to: (i) all fixtures, furnishings, building materials, machinery,
equipment, telephones, televisions, computers, glass, tools, silver, china,
glassware, utensils, towels, linens, signs, transferable licenses and permits,
telephone numbers, trade names (but excluding any trade names owned by its
Franchisor, if any, or any other third party), motor vehicles, inventories, food
and beverages in process and all other articles of personal property now or
hereafter attached or appurtenant to such Land or the related Improvements or
used in connection with the use or operation thereof, including any Property
Records, drawings, as-built plans and specifications and all permits and
warranties in the possession of such Seller, and (ii) all attachments,
appliances, fittings, lighting fixtures, doors, cabinets, elevators, flagpoles,
sprinkler, plumbing, heating, air conditioning, electrical, ventilating,
lighting, incinerating, vacuum cleaning, refrigerating and cooling
<PAGE>
7
systems, vaults, safes, carpets and floor coverings, together with all parts and
supplies pertaining thereto.
Property. Collectively, with respect to any given Seller, all its
---------
right, title and interest in and to its Land, Improvements and Personal Property
(including, without limitation, its Hotel).
Property Records. With respect to any given Seller, the Property
-----------------
Records shall be each of the following, to the extent such are in the possession
of such Seller or its Manager:
(a) all operating statements (including income and expense
statements) and financial statements (for the calendar years 1995 and 1996
and 1997 to date), existing operating and capital expenditure budgets and
other books and records for its Property, including all guest registration
cards, guest transcripts, guest histories and all other available guest
information;
(b) all engineering and architectural plans, specifications and
drawings and as-built plans pertaining to its Property;
(c) all advance reservations and trade-out agreements for hotel
rooms, meetings, conventions and the use of facilities for banquets,
parties, affairs and the like relating to its Property which extend to a
period beyond the Closing Date;
(d) copies of all assignable guarantees and warranties issued or made
in connection with the construction, improvement, alteration, equipment and
repair of any Improvements comprising a part of its Property;
(e) copies of all certificates of occupancy, licenses, permits,
authorizations and approvals required by law for the current operation of
its Property, and issued by all Governmental Authorities having
jurisdiction, and copies of all certificates issued by the local board of
fire underwriters (or other body exercising similar functions);
(f) copies of all Assumed Contracts relating to its Property;
(g) all existing environmental audits, engineering reports, ADA
compliance reports, similar studies, notices and information concerning the
condition of its
<PAGE>
8
Improvements and any Hazardous Material on or about its Property;
(h) copies of all existing title reports, surveys and engineering and
structural reports in respect of its Property;
(i) copies of its Franchise Agreement, if any;
(j) 1997 and (if available) 1998 capital and operating budgets;
(k) samples of all material marketing brochures;
(l) copies of all risk management reports available from its Manager;
and
(m) any leases of adjacent land or facilities in connection with its
Hotel.
Purchase Price. Two hundred sixty-four million four hundred thousand
---------------
Dollars ($264,400,000).
REIT. American General Hospitality Corporation, a Maryland
-----
corporation.
Seller's Address. With respect to each Seller, c/o Financial Security
-----------------
Assurance Inc., 350 Park Avenue, 13th Floor, New York, NY 10022 (Telephone:
(212) 826-0100); Telecopy: (212) 339-3518); Attention: Alex Makowski.
Seller's Attorney. Kevin J. Grehan at the following address:
------------------
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019 (Telephone:
(212) 474-1490; Telecopy: (212) 474-3700).
Tampa Agreement. The Management Agreement between Tampa Manager and
----------------
Tampa Seller relating to the Tampa Hotel.
Tampa Hotel. The Doubletree Hotel Tampa Airport Westshore located in
------------
Tampa, Florida.
Tampa Manager. DT Management, Inc, an Arizona corporation.
--------------
Tampa Seller. Tampa Airport Hotel Trust, a Delaware business trust.
-------------
Tax. Any tax, governmental fee or other like assessment or charge of
----
any kind whatsoever relating to real
<PAGE>
9
or personal property (excluding, however, any sales, use or occupancy taxes),
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Authority responsible for the imposition of any such
tax, fee assessment, or charge.
Termination Date. The date 365 days from the Closing Date.
-----------------
Third Party Property. With respect to any given Seller, all items of
---------------------
personal property located at such Seller's Hotel which are (i) owned by space
lessees under space leases listed on Exhibit C, employees, guests or any other
person pursuant to any Assumed Contract, (ii) leased pursuant to any equipment
leases or vehicle leases with respect to such Hotel listed on Exhibit C, (iii)
items that are subject to the rights of such Seller's Franchisor, if any, under
such Seller's Franchise Agreement, or (iv) items that are subject to the rights
of such Seller's Manager under such Seller's Management Agreement, provided that
the aggregate value of all such items described in this clause (iv) does not
exceed $10,000.
Title Company. Lawyers Title Insurance Corporation, c/o Michael D.
--------------
Gallinar, Adams, Gallinar & Iglesias, P.A., 701 Brickell Avenue, Suite 2150,
Miami, FL 33131 (Telephone: (305) 416-6800; Telecopy: (305) 416-6811).
SECTION 1.02. Definitions Generally. Definitions in this Contract
----------------------
apply equally to both the singular and plural forms of the defined terms. The
words "include" and "including" shall be deemed to be followed by the phrase
"without limitation" when such phrase does not otherwise appear. The terms
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Contract as a whole and not to any particular article, section, paragraph,
subdivision, clause, exhibit or schedule. All article, section, paragraph,
subdivision, clause, exhibit or schedule references not attributed to a
particular document shall be references to such parts of this Contract.
ARTICLE II
Purchase and Sale; Assumption of Liabilities
--------------------------------------------
SECTION 2.01. Purchase and Sale. On the terms and subject to the
------------------
conditions set forth herein, each Seller agrees to sell and convey its Property
to Buyer and Buyer agrees to purchase and acquire such Property from such
Seller.
<PAGE>
10
SECTION 2.02. Assumed Liabilities. (a) Buyer shall assume as of the
--------------------
Closing Date and shall pay, perform and discharge when due, and shall indemnify
each Seller and its Affiliates against and hold them harmless from, all
obligations and liabilities of whatever kind and nature, primary or secondary,
direct or indirect, absolute or contingent, known or unknown, arising out of or
attributable to the ownership or operation of such Seller's Property (including
the use or operation of such Seller's Hotel) on or after the Closing Date (the
"Assumed Liabilities"), including, without limitation, the following:
(i) all obligations and liabilities under the Assumed Contracts
accruing from and after the Closing Date;
(ii) all liabilities to customers with respect to all unrefunded cash
deposits paid by such customers to such Seller prior to the Closing Date
and paid by such Seller to Buyer (or credited against the Purchase Price)
pursuant to Section 11.01 hereof;
(iii) all claims, obligations and liabilities relating to the use or
operation of such Seller's Hotel or arising out of events occurring at such
Seller's Property at any time on or after the Closing Date; and
(iv) all obligations and liabilities with respect to Taxes relating
to such Seller's Property with respect to any period that is not a Pre-
Closing Tax Period; provided, however, that the Buyer will not assume
-------- -------
liability for any Taxes relating to such Property with respect to any Pre-
Closing Tax Period except as set forth in Section 11.01 of this Contract. A
"Pre-Closing Tax Period" shall mean all taxable periods ending on or before
the Closing Date and the portion ending on the Closing Date of any taxable
period that includes (but does not end on) such day. In the case of any
taxable period that includes (but does not end on) the Closing Date (a
"Straddle Period"): (i) real, personal and intangible property Taxes
("Property Taxes") relating to such Property with respect to the Pre-
Closing Tax Period shall be equal to the amount of such Property Taxes for
the entire Straddle Period multiplied by a fraction, the numerator of which
is the number of days in the Pre-Closing Tax Period and the denominator of
which is the number of days in the applicable Straddle Period, and (ii)
Taxes (other than Property Taxes) relating to such Property with respect to
the Pre-Closing Tax Period shall be
<PAGE>
11
computed as if such taxable period ended as of the close of business on the
Closing Date.
On or prior to the expiration of the Review Period, Buyer may elect to require
that the Sellers terminate as of the Closing Date any Assumed Contracts (it
being acknowledged that any Assumed Contracts that by their terms will expire
between the Effective Date and the Closing Date will be renewed by the Sellers
to the extent required by Sections 6.01 and 6.02); provided, however, that Buyer
-------- -------
shall be responsible for paying on the Closing Date all termination fees,
penalties and other sums required in connection with such terminations, and the
Cash to Close shall be adjusted accordingly.
(b) Buyer's obligations under this Section 2.02 will not be subject
to offset or reduction by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Contract or any document
delivered in connection herewith or any right or alleged right to
indemnification hereunder.
ARTICLE III
Purchase Price
--------------
The Purchase Price shall be paid as follows:
SECTION 3.01. Deposit. No later than December 2, 1997, Buyer shall
--------
deliver to Escrow Agent the Deposit, together with a completed and executed W-9
Form for the Buyer. Provided that Buyer has not terminated this Contract
pursuant to Section 4.02(b) on or before the last day of the Review Period (as
defined below), the Deposit shall become nonrefundable to Buyer except as
expressly set forth in Section 7.02, Article XIII or Article XIV hereof.
SECTION 3.02. Cash to Close. The Cash to Close shall be paid to
--------------
Escrow Agent in accordance with the closing procedure hereinafter set forth.
SECTION 3.03. Allocations. On or prior to the expiration of the
------------
Review Period, the Sellers and Buyer shall use their best efforts to determine
the allocation of the Purchase Price among the Hotels. In the event the Sellers
and Buyer are unable to agree upon such allocations prior to the end of the
Review Period, either Sellers or Buyer may terminate this Contract. Neither
Buyer nor any of the Sellers (nor any of their respective Affiliates or
representatives) shall take any position on any tax return,
<PAGE>
12
including Form 8594, or with any taxing authority or in any judicial proceeding
that is inconsistent with the allocation of the Purchase Price as finally
determined pursuant to this Section 3.03. Buyer shall deliver to the Sellers,
and the Sellers shall deliver to Buyer, a signed copy of Form 8594 at least 10
days prior to the filing thereof.
ARTICLE IV
Sellers' Deliveries; Buyer's Due Diligence
------------------------------------------
SECTION 4.01. Property Records. Sellers have delivered or made
-----------------
available to Buyer (including through granting Buyer access to the Hotels) the
Property Records; provided, however, if any of the Sellers obtains or becomes
-------- -------
aware of any additional Property Records pertaining to its Hotel, such Seller
shall deliver or make available such additional Property Records to Buyer as
soon as practicable but in any event not less than five (5) days prior to the
end of the Review Period, and such records shall thereupon become, and be deemed
to be part of, the Property Records and all of Sellers' representations herein
shall be deemed to include such Property Records; provided further, that all
----------------
Property Records related to the AGH Hotels in the possession or control of AGHI
shall be deemed to have been delivered by Sellers.
SECTION 4.02. Inspection of Hotels; Confidentiality Agreements. (a)
-------------------------------------------------
During the period from the Effective Date through and including December 15,
1997 (the "Review Period"), Buyer and Buyer's agents and representatives shall
be given reasonable access to each Seller's Hotel (including all its Property
Records located thereat) during normal business hours and shall have the right
to physically inspect each Seller's Property and to conduct, at Buyer's sole
cost and expense, soil tests and other nondestructive inspections, provided that
such tests and inspections shall be (i) coordinated through such Sellers in
advance, (ii) performed by Persons reasonably satisfactory to such Sellers and
who shall have obtained or be otherwise covered by adequate insurance for any
costs, losses or damages arising while on each such Seller's Property and (iii)
performed in a manner that does not unreasonably interfere with the use and
occupancy of such Hotel by such Seller, by guests or patrons of such Hotel, or
by tenants. In the event that the Closing does not occur for any reason, Buyer
shall have the obligation promptly to restore (at Buyer's expense) each Seller's
Property to the condition of such Property prior to Buyer's entry (other than
changes in the condition of such Property not caused by
<PAGE>
13
Buyer's entry), which obligation shall survive any termination of this Contract.
Buyer covenants and agrees that each Seller's Property shall not be damaged or
impaired in any way as the result of its activities on such Seller's Hotel's
premises, and hereby agrees to indemnify and hold such Seller and its Affiliates
harmless from and against any claims, causes of action, damages and expenses
(including Attorneys' Fees) to the extent incident to, resulting from or in any
way arising out of (i) Buyer's presence (or the presence of Buyer's agents or
representatives) in, on or about such Property, or (ii) out of any test or
inspection conducted by Buyer on such Property. Such indemnity shall survive the
Closing or any termination of this Contract and not be merged therein.
(b) Buyer shall have until the end of the Review Period to notify
Sellers in writing of (i) any objections relating to any or all of the
Properties that Buyer has discovered as a result of Buyer's inspections pursuant
to Section 4.02(a) or Buyer's review of the Property Records, or (ii) its
election to terminate this Contract, which it may exercise in its sole and
absolute discretion. If, on or before the end of the Review Period, Buyer shall
notify Sellers of any such objections, Sellers may elect to cure such objections
within 10 days after the date on which Sellers received notice of Buyer's
objections and, following such election, shall use reasonable efforts to cure
such objections no more than 90 days following such election, or shall deliver
notice to Buyer that they will not cure. If Sellers shall have so elected to
cure such objections, but shall not have cured such objections within such 90
days (the "Cure Period") to Buyer's reasonable satisfaction, or if Sellers shall
have delivered notice to Buyer that they will not cure, Buyer may terminate this
Contract by written notice to Sellers and Escrow Agent at any time within 10
days after the expiration of the Cure Period or its receipt of Sellers' notice
that they will not cure, as the case may be. If Buyer fails to notify Sellers
and Escrow Agent of any such objections or its election to terminate this
Contract on or before the end of the Review Period, or if Buyer fails to notify
Sellers and Escrow Agent that it is not satisfied with the cure of any such
objections within 10 days after the Cure Period or of its election to terminate
this Contract within 10 days after its receipt of Sellers' notice that they will
not cure, Buyer shall be deemed to have approved all such matters and to have
waived its right to terminate this Contract under this Section 4.02. If Buyer
terminates this Contract pursuant to this Section, Sellers shall be entitled to
retain (and, to the extent it has not already done so, Buyer shall return to
Sellers) all Property Records, including all reports and
<PAGE>
14
studies prepared by third parties relating to the Properties resulting from the
inspection of the Properties and all documents delivered to Buyer pursuant to
Section 4.01 hereof. The Deposit shall be returned to Buyer by Escrow Agent
within two (2) business days after any such termination and neither party shall
have any further rights or obligations one to the other, except for the
indemnity set forth in Section 4.02(a). If Buyer does not terminate this
Contract as provided herein, Buyer shall be deemed to have waived the right to
terminate this Contract under this Section and shall be deemed to have accepted
and approved the condition of the Properties, subject to the remaining terms of
this Contract, and the Deposit shall become nonrefundable to Buyer, subject only
to Section 7.02, Article XIII and Article XIV hereof. Notwithstanding the
foregoing, Sellers shall be obligated to remove (i) to the extent objected to by
Buyer prior to the end of the Review Period, any objections to title in the
nature of mortgages, liens or judgments (other than those created pursuant to
Assumed Contracts) ("Objections to Title") that can be removed upon payment of a
liquidated sum of money and that are shown on the title reports delivered as
Property Records, (ii) mortgages and mechanics liens discovered after the date
of such title reports that are the result of acts of the Sellers and (iii) other
Objections to Title discovered after the date of such title reports that can be
removed upon payment of a liquidated sum of money; provided, however, that in no
-------- -------
event shall the Sellers be obligated to expend more than $960,000 in the
aggregate to remove objections of the type described in clause (iii).
(c) Except to the extent otherwise provided herein, required by law
or advised by counsel to be required by law, until the consummation of the
transactions contemplated by this Contract, the parties hereto shall hold, and
shall cause each of their respective Affiliates to hold, all information and
documents obtained in connection with the transactions contemplated hereby
confidential including any oral and written information concerning the Sellers
and the Properties received from the Sellers or from a third party at the
direction of the Sellers (collectively, the "Due Diligence Material"). The Due
Diligence Material shall not be disclosed, discussed or made known without the
prior written consent of the Sellers, except to the employees or boards of
directors of Buyer, the REIT, or any of their Affiliates, to Buyer's prospective
lenders and their counsel, to any hotel franchisors, any marketing company
employed to do feasibility studies, or any investment banking, accounting, legal
or other professional advisers, or to any environmental or engineering
consultants with whom Buyer desires to consult in connection with the
<PAGE>
15
transactions contemplated hereby. If the transactions contemplated hereby are
not consummated for any reason whatever, each party hereto shall, as soon as
practicable, return all such information and documents (and any copies thereof
in such party's possession) to such other party hereto. Notwithstanding the
foregoing, it is acknowledged that the REIT may sell shares to the general
public and that in connection therewith, the REIT has the absolute and unbridled
right to market such securities and prepare and file all necessary or reasonably
required registration statements and other papers, documents and instruments
necessary or reasonably required in the REIT's judgment, and that of its
attorneys and underwriters, to file a registration statement with respect to its
shares with the Commission and/or similar state authorities and to cause same to
become effective and to disclose therein and thus to its underwriters, to the
Commission and/or to similar state authorities and to the public all of the
terms, conditions and provisions of this Contract, as well as various documents
delivered to the REIT and/or Buyer pursuant to this Contract.
SECTION 4.03. Access to Hotels. Buyer shall have the following
-----------------
access to the Hotels:
(a) Oversight. After the Review Period, Buyer and Buyer's authorized
----------
representatives and employees shall have the right, at Buyer's sole cost, risk
and expense, from time to time to enter upon and pass through the Hotels during
normal business hours and to establish and maintain an oversight operation with
respect to the Hotels prior to the Closing Date. Personnel from such oversight
operation shall have reasonable access during normal business hours to all
books, records and other information in the possession or control of Sellers or
their agents concerning the Hotels and shall have the right (at Buyer's expense)
to establish duplicate books and records in order to effect a smooth transition
in the ownership and management of the Hotels; provided, however, that Buyer and
-------- -------
its oversight operation and employees (a) shall not unreasonably interfere with
the normal management and operation of the Hotels, (b) shall hold all
information acquired from such books and records confidential in accordance with
the provisions of this Contract, (c) shall repair any damage to the physical
condition of the Hotels caused by Buyer or its agents in any such oversight
operation and (d) shall not assume, or be deemed to have assumed, management
responsibilities prior to Closing by virtue of such oversight operation. Buyer
shall indemnify Sellers from and against any and all loss, damage, liability,
cost or expense resulting from the violation or breach of any of the covenants
set forth in clauses (a)
<PAGE>
16
through (d) of the preceding sentence. Nothing contained herein is deemed to
create a right of the Buyer to terminate this Contract after the Review Period.
(b) Access to Records and Financial Information. (i) Buyer and
--------------------------------------------
Buyer's authorized representatives and employees shall have the right, at
Buyer's sole cost, risk and expense, from time to time to enter upon and pass
through the Hotels during normal business hours and upon reasonable notice to
Sellers to examine and inspect all of the then existing books, records, surveys,
plans, specifications, permits, certificates of occupancy and other files that
are relevant to the management, ownership, operation, use, occupancy,
construction or leasing of the Hotels, are in Sellers' possession or control,
and have not been otherwise provided to Buyer as required elsewhere herein.
(ii) Sellers agree to cooperate with Buyer to obtain any information
needed from Sellers to enable Buyer and the REIT to file any necessary tax
returns.
(iii) Without limiting the foregoing and in addition thereto, for the
period of time commencing on the date of this Contract and continuing through
the second (2nd) anniversary of the Closing Date, Sellers shall, from time to
time, upon reasonable advance notice from Buyer, provide Buyer and its
designated accountants and employees with access to all financial information in
their possession pertaining to the period of their ownership of the Properties,
which information is relevant and reasonably necessary, in the opinion of
Buyer's outside, third party accountants, to enable Buyer, the REIT and their
accountants to prepare financial statements in compliance with any or all of (i)
Rule 3-14 of Regulation S-X of the Commission; (ii) any other rule issued by the
Commission and applicable to Buyer or the REIT; and (iii) any registration
statement, report or disclosure statement filed with the Commission by, or on
behalf of, Buyer or the REIT; provided, however, that in any such event(s),
-------- -------
Buyer shall reimburse the Sellers for any third party, out-of-pocket costs and
expenses that the Sellers incur in order to comply with the foregoing
requirements. Sellers acknowledge and agree that the following is a
representative description of the information and documentation that Buyer, the
REIT and their accountants' may require to be provided (to the extent in the
Sellers' possession or control as of the date of this
<PAGE>
17
Contract and not turned over to Buyer or the REIT, or their respective
Affiliates at Closing) in order to comply with clauses (i), (ii) or (iii) of the
previous sentence:
(1) applicable rent rolls for the eleven (11) calendar months
immediately preceding the calendar month in which the Closing occurs;
(2) Sellers' internally-prepared operating statements;
(3) applicable leases;
(4) Sellers' budgeted annual and monthly income and expenses, and
actual annual and monthly income and expenses;
(5) Sellers' cash receipt journals and bank statements for the
Properties;
(6) Sellers' general ledgers with respect to the Properties;
(7) Sellers' schedules of expense reimbursements required under
applicable leases in effect on the Closing Date, if they exist;
(8) Sellers' schedules, if they exist, of those items of repairs and
maintenance performed by, or at the direction of Sellers, during the
Sellers' final fiscal year in which the Sellers owned and operated the
Properties (the "Final Fiscal Year");
(9) Sellers' schedules, if they exist, of those capital improvements
and fixed asset additions made by, or at the direction of, Sellers during
the Final Fiscal Year;
(10) Sellers' invoices with respect to expenditures made during the
Final Fiscal Year; and
(11) access (during normal and customary business hours) to
responsible personnel to answer accounting questions.
(iv) Prior to the end of the Review Period, each Seller shall also
provide to Buyer's representatives a representation letter, as prescribed by
generally accepted auditing standards promulgated by the Auditing Standards
Division of the American Institute of Certified Public Accountants, signed by
individuals(s) responsible for such
<PAGE>
18
Seller's financial reporting sufficient to enable Buyer's accountants to render
an opinion on the financial statements related to such Seller's Hotel, such
letter to be in a form which shall be reasonably agreed to by Sellers and Buyer
on or prior to the expiration of the Review Period.
(v) To the extent that the financial statements previously provided
by any Seller for the current year do not include any period up to and including
the Closing Date, such Seller shall, within twenty-five (25) days after the
Closing Date, provide Buyer with monthly unaudited compilation financial
statements, including balance sheets, general ledger and income statements
applicable to such period inclusive of the Closing Date. From the date hereof
until the Closing Date, such Seller shall deliver to Buyer each week upon
receipt of copies of the weekly status report for its Hotel.
ARTICLE V
Sellers' Representations
------------------------
SECTION 5.01. Representations of Sellers. Each Seller represents and
--------------------------
warrants to Buyer with respect to its Property as of the date hereof as follows
(to the extent that such representations and warranties are expressly qualified
by reference to such Seller's knowledge (or similar reference), then, unless
otherwise indicated, such reference shall be to the current, actual knowledge of
Alex Makowski, without any inquiry other than of the general managers of each
Hotel, Errol Uhr and Maria E. Cheng):
(a) Seller's Existence. Such Seller is a corporation or business
-------------------
trust, as indicated on Schedule A hereto, duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is not a foreign
entity, foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in Section 1445 of the I.R.C.).
(b) Authority. Such Seller has the corporate or trust power and
----------
authority to execute, deliver and perform this Contract and the other documents
and agreements contemplated hereby; such Seller has duly authorized the
execution and delivery of this Contract and the performance of its obligations
hereunder; and subject to obtaining the consents required hereunder, if any, the
entry into, the performance of, or compliance with this Contract by such Seller
will not, to such Seller's knowledge, result in any violation of, default under,
or acceleration of any
<PAGE>
19
obligation under any existing partnership agreement, mortgage indenture,
agreement, note, contract, permit, judgment, decree, order, restrictive
covenant, statute, rule or regulation applicable to either such Seller or its
Hotel.
(c) Litigation. Except as set forth on Exhibit F, there are no
-----------
actions, suits, proceedings or investigations (including condemnation
proceedings) that are material in relation to such Seller's Hotel pending or, to
such Seller's knowledge, threatened against its Property and such Seller is not
aware of any facts which might result in any such action, suit or proceeding.
(d) Hazardous Material. Except for (i) those matters specified in
-------------------
such Seller's existing environmental reports which form a part of the Property
Records and (ii) the handling, use and storage of Hazardous Material in the
ordinary course of operating its Hotel, which in each instance has been and
shall be in material compliance with all applicable Governmental Requirements,
such Seller (A) has no knowledge of any discharge, spill, or disposal of any
Hazardous Material on or under its Property and (B) has received no written
notice from any Governmental Authority of any violations of Governmental
Requirements regarding Hazardous Materials concerning such Property or any
portion thereof.
(e) No Rights To Purchase. Except as set forth in Exhibit E, no
----------------------
other Person has any right of first refusal or option to acquire such Seller's
Property or any portion thereof or lease any space therein.
(f) Assumed Contracts. Other than its Management Agreement and
------------------
Franchise Agreement, if any, the schedule of Assumed Contracts attached to this
Contract as Exhibit C, as such Exhibit may be supplemented from time to time in
accordance with Section 4.01 (true, accurate and complete copies of which are
included in the Property Records), to the extent it pertains to such Seller's
Property, constitutes a list of all of the agreements, leases or other contracts
affecting such Property and there are no other agreements, leases or other
contracts with respect to such Property. Except as set forth herein or as
provided in any Exhibit hereto, such Seller has neither received nor delivered
any written notice that any party to any Ground Lease or restaurant lease set
forth in Exhibit C (as such Exhibit may be supplemented from time to time in
accordance with Section 4.01) is currently in default thereunder or that any
party to any other Assumed Contract is currently in material default thereunder,
and to such Seller's knowledge, no event has occurred or circumstance exists
which, with the
<PAGE>
20
giving of notice or passage of time, would constitute a material default
thereunder. Such Seller has received no notice that any party to any such
Assumed Contract intends to cancel or terminate such Assumed Contract. Such
Seller shall not assign any Assumed Contract or any claim, right or benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of a third party thereto, would constitute a breach or other
contravention of such Assumed Contract or in any way adversely affect the rights
of Buyer or such Seller thereunder. Such Seller and Buyer will use commercially
reasonable good faith efforts (but without any payment of money by such Seller
or Buyer other than incidental out-of-pocket expenses related thereto) to obtain
any required consent of the other parties to any such Assumed Contract for the
assignment thereof, or any claim, right or benefit arising thereunder or
resulting therefrom, to Buyer as Buyer may reasonably request.
(g) Financial Statements. The financial statements for such Seller's
---------------------
Hotel delivered to Buyer, for the current year and each of the two years prior
to the date of this Contract, were prepared in accordance with generally
accepted accounting principles consistently applied in all material respects or
the Uniform System of Account for Hotels. To Sellers' knowledge, the financial
statements referred to in this Section 5.01(g) present fairly the financial
condition and results of operations of the Hotels as of the dates thereof.
(h) Notices. Such Seller has received no written notice from any
--------
Governmental Authority, any insurer or any other party (i) that either its
Property or the use or operation thereof is currently in violation of any zoning
or other land use regulations, (ii) that such Seller is currently in violation,
or with the passage of time will be in violation, of the requirements of any
ordinance, law, regulation or order of any Governmental Authority affecting such
Property or that any investigation has commenced or is contemplated regarding
any such possible violation, or (iii) asserting that such Seller is required to
perform work at such Property or obtain any permit, license, certificate or
authority to cure or avoid any such violation; provided that such Seller shall
--------
not be deemed to have breached any of the above representations or warranties
unless the applicable violation is material in relation to its Hotel.
(i) Parties in Possession. Other than (i) guests in such Seller's
----------------------
Hotel and (ii) as described in the Property Records pertaining to such Hotel
(including lessees under leases included therein), there are no parties other
than
<PAGE>
21
such Seller in possession of any portion of its Land or Improvements as lessees,
tenants at sufferance or trespassers. There are no leases or licenses for the
use of adjacent land or facilities in connection with the operation of such
Seller's Hotel.
(j) Commitments to Governmental Authorities. Except as set forth in
----------------------------------------
the Property Records pertaining to such Seller's Property (i) no commitments
relating to such Property that are material in relation to such Seller's Hotel
have been made to any Governmental Authority, utility company, school board,
church or other religious body or any homeowner or homeowners association,
merchant's association or any other organization, group or individual which
would impose an obligation upon Buyer or its successors or assigns to make any
contribution or dedication of money or land or to construct, install or maintain
any improvements of a public or private nature on or off such Seller's Land and
(ii) no Governmental Authority has imposed, or to the knowledge of such Seller
has threatened to impose, any requirement that is material in relation to such
Hotel that any owner of such Land pay directly or indirectly any special fees or
contributions or incur any expenses or obligations in connection with such Land.
(k) Ownership of Property. Such Seller owns good and insurable title
----------------------
to its Land and Improvements, and/or has a good and valid leasehold interest in
its Land and Improvements, as shown on Schedule A, in each case subject only to
Permitted Liens and Permitted Exceptions. Except as otherwise shown on Exhibit
C, all of its Personal Property has been fully paid for and is owned by such
Seller free and clear of all liens and encumbrances, in each case subject only
to Permitted Liens and Permitted Exceptions.
(l) Franchise Agreement. Such Seller has delivered to Buyer a true,
--------------------
accurate and complete copy of its Franchise Agreement, if any, which includes
all amendments, modifications and supplements thereto and guaranties, extensions
and renewals thereof. Except as set forth in the Property Records or as
disclosed in Exhibit G, or as otherwise herein or in any other Exhibit hereto
expressly provided, such Seller has neither received nor delivered any written
notice that any party to its Franchise Agreement is currently in material
default thereunder, and to such Seller's knowledge, no event has occurred or
circumstance exists which, with the giving of notice or passage of time, would
constitute a material default thereunder.
(m) ERISA. Such Seller is not an "employee benefit plan" within the
------
meaning of Section 3(3) of ERISA or
<PAGE>
22
an entity whose assets include plan assets within the meaning of Department of
Labor Regulation Section 2510.3-101. The consummation of the transactions
contemplated by this Contract will not result in a "prohibited transaction"
within the meaning of Section 4975(c) of the I.R.C. or Section 406 of ERISA.
(n) No Employees. None of the employees employed in connection with
-------------
such Seller's Hotel are employed by such Seller and there are no union contracts
or other employment agreements covering any such employees binding on such
Seller or its Hotel.
SECTION 5.02. Survival of Representations and Covenants. The
------------------------------------------
representations and warranties of the Buyer and Sellers set forth in this
Contract shall survive until the Termination Date. Except as expressly provided
in this Contract, all of the covenants and agreements of the Buyer and Sellers
set forth in this Contract shall expressly survive for an indefinite period
after the Closing and shall specifically not merge into the Closing and the
delivery of the Deeds, the Assignments of Leases and the Assignments.
SECTION 5.03. No Reliance on Documents. Except as expressly stated
-------------------------
in this Contract, Sellers make no representation or warranty as to the truth,
accuracy or completeness of any materials, data or information delivered by
Sellers to Buyer in connection with the transactions contemplated hereby. Buyer
acknowledges and agrees that all materials, data and information delivered by
Sellers (or their brokers, agents, representatives or advisors) to Buyer in
connection with the transactions contemplated hereby are provided to Buyer as a
convenience only and that any reliance on or use of such materials, data or
information by Buyer shall be at the sole risk of Buyer, except as otherwise
expressly stated herein. Without limiting the generality of the foregoing
provisions, Buyer acknowledges and agrees that (a) any environmental or other
report with respect to any Property which is delivered by Sellers to Buyer shall
be for general informational purposes only, (b) Buyer shall not have any right
to rely on any such report delivered by Sellers to Buyer, but rather will rely
on its own inspections and investigations of the Properties and any reports
commissioned by Buyer with respect thereto, and (c) none of the Sellers, any
Affiliate of Sellers nor the Person which prepared any such report delivered by
Sellers to Buyer shall have any liability to Buyer for any inaccuracy in or
omission from any such report.
SECTION 5.04. DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
------------
CONTRACT, IT IS UNDERSTOOD AND AGREED THAT
<PAGE>
23
SELLERS ARE NOT MAKING AND HAVE NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO
ANY PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS
AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE,
ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION,
UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS,
THE COMPLIANCE OF ANY PROPERTY WITH GOVERNMENTAL LAWS (INCLUDING, WITHOUT
LIMITATION, ACCESSIBILITY FOR HANDICAPPED PERSONS), THE TRUTH, ACCURACY OR
COMPLETENESS OF ANY PROPERTY RECORDS OR ANY OTHER INFORMATION PROVIDED BY OR ON
BEHALF OF SELLERS TO BUYER, OR ANY OTHER MATTER OR THING REGARDING ANY PROPERTY.
BUYER ACKNOWLEDGES AND AGREES THAT UPON THE CLOSING SELLERS SHALL SELL AND
CONVEY TO BUYER AND BUYER SHALL ACCEPT EACH PROPERTY "AS IS, WHERE IS, WITH ALL
FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS CONTRACT.
BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLERS ARE NOT LIABLE FOR OR
BOUND BY ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS,
REPRESENTATIONS OR INFORMATION PERTAINING TO ANY PROPERTY OR RELATING THERETO
(INCLUDING SPECIFICALLY, WITHOUT LIMITATION, INFORMATION DISTRIBUTED WITH
RESPECT TO ANY PROPERTY) MADE OR FURNISHED BY SELLERS, THE MANAGER OF ANY
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO
REPRESENT SELLERS, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR
IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS CONTRACT. BUYER REPRESENTS TO
SELLERS THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH
INVESTIGATIONS OF THE PROPERTIES, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY TO SATISFY ITSELF AS
TO THE CONDITION OF THE PROPERTIES AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE
ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR
DISCHARGED FROM ANY OF THE PROPERTIES, AND WILL RELY SOLELY UPON SAME AND NOT
UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLERS OR THEIR AGENTS OR
EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLERS AS ARE EXPRESSLY SET FORTH IN THIS CONTRACT. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN TO THE CONTRARY, UPON CLOSING, BUYER SHALL
ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO,
CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT
HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE
DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLERS (AND SELLERS' OFFICERS,
DIRECTORS, TRUSTEES, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT),
LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
<PAGE>
24
ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR
UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLERS (AND
SELLERS' OFFICERS, DIRECTORS, TRUSTEES, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT
ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION
DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING,
WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS,
OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTIES. BUYER
AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES
OR OTHER ENVIRONMENTAL CONDITIONS ON ANY PROPERTY BE REQUIRED AFTER THE DATE OF
CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF
AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF BUYER.
SECTION 5.05. Effect of Disclaimers. Sellers and Buyer acknowledge
----------------------
that the compensation to be paid to Sellers for the Properties has been
determined based upon the fact that the Properties are being sold subject to the
provisions of Sections 5.02, 5.03 and 5.04.
ARTICLE VI
Covenants and Affirmative Obligations
-------------------------------------
SECTION 6.01. Maintenance of Property. From and after the Effective
------------------------
Date, no Seller shall perform any construction or removal of any of its
Improvements, or make any other change or improvement on or about its Property,
except in accordance with its 1997 capital or operating budget, without the
prior written consent of Buyer. Between the Effective Date and the Closing Date,
each Seller shall maintain and operate its Property in substantially the same
condition and manner as such Property is now maintained and operated by such
Seller (giving effect to seasonal fluctuations). The Personal Property located
at each Hotel as of the Closing Date will be substantially similar to that
located at such Hotel on the Effective Date, subject only to any changes arising
from Hotel operations conducted in the ordinary course of business. All building
supplies, maintenance materials, food and beverage in process, linens and
equipment, if any, located at each Seller's Property on the Closing Date will be
delivered and transferred to the Buyer.
SECTION 6.02. Assumed Contracts. After the Effective Date, other
------------------
than agreements terminable without penalty on no more than 30 days' notice, no
Seller shall enter into any new Assumed Contract or extend, replace,
<PAGE>
25
renew or terminate any Assumed Contract without the prior written consent of
Buyer, such consent of Buyer not to be unreasonably withheld.
SECTION 6.03. No Further Encumbrances. After the Effective Date, no
------------------------
Seller shall create or incur any mortgage, lien, pledge or other encumbrance
affecting its Property other than the exceptions set forth on the title reports
or title commitments comprising part of the Property Records and Permitted Liens
and Permitted Exceptions.
SECTION 6.04. Compliance with Obligations. Each Seller will perform
----------------------------
all of its material obligations under its Assumed Contracts and will comply in
all material respects with all Governmental Requirements affecting its Property
and the use thereof until the Closing Date.
SECTION 6.05. Notice of Change in Governmental Requirements. Each
----------------------------------------------
Seller shall, upon notice, or upon becoming aware of any such changes, notify
Buyer promptly of any change in any applicable Governmental Requirements which
might affect the value or use of its Property to Buyer in a manner that is
material in relation to its Hotel.
SECTION 6.06. Insurance. Each Seller shall maintain in full force
----------
and effect all of its existing insurance (or renew such insurance on
substantially similar terms) until the Closing Date.
SECTION 6.07. Liquor Licenses. (a) The Buyer shall make and
----------------
prosecute (and each Seller will reasonably cooperate in connection therewith)
applications for approval of the transfer of all liquor licenses and alcoholic
beverage licenses necessary to operate the restaurants, bars and lounges
presently located within such Seller's Hotel from such Seller (and/or such other
Person or Persons as may hold such licenses) to the Buyer (or for the issuance
of new licenses in favor of the Buyer or its designee). The Buyer and each
Seller agree that they will promptly execute all transfer forms, applications
and other documents required by the liquor authorities in order to effect such
transfers (or the issuance of new licenses) in accordance with all applicable
laws on the Closing Date or at the earliest possible time thereafter. To the
extent necessary, each Seller will reasonably cooperate with the Buyer in
keeping open the bars and lounges and liquor facilities of its Hotel between the
Closing Date and the time when such liquor license transfers (or the issuance of
new licenses) actually become effective, by exercising management and
supervision of such facilities under the existing liquor license, to the extent
such licenses are in the name of such Seller or
<PAGE>
26
Affiliates thereof; provided, however, that (i) Buyer shall indemnify and hold
-------- -------
such Seller and Affiliates harmless from any liability, damages or claims
encountered in connection with such operations during such period, and Buyer
shall procure and pay for dram shop liability insurance naming Buyer and such
Seller and Affiliates as insured thereunder, and (ii) such obligation of such
Seller to cooperate and keep open the liquor facilities of its Hotel shall
terminate on the earlier to occur of (A) 60 days after the Closing and (B) Buyer
(or its designee) having obtained liquor licenses to operate at such Hotel. If
any liquor license is in the name of a Manager or any Affiliate thereof, the
applicable Seller shall use commercially reasonable good faith efforts (without
the payment of any money or the incurrence of any liability or obligation) to
cause such Manager (or such Affiliate) to comply with the foregoing requirements
applicable to such Seller as if such Seller were the holder of such license.
(b) With respect to the Hotel located in Marina del Ray, California,
Buyer and the applicable Seller acknowledge that applicable laws require that
Buyer and such Seller enter into an escrow arrangement with a qualified escrow
agent pursuant to which a portion of the Purchase Price for each such Hotel be
allocated to the liquor and alcoholic beverage licenses applicable to such
Hotel, and that a portion of the Purchase Price for each such Hotel be allocated
to the liquor and alcoholic beverage inventory at such Hotel on the Closing
Date. The parties agree that on or prior to the end of the Review Period, they
will agree upon such escrow procedures (and if the Escrow Agent or one of its
Affiliates is qualified to so act, the parties agree to use the Escrow Agent or
such Affiliate as the escrow agent for such purposes) and will agree upon the
amounts to be allocated for the purpose of such escrow at or prior to the end of
the Review Period.
SECTION 6.08. Franchise and Management Agreements. (a) Buyer
------------------------------------
acknowledges that none of the Franchise Agreements is assignable without the
consent of the related Franchisor. Each Seller shall use commercially
reasonable good faith efforts (but without any payment of money or the
incurrence of any expense or liability or the interruption of such Seller's
normal business) to cooperate with Buyer, at Buyer's election (i) to obtain the
consent of its Franchisor (if any) to the assignment of its Franchise Agreement
(if any) to Buyer's lessee in which event, assuming such consent, together with
a full release of such Seller from such Franchisor under such Franchise
Agreement in connection therewith (except for unpaid franchise fees and other
recurring charges incurred prior to the Closing
<PAGE>
27
Date) is obtained at or prior to Closing, such Franchise Agreement shall be
treated as an Assumed Contract hereunder, (ii) to obtain a new franchise or
licensing agreement for its Hotel in the name of Buyer's lessee either with the
existing Franchisor (if any) or another hotel franchising or licensing company,
and/or (iii) to terminate its Franchise Agreement (if any). To the extent that
Buyer has not provided to any given Seller evidence of the consent of its
Franchisor (if any) to the assignment to Buyer of its Franchise Agreement (if
any) pursuant to the immediately preceding clause (i), together with the full
release of such Seller described therein in connection therewith at or prior to
the Closing, Buyer specifically acknowledges and agrees that such Seller shall
terminate such Franchise Agreement. In any and all events, Buyer shall be solely
responsible for, and indemnify the Sellers against, any and all fees, charges,
expenses and other liabilities of any kind based upon, or arising out of, any
such assignment or assignments, any such new franchise or licensing agreement or
agreements (whether with the related existing Franchisors or otherwise) and any
such termination or terminations of the existing Franchise Agreements. In the
event that any Franchisor does not consent to the assignment of its Franchise
Agreement to Buyer (or agree to enter into a new franchise or license agreement
with the Buyer in replacement thereof), the related Seller or Sellers shall have
the right on and for 30 days after the Closing Date to remove, without liability
on the part of such Seller or Sellers to Buyer, any and all Third Party Property
that is owned by, or subject to the intangible property rights of, such
Franchisor under such Franchise Agreement.
(b) Buyer acknowledges that, except as provided for in Section 20.02,
all of the Management Agreements will be terminated by the related Sellers at or
prior to Closing.
SECTION 6.09. Leases. Each Seller owning a Hotel which is subject to
-------
a Ground Lease, restaurant lease or garage lease shall use commercially
reasonable good faith efforts (without the payment of any money) to obtain and
deliver to Buyer (i) an estoppel certificate relating to such Ground Lease,
restaurant lease or garage lease, as the case may be, in the form contemplated
by such Ground Lease, restaurant lease or garage lease, as the case may be, or,
if no such form is contemplated, in the form reasonably agreed upon by Buyer and
such Seller and (ii) any consent required under the terms of such Ground Lease
for the assignment of the Ground Lease to Buyer, the subsequent lease of the
Property by Buyer to its designated lessee, any change in the franchise or
management of the Property and any other matters for which such lessor's consent
may be required.
<PAGE>
28
SECTION 6.10. Cooperation. Except as otherwise expressly provided
------------
for herein, Buyer and Sellers shall use commercially reasonable efforts to make
or file all required notifications and to obtain all consents, approvals and
authorizations which must be obtained in order to consummate the transactions
contemplated hereby. Each party hereto shall give to the other parties its full
and complete cooperation in giving such notices or obtaining such consents,
approvals and authorizations. Each party covenants and agrees to promptly
furnish to the other all information and data in the furnishing party's
possession requested in writing by the requesting party which the furnishing
party has the right to disclose and which is reasonable or necessary in order to
assist the requesting party to give the necessary notices or secure the permits,
licenses and approvals required as contemplated by this Contract.
SECTION 6.11. Sellers' Indemnity. Subject to the terms of Sections
-------------------
5.02, 5.03 and 5.04, each Seller agrees to indemnify and hold Buyer and its
Affiliates harmless from all liabilities, losses, damages, costs and expenses
(including Attorneys' Fees) which the Buyer or any of its Affiliates may suffer
or incur by reason of any action or claim arising from acts or omissions of such
Seller prior to the Closing Date in connection with its Property or the use or
operation of its Hotel and all liabilities in respect of its Property or the
operation of its Hotel that are not Assumed Liabilities or such Seller's failure
to fulfill any of its obligations set forth in this Contract.
SECTION 6.12. Buyer's Indemnity. Buyer agrees to indemnify and hold
------------------
each Seller and its Affiliates harmless from all liabilities, losses, damages,
costs and expenses (including Attorneys' Fees) which such Seller or any of its
Affiliates may suffer or incur by reason of any action or claim arising on or
after the Closing Date from acts or omissions of Buyer or otherwise arising out
of such Seller's Property or the use or operation of its Hotel on or after the
Closing Date, including Buyer's failure to discharge any of the Assumed
Liabilities, Buyer's failure to fulfill any of its obligations set forth in this
Contract, or Sellers' incurrence of any costs related to the expiration or
termination of any Assumed Contract made pursuant to Buyer's request under the
provisions of Section 2.02(a).
SECTION 6.13. Indemnity Procedures Relating to Third Party Claims;
----------------------------------------------------
Exclusivity. (a) Any party seeking indemnification under Section 6.11 or 6.12
- ------------
(the "Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the
<PAGE>
29
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought under Section 6.11 or 6.12. The
Indemnifying Party may, and at the request of the Indemnified Party shall,
participate in and control the defense of any such claim, suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable under
Section 6.11 or 6.12 for any settlement effected without its consent of any
claim, suit, action or proceeding in respect of which indemnity may be sought
hereunder.
(b) After the Closing, this Section 6.13 will provide (subject to
Section 6.14) the exclusive procedures for indemnification for any liabilities,
losses, damages, costs, losses or expenses to third parties arising out of this
Contract, any of the Properties, the business conducted at any of the Hotels or
the transactions contemplated hereby.
SECTION 6.14. Indemnity Fund. At the Closing, Sellers shall deposit
---------------
with the Escrow Agent $7,350,000 (together with all investment earnings thereon,
the "Indemnity Fund"), which shall be held by Escrow Agent in a segregated
account and shall be invested only in Permitted Investments. The $7,350,000
amount deposited shall at all times be comprised, at Sellers' sole discretion,
of (a) cash or (b) subject to any modification of the escrow provisions set
forth in this Section as may be reasonably required by Buyer, unconditional,
irrevocable letters of credit issued by a Person reasonably acceptable to Buyer,
and having terms, conditions and an expiration date reasonably acceptable to
Buyer. In the event Buyer makes a claim or demand under this Contract or any
other agreement entered into between Sellers and Buyer at Closing, and the
Sellers do not dispute such claim or demand, or are determined to be liable
pursuant to such claim or demand by a court of competent jurisdiction or
otherwise in a mutually acceptable dispute resolution forum (after the
expiration of all applicable and available appeal periods or the earlier
resolution of such appeals), then if the applicable Sellers fail promptly to pay
such claim or demand, Escrow Agent promptly upon the receipt of notice shall pay
such claim or demand in full, in any event not to exceed the available funds in
the Indemnity Fund. On the Termination Date the Escrow Agent promptly shall
return all remaining funds or letters of credit in the Indemnity Fund to
Sellers; provided, however, that if prior to the Termination Date Buyer shall
-------- -------
have either commenced litigation to enforce the terms of its rights hereunder or
provided notice to Escrow Agent setting forth in reasonable detail the facts and
circumstances of any claim, liability, cost or expense to
<PAGE>
30
which Buyer is entitled to indemnification hereunder, the terms of this Section
shall be extended until the final resolution of such litigation, including any
appeal, provided that all amounts or letters of credit remaining in the
Indemnity Fund at such time in excess of the amount of the alleged claim,
liability, cost or expense (plus reasonable estimated Attorneys' Fees) or demand
shall be returned to Sellers on the Termination Date. Buyer agrees that its sole
remedy and recourse with respect to any claims arising under or in connection
with this Contract that Buyer elects to pursue after the Closing shall be made
pursuant to this Section 6.14. If Buyer acquires the hotel that is the subject
of the Mystic Agreement pursuant to the Mystic Agreement, and if Buyer has a
claim under the Mystic Agreement that would otherwise entitle Buyer to be
reimbursed from the indemnity fund under the Mystic Agreement, then Buyer may
pursue its rights with respect to such claim under this Section 6.14 as well, as
if such claim had arisen under this Contract.
SECTION 6.15. Hotel Employees. The Sellers agree that Buyer will in
----------------
no way be liable for any employees, or for any employment agreements or union
contracts with respect to employees, working at the Hotels (the "Hotel
Employees"), other than termination or severance payments, if any, due to a
Hotel Employee at AGH Hotels arising solely as a result of a termination of such
Hotel Employee. In particular, the Sellers will not, and will not authorize any
Manager to, between the date hereof and the date of Closing, enter into any
employment or union contracts or agreements that will be binding on Buyer, the
entity to which Buyer leases the Hotel ("Lessee") or any manager retained by the
Lessee to manage the Hotel ("New Manager") on or after the Closing. None of
Buyer, Lessee and New Manager will be obligated to pay any amount to or on
behalf of any Hotel Employees for any period prior to Closing. None of Buyer,
Lessee and New Manager shall have any liability (accrued or unaccrued) under any
pension, welfare or profit sharing plan that any Seller or Manager or any other
party may have established with respect to any Hotel Employees. Sellers shall
pay at Closing all accrued (whether earned or unearned) salaries, wages,
bonuses, profit-sharing, and other compensation, vacation, sick leave, worker's
compensation, and welfare benefits, deferred compensation, savings, pension,
profit sharing, 401K, retirement plan and insurance and other benefits through
the day preceding the Closing Date of all Hotel Employees, whether or not
employed by whichever of Buyer, Lessee or New Manager shall be the employer from
and after the Closing Date (the "New Employer"), and for all liabilities of
whatever kind with respect to all Hotel Employees who are not employed by the
<PAGE>
31
New Employer (except as specifically set forth in this Section with respect to
(i) termination or severance payments, if any, due to a Hotel Employee at AGH
Hotels arising solely as a result of a termination of such Hotel Employee and
(ii) matters as to which Buyer has agreed to indemnify Sellers). Without
limiting the generality of the foregoing, each Seller shall be responsible for
all obligations under group health plan continuation coverage rules under part 6
of Title I of ERISA and Section 4980B of the I.R.C. for all existing and former
Hotel Employees and their beneficiaries who become entitled to such coverage on
or before the Closing Date. Each applicable Seller hereby indemnifies, defends
and saves harmless Buyer with respect to the foregoing. The applicable Sellers
shall terminate or cause their Managers to terminate the Hotel Employees
effective as of 11:59 p.m. on the day before the Closing Date (it being
understood that if for any reason the Closing does not occur, such termination
shall be deemed to be rescinded ab initio) and to pay to such employees all
-- ------
amounts owed to such employees including amounts owed on account of accrued and
unpaid benefits including earned and/or accrued vacation pay and sick leave.
Each such Seller shall be responsible for and shall pay any sums due and owing
for any multiemployer withdrawal liability under Title IV of ERISA incurred as a
result of sale of the Hotel owned by it. Buyer shall cause the New Employer to
rehire any or all of those Hotel Employees it desires to hire effective as of
12:01 a.m. on the Closing Date (it being understood that if for any reason the
Closing does not occur, such rehiring shall be deemed void ab initio) upon such
-- ------
terms as such New Employer may elect. Neither Buyer, nor Lessee, nor New
Manager nor their respective Affiliates shall have any obligation to hire any or
all of the Hotel Employees, provided that if the failure to hire less than all
of the Hotel Employees or the hiring of Hotel Employees on different terms
results in a violation of, or causes the applicability of, the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. (S) 2101 et. seq. (the "WARN Act"),
Buyer shall be responsible for all claims, damages and penalties under the WARN
Act and shall indemnify Sellers from and against any liability or expense
relating to the WARN Act. Buyer shall be responsible for all employee
obligations in respect of the rehired Hotel Employees accruing from and after
such rehiring. Each Seller hereby agrees that neither it nor its Affiliates
shall induce or cause any Hotel Employee to be hired by any Affiliate of such
Seller. Each of Sellers and Buyer shall indemnify and hold the other (and their
respective lessees and managing agents) harmless from and against any loss,
cost, expense (including reasonable Attorneys' Fees and disbursements
<PAGE>
32
actually incurred), damage or liability any such party may suffer by reason of
the other's default under this Section.
ARTICLE VII
Conditions
----------
SECTION 7.01. Conditions to Buyer's Obligation to Close. Buyer shall
------------------------------------------
not be obligated to consummate the Closing unless and until each of the
following conditions are either fulfilled or waived in writing by Buyer:
(a) Delivery of Documents. Each Seller shall be prepared to deliver
----------------------
all instruments and documents to be delivered by such Seller at the Closing
pursuant to Sections 9.01 and 10.02 of this Contract.
(b) Representations and Warranties; Compliance with Covenants. Each
----------------------------------------------------------
Seller's representations and warranties contained in Section 5.01 shall be
true and correct in all material respects as of the Closing Date subject,
however, to facts disclosed on supplements to Exhibit C delivered in
accordance with Section 4.01 (which supplements, upon their delivery to
Buyer in accordance with Section 4.01, shall for all purposes of this
Contract constitute part of Exhibit C). Each Seller shall have performed
in all material respects all covenants, agreements and obligations required
by this Contract to be performed or complied with by such Seller prior to
the Closing Date.
(c) Ground Leases. Sellers shall have (i) delivered all estoppel
--------------
certificates in accordance with Section 6.09 and (ii) obtained any required
consents from, or sent required notices to, lessors under the Ground
Leases.
(d) Management and Franchise Agreements. Except to the extent
------------------------------------
otherwise provided in Section 6.08, Sellers shall have terminated each of
the Franchise Agreements and the Management Agreements.
(e) Title Policies. The Title Company shall be prepared to issue its
---------------
title policies insuring title to each of the Properties, free and clear of
all matters except Permitted Liens and Permitted Exceptions.
SECTION 7.02. Failure of Buyer's Conditions. If any of the
------------------------------
conditions to Buyer's obligations have not been satisfied (or deemed satisfied)
on or before the Closing
<PAGE>
33
Date other than solely as a result of any Seller's failure to comply with its
obligations hereunder for a period in excess of 30 days after receipt of notice
from Buyer of such failure (in which case, the provisions of Section 14.02 shall
be applicable), and Buyer is otherwise in material compliance with the terms
hereof, Buyer may exercise the remedy granted pursuant to Section 14.02(i)
hereof.
SECTION 7.03. Conditions to Sellers' Obligations to Close. No Seller
--------------------------------------------
shall be obligated to consummate the Closing unless and until each of the
following conditions are either fulfilled or waived by such Seller:
(a) Representations and Warranties; Compliance With Covenants.
----------------------------------------------------------
Buyer's representations and warranties contained in Article XIX shall be
true and correct in all material respects as of the Closing Date. Buyer
shall have performed in all material respects all covenants, agreements and
obligations required by this Contract to be performed or complied with by
Buyer prior to the Closing Date.
(b) Delivery of Documents and Cash to Close. Buyer shall be prepared
----------------------------------------
to deliver all Cash to Close and all instruments and documents to be
delivered by Buyer at the Closing pursuant to Sections 9.01, 9.02, 10.01
and 10.02 of this Contract.
(c) Mystic. Buyer shall have performed all its obligations under the
-------
Mystic Agreement and, to the extent Buyer is required to close the
transaction contemplated by the Mystic Agreement, such closing shall occur
concurrently with the Closing of the transactions contemplated hereby,
unless Buyer's obligation to close the transaction contemplated by the
Mystic Agreement is extended or terminated solely by reason of a material
breach of the obligations of the seller under the Mystic Agreement.
Notwithstanding anything to the contrary contained in this Contract or in
the Mystic Agreement, (i) Buyer will not be obligated to close under the
Mystic Agreement if Buyer is not obligated to close under this Contract as
a result of Sellers' default hereunder or the failure of a condition under
Section 7.01, (ii) if, as contemplated by the Mystic Agreement, the
restaurant lessee (or its designee) enters into a binding agreement to
purchase the hotel subject thereto but nevertheless fails to close such
purchase for any reason, then the obligation of Buyer under the Mystic
Agreement to purchase such hotel will be automatically reinstated on the
same terms and conditions as set
<PAGE>
34
forth in the Mystic Agreement and the parties will cause such changes to
made to the Mystic Agreement as may be reasonably necessary to effect such
reinstatement, including agreeing upon a new closing date for such purchase
as soon as practicable thereafter, provided Buyer will have no obligation
under the Mystic Agreement to close the purchase thereunder unless all
conditions to such purchase have been satisfied on or before December 15,
1998 and (iii) if Buyer elects to terminate the Mystic Agreement in
accordance with Section 4.02 thereof, Buyer shall automatically be deemed
to have concurrently elected to terminate this Contract in accordance with
Section 4.02 hereof. Promptly after the Effective Date Sellers will
initiate the right of first refusal procedure contemplated by Article XXX
of the Restaurant Lease (as defined in the Mystic Agreement). Unless the
lessee under the Restaurant Lease has waived its rights under Article XXX
thereof by a written instrument reasonably satisfactory to Buyer on or
before the closing date under the Mystic Agreement, Sellers will, in
accordance with Section 9.01, deliver a certificate to Buyer certifying
that Seller has complied with such Article XXX and that the lessee under
the Restaurant Lease has failed to timely exercise its right of first
refusal pursuant thereto. Seller agrees to indemnify and hold Buyer and its
Affiliates harmless from all liabilities, losses, damages, costs and
expenses (including Attorneys' Fees) which the Buyer or any of its
Affiliates may suffer or incur by reason of any action or claim by the
lessee under the Restaurant Lease with respect to Article XXX of the
Restaurant Lease with respect to the Mystic Agreement.
SECTION 7.04. Failure of Sellers' Conditions. If any of the
-------------------------------
conditions to any Seller's obligations have not been satisfied on or before the
Closing Date as a result of Buyer's failure to comply with any of its
obligations hereunder for a period of 30 days after receipt of notice from such
Seller of such failure, and all Sellers are otherwise in material compliance
with the terms hereof, Sellers may terminate this Contract and receive the
Deposit as liquidated damages pursuant to Section 14.01 hereof.
<PAGE>
35
ARTICLE VIII
Closing
-------
Subject to all of the provisions of this Contract, Buyer and Sellers
shall close the transactions contemplated hereby as soon as practicable
following the satisfaction or waiver of the conditions to Closing set forth
herein on a date set forth in a written notice from Buyer to Sellers at least 14
days prior to such date, provided that in no event shall the Closing Date occur
after January 30, 1998, unless such Closing Date is extended pursuant to the
following sentence or pursuant to the Cure Period provided for in Section 4.02.
At Buyer's election, the Closing Date may be extended from January 30, 1998 to
February 16, 1998; provided, however, that by January 15, 1998 Buyer shall have
-------- -------
(i) given Sellers written notice of such election and (ii) increased the Deposit
to $14,700,000. The Closing shall take place on the Closing Date at 10:00 a.m.
in New York, New York at the offices of Sellers' Attorney, or at such other
location mutually agreed upon by the parties.
ARTICLE IX
Closing Documents
-----------------
SECTION 9.01. Sellers' Closing Documents. At Closing, each Seller
---------------------------
shall execute and deliver the following documents (its "Seller's Closing
Documents") in accordance with Section 10.02:
(a) Deeds, Assignments of Leases and Assignments. A Deed or an
---------------------------------------------
Assignment of Lease, as applicable, an Assignment and required transfer tax
forms and affidavits, which shall be duly executed and acknowledged by such
Seller so as to convey to Buyer (or its designee) good and insurable title
to, or a leasehold interest in, its Property described therein free and
clear of all liens, encumbrances and other conditions of title other than
the Permitted Exceptions and Permitted Liens.
(b) Seller's Affidavits. Affidavits and "gap undertakings" from such
--------------------
Seller in form and content reasonably satisfactory to Buyer and the Title
Company to facilitate the deletion of those standard exceptions on the
Title Company's related title insurance commitment which may be deleted
solely by delivery of an affidavit.
<PAGE>
36
(c) Closing Statement. A closing statement setting forth the
------------------
Purchase Price and all credits, adjustments and prorations between Buyer
and such Seller, and the net Cash to Close due from Buyer.
(d) Authorizing Resolutions. Certificates of such resolutions in
------------------------
form and content as the Title Company may reasonably request evidencing
such Seller's existence, power and authority to consummate the transactions
herein contemplated, including copies of all corporate or trust
organizational documents or other reasonable evidence of corporate or trust
authority.
(e) FIRPTA. A FIRPTA Non-Foreign Transferor Certificate in
-------
accordance with Section 1445 of the I.R.C. from such Seller.
(f) Property Records. The originals, if available, otherwise copies,
-----------------
of each of such Seller's Property Records to the extent not otherwise
covered in this Section.
(g) Vehicle Titles. The necessary certificates of title duly
---------------
endorsed for transfer together with any required affidavits and other
documentation necessary for the transfer of title from such Seller to Buyer
of any motor vehicles owned by such Seller and used in connection with its
Hotel's operations.
(h) Certificate Regarding Representations and Warranties. A
----------------------------------------------------
certificate of the Sellers certifying to Buyer that the representations and
warranties of Sellers set forth herein are true and correct in all material
respects as of the Closing Date as if made on such date, subject, however,
to facts disclosed on supplements to Exhibit C delivered in accordance with
Section 4.01.
SECTION 9.02. Buyer's Closing Documents. At Closing, Buyer shall
--------------------------
execute and deliver the following documents ("Buyer's Closing Documents") in
accordance with Section 10.02:
(a) Assumption Documents. All documents under this Article IX to be
---------------------
executed by Buyer.
(b) Resolutions. Certificate of resolutions of Buyer in form and
------------
content as the Title Company may reasonably request evidencing authorizing
the entering
<PAGE>
37
into and execution of this Contract and the consummation of the
transactions contemplated hereby.
ARTICLE X
Closing Procedure
-----------------
The Closing shall proceed in the following manner:
SECTION 10.01. Transfer of Funds. Buyer shall pay the Cash to Close
------------------
to the Escrow Agent by wire transfer to a depository designated by the Escrow
Agent.
SECTION 10.02. Delivery of Documents. Each Seller shall deliver its
----------------------
Seller's Closing Documents and Buyer shall deliver Buyer's Closing Documents to
the Escrow Agent.
SECTION 10.03. Disbursement of Funds and Documents. When Sellers and
------------------------------------
Buyer have delivered all documents and funds to Escrow Agent as provided in
Sections 10.01 and 10.02 and when the Title Company is prepared to issue its
title policies in the form required hereby, then the Escrow Agent shall (a)
disburse the Purchase Price to Sellers, subject to adjustments and prorations
hereunder and less any closing costs or other sums due hereunder from Sellers,
(b) return the Deposit to Buyer, record all Deeds and Assignments of Leases and
deliver all the Seller's Closing Documents to Buyer, (c) deliver all the Buyer's
Closing Documents to Sellers and (d) pay all of the closing costs and other sums
due to third parties hereunder, to the extent set forth on any closing statement
executed by Sellers and Buyer at or prior to the Closing.
ARTICLE XI
Prorations and Closing Costs
----------------------------
SECTION 11.01. Prorations. Except as otherwise specified in clause
-----------
(a) below, the following items shall be prorated at the Closing as of midnight
preceding the Closing Date, without duplication:
(a) Certain costs and expenses relating to each Property shall be
adjusted as of the Closing Date between Sellers and Buyer (the "Closing Date
------------
Adjustments"). The Closing Date Adjustments shall constitute a composite
- -----------
accounting of the different items described below in this Section. The intent
is to credit or charge, as the case may
<PAGE>
38
be, each Seller with all revenues and expenses respecting its Property which are
attributable to operations before the Closing Date and to credit or charge, as
the case may be, Buyer with all such revenues and expenses attributable to
operations on and after the Closing Date. Unless otherwise provided for herein,
all revenues and expenses shall be separately accounted for as between each
Seller and Buyer as of 12:01 a.m. on the Closing Date. No later than 90 days
after the Closing Date (or with respect to real estate taxes, 30 days from the
date that the amounts such taxes are determinable), Sellers and Buyer shall
review all the amounts and calculations made in respect of the Closing Date
Adjustments and any final corrections shall be made to the Closing Date
Adjustments, and each Seller and Buyer at that time shall settle any funds owed
to each other. The following items shall be accounted for in calculating the
Closing Date Adjustments as between each Seller and Buyer:
(i) Prepaid charges and fees for licenses and permits or for other
items transferred by such Seller to Buyer shall be prorated as between such
Seller and Buyer.
(ii) Prepaid rents and all room and other deposits and advance
payments under booking arrangements and trade-out agreements for use of
such Seller's Property facilities after the Closing Date shall be credited
to Buyer.
(iii) With regard to food (other than food in process including mini-
bars and gift shops) and non-alcoholic and alcoholic beverages (other than
opened containers and unopened containers outside of storage areas), Buyer
shall be charged with the costs of all food and non-alcoholic and alcoholic
beverages at such Seller's Property at such Seller's cost based upon an
inventory of such items performed jointly by Buyer and such Seller as of
12:01 a.m. on the Closing Date.
(iv) All charges and prepayments relating to such Seller's Assumed
Contracts which are assumed by Buyer shall be separately accounted for as
between such Seller and Buyer as of 12:01 a.m. on the Closing Date.
(v) All cash in the operating accounts for such Seller's Hotel (it
being understood that such accounts refer to "house banks" and not bank
accounts) shall be paid over to Buyer at Closing and such Seller shall
receive a credit therefor in the Closing Date Adjustments.
<PAGE>
39
(vi) With regard to the booking of guest rooms and the provision of
other services at such Seller's Property, the parties agree that such
Seller shall be entitled to all of the revenue generated by such operations
through and including the night before the Closing Date; provided that
--------
Buyer shall be entitled to one-half of such revenue (including applicable
sales Tax) for the night before the Closing Date. Each Seller shall
receive a credit, without duplication, for all accounts receivable (other
than for the guests' stay that includes the night prior to Closing) with
respect to hotel guests then in occupancy, net of any travel agent
commissions, credit card commissions or other similar costs to collect such
revenue. Except as expressly provided for in this subsection (vi), each
Seller shall own and be entitled to all collections with respect to
accounts receivable for the period prior to the Closing Date. Buyer
agrees, on a prompt, but no less frequent than monthly, basis, to deliver
to each Seller any payments and back-up received or generated with respect
to such Seller's accounts receivable. The parties acknowledge that if
Buyer receives a payment from a party which does not specify the invoice
being paid, then such payment shall be applied, to the extent such payment
is not identifiable to a particular invoice, first to the oldest past due
sums due Seller from such party, if any, provided, however, that payments
made (i) in respect of airline accounts will be applied only to amounts
owed that are less than 180 days past due and (ii) all payments made in
respect of any other accounts will be applied only to amounts owed that are
less than 90 days past due. Buyer has no obligation nor responsibility to
collect said accounts receivable, however, Buyer will cooperate with each
Seller in such collection and shall give each Seller rights to inspect
Buyer's books and records at reasonable times with respect to such accounts
receivable.
(vii) With respect to baggage, personal property, laundry, valet
packages and other property of Hotel guests checked or left in the care of
any Seller by transient hotel guests or tenants prior to the Closing (all
of which, except for any items locked in any Hotel's safe deposit boxes as
to which Sellers or Managers cannot reasonably gain access shall be
inventoried on the Closing Date), Buyer shall be responsible from and after
the Closing Date for all such property.
<PAGE>
40
(b) Subject to Section 2.02(a)(iv), each Seller shall pay or credit
against the Purchase Price any of the following that are a lien on its Land or
Improvements: all unpaid sales, occupancy, personal property or real estate
Taxes for years prior to Closing, together with any interest and penalties
relating to any of the foregoing.
(c) Each Seller shall notify the utility companies servicing its
Property prior to Closing that billing to such Seller for such utilities shall
be discontinued at the end of the day preceding the Closing Date, and Buyer
shall arrange with such utilities to have such billings for utility services
charged to Buyer from and after the Closing Date and such Seller shall be
entitled to the refunds of all deposits therefor. Such Seller shall pay all
charges with respect to such utilities for the period prior to the Closing Date
and utility charges since the date of the last billing will be adjusted at
Closing as of the Closing Date on the basis of the last bill so rendered, with
subsequent adjustment, if any, when final bills are rendered.
(d) If there is a water meter on a Seller's Property, such Seller
shall furnish, at the Closing or as soon thereafter as practicable, a reading to
a date not more than 30 days prior to the Closing Date, and the unfixed meter
charge, the unfixed sewer rent and/or unfixed water charges, if any, based
thereon for the intervening time shall be apportioned on the basis of such last
reading, subject to adjustment upon receipt of the actual meter charge and sewer
rent.
(e) Other costs, expenses and charges which are a lien or may become
a lien against a Seller's Property and are of such a type as are usually
involved in and adjusted with regard to property similar to and located in the
locale of such Property, including Taxes in accordance with Section 2.02(a)(iv).
Prorations hereunder shall, where applicable, be made on the basis of a 365-day
year and, for any month, on the basis of the number of days elapsed. If any of
the foregoing cannot be apportioned at the Closing because of the unavailability
of the amounts which are to be prorated, unless otherwise provided for herein, a
reasonable estimation of the amount of such items shall be placed in escrow with
the Title Company, and such items shall be prorated as soon as practicable after
the Closing Date.
(f) To the fullest extent permitted by applicable law, any
controversy, claim or dispute arising out of or relating to the prorations set
forth in this Section 11.01, including any dispute concerning the scope of this
<PAGE>
41
clause (f), shall be resolved exclusively by the final and binding decision of
the Accountants as set forth herein. In the case of a dispute with respect to
such matters, either Sellers or Buyer may submit such matter to arbitration
which shall be conducted by the Accountants. The "Accountants" shall be one of
three (3) firms of certified public accountants of recognized international
standing in the hotel industry. Until otherwise agreed to by the parties, the
three (3) firms shall be Arthur Andersen LLP, Coopers & Lybrand L.L.P. and
Pannell Kerr Forster PC, notwithstanding any existing relationships which may
exist between any of the Sellers and such accounting firms or Buyer and such
accounting firms. The party (i.e., either Sellers or Buyer) desiring to submit
----
any matter to arbitration hereunder shall do so by written notice to the other
party, which notice shall set forth the items to be arbitrated and such party's
choice of one of the three (3) accounting firms. The party receiving such
notice shall within fifteen (15) days after receipt of such notice either
approve such choice, or designate one of the remaining two (2) firms by written
notice back to the first party, and the first party shall within fifteen (15)
days after receipt of such notice either approve such choice or disapprove the
same. If both parties shall have approved one of the three (3) firms under the
preceding sentence, then such firm shall be the "Accountants" for the purposes
of arbitrating the dispute; if the parties are unable to agree on an accounting
firm, then the third firm, which was not designated by either party, shall be
the "Accountants" for such purpose. The Accountants shall be required to render
a decision in accordance with the procedures described below within fifteen (15)
days after being notified of their selection. The fees and expenses of the
Accountants will be paid by the non-prevailing party. In all arbitration
proceedings submitted to the Accountants, the Accountants shall be required to
agree upon and approve the substantive position advocated by Buyer or Sellers
with respect to each disputed item. Any decision rendered by the Accountants
that does not reflect the position advocated by Buyer or Sellers shall be beyond
the scope of authority granted to the Accountants and, consequently, may be
overturned by either party. All proceedings by the Accountants shall be
conducted in accordance with the Uniform Arbitration Act, except to the extent
the provisions of such act are modified by this Contract or the mutual agreement
of the parties. Unless otherwise agreed, all arbitration proceedings shall be
conducted at the Hotel or Hotels with respect to which the dispute arose.
<PAGE>
42
SECTION 11.02. Sellers' Closing Costs. Each Seller shall pay for the
-----------------------
following items prior to or at the time of Closing:
(a) 50% of all transfer taxes, sales taxes, conveyance fees,
recording costs and other documentary stamp tax related to the transfer of
its Property;
(b) 50% of the premium and other costs and fees payable in connection
with an Owner's Title Insurance Policy obtained by Buyer and issued by the
Title Company covering its Land and the Improvements related thereto, plus
the cost of all endorsements thereto;
(c) One-half of all escrow fees and costs relating to its Property;
and
(d) Its portion (as opposed to other Sellers' portions) of Sellers'
attorneys' fees.
SECTION 11.03. Buyer's Closing Costs. Buyer shall pay for the
----------------------
following items prior to or at the time of Closing:
(a) 50% of the transfer taxes, sales taxes, conveyance fees,
recording costs and documentary stamp tax related to the transfer of all
the Properties;
(b) 50% of the premium and other costs and fees payable in connection
with an Owner's Title Insurance Policy or Policies obtained by Buyer and
issued by the Title Company covering all the Land and the Improvements
related thereto, plus the cost of all endorsements thereto;
(c) The costs and fees payable in connection with any surveys, or
updates of surveys, relating to any of the Properties;
(d) One-half of all escrow fees and costs; and
(e) Buyer's attorneys' fees.
SECTION 11.04. Accounts Payable. Each Seller shall retain and be
-----------------
responsible for the payment of all accounts payable, liabilities and obligations
relating to its Property (including its Hotel) accrued prior to and as of the
Closing and payable after the Closing. Buyer shall be responsible for the
particular accounts payable, liabilities and obligations relating to each
Property (including each Hotel) accruing on or after the Closing.
<PAGE>
43
ARTICLE XII
Possession; Risk of Loss
------------------------
Buyer shall be granted full possession of each Property at Closing
subject to (i) tenant's rights under any space leases of any Property (or any
portion thereof) assumed by Buyer, (ii) guests in occupancy and (iii) Permitted
Liens and Permitted Exceptions. All risk of loss with respect to each Property
shall pass to Buyer on and as of the Closing Date.
ARTICLE XIII
Condemnation and Damage by Casualty
-----------------------------------
SECTION 13.01. Condemnation. In the event of the institution of any
-------------
proceedings by any Governmental Authority which shall relate to the proposed
taking of any Material Portion of a Hotel by eminent domain prior to Closing, or
in the event of the taking of any Material Portion of a Hotel by eminent domain
prior to Closing, the affected Seller or Sellers shall promptly notify Buyer and
Buyer shall thereafter have the right and option to terminate this Contract, but
only with respect to such Hotel, by giving Sellers and the Escrow Agent written
notice of Buyer's election to terminate within 30 days after receipt by Buyer of
the notice from the affected Seller or Sellers. Each Seller hereby agrees to
furnish Buyer with written notice of a proposed condemnation within two business
days after such Seller's receipt of such notification. Should Buyer terminate
this Contract with respect to a Hotel pursuant to this Section 13.01, the Escrow
Agent shall return to Buyer a pro rata portion of the Deposit (based upon the
ratio of the allocated Purchase Price of the affected Hotel to the total
Purchase Price) and, except as otherwise provided for in this Contract, the
parties hereto shall be released from their respective obligations and
liabilities hereunder with respect to such Hotel. Should Buyer elect not to
terminate this Contract with respect to such Hotel, the parties hereto shall
proceed to Closing and the affected Seller or Sellers shall assign all of its or
their right, title and interest in all awards in connection with such taking or
takings to Buyer.
SECTION 13.02. Damage by Casualty. (a) If, after the Effective Date
-------------------
but prior to the Closing Date, any damage other than Material Damage occurs from
fire, windstorm or other casualty to any Property, and if the sum
<PAGE>
44
of (i) the insurance proceeds paid or payable with respect to such damage (other
than business interruption insurance for periods prior to the Closing Date) plus
(ii) the amount of any deductible or co-payment amount under the related
insurance policy or policies plus (iii) such amounts, if any, as the Sellers may
in their sole discretion elect to pay to Buyer or credit to Buyer at Closing is
sufficient to restore the affected Hotel to the condition it was in immediately
prior to the occurrence of such casualty plus the costs of any interruption of
business at such Hotel that will extend beyond the Closing Date, then (1) Buyer
shall be required to close this transaction in accordance with the Contract, (2)
the affected Seller or Sellers shall assign unto Buyer any and all insurance
proceeds paid or payable with respect to such damage (other than business
interruption insurance for periods prior to the Closing Date) and (3) Buyer
shall receive at Closing a credit in the amount of any deductible or co-payment
amount under the related policy or policies plus such other amounts, if any,
described in clause (iii) of this sentence. In such event, no Seller shall have
any additional obligation if such insurance proceeds are insufficient or
unavailable to repair such damage.
(b) If, prior to Closing, there is any Material Damage to any Hotel
and such Material Damage is, in the reasonable estimation of Sellers, capable of
restoration within one year following the occurrence of such Material Damage,
Sellers shall elect within 30 days of the date of such Material Damage whether
to terminate this Contract with respect to such Hotel, and if Sellers make such
election, no party shall have any further obligation or liability to the others
under this Contract with respect to such Hotel. If Sellers elect not to
terminate this Contract with respect to such Hotel, the Closing with respect to
such Hotel (but not with respect to the other Hotels) shall be extended to the
date (not to exceed one year from the date of Sellers' election) necessary to
enable Sellers to restore such Hotel to the condition it was in immediately
prior to the occurrence of such Material Damage. If prior to Closing there is
any Material Damage to any Hotel and such Material Damage is not, in the
reasonable estimation of Sellers, capable of restoration within one year
following the occurrence of such Material Damage, no party shall have any
further obligation or liability to the others under this Contract with respect
to such Hotel.
<PAGE>
45
ARTICLE XIV
Default
-------
SECTION 14.01. Buyer's Default; Liquidated Damages. In the event
------------------------------------
that the transactions fail to close solely due to Buyer's failure to comply with
its obligations hereunder (after giving effect to the cure period in Section
7.04), the Deposit (including any interest earned thereon) shall be immediately
paid to Sellers by the Escrow Agent and Buyer shall have no further rights with
respect thereto. Buyer recognizes that the Properties will be removed from the
market during the existence of this Contract and, if Buyer fails to perform its
obligations hereunder, Sellers shall be entitled to compensation for the
detriment caused thereby. However, all parties agree that it is extremely
difficult and impractical to ascertain the extent of the detriment and, to avoid
such difficulties, the parties agree that Sellers shall be entitled to retain
the Deposit (including any interest earned thereon) as liquidated damages (and
not as a penalty) in accordance with this Section 14.01. All parties agree that
such amount stated as liquidated damages shall be in lieu of any other relief to
which Sellers might otherwise be entitled by virtue of this Contract or by
operation of law.
SECTION 14.02. Sellers' Default. In the event that the transactions
-----------------
fail to close solely due to the failure of one or more Sellers to comply with
its or their obligations hereunder (after giving effect to the cure period in
Section 7.02) or a material breach of its or their representations or warranties
hereunder, Buyer shall have the right to either (i) terminate this Contract and
receive a refund of the Deposit, (ii) commence an action for the specific
performance of this Contract or (iii) in the case of a prior sale or encumbrance
of any of the Hotels by Sellers to any Person other than Buyer or its successors
or permitted assigns in breach of this Contract or in the case of any wilful or
knowing material breach by Sellers of their representations, warranties or
covenants hereunder, Buyer shall also be entitled to seek damages. Except as
provided in the preceding clause (iii), Buyer hereby waives any right to sue
Sellers for damages for any default by Sellers hereunder, but if the Closing
occurs, subject to the provisions of Section 6.14, such waiver shall not apply
to damages to which Buyer may be entitled hereunder by reason of any breach by
Sellers of any of their representations, warranties or covenants hereunder which
survive the Closing and that first become known to Buyer after Closing.
<PAGE>
46
ARTICLE XV
Real Estate and Other Commissions and Fees
------------------------------------------
Sellers and Buyer each represent and warrant to the other that there
are no brokers, salespersons, advisors or finders involved in this transaction
by reason of agreement with such representing party, except for Hodges Ward
Elliott pursuant to an agreement with Sellers. The provisions of this Article
shall survive the Closing or termination of this Contract.
Sellers agree to, and hereby do, indemnify and save harmless Buyer and
its Affiliates and their respective successors and assigns against and from any
loss, liability or expense, including Attorneys' Fees, arising out of any claim
or claims for commissions or other compensation for bringing about this Contract
or the transactions contemplated hereby, or advice in connection herewith, made
by any broker, finder, consultant or like agent if such claim or claims made by
any such broker, finder, consultant or like agent are based in whole or in part
on any agreements entered into with Sellers or their representatives for a
commission or other compensation. Buyer agrees to, and hereby does, indemnify
and save harmless Sellers, their respective Affiliates and their respective
successors and assigns against and from any loss, liability or expense,
including Attorneys' Fees, arising out of any claim or claims for commissions or
other compensation for bringing about this Contract or the transactions
contemplated hereby, or advice in connection herewith, made by any broker,
finder, consultant or like agent if such claim or claims by any such broker,
finder, consultant or like agent are based on any agreements entered into with
Buyer or its representatives for a commission or other compensation.
ARTICLE XVI
Notices
-------
Any notice, request, demand, instruction or other communication to be
given to any party hereunder, except where required to be delivered at the
Closing, shall be in writing and shall be hand-delivered or sent by Federal
Express or a comparable overnight mail service, or mailed by U.S. registered or
certified mail, return receipt requested, postage prepaid, to Buyer, each
Seller, Buyer's Attorney, Sellers' Attorney, and Escrow Agent at their
respective addresses set forth in Article I of this Contract. Notice
<PAGE>
47
shall be deemed to have been given upon receipt or refusal of delivery of said
notice. Notices may be given by confirmed telecopy provided a hard copy of such
notice is sent by another means in accordance with this Article on the next
business day following such telecopy delivery. The addressees and addresses for
the purpose of this Article may be changed by giving notice. Unless and until
such written notice is received, the last addressee and address stated herein
shall be deemed to continue in effect for all purposes hereunder.
ARTICLE XVII
Assignment
----------
This Contract as it relates to one or more Properties may be assigned
by Buyer without the prior written consent of Sellers; provided, however, that
-------- -------
(i) such assignee shall assume the applicable Assumed Liabilities on the terms
and conditions contained herein and shall otherwise acquire all of the right,
title and interest to such Properties that Buyer would have acquired, under the
conditions and subject to the obligations that Buyer would have undertaken
hereunder with respect to such Properties and (ii) Buyer shall remain fully
liable to Sellers hereunder as if such transfer and assumption were made
directly to and by Buyer.
ARTICLE XVIII
Escrow Agent
------------
SECTION 18.01. Duties and Authorization. The payment of the Deposit,
-------------------------
Cash to Close and all other funds provided hereunder to the Escrow Agent is for
the accommodation of the parties to this Contract. The duties of the Escrow
Agent shall be determined solely by the express provisions of this Contract.
The Escrow Agent shall invest the Deposit (to the extent delivered in cash) as
directed in writing by the Buyer and Sellers. If this Contract has been
terminated in accordance with Section 4.02(b), Escrow Agent shall return the
Deposit to Buyer within two (2) business days after such termination without
further notice to any party to this Contract. In the event the Escrow Agent
receives a written demand from either Sellers or Buyer for the Deposit after the
expiration of the Review Period (which demand shall include an explanation
setting forth the factual basis for such party's demand for the Deposit), Escrow
Agent shall give 10 days written notice
<PAGE>
48
to the other party (i.e., Buyer or Sellers) of such demand and of Escrow Agent's
----
intention to remit the Deposit to the party making the demand on the stated
date. If Escrow Agent does not receive a written objection within 10 days after
such notice, the Escrow Agent is hereby authorized to so remit the Deposit. If,
however, the Escrow Agent receives written objection from the other party within
10 days after such notice, the Escrow Agent shall continue to hold the Deposit
until otherwise directed by joint written instructions from Sellers and Buyer,
or until a final judgment of an appropriate court or arbitrator is issued. Buyer
and Sellers authorize the Escrow Agent, without creating any obligation on the
part of the Escrow Agent, in the event this Contract or the Deposit becomes
involved in litigation, to deposit the Deposit with the clerk of the court in
which the litigation is pending and thereupon the Escrow Agent shall be fully
relieved and discharged of any further responsibility under this Contract. Buyer
and Sellers also authorize the Escrow Agent, if it is threatened with
litigation, to interplead all interested parties in any court of competent
jurisdiction and to deposit the Deposit with the clerk of the court and
thereupon the Escrow Agent shall be fully relieved and discharged of any further
responsibility hereunder. Notwithstanding anything to the contrary contained
herein, in the event there is any controversy as to which party is entitled to
the Deposit and all or any portion of the Deposit is comprised of a Letter of
Credit, then, prior to the expiration of any such Letter of Credit, the Escrow
Agent shall (i) instruct Sellers to submit a drawing under such Letter of Credit
and deposit the proceeds of such drawing into the escrow or (ii) accept from
Buyer a substituted Letter of Credit which is in the same form and from the same
financial institution as the previously deposited Letter of Credit with an
expiration date no less than six months after the date of replacement.
SECTION 18.02. Liability. The Escrow Agent shall not be liable for
----------
any mistake of fact or error of judgment or any acts or omissions of any kind
unless caused by its own wilful misconduct or negligence. The Escrow Agent
shall be entitled to rely on any instrument or signature reasonably believed by
it to be genuine and may assume that any Person purporting to give any writing,
notice or instruction in connection with this Contract is duly authorized to do
so by the party on whose behalf such writing, notice, or instruction is given.
SECTION 18.03. Hold Harmless. Buyer and Sellers will, and hereby
--------------
agree to, jointly and severally, indemnify the Escrow Agent for and hold it
harmless against any loss, liability or expense, including Attorneys' Fees,
incurred on
<PAGE>
49
the part of the Escrow Agent arising out of or in connection with the acceptance
of, or the performance of, its duties under this Contract, as well as the costs
and expenses of defending against any claim or liability arising under this
Contract other than as a result of its own wilful misconduct or negligence. This
provision shall survive the Closing or earlier termination of this Contract.
SECTION 18.04. FDIC Coverage. The parties are informed that the
--------------
Federal Deposit Insurance Corporation (FDIC) coverage applies only to a maximum
amount of One hundred thousand Dollars ($100,000) for each individual depositor,
and that the Escrow Agent assumes no responsibility for any loss occurring which
arises from the fact that the amount held by the Escrow Agent in any account may
cause the aggregate amount of any individual depositor's accounts to exceed One
hundred thousand Dollars ($100,000) and that the excess amount is not insured by
the Federal Deposit Insurance Corporation.
ARTICLE XIX
Buyer's Representations
-----------------------
SECTION 19.01. Organization and Authority. Buyer represents and
---------------------------
warrants to Seller, as of the date hereof and as of the Closing Date, that Buyer
is duly organized, validly existing and in good standing under the laws of the
state of its formation; has the requisite power and authority to execute,
deliver and perform this Contract and the other documents and agreements
contemplated hereby; Buyer has duly authorized the execution and delivery of
this Contract and by the end of the Review Period (assuming this Contract has
not been terminated), the performance of its obligations hereunder will have
been duly authorized; and the entry into, the performance of, or compliance with
this Contract by Buyer will not, to Buyer's knowledge, result in any violation
of, default under, or acceleration of any obligation under any existing
partnership agreement, mortgage indenture, agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to Buyer.
SECTION 19.02. Resources. Buyer has or will have by Closing the
----------
requisite cash, cash equivalents, equity commitment or other sources of
financing available to consummate the transactions contemplated hereby.
<PAGE>
50
ARTICLE XX
Provisions Relating to Certain Hotels
-------------------------------------
SECTION 20.01. Florida Radon Gas Disclosure. Radon is a naturally
-----------------------------
occurring radioactive gas that, when it has accumulated in a building in
sufficient quantities, may present health risk to persons who are exposed to it
over time. Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
SECTION 20.02. Tampa Hotel. Buyer acknowledges that the Tampa
------------
Agreement requires 90 days notice to Tampa Manager prior to termination thereof.
Buyer and Tampa Seller shall use good faith efforts to reach an agreement with
Tampa Manager to cause the Tampa Agreement to be terminated prior to the
expiration of such 90-day notice provision at no greater expense thereunder than
would have been payable if such full 90 days' notice had been given. In the
event that Buyer and Tampa Seller are unable so to terminate the Tampa Agreement
prior to the Closing Date, Tampa Seller shall give Tampa Manager notice of
termination in accordance with the Tampa Agreement within two (2) business days
after the expiration of the Review Period, whereupon Buyer and Sellers shall
conduct the closing as to the other Hotels on the Closing Date in accordance
with the terms of this Contract and Buyer and Tampa Seller shall conduct the
Closing with respect to the Tampa Hotel as soon as practicable following the
termination of the Tampa Agreement in accordance with the terms of this
Contract, but in no event later than the first business day following the
expiration of such 90-day notice provision; provided, however, that all
-------- -------
prorations with respect to the Tampa Hotel shall nevertheless be calculated as
of the Closing Date (and Buyer shall be credited with all revenues and expenses
derived from or related to the Tampa Hotel from and after the Closing Date), and
Tampa Seller shall be entitled to interest at the rate of 8% per annum on the
portion of the Purchase Price allocated to such Hotel pursuant to Section 3.03
for the number of days from and including the Closing Date to but excluding the
first business day following the expiration of such 90-day notice provision.
Buyer and Tampa Seller each agree to each pay one-half of all fees, charges,
expenses and other obligations of any kind based upon, or arising out of, the
termination of the Tampa Agreement, including any application fees associated
with a new franchise agreement for the Tampa Hotel from the Tampa Manager or any
Affiliate thereof but excluding any costs relating to the completion of any
"property
<PAGE>
51
improvement program" specified by such franchisor in connection with any such
new franchise agreement.
SECTION 20.03. Key Largo Property. Sellers and Buyer acknowledge
-------------------
that the Hotel located in Key Largo, Florida, is subject to a right of first
refusal in favor of the lessee under a restaurant lease applicable to such
Hotel. If such right of first refusal has not been waived in writing by such
lessee on a basis reasonably acceptable to Buyer on or prior to the expiration
of the Review Period, Sellers and Buyer shall promptly enter into (i) a separate
agreement, substantially similar to the Mystic Agreement, pursuant to which
Buyer will agree to purchase such Key Largo Hotel for the price allocated to
such Hotel in accordance with Section 3.03 and (ii) an amendment of this
Contract to reflect the separate agreement described in the preceding clause
(i), including the addition of a provision substantially similar to Section
7.03(c) and the last sentence of Section 6.14 with respect to the Key Largo
Hotel.
SECTION 20.04. Rochester Property. Sellers and Buyer acknowledge
-------------------
that the Hotel located in Rochester, New York, may be subject to a right of
first refusal. If such right of first refusal has been reasonably determined by
Sellers to exist but has not been waived in writing on a basis reasonably
acceptable to Buyer on or prior to the expiration of the Review Period, Sellers
and Buyer shall promptly enter into (i) a separate agreement, substantially
similar to the Mystic Agreement, pursuant to which Buyer will agree to purchase
such Rochester Hotel for the price allocated to such Hotel in accordance with
Section 3.03 and (ii) an amendment of this Contract to reflect the separate
agreement described in the preceding clause (i), including the addition of a
provision substantially similar to Section 7.03(c) and the last sentence of
Section 6.14 with respect to the Rochester Hotel.
ARTICLE XXI
Miscellaneous
-------------
SECTION 21.01. Counterparts. This Contract may be executed in any
-------------
number of counterparts, any one and all of which shall constitute the contract
of the parties and each of which shall be deemed an original.
SECTION 21.02. Section and Paragraph Headings. The section and
-------------------------------
paragraph headings herein contained are for
<PAGE>
52
the purposes of identification only and shall not be considered in construing
this Contract.
SECTION 21.03. Amendment. No modification or amendment of this
----------
Contract shall be of any force or effect unless in writing executed by both
Sellers and Buyer.
SECTION 21.04. Attorneys' Fees. If any party obtains a judgment
----------------
against any other party by reason of breach of this Contract, Attorneys' Fees
and costs shall be included in such judgment.
SECTION 21.05. Governing Law. This Contract shall be interpreted in
--------------
accordance with the internal laws of the State of New York both substantive and
remedial, excluding laws governing conflicts of laws.
SECTION 21.06. Entire Contract. This Contract, including all
----------------
Schedules and Exhibits which are incorporated by reference, sets forth the
entire agreement among Sellers and Buyer relating to the Properties and all
subject matter herein and supersedes all prior and contemporaneous negotiations,
understandings and agreements, written or oral, among the parties.
SECTION 21.07. Time of the Essence. Time is of the essence in the
--------------------
performance of all obligations by Buyer and Sellers under this Contract.
SECTION 21.08. Computation of Time. Any reference herein to time
--------------------
periods of less than six (6) days shall exclude Saturdays, Sundays and legal
holidays in the computation thereof. Any time period provided for in this
Contract which ends on a Saturday, Sunday or legal holiday shall extend to 5:00
p.m. on the next full business day.
SECTION 21.09. Successors and Assigns. This Contract shall inure to
-----------------------
the benefit of and be binding upon the successors and permitted assigns of the
parties hereto.
SECTION 21.10. No Party Draftsman. This Contract has been drafted
-------------------
jointly by Buyer and Sellers and, accordingly, shall not be construed or
interpreted against either Buyer or Sellers.
SECTION 21.11. No Third Party Benefitted. This Contract is solely
--------------------------
for the benefit of the parties hereto and there shall be no third party
beneficiaries of the terms hereof.
<PAGE>
53
SECTION 21.12. Public Announcements. Subject to disclosure
---------------------
obligations required by law or advised by their counsel to be required by law,
neither Sellers nor any of their Affiliates shall issue any press release or
otherwise make public any information with respect to this Contract or the
transactions contemplated hereby prior to the Closing Date without the prior
written consent of Buyer. Subject to disclosure obligations required pursuant
to securities laws or stock exchange rules or regulations, or otherwise required
by law or advised by its counsel to be required by law, neither Buyer nor any of
its Affiliates shall issue any press release or otherwise make public any
information with respect to this Contract or the transactions contemplated
hereby prior to the expiration of the Review Period without the prior written
consent of the Sellers. If a party is required or permitted to issue a press
release or other public announcement pursuant to the foregoing, it shall advise
the other party in advance thereof and use reasonable best efforts to cause a
mutually agreeable release or announcement to be issued; provided, however, that
-------- -------
with respect to any press release or other public disclosure, Sellers must
approve those aspects relating to a description of Sellers or their Affiliates.
Until such time as a press release has been issued by Buyer, neither Sellers nor
Buyer shall discuss or disclose the existence of this transaction, the terms of
this Contract or the identity of the parties hereto with any other Person,
except for those employees, prospective lenders, advisors, attorneys,
consultants and other professionals required to implement the terms of this
Contract or to assist in Buyer's due diligence and who have agreed to maintain
the confidentiality of the transaction and the information they receive, and
except to the extent required by law or advised by counsel to be required by
law.
SECTION 21.13. Recordation. The parties agree that neither this
------------
Contract nor any memorandum or notice hereof shall be recorded or filed in any
public records. If Buyer violates the terms of this Section, Sellers, in
addition to any other rights or remedies they may have, may immediately
terminate this Contract by giving notice to Buyer of their election to do so
and, in the event of such termination, Seller shall be entitled to receive the
Deposit (including any interest earned thereon) from the Escrow Agent as
liquidated damages for Buyer's breach. The provisions of this Section shall
survive the Closing or any termination of this Contract.
<PAGE>
54
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of the day and year first written above.
CLEARWATER SURFSIDE HOTEL TRUST,
FSA ZETA LBV HOTEL, INC.
TAMPA AIRPORT HOTEL TRUST,
MARINA DEL REY HOTEL TRUST,
FT. LAUDERDALE BEACH HOTEL TRUST,
CLEARWATER-GULFVIEW HOTEL TRUST,
CENTURY CITY HOTEL MANAGEMENT, INC.,
MADEIRA BEACH HOTEL TRUST,
ZETA KEY LARGO HOTEL, INC.,
RICHMOND HOTEL TRUST,
ZETA ST. LOUIS HOTEL, INC.,
ZETA ROCHESTER HOTEL, INC.,
ZETA BLOOMINGTON HOTEL, INC.,
by /s/ Alex Makowski
------------------------
Name: Alex Makowski
Title: Vice President
<PAGE>
55
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
by AGH GP, INC., its
general partner,
by /s/ Bruce G. Wiles
-------------------------------
Name: Bruce G. Wiles
Title:Executive Vice President
THE UNDERSIGNED HEREBY EXECUTES THIS CONTRACT TO EVIDENCE ITS
AGREEMENT TO BE BOUND BY SECTION 7.03(C) HEREOF.
ZETA MYSTIC HOTEL, INC.,
by /s/ Alex Makowski
----------------------------------
Name: Alex Makowski
Title: Vice President
THE UNDERSIGNED HEREBY EXECUTES THIS
CONTRACT TO EVIDENCE ITS AGREEMENT TO
ACT AS ESCROW AGENT HEREUNDER.
LAWYERS TITLE INSURANCE
CORPORATION
by /s/ Michael D. Gallinar
----------------------------------
Name: Michael D. Gallinar
Title: Title Agent
<PAGE>
Exhibit 2.1
EXECUTION COPY
This AMENDMENT No. 1 is dated as of December 15, 1997 (this
"Amendment") to the Contract for Purchase and Sale of Hotels dated as of
November 26, 1997 (the "Contract"), by and among those entities identified
on Schedule A of the Contract (each a "Seller", and collectively, the
"Sellers") and American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "Buyer"). Terms used herein but not
otherwise defined have the meanings assigned to such terms in the Contract.
Recital
-------
WHEREAS, pursuant to the Contract, Sellers have agreed to sell
and Buyer has agreed to buy the Properties; and
WHEREAS, Sellers and Buyer now desire to amend the Contract to
reflect the provisions set forth herein.
NOW THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Extension of Buyer's Due Diligence Regarding Certain
----------------------------------------------------
Items. (a) The provisions of this paragraph supersede any contrary provisions
- ------
of the Contract. Buyer shall have until December 17, 1997 to complete its
investigation of the compliance of the three Properties located in Madeira
Beach, Tampa, and Ft. Lauderdale, Florida with local zoning laws and building
codes. If the cost required to bring any such Property into compliance with
local zoning laws and building codes exceeds $50,000 (based on the reasonable
estimates of the Buyer), Buyer may so notify Sellers and Escrow Agent in writing
on or before 5:00 p.m. Eastern Standard time on December 17, 1997 of any such
non-compliance (a "Zoning/Building Code Notice"). In the event Sellers receive
any such Zoning/Building Code Notice, Sellers may, with respect to each of the
Properties covered by such Notice, elect (i) to terminate the obligations of all
parties under the Contract solely with respect to such Property, whereupon
Sellers and Buyer shall conduct the Closing as to the other Properties not
terminated pursuant to this Amendment on the Closing Date in accordance with the
terms of the Contract, except that all provisions of the Contract shall apply
only to such other Properties and the Purchase Price, Deposit and Indemnity Fund
shall each be reduced by the ratio of the Purchase Price allocated to such
Properties (as set forth in Exhibit A to this Amendment) to the Purchase Price
for all the Properties
<PAGE>
2
(including such other Properties), (ii) to cure all objections with respect to
such Property contained in such Notice by giving written notice of such election
to cure within 10 days after the date on which Sellers received such Notice and,
following such election, use reasonable efforts to cure such objections no more
than 90 days following such election or (iii) to deliver notice to Buyer that
they will not cure all such objections relating to such Property. If Sellers
shall have elected to cure any such objections, but shall not have cured all
such objections within such 90 day period to Buyer's reasonable satisfaction, or
if Sellers shall have delivered notice to Buyer that they will not cure all such
objections, Buyer may then terminate the Contract by written notice to Sellers
and Escrow Agent at any time within 10 days after the expiration of such 90-day
period or its receipt of Sellers' notice that they will not cure such
objections, as the case may be. If (1) Buyer fails to provide Sellers with any
Zoning/Building Code Notice as permitted pursuant to this paragraph, (2) Buyer
fails to notify Sellers and Escrow Agent that it is not reasonably satisfied
with Sellers' cure of any objections set forth in any such Notice within 10 days
after such 90-day period or (3) Buyer fails to notify Sellers and Escrow Agent
of its election to terminate the Contract within 10 days after its receipt of
Sellers' notice that they will not cure all such objections, then Buyer shall be
deemed to have approved all such matters and to have waived its right to
terminate the Contract under this paragraph.
(b) The provisions of this paragraph supersede any contrary
provisions of the Contract. Buyer shall have until December 19, 1997 to complete
environmental testing of (i) lead contained in the water supply or paint at any
of the Properties, (ii) radon located at any of the Properties and (iii)
underground storage tanks located at Bloomington, Minnesota, Madeira Beach,
Florida and Clearwater Beach (Ramada Inn), FL. If the cost required to remediate
any such environmental condition revealed by such testing at any such Property
exceeds $50,000 (based on the reasonable estimates of the Buyer), Buyer may so
notify Sellers and Escrow Agent in writing on or before 5:00 p.m. Eastern
Standard time on December 19, 1997 of any such non-compliance (a "Lead/Radon/UST
Notice"). In the event Sellers receive any such Lead/Radon/UST Notice, Sellers
may, with respect to each of the Properties covered by such Notice, elect (i) to
terminate the obligations of all parties under the Contract solely with respect
to such Property, whereupon Sellers and Buyer shall conduct the Closing as to
the other Properties not terminated pursuant to this Amendment on the Closing
Date in accordance with the terms of the Contract, except that all provisions of
the Contract shall apply only to such other Properties and the Purchase Price,
Deposit and Indemnity Fund shall each be reduced by the ratio of the Purchase
Price allocated to such Properties (as set forth in Exhibit A to this
<PAGE>
3
Amendment) to the Purchase Price for all the Properties (including such other
Properties), (ii) to cure all objections with respect to such Property contained
in such Notice by giving written notice of such election to cure within 10 days
after the date on which Sellers received such Notice and, following such
election, use reasonable efforts to cure such objections no more than 90 days
following such election or (iii) to deliver notice to Buyer that they will not
cure all such objections relating to such Property. If Sellers shall have
elected to cure any such objections, but shall not have cured all such
objections within such 90-day period to Buyer's reasonable satisfaction, or if
Sellers shall have delivered notice to Buyer that they will not cure all such
objections, Buyer may then terminate the Contract by written notice to Sellers
and Escrow Agent at any time within 10 days after the expiration of such 90-day
period or its receipt of Sellers' notice that they will not cure such
objections, as the case may be. If (1) Buyer fails to provide Sellers with any
Lead/Radon/UST Notice as permitted pursuant to this paragraph, (2) Buyer fails
to notify Sellers and Escrow Agent that it is not reasonably satisfied with
Sellers' cure of any objections set forth in any such Notice within 10 days
after such 90-day period or (3) Buyer fails to notify Sellers and Escrow Agent
of its election to terminate the Contract within 10 days after its receipt of
Sellers' notice that they will not cure all such objections, then Buyer shall be
deemed to have approved all such matters and to have waived its right to
terminate the Contract under this paragraph.
(c) If Buyer terminates the Contract pursuant to this Section,
Sellers shall be entitled to retain (and, to the extent it has not already done
so, Buyer shall return to Sellers) all Property Records, including all copies of
reports and studies prepared by third parties relating to the Properties
resulting from the inspection of the Properties and all documents delivered to
Buyer pursuant to Section 4.01 of the Contract. The Deposit shall be returned to
Buyer by Escrow Agent within two (2) business days after any such termination
and no party shall have any further rights or obligations to any other, except
for the indemnity set forth in Section 4.02(a) of the Contract. If Buyer does
not terminate the Contract as provided in this Section, Buyer shall be deemed to
have waived its right to terminate the Contract under this Section and shall be
deemed to have accepted and approved the condition of the Properties, subject to
the remaining terms of the Contract, and the Deposit shall become nonrefundable
to Buyer, subject only to Section 7.02, Article XIII and Article XIV of the
Contract.
(d) If Buyer elects to terminate the Mystic Agreement in accordance
with Amendment No. 1 thereto, Buyer shall automatically be deemed to have
concurrently elected to terminate the Contract in accordance with this Amendment
No. 1.
<PAGE>
4
SECTION 2. St. Louis Property. With respect to the Property located
-------------------
in St. Louis, Missouri (the "St. Louis Property"), Buyer shall have until
January 15, 1998 to complete any additional third party environmental studies or
reports it determines advisable ("Environmental Studies"). If the results of
such tests are materially unsatisfactory to Buyer as set forth in a written
notice to Sellers on or before January 15, 1998, (A) Sellers and Buyer shall
conduct the Closing as to the other Properties on the Closing Date in accordance
with the terms of the Contract, except that all provisions of the Contract shall
apply only to such other Properties, the Purchase Price shall be reduced by the
portion thereof allocated to the St. Louis Property, as set forth in Exhibit A
to this Amendment (the "St. Louis Purchase Price"), and the Deposit and
Indemnity Fund shall each be reduced by the ratio of the St. Louis Purchase
Price to the Purchase Price for all the Properties (including the St. Louis
Property) and (B) Buyer and ZETA St. Louis Hotel, Inc. (the "St. Louis Seller")
shall mutually agree upon the price, terms and conditions with respect to the
sale of the St. Louis Property to the Buyer; provided, however, that either
-------- -------
Buyer or Sellers may elect to terminate the obligations of all parties under the
Contract (following the delivery of any notice made by Buyer pursuant to this
Section) solely with respect to the St. Louis Property by providing written
notice to the other of their election to so terminate such obligations,
whereupon the portion of the Deposit allocable to the St. Louis Property shall
be returned to Buyer.
SECTION 3. Purchase Price Allocations. Buyer and Sellers agree that
---------------------------
the Purchase Price allocations to be determined pursuant to Section 3.03 of the
Contract are attached hereto as Exhibit A and are hereby approved by each party.
SECTION 4. Expiration of Review Period. Sellers and Buyer agree
----------------------------
that, except as specifically set forth in Sections 1 and 2 of this Amendment,
the Review Period has expired.
SECTION 5. Miscellaneous. Except as amended hereby, the terms of the
--------------
Contract shall remain in full force and effect. This Amendment shall be
governed by, and construed under, the internal laws of New York. This Amendment
may be executed and delivered by the parties by telecopy and may be signed in
any number of identical counterparts, each set of which executed by all parties
shall be deemed to be an original counterpart, and all such counterparts shall
constitute one and the same instrument.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first written above.
CLEARWATER SURFSIDE HOTEL TRUST,
FSA ZETA LBV HOTEL, INC.
TAMPA AIRPORT HOTEL TRUST,
MARINA DEL REY HOTEL TRUST,
FT. LAUDERDALE BEACH HOTEL TRUST,
CLEARWATER-GULFVIEW HOTEL TRUST,
CENTURY CITY HOTEL MANAGEMENT, INC.,
MADEIRA BEACH HOTEL TRUST,
ZETA KEY LARGO HOTEL, INC.,
RICHMOND HOTEL TRUST,
ZETA ST. LOUIS HOTEL, INC.,
ZETA ROCHESTER HOTEL, INC.,
ZETA BLOOMINGTON HOTEL, INC.,
by
________________________
Name: Alex Makowski
Title: Vice President
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
by AGH GP, INC., its
general partner,
by
_________________________
Name:
Title:
<PAGE>
Exhibit A
<PAGE>
Exhibit B
<PAGE>
Exhibit 2.1
EXECUTION COPY
CERTIFICATION OF NONFOREIGN STATUS
(Entity - Transferor)
Section 1445 of the Internal Revenue Code provides that a transferee
(buyer) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (buyer) that withholding
tax is not required upon the disposition of a U.S. real property interest by the
following entities, the undersigned, on behalf of each of the transferors listed
herein, hereby certifies the following:
(1) 400 Mandalay Avenue, Clearwater Beach, Florida (the "Clearwater-Surfside
------------------------------------------------------------------------
Property")
----------
(a) Clearwater-Surfside Hotel Trust, the transferor of the
Clearwater-Surfside Property, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations);
(b) Clearwater-Surfside Hotel Trust's U.S. employer identification
number is 51-6498646;
(c) Clearwater-Surfside Hotel Trust's office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Clearwater-Surfside Property (the real
property being transferred) is 400 Mandalay Avenue, Clearwater Beach,
Florida 34630.
Clearwater-Surfside Hotel Trust understands that this certification
may be disclosed to the Internal Revenue Service by transferee and that any
false statement contained herein could be punished by fine, imprisonment, or
both.
<PAGE>
(2) Walt Disney World Village, 1805 Hotel Plaza Boulevard, Lake Buena Vista,
------------------------------------------------------------------------
Florida (the "Lake Buena Vista Property")
-----------------------------------------
(a) FSA ZETA LBV Hotel, Inc., the transferor of the Lake Buena Vista
Property, is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
(b) FSA ZETA LBV Hotel, Inc.'s U.S. employer identification number is
59-3162781;
(c) FSA ZETA LBV Hotel, Inc.'s office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Lake Buena Vista Property (the real property
being transferred) is Walt Disney World Village, 1805 Hotel Plaza
Boulevard, Lake Buena Vista, Florida 32830.
FSA ZETA LBV Hotel, Inc., understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
(3) 4500 Cypress Street, Tampa, Florida (the "Tampa Airport Hotel Property")
------------------------------------------------------------------------
(a) Tampa Airport Hotel Trust, the transferor of the Tampa Airport
Hotel Property, is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(b) Tampa Airport Hotel Trust's U.S. employer identification number
is 51-6498654;
(c) Tampa Airport Hotel Trust's office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Tampa Airport Hotel Property (the real
property being transferred) is 4500 Cypress Street, Tampa, Florida 33607.
Tampa Airport Hotel Trust understands that this certification may be
disclosed to the Internal Revenue
<PAGE>
Service by transferee and that any false statement contained herein could be
punished by fine, imprisonment, or both.
(4) 13480 Maxella Avenue, Marina del Rey, California (the "Marina del Rey
---------------------------------------------------------------------
Property")
----------
(a) Marina del Rey Hotel Trust, the transferor of the Marina del Rey
Property, is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
(b) Marina del Rey Hotel Trust's U.S. employer identification number
is 51-6498652;
(c) Marina del Rey Hotel Trust's office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Marina del Rey Property (the real property
being transferred) is 13480 Maxella Avenue, Marina del Rey, California
90291.
Marina del Rey Hotel Trust understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
(5) 999 North Atlantic Boulevard, Ft. Lauderdale, Florida (the "Ft. Lauderdale
--------------------------------------------------------------------------
Beach Property")
----------------
(a) Ft. Lauderdale Beach Hotel Trust, the transferor of the Ft.
Lauderdale Beach Property, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations);
(b) Ft. Lauderdale Beach Hotel Trust's U.S. employer identification
number is 51-6498648;
(c) Ft. Lauderdale Beach Hotel Trust's office address is c/o
Financial Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New
York, NY 10022; and
(d) The address of the Ft. Lauderdale Beach Property (the real
property being transferred) is 999 North Atlantic Boulevard, Ft.
Lauderdale, Florida 33304.
<PAGE>
Ft. Lauderdale Beach Hotel Trust understands that this certification
may be disclosed to the Internal Revenue Service by transferee and that any
false statement contained herein could be punished by fine, imprisonment, or
both.
(6) 521 South Gulf Boulevard, Clearwater Beach, Florida (the "Clearwater-
--------------------------------------------------------------------
Gulfview Property")
-------------------
(a) Clearwater-Gulfview Hotel Trust, the transferor of the Clearwater-
Gulfview Property, is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
(b) Clearwater-Gulfview Hotel Trust's U.S. employer identification
number is 51-6498645;
(c) Clearwater-Gulfview Hotel Trust's office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Clearwater-Gulfview Property (the real property
being transferred) is 521 South Gulf Boulevard, Clearwater Beach, Florida
34630.
Clearwater-Gulfview Hotel Trust understands that this certification
may be disclosed to the Internal Revenue Service by transferee and that any
false statement contained herein could be punished by fine, imprisonment, or
both.
(7) 10320 West Olympic Boulevard, Los Angeles, California (the "Century City
------------------------------------------------------------------------
Property")
----------
(a) Century City Hotel Management, Inc., the transferor of the Century
City Property, is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(b) Century City Hotel Management, Inc.'s U.S. employer identification
number is 13-3600111;
(c) Century City Hotel Management, Inc.'s office address is c/o
Financial Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New
York, NY 10022; and
<PAGE>
(d) The address of the Century City Property (the real property being
transferred) is 10320 West Olympic Boulevard, Los Angeles, California
90066.
Century City Hotel Management, Inc. understands that this
certification may be disclosed to the Internal Revenue Service by transferee and
that any false statement contained herein could be punished by fine,
imprisonment, or both.
(8) 15208 Gulf Boulevard, Madeira Beach, Florida (the "Madeira Beach Property")
---------------------------------------------------------------------------
(a) Madeira Beach Hotel Trust, the transferor of the Madeira Beach
Property, is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
(b) Madeira Beach Hotel Trust's U.S. employer identification number is
51-6498651;
(c) Madeira Beach Hotel Trust's office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Madeira Beach Property (the real property being
transferred) is 15208 Gulf Boulevard, Madeira Beach, Florida 33708.
Madeira Beach Hotel Trust understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
(9) P.O. Box 1024 Overseas Highway (U.S. 1), Key Largo, Florida (the "Key Largo
---------------------------------------------------------------------------
Property")
----------
(a) ZETA Key Largo Hotel, Inc., the transferor of the Key Largo
Property, is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
(b) ZETA Key Largo Hotel, Inc.'s U.S. employer identification number
is 65-0384822;
<PAGE>
(c) ZETA Key Largo Hotel, Inc.'s office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Key Largo Property (the real property being
transferred) is P.O. Box 1024 Overseas Highway (U.S. 1), Key Largo, Florida
33037.
ZETA Key Largo Hotel, Inc. understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
(10) I-64 West End, 6531 West Broad Street, Richmond, Virginia (the "Richmond
------------------------------------------------------------------------
Property")
----------
(a) Richmond Hotel Trust, the transferor of the Richmond Property, is
not a foreign corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Internal Revenue Code and Income
Tax Regulations);
(b) Richmond Hotel Trust's U.S. employer identification number is 51-
6498653;
(c) Richmond Hotel Trust's office address is c/o Financial Security
Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY 10022;
and
(d) The address of the Richmond Property (the real property being
transferred) is I-64 West End, 6531 West Broad Street, Richmond, Virginia
23230.
Richmond Hotel Trust understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
(11) 5915 Wilson Avenue, St. Louis, Missouri (the "St. Louis Property")
------------------------------------------------------------------
(a) ZETA St. Louis Hotel, Inc., the transferor of the St. Louis
Property, is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
(b) ZETA St. Louis Hotel, Inc.'s U.S. employer identification number
is 43-1629026;
<PAGE>
(c) ZETA St. Louis Hotel, Inc.'s office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the St. Louis Property (the real property being
transferred) is 5915 Wilson Avenue, St. Louis, Missouri 63110.
ZETA St. Louis Hotel, Inc. understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
(12) 175 Jefferson Road, Henrietta, New York (the "Rochester Property")
------------------------------------------------------------------
(a) ZETA Rochester Hotel, Inc., the transferor of the Rochester
Property, is not a foreign corporation, foreign partnership, foreign trust,
or foreign estate (as those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
(b) ZETA Rochester Hotel, Inc.'s U.S. employer identification number
is 16-1431097;
(c) ZETA Rochester Hotel, Inc.'s office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the Rochester Property (the real property being
transferred) is 175 Jefferson Road, Henrietta, New York 14623.
ZETA Rochester Hotel, Inc. understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
____________________
Under penalties of perjury, the undersigned declares that he has
examined this Certification, and, to the best of his knowledge and belief, it is
true, correct and complete, and he further declares that he has authority to
sign this document on behalf of each of the transferors described herein.
<PAGE>
Dated: February , 1998
CLEARWATER-SURFSIDE HOTEL TRUST,
FSA ZETA LBV HOTEL, INC.,
TAMPA AIRPORT HOTEL TRUST,
MARINA DEL REY HOTEL TRUST,
FT. LAUDERDALE BEACH HOTEL TRUST,
CLEARWATER-GULFVIEW HOTEL TRUST,
CENTURY CITY HOTEL MANAGEMENT, INC.,
MADEIRA BEACH HOTEL TRUST,
ZETA KEY LARGO HOTEL, INC.,
RICHMOND HOTEL TRUST,
ZETA ST. LOUIS HOTEL, INC.,
ZETA ROCHESTER HOTEL, INC.,
by
_______________________________
Name: Alex Makowski
Title: Vice President
Sworn to before me this
____ day of _______, 1998.
__________________________
Notary Public
<PAGE>
EXHIBIT 2.2
EXECUTION COPY
================================================================================
CONTRACT FOR PURCHASE AND SALE OF HOTEL
between
ZETA MYSTIC HOTEL, INC.
as Seller
and
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as Buyer
Dated November 26, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Definitions Generally................................. 7
ARTICLE II
Purchase and Sale; Assumption of Liabilities
--------------------------------------------
SECTION 2.01. Purchase and Sale..................................... 8
SECTION 2.02. Assumed Liabilities................................... 8
ARTICLE III
Purchase Price
--------------
SECTION 3.01. Deposit............................................... 9
SECTION 3.02. Cash to Close......................................... 9
ARTICLE IV
Seller's Deliveries; Buyer's Due Diligence
------------------------------------------
SECTION 4.01. Property Records...................................... 10
SECTION 4.02. Inspection of Hotel; Confidentiality Agreements....... 10
SECTION 4.03. Access to Hotel....................................... 13
ARTICLE V
Seller's Representations
------------------------
SECTION 5.01. Representations of Seller............................. 16
SECTION 5.02. Survival of Representations and Covenants............. 19
SECTION 5.03. No Reliance on Documents.............................. 19
SECTION 5.04. Disclaimers........................................... 20
SECTION 5.05. Effect of Disclaimers................................. 21
</TABLE>
<PAGE>
2
<TABLE>
<S> <C>
ARTICLE VI
Covenants and Affirmative Obligations
-------------------------------------
SECTION 6.01. Maintenance of Property................................ 21
SECTION 6.02. Assumed Contracts...................................... 22
SECTION 6.03. No Further Encumbrances................................ 22
SECTION 6.04. Compliance with Obligations............................ 22
SECTION 6.05. Notice of Change in Governmental Requirements.......... 22
SECTION 6.06. Insurance.............................................. 22
SECTION 6.07. Restaurant Lease....................................... 22
SECTION 6.08. Management Agreements.................................. 22
SECTION 6.09. Cooperation............................................ 23
SECTION 6.10. Seller's Indemnity..................................... 23
SECTION 6.11. Buyer's Indemnity...................................... 23
SECTION 6.12. Indemnity Procedures Relating to Third Party Claims;
Exclusivity........................................... 23
SECTION 6.13. Indemnity Fund......................................... 24
SECTION 6.14. Hotel Employees........................................ 25
ARTICLE VII
Conditions
----------
SECTION 7.01. Conditions to Buyer's Obligation to Close.............. 27
SECTION 7.02. Failure of Buyer's Conditions.......................... 27
SECTION 7.03. Conditions to Seller's Obligations to Close............ 28
SECTION 7.04. Failure of Seller's Conditions......................... 28
ARTICLE VIII
Closing................................. 28
-------
</TABLE>
<PAGE>
3
<TABLE>
<S> <C>
ARTICLE IX
Closing Documents
-----------------
SECTION 9.01. Seller's Closing Documents............................ 29
SECTION 9.02. Buyer's Closing Documents............................. 30
ARTICLE X
Closing Procedure
-----------------
SECTION 10.01. Transfer of Funds..................................... 30
SECTION 10.02. Delivery of Documents................................. 30
SECTION 10.03. Disbursement of Funds and Documents................... 31
ARTICLE XI
Prorations and Closing Costs
----------------------------
SECTION 11.01. Prorations............................................ 31
SECTION 11.02. Seller's Closing Costs................................ 35
SECTION 11.03. Buyer's Closing Costs................................. 35
SECTION 11.04. Accounts Payable...................................... 36
ARTICLE XII
Possession; Risk of Loss..................... 36
------------------------
ARTICLE XIII
Condemnation and Damage by Casualty
-----------------------------------
SECTION 13.01. Condemnation.......................................... 36
SECTION 13.02. Damage by Casualty.................................... 37
ARTICLE XIV
Default
-------
SECTION 14.01. Buyer's Default; Liquidated Damages................... 38
SECTION 14.02. Seller's Default...................................... 38
</TABLE>
<PAGE>
4
<TABLE>
ARTICLE XV
<S> <C>
Real Estate and Other Commissions and Fees.............................. 39
ARTICLE XVI
Notices............................. 40
-------
ARTICLE XVII
Assignment............................ 40
----------
ARTICLE XVIII
Escrow Agent
------------
SECTION 18.01. Duties and Authorization.............................. 40
SECTION 18.02. Liability............................................. 41
SECTION 18.03. Hold Harmless......................................... 42
SECTION 18.04. FDIC Coverage......................................... 42
ARTICLE XIX
Buyer's Representations
-----------------------
SECTION 19.01. Organization and Corporate Authority.................. 42
SECTION 19.02. Resources............................................. 43
ARTICLE XX
Miscellaneous
-------------
SECTION 20.01. Counterparts.......................................... 43
SECTION 20.02. Section and Paragraph Headings........................ 43
SECTION 20.03. Amendment............................................. 43
SECTION 20.04. Attorneys' Fees....................................... 43
SECTION 20.05. Governing Law......................................... 43
SECTION 20.06. Entire Contract....................................... 43
SECTION 20.07. Time of the Essence................................... 43
SECTION 20.08. Computation of Time................................... 44
SECTION 20.09. Successors and Assigns................................ 44
SECTION 20.10. No Party Draftsman.................................... 44
</TABLE>
<PAGE>
5
<TABLE>
<S> <C>
SECTION 20.11. No Third Party Benefitted............................. 44
SECTION 20.12. Public Announcements.................................. 44
SECTION 20.13. Recordation........................................... 45
</TABLE>
EXHIBIT A Title Description
EXHIBIT B Intentionally Omitted
EXHIBIT C Assumed Contracts
EXHIBIT D Intentionally Omitted
EXHIBIT E Litigation
EXHIBIT F Form of Letter of Credit
<PAGE>
This CONTRACT FOR PURCHASE AND SALE OF HOTEL (this
"Contract") is made and entered into as of November 26, 1997 (the
"Effective Date"), between ZETA MYSTIC HOTEL, INC., a Delaware
corporation (the "Seller") and AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Buyer").
In consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions. The following terms when used in this
------------
Contract shall have the following meanings:
Affiliate. With respect to any Person, means any other Person
----------
directly or indirectly controlling, controlled by or under common control with
such specified Person or which is a director, officer, general partner or
managing member of such specified Person.
Assignment. The Assignment and Bill of Sale which conveys all of the
-----------
Seller's right, title and interest in and to the Assumed Contracts (other than
those terminated at Buyer's request pursuant to Section 2.02(a)) and Personal
Property to Buyer or its designee, subject only to Permitted Exceptions and
Permitted Liens.
Assumed Contracts. All service contracts, real property leases,
------------------
equipment, vehicle or other personal property leases, installment sales
contracts, sales and purchase orders, maintenance agreements and other
agreements relating to the Property or the use and operation of the Hotel to the
extent listed on the attached Exhibit C (as such Exhibit may be supplemented
from time to time in accordance with Section 4.01), but excluding the Management
Agreement.
Attorneys' Fees. All reasonable fees and disbursements charged by
----------------
attorneys or law firms for legal services and the services of any paralegals,
legal assistants or law clerks, including without limitation fees
<PAGE>
2
charged for representation in negotiations, at the trial level and in all
appeals.
Buyer's Address. American General Hospitality Operating Partnership,
----------------
L.P., 5605 MacArthur Boulevard, Suite 1200, Irving, Texas 75038 (Telephone:
(972) 550-6800; Telecopy: (972) 550-6895); Attention: Steven D. Jorns and Bruce
G. Wiles.
Buyer's Attorney. Douglas A. Raelson at the following address:
-----------------
Battle Fowler LLP, Park Avenue Tower, 75 East 55th Street, New York, NY 10022
(Telephone: (212) 856-7189; Telecopy: (212) 856-7806).
Cash to Close. The Purchase Price plus all of Buyer's closing costs
--------------
specified herein, subject to the adjustments and prorations set forth herein.
Closing. The delivery of the Deed and Assignment to Buyer
--------
concurrently with the delivery of the Purchase Price to Seller and the
consummation of the transaction contemplated hereby.
Closing Date. The date of consummation of the transaction
-------------
contemplated hereby in accordance with the terms of this Contract; provided,
however, that in no event shall the Closing Date occur later than the date set
forth in Article VIII hereof.
Commission. The U.S. Securities and Exchange Commission.
-----------
Control. With respect to any Person, the power to direct the
--------
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have correlative meanings.
----------- ----------
Deed. The special warranty deed (or equivalent) by which Seller
-----
conveys its interest in the Land, together with the related Improvements
thereon, to Buyer, subject to Permitted Exceptions and Permitted Liens.
Deposit. At Buyer's sole option, and subject to any election of Buyer
--------
to increase the Deposit pursuant to Article VIII, either (i) a Letter of Credit
in the face amount of $200,000 or (ii) the sum of $200,000 cash, together with
all interest earned on said sum while it is held in escrow by Escrow Agent in
accordance with this Contract. Except as specifically provided herein, any
<PAGE>
3
interest earned on the Deposit shall be paid to Buyer at Closing.
Effective Date. The date of this Contract as set forth in the
---------------
preamble hereof.
ERISA. Employee Retirement Income Security Act of 1974, as amended
------
from time to time.
Escrow Agent. The Title Company.
-------------
Governmental Authority. Any Federal, state, county, municipal or
-----------------------
other governmental department, entity, authority, commission, board, bureau,
court, agency or any instrumentality of any of them.
Governmental Requirement. Any law, statute, code, ordinance, rule,
-------------------------
regulation, permit, certificate, license, authorization, agreement or
requirement now existing of any Governmental Authority.
Hazardous Material. Any flammable or explosive materials, petroleum
-------------------
or petroleum products, oil, crude oil, natural gas or synthetic gas usable for
fuel, radioactive materials, asbestos, polychlorinated biphenyls (PCB's),
dioxin, urea formaldehyde, hazardous wastes or substances or toxic wastes or
substances, including, without limitation, any substances now or hereafter
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "toxic materials" or "toxic substances" under
any applicable Governmental Requirement.
Hotel. The hotel known as "The Lodge at the Seaport" located in
------
Mystic, Connecticut, consisting of all right, title and interest of the Seller
in and to the Land, Improvements and Personal Property.
Improvements. All structures, fixtures or other improvements on, over
-------------
or beneath the Land.
I.R.C. The Internal Revenue Code of 1986, as amended from time to
------
time.
Land. The real property upon which the Hotel is located, as more
-----
particularly described in Exhibit A.
Letter of Credit. An irrevocable letter of credit naming Seller as
-----------------
payee, in substantially the form of Exhibit F.
<PAGE>
4
Management Agreement. The management agreement with the Manager
---------------------
relating to the Hotel as in effect on the date hereof.
Manager. American General Hospitality Operating Partnership, L.P.
--------
Material Damage. Unrepaired damage as a result of fire or other
----------------
casualty to the Hotel with an aggregate cost to repair of 15% of the Purchase
Price.
Material Portion. Any portion of the Hotel which, if removed, would
-----------------
result in a decrease in value of the Hotel of more than 15% of the Purchase
Price.
Permitted Exceptions. The title exceptions described in the title
---------------------
report delivered as part of the Property Records if not objected to in writing
by Buyer prior to the end of the Review Period, subject to the provisions of
Section 4.02(b).
Permitted Investments. Investments in (i) United States government
----------------------
securities or securities of agencies of the United States government which are
guaranteed by the United States government and having a maturity of one year or
less; (ii) certificates of deposit, banker's acceptances and time deposits and
money market deposit accounts issued or offered by commercial banks having a
combined capital and surplus in excess of $1 billion organized under the laws of
the United States or any political subdivision thereof and having a maturity of
one year or less; (iii) commercial or finance company paper of companies
organized under the laws of any state of the United States or any political
subdivision thereof having a rating assigned to such commercial paper of one of
the two highest unsecured debt ratings by Standard & Poor's Corporation or
Moody's Investors Service, Inc. and having a maturity of one year or less; (iv)
repurchase obligations with respect to any security described in clause (i)
above entered into with a depository or trust company; or (v) such other
investments upon such terms as Buyer and Seller may agree upon in writing.
Permitted Liens. To the extent not included in the definition of
----------------
Permitted Exceptions, all liens, security interests, claims, charges and
encumbrances (i) pertaining to the Assumed Contracts or (ii) for Taxes which are
not due and payable or which may thereafter be paid without penalty.
Person. Any individual, trustee, corporation, general or limited
-------
partnership, limited liability
<PAGE>
5
partnership, limited liability company, joint venture, joint stock company,
bank, firm, governmental agency, trust, association, organization or
unincorporated entity of any kind or nature whatsoever.
Personal Property. All items of personal property located on the Land
------------------
or owned by Seller and used in connection with the operation of the Hotel, but
excluding therefrom any Third Party Property. Such items of personal property
shall include, but not be limited to: (i) all fixtures, furnishings, building
materials, machinery, equipment, telephones, televisions, computers, glass,
tools, silver, china, glassware, utensils, towels, linens, signs, transferable
licenses and permits, telephone numbers, trade names (but excluding any trade
names of any former franchisors of the Hotel or any other third party), motor
vehicles, inventories, food and beverages in process and all other articles of
personal property now or hereafter attached or appurtenant to the Land or the
Improvements or used in connection with the use or operation thereof, including
any Property Records, drawings, as-built plans and specifications and all
permits and warranties in the possession of the Seller and (ii) all attachments,
appliances, fittings, lighting fixtures, doors, cabinets, elevators, flagpoles,
sprinkler, plumbing, heating, air conditioning, electrical, ventilating,
lighting, incinerating, vacuum cleaning, refrigerating and cooling systems,
vaults, safes, carpets and floor coverings, together with all parts and supplies
pertaining thereto.
Property. Collectively, all the Seller's right, title and interest in
---------
and to the Land, Improvements and Personal Property (including, without
limitation, the Hotel).
Property Records. Each of the following, to the extent such are in
-----------------
the possession of Seller or the Manager:
(a) all operating statements (including income and expense statements)
and financial statements (for the calendar years 1995 and 1996 and 1997 to
date), existing operating and capital expenditure budgets and other books
and records for the Property, including all guest registration cards, guest
transcripts, guest histories and all other available guest information;
(b) all engineering and architectural plans, specifications and
drawings and as-built plans pertaining to the Property;
<PAGE>
6
(c) all advance reservations and trade-out agreements for hotel rooms,
meetings, conventions and the use of facilities for banquets, parties,
affairs and the like which extend to a period beyond the Closing Date;
(d) copies of all assignable guarantees and warranties issued or made
in connection with the construction, improvement, alteration, equipment and
repair of any Improvements;
(e) copies of all certificates of occupancy, licenses, permits,
authorizations and approvals required by law for the current operation of
the Property, and issued by all Governmental Authorities having
jurisdiction, and copies of all certificates issued by the local board of
fire underwriters (or other body exercising similar functions);
(f) copies of all Assumed Contracts;
(g) all existing environmental audits, engineering reports, ADA
compliance reports, similar studies, notices and information concerning the
condition of the Improvements and any Hazardous Material on or about the
Property;
(h) copies of all existing title reports, surveys and engineering and
structural reports in respect of the Property;
(i) 1997 and (if available) 1998 capital and operating budgets;
(j) samples of all material marketing brochures;
(k) copies of all risk management reports available from the Manager;
and
(l) any leases of adjacent land or facilities in connection with the
Hotel.
Purchase Price. Five million six hundred thousand Dollars
---------------
($5,600,000).
REIT. American General Hospitality Corporation, a Maryland
-----
corporation.
Restaurant Lease. That certain lease dated as of March 25, 1965, as
-----------------
amended, relating to the restaurant portion of the Property.
<PAGE>
7
Seller's Address. ZETA Mystic Hotel, Inc., c/o Financial Security
-----------------
Assurance Inc., 350 Park Avenue, 13th Floor, New York, NY 10022 (Telephone:
(212) 826-0100); Telecopy: (212) 339-3518); Attention: Alex Makowski.
Seller's Attorney. Kevin J. Grehan at the following address:
------------------
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019 (Telephone:
(212) 474-1490; Telecopy: (212) 474-3700).
Tax. Any tax, governmental fee or other like assessment or charge of
----
any kind whatsoever relating to real or personal property (excluding, however,
any sales, use or occupancy taxes), together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Authority
responsible for the imposition of any such tax, fee assessment, or charge.
Termination Date. The date 365 days from the Closing Date.
-----------------
Third Party Property. All items of personal property located at the
---------------------
Hotel which are (i) owned by space lessees under space leases listed on Exhibit
C, employees, guests or any other person pursuant to any Assumed Contract, (ii)
leased pursuant to any equipment leases or vehicle leases with respect to the
Hotel listed on Exhibit C, or (iii) items that are subject to the rights of the
Manager under the Management Agreement, provided that the aggregate value of all
such items described in this clause (iii) does not exceed $10,000.
Title Company. Lawyers Title Insurance Corporation, c/o Michael D.
--------------
Gallinar, Adams, Gallinar & Iglesias, P.A., 701 Brickell Avenue, Suite 2150,
Miami, FL 33131 (Telephone: (305) 416-6800; Telecopy (305) 416-6811).
SECTION 1.02. Definitions Generally. Definitions in this Contract
----------------------
apply equally to both the singular and plural forms of the defined terms. The
words "include" and "including" shall be deemed to be followed by the phrase
"without limitation" when such phrase does not otherwise appear. The terms
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Contract as a whole and not to any particular article, section, paragraph,
subdivision, clause, exhibit or schedule. All article, section, paragraph,
subdivision, clause, exhibit or schedule references not attributed to a
particular document shall be references to such parts of this Contract.
<PAGE>
8
ARTICLE II
Purchase and Sale; Assumption of Liabilities
--------------------------------------------
SECTION 2.01. Purchase and Sale. On the terms and subject to the
------------------
conditions set forth herein, Seller agrees to sell and convey the Property to
Buyer and Buyer agrees to purchase and acquire the Property from Seller.
SECTION 2.02. Assumed Liabilities. (a) Buyer shall assume as of the
--------------------
Closing Date and shall pay, perform and discharge when due, and shall indemnify
Seller and its Affiliates against and hold them harmless from, all obligations
and liabilities of whatever kind and nature, primary or secondary, direct or
indirect, absolute or contingent, known or unknown, arising out of or
attributable to the ownership or operation of the Property (including the use or
operation of the Hotel) on or after the Closing Date (the "Assumed
Liabilities"), including, without limitation, the following:
(i) all obligations and liabilities under the Assumed Contracts
accruing from and after the Closing Date;
(ii) all liabilities to customers with respect to all unrefunded cash
deposits paid by such customers to Seller prior to the Closing Date and
paid by Seller to Buyer (or credited against the Purchase Price) pursuant
to Section 11.01 hereof;
(iii) all claims, obligations and liabilities relating to the use or
operation of the Hotel or arising out of events occurring at the Property
at any time on or after the Closing Date; and
(iv) all obligations and liabilities with respect to Taxes relating
to the Property with respect to any period that is not a Pre-Closing Tax
Period; provided, however, that the Buyer will not assume liability for any
Taxes relating to the Property with respect to any Pre-Closing Tax Period
except as set forth in Section 11.01 of this Contract. A "Pre-Closing Tax
Period" shall mean all taxable periods ending on or before the Closing Date
and the portion ending on the Closing Date of any taxable period that
includes (but does not end on) such day. In the case of any taxable period
that includes (but does not end on) the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property Taxes")
relating to the Property with respect to the Pre-Closing Tax
<PAGE>
9
Period shall be equal to the amount of the Property Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the
number of days in the Pre-Closing Tax Period and the denominator of which
is the number of days in the applicable Straddle Period, and (ii) Taxes
(other than Property Taxes) relating to the Property with respect to the
Pre-Closing Tax Period shall be computed as if such taxable period ended as
of the close of business on the Closing Date.
On or prior to the expiration of the Review Period, Buyer may elect to require
that Seller terminate as of the Closing Date any Assumed Contracts (it being
acknowledged that any Assumed Contracts that by their terms will expire between
the Effective Date and the Closing Date will be renewed by the Seller to the
extent required by Sections 6.01 and 6.02); provided, however, that Buyer shall
be responsible for paying on the Closing Date all termination fees, penalties
and other sums required in connection with such terminations, and the Cash to
Close shall be adjusted accordingly.
(b) Buyer's obligations under this Section 2.02 will not be subject
to offset or reduction by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Contract or any document
delivered in connection herewith or any right or alleged right to
indemnification hereunder.
ARTICLE III
Purchase Price
--------------
The Purchase Price shall be paid as follows:
SECTION 3.01. Deposit. No later than December 2, 1997, Buyer shall
--------
deliver to Escrow Agent the Deposit, together with a completed and executed W-9
Form for the Buyer. Provided that Buyer has not terminated this Contract
pursuant to Section 4.02(b) on or before the last day of the Review Period (as
defined below), the Deposit shall become nonrefundable to Buyer except as
expressly set forth in Section 7.02, Article XIII or Article XIV hereof.
SECTION 3.02. Cash to Close. The Cash to Close shall be paid to
--------------
Escrow Agent in accordance with the closing procedure hereinafter set forth.
<PAGE>
10
ARTICLE IV
Seller's Deliveries; Buyer's Due Diligence
------------------------------------------
SECTION 4.01. Property Records. Seller has delivered or made
-----------------
available to Buyer (including through granting Buyer access to the Hotel) the
Property Records; provided, however, if Seller obtains or becomes aware of any
-------- -------
additional Property Records, Seller shall deliver or make available such
additional Property Records to Buyer as soon as practicable but in any event not
less than five (5) days prior to the end of the Review Period, and such records
shall thereupon become, and be deemed to be part of, the Property Records and
all of Seller's representations herein shall be deemed to include such Property
Records; provided further, that all Property Records in the possession or
----------------
control of Manager or an Affiliate thereof shall be deemed to have been
delivered by Seller.
SECTION 4.02. Inspection of Hotel; Confidentiality Agreements. (a)
------------------------------------------------
During the period from the Effective Date through and including December 15,
1997 (the "Review Period"), Buyer and Buyer's agents and representatives shall
be given reasonable access to the Hotel (including Property Records located
thereat) during normal business hours and shall have the right to physically
inspect the Property and to conduct, at Buyer's sole cost and expense, soil
tests and other nondestructive inspections, provided that such tests and
--------
inspections shall be (i) coordinated with Seller in advance, (ii) performed by
Persons reasonably satisfactory to Seller and who shall have obtained or be
otherwise covered by adequate insurance for any costs, losses or damages arising
while on the Property and (iii) performed in a manner that does not unreasonably
interfere with the use and occupancy of the Hotel by the Seller, by guests or
patrons of the Hotel, or by tenants. In the event that the Closing does not
occur for any reason, Buyer shall have the obligation promptly to restore (at
Buyer's expense) the Property to the condition existing prior to Buyer's entry
(other than changes in the condition of the Property not caused by Buyer's
entry), which obligation shall survive any termination of this Contract. Buyer
covenants and agrees that the Property shall not be damaged or impaired in any
way as the result of its activities on the Hotel's premises, and hereby agrees
to indemnify and hold the Seller and its Affiliates harmless from and against
any claims, causes of action, damages and expenses (including Attorneys' Fees)
to the extent incident to, resulting from or in any way arising out of (i)
Buyer's presence (or the presence of Buyer's agents or representatives) in, on
or about the Property, or (ii) out of any
<PAGE>
11
test or inspection conducted by Buyer on the Property. Such indemnity shall
survive the Closing or any termination of this Contract and not be merged
therein.
(b) Buyer shall have until the end of the Review Period to notify
Seller in writing of (i) any objections relating to the Property that Buyer has
discovered as a result of Buyer's inspections pursuant to Section 4.02(a) or
Buyer's review of the Property Records, or (ii) its election to terminate this
Contract, which it may exercise in its sole and absolute discretion. If, on or
before the end of the Review Period, Buyer shall notify Seller of any such
objections, Seller may elect to cure such objections within 10 days after the
date on which it received notice of Buyer's objections and, following such
election, shall use reasonable efforts to cure such objections no more than 90
days following such election, or shall deliver notice to Buyer that it will not
cure. If Seller shall have so elected to cure such objections, but shall not
have cured such objections within such 90 days (the "Cure Period") to Buyer's
reasonable satisfaction or shall have delivered notice to Buyer that it will not
cure, Buyer may terminate this Contract by written notice to Seller and Escrow
Agent at any time within 10 days after the expiration of the Cure Period or its
receipt of Seller's notice that it will not cure, as the case may be. If Buyer
fails to notify Seller and Escrow Agent of any such objections or its election
to terminate this Contract on or before the end of the Review Period, or if
Buyer fails to notify Seller and Escrow Agent that it is not satisfied with the
cure of any such objections within 10 days after the Cure Period or of its
election to terminate this Contract within 10 days after its receipt of Seller's
notice that it will not cure, Buyer shall be deemed to have approved all such
matters and to have waived its right to terminate this Contract under this
Section 4.02. If Buyer terminates this Contract pursuant to this Section,
Seller shall be entitled to retain (and, to the extent it has not already done
so, Buyer shall return to Seller) all Property Records, including all reports
and studies prepared by third parties relating to the Property resulting from
the inspection of the Property and all documents delivered to Buyer pursuant to
Section 4.01 hereof. The Deposit shall be returned to Buyer by Escrow Agent
within two (2) business days after any such termination and neither party shall
have any further rights or obligations to the other, except for the indemnity
set forth in Section 4.02(a). If Buyer does not terminate this Contract as
provided herein, Buyer shall be deemed to have waived the right to terminate
this Contract under this Section and shall be deemed to have accepted and
approved the condition of the Property, subject to the remaining
<PAGE>
12
terms of this Contract, and the Deposit shall become nonrefundable to Buyer,
subject only to Section 7.02, Article XIII and Article XIV hereof.
Notwithstanding the foregoing, Seller shall be obligated to remove (i) to the
extent objected to by Buyer prior to the end of the Review Period, any
objections to title in the nature of mortgages, liens or judgments (other than
those created pursuant to Assumed Contracts) ("Objections to Title") that can be
removed upon payment of a liquidated sum of money and that are shown on title
report delivered as a Property Record, (ii) mortgages and mechanics liens
discovered after the date of such title report that are the result of acts of
the Seller and (iii) other Objections to Title discovered after the date of such
title report that can be removed upon payment of a liquidated sum of money;
provided, however, that in no-------- -------event shall Seller be obligated to
expend more than $40,000 in the aggregate to remove objections of the type
described in clause (iii).
(c) Except to the extent otherwise provided herein, required by law
or advised by counsel to be required by law, until the consummation of the
transaction contemplated by this Contract, the parties hereto shall hold, and
shall cause each of their respective Affiliates to hold, all information and
documents obtained in connection with the transaction contemplated hereby
confidential including any oral and written information concerning the Seller
and the Property received from the Seller or from a third party at the direction
of the Seller (collectively, the "Due Diligence Material"). The Due Diligence
Material shall not be disclosed, discussed or made known without the prior
written consent of the Seller, except to the employees or boards of directors of
Buyer, the REIT, or any of their Affiliates, to Buyer's prospective lenders and
their counsel, to any hotel franchisors, any marketing company employed to do
feasibility studies, or any investment banking, accounting, legal or other
professional advisers, or to any environmental or engineering consultants with
whom Buyer desires to consult in connection with the transaction contemplated
hereby. If the transaction contemplated hereby is not consummated for any
reason whatever, each party hereto shall, as soon as practicable, return all
such information and documents (and any copies thereof in such party's
possession) to such other party hereto. Notwithstanding the foregoing, it is
acknowledged that the REIT may sell shares to the general public and that in
connection therewith, the REIT has the absolute and unbridled right to market
such securities and prepare and file all necessary or reasonably required
registration statements and other papers, documents and instruments necessary or
reasonably required in the REIT's judgment, and
<PAGE>
13
that of its attorneys and underwriters, to file a registration statement with
respect to its shares with the Commission and/or similar state authorities and
to cause same to become effective and to disclose therein and thus to its
underwriters, to the Commission and/or to similar state authorities and to the
public all of the terms, conditions and provisions of this Contract, as well as
various documents delivered to the REIT and/or Buyer pursuant to this Contract.
SECTION 4.03. Access to Hotel. Buyer shall have the following access
----------------
to the Hotel:
(a) Oversight. After the Review Period, Buyer and Buyer's authorized
----------
representatives and employees shall have the right, at Buyer's sole cost, risk
and expense, from time to time to enter upon and pass through the Hotel during
normal business hours and to establish and maintain an oversight operation with
respect to the Hotel prior to the Closing Date. Personnel from such oversight
operation shall have reasonable access during normal business hours to all
books, records and other information in the possession or control of Seller or
its agents concerning the Hotel and shall have the right (at Buyer's expense) to
establish duplicate books and records in order to effect a smooth transition in
the ownership and management of the Hotel; provided, however, that Buyer and its
oversight operation and employees (a) shall not unreasonably interfere with the
normal management and operation of the Hotel, (b) shall hold all information
acquired from such books and records confidential in accordance with the
provisions of this Contract, (c) shall repair any damage to the physical
condition of the Hotel caused by Buyer or its agents in any such oversight
operation, and (d) shall not assume, or be deemed to have assumed, management
responsibilities prior to Closing by virtue of such oversight operation. Buyer
shall indemnify Seller from and against any and all loss, damage, liability,
cost or expense resulting from the violation or breach of any of the covenants
set forth in clauses (a) through (d) of the preceding sentence. Nothing
contained herein is deemed to create a right of the Buyer to terminate this
Contract after the Review Period.
(b) Access to Records and Financial Information. (i) Buyer and
--------------------------------------------
Buyer's authorized representatives and employees shall have the right, at
Buyer's sole cost, risk and expense, from time to time to enter upon and pass
through the Hotel during normal business hours and upon reasonable notice to
Seller to examine and inspect all of the then existing books, records, surveys,
plans, specifications, permits, certificates of occupancy and other
<PAGE>
14
files that are relevant to the management, ownership, operation, use, occupancy,
construction or leasing of the Hotel, are in Seller's possession or control, and
have not been otherwise provided to Buyer as required elsewhere herein.
(ii) Seller agrees to cooperate with Buyer to obtain any information
needed from Seller to enable Buyer and the REIT to file any necessary tax
returns.
(iii) Without limiting the foregoing and in addition thereto, for the
period of time commencing on the date of this Contract and continuing through
the second anniversary of the Closing Date, Seller shall, from time to time,
upon reasonable advance notice from Buyer, provide Buyer and its designated
accountants and employees with access to all financial information in its
possession pertaining to the period of Seller's ownership of the Property, which
information is relevant and reasonably necessary, in the opinion of Buyer's
outside, third party accountants, to enable Buyer, the REIT and their
accountants to prepare financial statements in compliance with any or all of (i)
Rule 3-14 of Regulation S-X of the Commission, (ii) any other rule issued by the
Commission and applicable to Buyer or the REIT and (iii) any registration
statement, report or disclosure statement filed with the Commission by, or on
behalf of, Buyer or the REIT; provided, however, that in any such event(s),
Buyer shall reimburse Seller for third party, out-of-pocket costs and expenses
that Seller incurs in order to comply with the foregoing requirements. Seller
acknowledges and agrees that the following is a representative description of
the information and documentation that Buyer, the REIT and their accountants'
may require to be provided (to the extent in the Seller's possession or control
as of the date of this Contract and not turned over to Buyer or the REIT, or
their respective Affiliates at Closing) in order to comply with clauses (i),
(ii) or (iii) of the previous sentence:
(1) applicable rent rolls for the eleven (11) calendar months
immediately preceding the calendar month in which the Closing occurs;
(2) Seller's internally-prepared operating statements;
(3) applicable leases;
(4) Seller's budgeted annual and monthly income and expenses, and
actual annual and monthly income and expenses;
<PAGE>
15
(5) Seller's cash receipt journals and bank statements for the
Property;
(6) Seller's general ledgers with respect to the Property;
(7) Seller's schedule of expense reimbursements required under
applicable leases in effect on the Closing Date, if one exists;
(8) Seller's schedule, if one exists, of those items of repairs and
maintenance performed by, or at the direction of Seller, during the
Seller's final fiscal year in which the Seller owned and operated the
Property (the "Final Fiscal Year");
(9) Seller's schedule, if one exists, of those capital improvements
and fixed asset additions made by, or at the direction of, Seller during
the Final Fiscal Year;
(10) Seller's invoices with respect to expenditures made during the
Final Fiscal Year; and
(11) access (during normal and customary business hours) to
responsible personnel to answer accounting questions.
(iv) Prior to the end of the Review Period, Seller shall also provide
to Buyer's representatives a representation letter, as prescribed by generally
accepted auditing standards promulgated by the Auditing Standards Division of
the American Institute of Certified Public Accountants, signed by individuals(s)
responsible for Seller's financial reporting sufficient to enable Buyer's
accountants to render an opinion on the financial statements related to the
Hotel, such letter to be in a form which shall be reasonably agreed to by Seller
and Buyer on or prior to the expiration of the Review Period.
(v) To the extent that the financial statements previously provided
by Seller for the current year do not include any period up to and including the
Closing Date, Seller shall, within twenty-five (25) days after the Closing Date,
provide Buyer with monthly unaudited compilation financial statements, including
balance sheets, general ledger and income statements applicable to such period
inclusive of the Closing Date. From the date hereof until the Closing Date,
Seller shall deliver to Buyer each week upon receipt of a copy of the weekly
status report for the Hotel.
<PAGE>
16
ARTICLE V
Seller's Representations
------------------------
SECTION 5.01. Representations of Seller. Seller represents and
-------------------------
warrants to Buyer as of the date hereof as follows (to the extent that such
representations and warranties are expressly qualified by reference to the
Seller's knowledge (or similar reference), then, unless otherwise indicated,
such reference shall be to the current, actual knowledge of Alex Makowski,
without any inquiry other than (i) of the general manager of the Hotel and (ii)
of Errol Uhr and Maria E. Cheng):
(a) Seller's Existence. Seller is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware,
and is not a foreign entity, foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in Section 1445 of the
I.R.C.).
(b) Authority. Seller has the corporate power and authority to
----------
execute, deliver and perform this Contract and the other documents and
agreements contemplated hereby; Seller has duly authorized the execution and
delivery of this Contract and the performance of its obligations hereunder;
subject to obtaining the consents required hereunder, if any, and except for the
rights of the lessee under the Restaurant Lease, the entry into, the performance
of, or compliance with this Contract by Seller will not, to Seller's knowledge,
result in any violation of, default under, or acceleration of any obligation
under any existing partnership agreement, mortgage indenture, agreement, note,
contract, permit, judgment, decree, order, restrictive covenant, statute, rule
or regulation applicable to Seller or the Hotel.
(c) Litigation. Except as set forth on Exhibit E, there are no
-----------
actions, suits, proceedings or investigations (including condemnation
proceedings) that are material in relation to the Hotel pending or, to Seller's
knowledge, threatened against the Property and Seller is not aware of any facts
which might result in any such action, suit or proceeding.
(d) Hazardous Material. Except for (i) those matters specified in
-------------------
Seller's existing environmental reports which form a part of the Property
Records and (ii) the handling, use and storage of Hazardous Material in the
ordinary course of operating the Hotel, which in each
<PAGE>
17
instance has been and shall be in material compliance with all applicable
Governmental Requirements, Seller (A) has no knowledge of any discharge, spill,
or disposal of any Hazardous Material on or under the Property and (B) has
received no written notice from any Governmental Authority of any violations of
Governmental Requirements regarding Hazardous Materials concerning the Property
or any portion thereof.
(e) No Rights To Purchase. Except for the rights of the lessee under
----------------------
the Restaurant Lease, no other Person has any right of first refusal or option
to acquire Seller's Property or any portion thereof or lease any space therein.
(f) Assumed Contracts. Other than the Management Agreement, the
------------------
schedule of Assumed Contracts attached to this Contract as Exhibit C, as such
Exhibit may be supplemented from time to time in accordance with Section 4.01
(true, accurate and complete copies of which are included in the Property
Records), constitutes a list of all of the agreements, leases or other contracts
affecting the Property and there are no other agreements, leases or other
contracts with respect to the Property. Except as set forth herein or as
provided in any Exhibit hereto, Seller has neither received nor delivered any
written notice that any party is currently in material default under any Assumed
Contract and to Seller's knowledge, no event has occurred or circumstance exists
which, with the giving of notice or passage of time, would constitute a material
default thereunder. Seller has received no notice that any party to any Assumed
Contract intends to cancel or terminate such Assumed Contract. Seller shall not
assign any Assumed Contract or any claim, right or benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach or other contravention of such
Assumed Contract or in any way adversely affect the rights of Buyer or Seller.
Seller and Buyer will use commercially reasonable good faith efforts (but
without any payment of money by Seller or Buyer other than incidental out-of-
pocket expenses related thereto) to obtain any required consent of the other
parties to any such Assumed Contract for the assignment thereof, or any claim,
right or benefit arising thereunder or resulting therefrom, to Buyer as Buyer
may reasonably request.
(g) Financial Statements. The financial statements for the Hotel
---------------------
delivered to Buyer, for the current year and each of the two years prior to the
date of this Contract, were prepared in accordance with generally accepted
accounting principles consistently applied in all
<PAGE>
18
material respects or the Uniform System of Account for Hotels. To Seller's
knowledge, the financial statements referred to in this Section 5.01(g) present
fairly the financial condition and results of operations of the Hotel as of the
dates thereof.
(h) Notices. Seller has received no written notice from any
--------
Governmental Authority, any insurer or any other party (i) that either the
Property or the use or operation thereof is currently in violation of any zoning
or other land use regulations, (ii) that Seller is currently in violation, or
with the passage of time will be in violation, of the requirements of any
ordinance, law, regulation or order of any Governmental Authority affecting the
Property or that any investigation has commenced or is contemplated regarding
any such possible violation, or (iii) asserting that Seller is required to
perform work at the Property or obtain any permit, license, certificate or
authority to cure or avoid any such violation; provided that Seller shall not be
--------
deemed to have breached any of the above representations or warranties unless
the applicable violation is material in relation to the Hotel.
(i) Parties in Possession. Other than (i) guests in the Hotel and
----------------------
(ii) as described in the Property Records (including lessees under leases
included therein), there are no parties other than Seller in possession of any
portion of the Land or Improvements as lessees, tenants at sufferance or
trespassers. There are no leases or licenses for the use of adjacent land or
facilities in connection with the operation of the Hotel.
(j) Commitments to Governmental Authorities. Except as set forth in
----------------------------------------
the Property Records (i) no commitments relating to the Property that are
material in relation to the Hotel have been made to any Governmental Authority,
utility company, school board, church or other religious body or any homeowner
or homeowners association, merchant's association or any other organization,
group or individual which would impose an obligation upon Buyer or its
successors or assigns to make any contribution or dedication of money or land or
to construct, install or maintain any improvements of a public or private nature
on or off the Land and (ii) no Governmental Authority has imposed, or to the
knowledge of Seller has threatened to impose, any requirement that is material
in relation to the Hotel that the owner of the Land pay directly or indirectly
any special fees or contributions or incur any expenses or obligations in
connection the Land.
<PAGE>
19
(k) Ownership of Property. Seller owns good and insurable title to
----------------------
the Land and Improvements, subject only to Permitted Liens and Permitted
Exceptions. Except as otherwise shown on Exhibit C, all of the Personal
Property has been fully paid for and is owned by Seller free and clear of all
liens and encumbrances, in each case subject only to Permitted Liens and
Permitted Exceptions.
(l) No Franchise Agreement. There is no franchise agreement
-----------------------
currently in effect for the Hotel.
(m) ERISA. Seller is not an "employee benefit plan" within the
------
meaning of Section 3(3) of ERISA or an entity whose assets include plan assets
within the meaning of Department of Labor Regulation Section 2510.3-101. The
consummation of the transaction contemplated by this Contract will not result in
a "prohibited transaction" within the meaning of Section 4975(c) of the I.R.C.
or Section 406 of ERISA.
(n) No Employees. No employees employed in connection with the Hotel
-------------
are employed by Seller and there are no union contracts or other employment
agreements covering any such employees binding on Seller or the Hotel.
SECTION 5.02. Survival of Representations and Covenants. The
------------------------------------------
representations and warranties of the Buyer and Seller set forth in this
Contract shall survive until the Termination Date. Except as expressly provided
in this Contract, all of the covenants and agreements of Buyer and Seller set
forth in this Contract shall expressly survive for an indefinite period after
the Closing and shall specifically not merge into the Closing and the delivery
of the Deed and the Assignment.
SECTION 5.03. No Reliance on Documents. Except as expressly stated
-------------------------
in this Contract, Seller makes no representation or warranty as to the truth,
accuracy or completeness of any materials, data or information delivered by
Seller to Buyer in connection with the transaction contemplated hereby. Buyer
acknowledges and agrees that all materials, data and information delivered by
Seller (or its brokers, agents, representatives or advisors) to Buyer in
connection with the transaction contemplated hereby are provided to Buyer as a
convenience only and that any reliance on or use of such materials, data or
information by Buyer shall be at the sole risk of Buyer, except as otherwise
expressly stated herein. Without limiting the generality of the foregoing
provisions, Buyer acknowledges and agrees that (a) any environmental or other
report with respect to the Property which is delivered by Seller to
<PAGE>
20
Buyer shall be for general informational purposes only, (b) Buyer shall not have
any right to rely on any such report delivered by Seller to Buyer, but rather
will rely on its own inspections and investigations of the Property and any
reports commissioned by Buyer with respect thereto, and (c) none of the Seller,
its Affiliates or the Person which prepared any such report delivered by Seller
to Buyer shall have any liability to Buyer for any inaccuracy in or omission
from any such report.
SECTION 5.04. DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
------------
CONTRACT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED
TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR
PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR
PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY
WITH GOVERNMENTAL LAWS (INCLUDING, WITHOUT LIMITATION, ACCESSIBILITY FOR
HANDICAPPED PERSONS), THE TRUTH, ACCURACY OR COMPLETENESS OF ANY PROPERTY
RECORDS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO BUYER, OR
ANY OTHER MATTER OR THING REGARDING THE PROPERTY. BUYER ACKNOWLEDGES AND AGREES
THAT UPON THE CLOSING SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL
ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED OTHERWISE IN THIS CONTRACT. BUYER HAS NOT RELIED AND WILL
NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
INFORMATION DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY
SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT
REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS CONTRACT. BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS
NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE
EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
<PAGE>
21
SELLER AS ARE EXPRESSLY SET FORTH IN THIS CONTRACT. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN TO THE CONTRARY, UPON CLOSING, BUYER SHALL ASSUME THE
RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, CONSTRUCTION DEFECTS
AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS, TRUSTEES,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF
ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS, TRUSTEES,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF
ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND
ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING
THE PROPERTY. BUYER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF
HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE
REQUIRED AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL
BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF
BUYER.
SECTION 5.05. Effect of Disclaimers. Seller and Buyer acknowledge
----------------------
that the compensation to be paid to Seller for the Property has been determined
based upon the fact that the Property is being sold subject to the provisions of
Sections 5.02, 5.03 and 5.04.
ARTICLE VI
Covenants and Affirmative Obligations
-------------------------------------
SECTION 6.01. Maintenance of Property. From and after the Effective
------------------------
Date, Seller shall not perform any construction or removal of any of the
Improvements, or make any other change or improvement on or about the Property,
except in accordance with its 1997 capital or operating budget, without the
prior written consent of Buyer. Between the Effective Date and the Closing
Date, Seller shall maintain and operate the Property in substantially the same
condition and manner as the Property is now maintained and operated by Seller
(giving effect to seasonal fluctuations). The Personal Property located at the
Hotel as of the Closing Date will be substantially similar to that located at
the Hotel on the Effective Date, subject only to any changes
<PAGE>
22
arising from Hotel operations conducted in the ordinary course of business. All
building supplies, maintenance materials, food and beverage in process, linens
and equipment, if any, located at the Property on the Closing Date will be
delivered and transferred to the Buyer.
SECTION 6.02. Assumed Contracts. After the Effective Date, other
------------------
than agreements terminable without penalty on no more than 30 days' notice,
Seller shall not enter into any new Assumed Contract or extend, replace, renew
or terminate any Assumed Contract without the prior written consent of Buyer,
such consent of Buyer not to be unreasonably withheld.
SECTION 6.03. No Further Encumbrances. After the Effective Date,
------------------------
Seller shall not create or incur any mortgage, lien, pledge or other encumbrance
affecting the Property other than the exceptions set forth on the title report
or title commitment comprising part of the Property Records and Permitted Liens
and Permitted Exceptions.
SECTION 6.04. Compliance with Obligations. Seller will perform all of
----------------------------
its material obligations under the Assumed Contracts and will comply in all
material respects with all Governmental Requirements affecting the Property and
the use thereof until the Closing Date.
SECTION 6.05. Notice of Change in Governmental Requirements. Seller
----------------------------------------------
shall, upon notice, or upon becoming aware of any such changes, notify Buyer
promptly of any change in any applicable Governmental Requirements which might
affect the value or use of the Property to Buyer in a manner that is material in
relation to the Hotel.
SECTION 6.06. Insurance. Seller shall maintain in full force and
----------
effect all of its existing insurance (or renew such insurance on substantially
similar terms) until the Closing Date.
SECTION 6.07. Restaurant Lease. Seller shall use commercially
-----------------
reasonable good faith efforts (without the payment of any money) to obtain and
deliver to Buyer an estoppel certificate relating to the Restaurant Lease in the
form contemplated by such lease, or, if no such form is contemplated, in the
form reasonably agreed upon by Buyer and Seller.
SECTION 6.08. Management Agreement. Buyer acknowledges that the
---------------------
Management Agreement will be terminated by Seller at or prior to Closing.
<PAGE>
23
SECTION 6.09. Cooperation. Except as otherwise expressly provided
------------
for herein, Buyer and Seller shall use commercially reasonable efforts to make
or file all required notifications and to obtain all consents, approvals and
authorizations which must be obtained in order to consummate the transaction
contemplated hereby. Each party hereto shall give to the other parties its full
and complete cooperation in giving such notices or obtaining such consents,
approvals and authorizations. Each party covenants and agrees to promptly
furnish to the other all information and data in the furnishing party's
possession requested in writing by the requesting party which the furnishing
party has the right to disclose and which is reasonable or necessary in order to
assist the requesting party to give the necessary notices or secure the permits,
licenses and approvals required as contemplated by this Contract.
SECTION 6.10. Seller's Indemnity. Subject to the terms of Sections
-------------------
5.02, 5.03 and 5.04, Seller agrees to indemnify and hold Buyer and its
Affiliates harmless from all liabilities, losses, damages, costs and expenses
(including Attorneys' Fees) which the Buyer or any of its Affiliates may suffer
or incur by reason of any action or claim arising from acts or omissions of
Seller prior to the Closing Date in connection with the Property or the use or
operation of the Hotel and all liabilities in respect of the Property or the
operation of the Hotel that are not Assumed Liabilities or Seller's failure to
fulfill any of its obligations set forth in this Contract.
SECTION 6.11. Buyer's Indemnity. Buyer agrees to indemnify and hold
------------------
Seller and its Affiliates harmless from all liabilities, losses, damages, costs
and expenses (including Attorneys' Fees) which Seller or any of its Affiliates
may suffer or incur by reason of any action or claim arising on or after the
Closing Date from acts or omissions of Buyer or otherwise arising out of the
Property or the use or operation of the Hotel on or after the Closing Date,
including Buyer's failure to discharge any of the Assumed Liabilities, Buyer's
failure to fulfill any of its obligations set forth in this Contract, or
Seller's incurrence of any costs related to the expiration or termination of any
Assumed Contract made pursuant to Buyer's request under the provisions of
Section 2.02(a).
SECTION 6.12. Indemnity Procedures Relating to Third Party Claims;
----------------------------------------------------
Exclusivity. (a) Any party seeking indemnification under Section 6.10 or 6.11
- ------------
(the "Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the
<PAGE>
24
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought under Section 6.10 or 6.11. The
Indemnifying Party may, and at the request of the Indemnified Party shall,
participate in and control the defense of any such claim, suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable under
Section 6.10 or 6.11 for any settlement effected without its consent of any
claim, suit, action or proceeding in respect of which indemnity may be sought
hereunder.
(b) After the Closing, this Section 6.12 will provide (subject to
Section 6.13) the exclusive procedures for indemnification for any liabilities,
losses, damages, costs, losses or expenses to third parties arising out of this
Contract, the Property, the business conducted at the Hotel or the transaction
contemplated hereby.
SECTION 6.13. Indemnity Fund. At the Closing, Seller shall deposit
---------------
with the Escrow Agent $150,000 (together with all investment earnings thereon,
the "Indemnity Fund"), which shall be held by Escrow Agent in a segregated
account and shall be invested only in Permitted Investments. The $150,000
amount deposited shall at all times be comprised, at Seller's sole discretion,
of (a) cash or (b) subject to any modification of the escrow provisions set
forth in this Section as may be reasonably required by Buyer, unconditional,
irrevocable letters of credit issued by a Person reasonably acceptable to Buyer,
and having terms, conditions and an expiration date reasonably acceptable to
Buyer. In the event Buyer makes a claim or demand under this Contract or any
other agreement entered into between Seller and Buyer at Closing, and the Seller
does not dispute such claim or demand, or is determined to be liable pursuant to
such claim or demand by a court of competent jurisdiction or otherwise in a
mutually acceptable dispute resolution forum (after the expiration of all
applicable and available appeal periods or the earlier resolution of such
appeals), then if Seller fails promptly to pay such claim or demand, Escrow
Agent promptly upon the receipt of notice shall pay such claim or demand in
full, in any event not to exceed the available funds in the Indemnity Fund. On
the Termination Date the Escrow Agent promptly shall return all remaining funds
or letters of credit in the Indemnity Fund to Seller; provided, however, that if
-------- -------
on or before the Termination Date, Buyer shall have either commenced litigation
to enforce the terms of its rights hereunder or provided notice to Escrow Agent
setting forth in reasonable detail the facts and circumstances of any claim,
liability, cost or expense to which Buyer is entitled to indemnification
hereunder, the terms of this Section
<PAGE>
25
shall be extended until the final resolution of such litigation, including any
appeal, provided that all amounts or letters of credit remaining in the
Indemnity Fund at such time in excess of the amount of the alleged claim,
liability, cost or expense (plus reasonable estimated Attorneys' Fees) or demand
shall be returned to the Seller on the Termination Date. Buyer agrees that its
sole remedy and recourse with respect to any claims arising under or in
connection with this Contract that Buyer elects to pursue after the Closing
shall be made pursuant to this Section 6.13.
SECTION 6.14. Hotel Employees. Seller agrees that Buyer will in no
----------------
way be liable for any employees, or for any employment agreements or union
contracts with respect to employees, working at the Hotel (the "Hotel
Employees"), other than termination or severance payments, if any, due to a
Hotel Employee arising solely as a result of a termination of such Hotel
Employee. In particular, Seller will not, and will not authorize the Manager
to, between the date hereof and the date of Closing, enter into any employment
or union contracts or agreements that will be binding on Buyer, the entity to
which Buyer leases the Hotel ("Lessee") or any manager retained by the Lessee to
manage the Hotel ("New Manager") on or after the Closing. None of Buyer, Lessee
and New Manager will be obligated to pay any amount to or on behalf of any Hotel
Employees for any period prior to Closing. None of Buyer, Lessee and New
Manager shall have any liability (accrued or unaccrued) under any pension,
welfare or profit sharing plan that Seller or Manager or any other party may
have established with respect to any Hotel Employees. Seller shall pay at
Closing all accrued (whether earned or unearned) salaries, wages, bonuses,
profit-sharing, and other compensation, vacation, sick leave, worker's
compensation, and welfare benefits, deferred compensation, savings, pension,
profit sharing, 401K, retirement plan and insurance and other benefits through
the day preceding the Closing Date of all Hotel Employees, whether or not
employed by whichever of Buyer, Lessee or New Manager shall be the employer from
and after the Closing Date (the "New Employer"), and for all liabilities of
whatever kind with respect to all Hotel Employees who are not employed by the
New Employer (except as specifically set forth in this Section with respect to
(i) termination or severance payments, if any, due to a Hotel Employee arising
solely as a result of a termination of such Hotel Employee and (ii) matters as
to which Buyer has agreed to indemnify Seller). Without limiting the generality
of the foregoing, Seller shall be responsible for all obligations under group
health plan continuation coverage rules under part 6 of Title I of ERISA and
<PAGE>
26
Section 4980B of the I.R.C. for all existing and former Hotel Employees and
their beneficiaries who become entitled to such coverage on or before the
Closing Date. Seller hereby indemnifies, defends and saves harmless Buyer with
respect to the foregoing. Seller shall terminate or cause the Manager to
terminate the Hotel Employees effective as of 11:59 p.m. on the day before the
Closing Date (it being understood that if for any reason the Closing does not
occur, such termination shall be deemed to be rescinded ab initio) and to pay to
-- ------
such employees all amounts owed to such employees including amounts owed on
account of accrued and unpaid benefits including earned and/or accrued vacation
pay and sick leave. Seller shall be responsible for and shall pay any sums due
and owing for any multiemployer withdrawal liability under Title IV of ERISA
incurred as a result of sale of the Hotel. Buyer shall cause the New Employer
to rehire any or all of those Hotel Employees it desires to hire effective as of
12:01 a.m. on the Closing Date (it being understood that if for any reason the
Closing does not occur, such rehiring shall be deemed void ab initio) upon such
-- ------
terms as such New Employer may elect. Neither Buyer, nor Lessee, nor New Manager
nor their respective Affiliates shall have any obligation to hire any or all of
the Hotel Employees, provided that if the failure to hire less than all of the
Hotel Employees or the hiring of Hotel Employees on different terms results in a
violation of, or causes the applicability of, the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. (S) 2101 et. seq. (the "WARN Act"), Buyer
shall be responsible for all claims, damages and penalties under the WARN Act
and shall indemnify Seller from and against any liability or expense relating to
the WARN Act. Buyer shall be responsible for all employee obligations in
respect of the rehired Hotel Employees accruing from and after such rehiring.
Seller hereby agrees that neither it nor its Affiliates shall induce or cause
any Hotel Employee to be hired by any Affiliate of Seller. Seller and Buyer
shall indemnify and hold the other (and their respective lessees and managing
agents) harmless from and against any loss, cost, expense (including reasonable
Attorneys' Fees and disbursements actually incurred), damage or liability any
such party may suffer by reason of the other's default under this Section.
<PAGE>
27
ARTICLE VII
Conditions
----------
SECTION 7.01. Conditions to Buyer's Obligation to Close. Buyer shall
------------------------------------------
not be obligated to consummate the Closing unless and until each of the
following conditions are either fulfilled or waived in writing by Buyer:
(a) Delivery of Documents. Seller shall be prepared to deliver all
----------------------
instruments and documents to be delivered by Seller at the Closing pursuant
to Sections 9.01 and 10.02 of this Contract.
(b) Representations and Warranties; Compliance with Covenants.
----------------------------------------------------------
Seller's representations and warranties contained in Section 5.01 shall be
true and correct in all material respects as of the Closing Date subject,
however, to facts disclosed on supplements to Exhibit C delivered in
accordance with Section 4.01 (which supplements, upon their delivery to
Buyer in accordance with Section 4.01, shall for all purposes of this
Contract constitute part of Exhibit C). Seller shall have performed in all
material respects all covenants, agreements and obligations required by
this Contract to be performed or complied with by Seller prior to the
Closing Date.
(c) Right of First Refusal. The lessee under the Restaurant Lease
-----------------------
shall not have purchased the Property pursuant to its right of first
refusal set forth in the Restaurant Lease.
(d) Management Agreement. Seller shall have terminated the
---------------------
Management Agreement.
(e) Title Policy. The Title Company shall be prepared to issue its
-------------
title policy insuring title to the Property, free and clear of all matters
except Permitted Liens and Permitted Exceptions.
SECTION 7.02. Failure of Buyer's Conditions. If any of the
------------------------------
conditions to Buyer's obligations have not been satisfied (or deemed satisfied)
on or before the Closing Date other than solely as a result of Seller's failure
to comply with its obligations hereunder for a period in excess of 30 days after
receipt of notice from Buyer of such failure (in which case, the provisions of
Section 14.02 shall be applicable), and Buyer is otherwise in material
compliance with the terms hereof, Buyer may exercise the remedy granted pursuant
to Section 14.02(i) hereof.
<PAGE>
28
SECTION 7.03. Conditions to Seller's Obligation to Close. Seller
-------------------------------------------
shall not be obligated to consummate the Closing unless and until each of the
following conditions are either fulfilled or waived by Seller:
(a) Representations and Warranties; Compliance With Covenants.
----------------------------------------------------------
Buyer's representations and warranties contained in Article XIX shall be
true and correct in all material respects as of the Closing Date. Buyer
shall have performed in all material respects all covenants, agreements and
obligations required by this Contract to be performed or complied with by
Buyer prior to the Closing Date.
(b) Delivery of Documents and Cash to Close. Buyer shall be prepared
----------------------------------------
to deliver all Cash to Close and all instruments and documents to be
delivered by Buyer at the Closing pursuant to Sections 9.01, 9.02, 10.01
and 10.02 of this Contract.
(c) Right of First Refusal. The lessee under the Restaurant Lease
-----------------------
shall not have purchased the Property pursuant to its right of first
refusal set forth in the Restaurant Lease.
SECTION 7.04. Failure of Seller's Conditions. If any of the
-------------------------------
conditions to Seller's obligations have not been satisfied on or before the
Closing Date as a result of Buyer's failure to comply with any of its
obligations hereunder for a period of 30 days after receipt of notice from
Seller of such failure, and Seller is otherwise in material compliance with the
terms hereof, Seller may terminate this Contract and receive the Deposit as
liquidated damages pursuant to Section 14.01 hereof.
ARTICLE VIII
Closing
-------
Subject to all of the provisions of this Contract, Buyer and Seller
shall close the transaction contemplated hereby as soon as practicable following
the satisfaction or waiver of the conditions to Closing set forth herein on a
date set forth in a written notice from Buyer to Seller at least 14 days prior
to such date, provided that in no event shall the Closing Date occur after
--------
January 30, 1998, unless such Closing Date is extended pursuant to the following
sentence, pursuant to the Cure Period provided for in Section 4.02 or pursuant
to Section 13.02. At Buyer's election, the Closing Date may be extended from
January 30,
<PAGE>
29
1998 to February 16, 1998; provided, however, that by January 15, 1998 Buyer
-------- -------
shall have (i) given Seller written notice of such election and (ii) increased
the Deposit to $300,000. The Closing shall take place on the Closing Date at
10:00 a.m. in New York, New York at the offices of Seller's Attorney, or at such
other location mutually agreed upon by the parties.
ARTICLE IX
Closing Documents
-----------------
SECTION 9.01. Seller's Closing Documents. At Closing, Seller shall
---------------------------
execute and deliver the following documents ("Seller's Closing Documents") in
accordance with Section 10.02:
(a) Deeds and Assignment. The Deed, the Assignment and required
---------------------
transfer tax forms and affidavits, which shall be duly executed and
acknowledged by Seller so as to convey to Buyer (or its designee) good and
insurable title to the Property described therein free and clear of all
liens, encumbrances and other conditions of title other than the Permitted
Exceptions and Permitted Liens.
(b) Seller's Affidavit. An affidavit and "gap undertakings" from
-------------------
Seller in form and content reasonably satisfactory to Buyer and the Title
Company to facilitate the deletion of those standard exceptions on the
Title Company's related title insurance commitment which may be deleted
solely by delivery of an affidavit.
(c) Closing Statement. A closing statement setting forth the
------------------
Purchase Price and all credits, adjustments and prorations between Buyer
and Seller, and the net Cash to Close due from Buyer.
(d) Authorizing Resolutions. Certificates of such resolutions in
------------------------
form and content as the Title Company may reasonably request evidencing
Seller's existence, power and authority to consummate the transaction
herein contemplated, including copies of all corporate organizational
documents or other reasonable evidence of corporate authority.
(e) FIRPTA. A FIRPTA Non-Foreign Transferor Certificate in
-------
accordance with Section 1445 of the I.R.C. from Seller.
<PAGE>
30
(f) Property Records. The originals, if available, otherwise copies,
-----------------
of each of the Property Records to the extent not otherwise covered in this
Section.
(g) Vehicle Titles. The necessary certificates of title duly
---------------
endorsed for transfer together with any required affidavits and other
documentation necessary for the transfer of title from Seller to Buyer of
any motor vehicles owned by Seller and used in connection with the Hotel's
operations.
(h) Certificate Regarding Representations and Warranties. A
-----------------------------------------------------
certificate of Seller certifying to Buyer that the representations and
warranties of Seller set forth herein are true and correct in all material
respects as of the Closing Date as if made on such date, subject, however,
to facts disclosed on supplements to Exhibit C delivered in accordance with
Section 4.01.
SECTION 9.02. Buyer's Closing Documents. At Closing, Buyer shall
--------------------------
execute and deliver the following documents ("Buyer's Closing Documents") in
accordance with Section 10.02:
(a) Assumption Documents. All documents under this Article IX to be
---------------------
executed by Buyer.
(b) Resolutions. Certificate of resolutions of Buyer in form and
------------
content as the Title Company may reasonably request evidencing authorizing
the entering into and execution of this Contract and the consummation of
the transaction contemplated hereby.
ARTICLE X
Closing Procedure
-----------------
The Closing shall proceed in the following manner:
SECTION 10.01. Transfer of Funds. Buyer shall pay the Cash to Close
------------------
to the Escrow Agent by wire transfer to a depository designated by the Escrow
Agent.
SECTION 10.02. Delivery of Documents. Seller shall deliver Seller's
----------------------
Closing Documents and Buyer shall deliver Buyer's Closing Documents to the
Escrow Agent.
<PAGE>
31
SECTION 10.03. Disbursement of Funds and Documents. When Seller and
------------------------------------
Buyer have delivered all documents and funds to Escrow Agent as provided in
Sections 10.01 and 10.02 and when the Title Company is prepared to issue its
title policy in the form required hereby, then the Escrow Agent shall (a)
disburse the Purchase Price to Seller, subject to adjustments and prorations
hereunder and less any closing costs or other sums due hereunder from Seller,
(b) return the Deposit to Buyer, record the Deed and deliver all the Seller's
Closing Documents to Buyer (c) deliver all the Buyer's Closing Documents to
Seller and (d) pay all of the closing costs and other sums due to third parties
hereunder, to the extent set forth on any closing statement executed by Seller
and Buyer at or prior to the Closing.
ARTICLE XI
Prorations and Closing Costs
----------------------------
SECTION 11.01. Prorations. Except as otherwise specified in clause
-----------
(a) below, the following items shall be prorated at the Closing as of midnight
preceding the Closing Date, without duplication:
(a) Certain costs and expenses relating to the Property shall be
adjusted as of the Closing Date between Seller and Buyer (the "Closing Date
------------
Adjustments"). The Closing Date Adjustments shall constitute a composite
- -----------
accounting of the different items described below in this Section. The intent
is to credit or charge, as the case may be, Seller with all revenues and
expenses respecting the Property which are attributable to operations before the
Closing Date and to credit or charge, as the case may be, Buyer with all such
revenues and expenses attributable to operations on and after the Closing Date.
Unless otherwise provided for herein, all revenues and expenses shall be
separately accounted for as between Seller and Buyer as of 12:01 a.m. on the
Closing Date. No later than 90 days after the Closing Date (or with respect to
real estate taxes, 30 days from the date that the amounts such taxes are
determinable), Seller and Buyer shall review all the amounts and calculations
made in respect of the Closing Date Adjustments and any final corrections shall
be made to the Closing Date Adjustments, and Seller and Buyer at that time shall
settle any funds owed to each other. The following items shall be accounted for
in calculating the Closing Date Adjustments as between Seller and Buyer:
<PAGE>
32
(i) Prepaid charges and fees for licenses and permits or for other
items transferred by Seller to Buyer shall be prorated as between Seller
and Buyer.
(ii) Prepaid rents and all room and other deposits and advance
payments under booking arrangements and trade-out agreements for use of
Seller's Property facilities after the Closing Date shall be credited to
Buyer.
(iii) With regard to food (other than food in process including mini-
bars and gift shops) and non-alcoholic and alcoholic beverages (other than
opened containers and unopened containers outside of storage areas), Buyer
shall be charged with the costs of all food and non-alcoholic and alcoholic
beverages at Seller's Property at Seller's cost based upon an inventory of
such items performed jointly by Buyer and Seller as of 12:01 a.m. on the
Closing Date.
(iv) All charges and prepayments relating to the Assumed Contracts
which are assumed by Buyer shall be separately accounted for as between
Seller and Buyer as of 12:01 a.m. on the Closing Date.
(v) All cash in the operating accounts for the Hotel (it being
understood that such accounts refer to "house banks" and not bank accounts)
shall be paid over to Buyer at Closing and Seller shall receive a credit
therefor in the Closing Date Adjustments.
(vi) With regard to the booking of guest rooms and the provision of
other services at the Property, the parties agree that Seller shall be
entitled to all of the revenue generated by such operations through and
including the night before the Closing Date; provided that Buyer shall be
--------
entitled to one-half of such revenue (including applicable sales Tax) for
the night before the Closing Date. Seller shall receive a credit, without
duplication, for all accounts receivable (other than for the guests' stay
that includes the night prior to Closing) with respect to hotel guests then
in occupancy, net of any travel agent commissions, credit card commissions
or other similar costs to collect such revenue. Except as expressly
provided for in this subsection (vi), Seller shall own and be entitled to
all collections with respect to accounts receivable for the period prior to
the Closing Date. Buyer agrees, on a prompt, but no less frequent than
monthly, basis, to deliver to Seller any payments and back-up received or
generated with respect to
<PAGE>
33
Seller's accounts receivable. The parties acknowledge that if Buyer
receives a payment from a party which does not specify the invoice being
paid, then such payment shall be applied, to the extent such payment is not
identifiable to a particular invoice, first to the oldest past due sums due
Seller from such party, if any, provided, however, that payments made (i)
in respect of airline accounts will be applied only to amounts owed that
are less than 180 days past due and (ii) all payments made in respect of
any other accounts will be applied only to amounts owed that are less than
90 days past due. Buyer has no obligation nor responsibility to collect
said accounts receivable, however, Buyer will cooperate with Seller in such
collection and shall give Seller rights to inspect Buyer's books and
records at reasonable times with respect to such accounts receivable.
(vii) With respect to baggage, personal property, laundry, valet
packages and other property of Hotel guests checked or left in the care of
Seller by transient hotel guests or tenants prior to the Closing (all of
which, except for any items locked in the Hotel's safe deposit boxes as to
which Seller or Manager cannot reasonably gain access shall be inventoried
on the Closing Date) Buyer shall be responsible from and after the Closing
Date for all such property.
(b) Subject to Section 2.02(a)(iv), Seller shall pay or credit
against the Purchase Price any of the following that are a lien on the Land or
Improvements: all unpaid sales, occupancy, personal property or real estate
Taxes for years prior to Closing, together with any interest and penalties
relating to any of the foregoing.
(c) Seller shall notify the utility companies servicing the Property
prior to Closing that billing to Seller for such utilities shall be discontinued
at the end of the day preceding the Closing Date, and Buyer shall arrange with
such utilities to have such billings for utility services charged to Buyer from
and after the Closing Date and Seller shall be entitled to the refunds of all
deposits therefor. Seller shall pay all charges with respect to such utilities
for the period prior to the Closing Date and utility charges since the date of
the last billing will be adjusted at Closing as of the Closing Date on the basis
of the last bill so rendered, with subsequent adjustment, if any, when final
bills are rendered.
<PAGE>
34
(d) If there is a water meter on the Property, Seller shall furnish,
at the Closing or as soon thereafter as practicable, a reading to a date not
more than 30 days prior to the Closing Date, and the unfixed meter charge, the
unfixed sewer rent and/or unfixed water charges, if any, based thereon for the
intervening time shall be apportioned on the basis of such last reading, subject
to adjustment upon receipt of the actual meter charge and sewer rent.
(e) Other costs, expenses and charges which are a lien or may become
a lien against the Seller's Property and are of such a type as are usually
involved in and adjusted with regard to property similar to and located in the
locale of the Property, including Taxes in accordance with Section 2.02(a)(iv).
Prorations hereunder shall, where applicable, be made on the basis of a 365-day
year and, for any month, on the basis of the number of days elapsed. If any of
the foregoing cannot be apportioned at the Closing because of the unavailability
of the amounts which are to be prorated, unless otherwise provided for herein, a
reasonable estimation of the amount of such items shall be placed in escrow with
the Title Company, and such items shall be prorated as soon as practicable after
the Closing Date.
(f) To the fullest extent permitted by applicable law, any
controversy, claim or dispute arising out of or relating to the prorations set
forth in this Section 11.01, including any dispute concerning the scope of this
clause (f), shall be resolved exclusively by the final and binding decision of
the Accountants as set forth herein. In the case of a dispute with respect to
such matters, either Seller or Buyer may submit such matter to arbitration which
shall be conducted by the Accountants. The "Accountants" shall be one of three
(3) firms of certified public accountants of recognized international standing
in the hotel industry. Until otherwise agreed to by the parties, the three (3)
firms shall be Arthur Andersen LLP, Coopers & Lybrand L.L.P. and Pannell Kerr
Forster PC, notwithstanding any existing relationships which may exist between
Seller and such accounting firms or Buyer and such accounting firms. The party
(i.e., either Seller or Buyer) desiring to submit any matter to arbitration
----
hereunder shall do so by written notice to the other party, which notice shall
set forth the items to be arbitrated and such party's choice of one of the three
(3) accounting firms. The party receiving such notice shall within fifteen (15)
days after receipt of such notice either approve such choice, or designate one
of the remaining two (2) firms by written notice back to the first party, and
the first party shall within fifteen (15) days after receipt of such notice
either approve such choice or disapprove the same. If both parties shall have
approved
<PAGE>
35
one of the three (3) firms under the preceding sentence, then such firm shall be
the "Accountants" for the purposes of arbitrating the dispute; if the parties
are unable to agree on an accounting firm, then the third firm, which was not
designated by either party, shall be the "Accountants" for such purpose. The
Accountants shall be required to render a decision in accordance with the
procedures described below within fifteen (15) days after being notified of
their selection. The fees and expenses of the Accountants will be paid by the
non-prevailing party. In all arbitration proceedings submitted to the
Accountants, the Accountants shall be required to agree upon and approve the
substantive position advocated by Buyer or Seller with respect to each disputed
item. Any decision rendered by the Accountants that does not reflect the
position advocated by Buyer or Seller shall be beyond the scope of authority
granted to the Accountants and, consequently, may be overturned by either party.
All proceedings by the Accountants shall be conducted in accordance with the
Uniform Arbitration Act, except to the extent the provisions of such act are
modified by this Contract or the mutual agreement of the parties. Unless
otherwise agreed, all arbitration proceedings shall be conducted at the Hotel
with respect to which the dispute arose.
SECTION 11.02. Seller's Closing Costs. Seller shall pay for the
-----------------------
following items prior to or at the time of Closing:
(a) 50% of all transfer taxes, sales taxes, conveyance fees, recording
costs and other documentary stamp tax related to the transfer of the
Property;
(b) 50% of the premium and other costs and fees payable in connection
with an Owner's Title Insurance Policy obtained by Buyer and issued by the
Title Company covering the Land and the Improvements related thereto, plus
the cost of all endorsements thereto;
(c) One-half of all escrow fees and costs; and
(d) Seller's Attorneys' Fees.
SECTION 11.03. Buyer's Closing Costs. Buyer shall pay for the
----------------------
following items prior to or at the time of Closing:
(a) 50% of the transfer taxes, sales taxes conveyance fees, recording
costs and documentary stamp tax related to the transfer of the Property;
<PAGE>
36
(b) 50% of the premium and other costs and fees payable in connection
with an Owner's Title Insurance Policy obtained by Buyer and issued by the
Title Company covering all the Land and the Improvements related thereto,
plus the cost of all endorsements thereto;
(c) The costs and fees payable in connection with any surveys, or
updates of surveys, relating to the Property;
(d) One-half of all escrow fees and costs; and
(e) Buyer's Attorneys' Fees.
SECTION 11.04. Accounts Payable. Seller shall retain and be
-----------------
responsible for the payment of all accounts payable, liabilities and obligations
relating to the Property (including the Hotel) accrued prior to and as of the
Closing and payable after the Closing. Buyer shall be responsible for the
particular accounts payable, liabilities and obligations relating to the
Property (including the Hotel) accruing on or after the Closing.
ARTICLE XII
Possession; Risk of Loss
------------------------
Buyer shall be granted full possession of the Property at Closing
subject to (i) tenant's rights under any space leases of the Property (or any
portion thereof) assumed by Buyer, (ii) guests in occupancy and (iii) Permitted
Liens and Permitted Exceptions. All risk of loss with respect to the Property
shall pass to Buyer on and as of the Closing Date.
ARTICLE XIII
Condemnation and Damage by Casualty
-----------------------------------
SECTION 13.01. Condemnation. In the event of the institution of any
-------------
proceedings by any Governmental Authority which shall relate to the proposed
taking of any Material Portion of the Hotel by eminent domain prior to Closing,
or in the event of the taking of any Material Portion of the Hotel by eminent
domain prior to Closing, Seller shall promptly notify Buyer and Buyer shall
thereafter have the right and option to terminate this Contract by giving Seller
and the Escrow Agent written notice of Buyer's election to
<PAGE>
37
terminate within 30 days after receipt by Buyer of the notice from the Seller.
Seller hereby agrees to furnish Buyer with written notice of a proposed
condemnation within two business days after Seller's receipt of such
notification. Should Buyer terminate this Contract pursuant to this Section
13.01, the Escrow Agent shall return to Buyer its Deposit and, except as
otherwise provided for in this Contract, the parties hereto shall be released
from their respective obligations and liabilities hereunder. Should Buyer elect
not to terminate this Contract with respect to such Hotel, the parties hereto
shall proceed to Closing and the affected Seller shall assign all of its right,
title and interest in all awards in connection with such taking or takings to
Buyer.
SECTION 13.02. Damage by Casualty. (a) If, after the Effective Date
-------------------
but prior to the Closing Date, any damage other than Material Damage occurs from
fire, windstorm or other casualty to the Property, and if the sum of (i) the
insurance proceeds paid or payable with respect to such damage (other than
business interruption insurance for periods prior to the Closing Date) plus (ii)
the amount of any deductible or co-payment amount under the related insurance
policy or policies plus (iii) such amounts, if any, as Seller may in its sole
discretion elect to pay to Buyer or credit to Buyer at Closing is sufficient to
restore the Hotel to the condition it was in immediately prior to the occurrence
of such casualty plus the costs of any interruption of business at its Hotel
that will extend beyond the Closing Date, then (1) Buyer shall be required to
close this transaction in accordance with the Contract, (2) Seller shall assign
unto Buyer any and all insurance proceeds paid or payable with respect to such
damage (other than business interruption insurance for periods prior to the
Closing Date), and (3) Buyer shall receive at Closing a credit in the amount of
any deductible or co-payment amount under the related policy or policies plus
such other amounts, if any, described in clause (iii) of this sentence. In such
event, Seller shall have no additional obligation if such insurance proceeds are
insufficient or unavailable to repair such damage.
(b) If, prior to Closing, there is any Material Damage to the Hotel
and such Material Damage is, in the reasonable estimation of Seller, capable of
restoration within one year following the occurrence of such Material Damage,
Seller may elect within 30 days of the date of such Material Damage to terminate
this Contract, and if Seller makes such election, neither Buyer nor Seller shall
have any further obligation or liability under this Contract. If Seller does
not elect to terminate this Contract, the
<PAGE>
38
Closing shall be extended to the date (not to exceed one year from the date of
Seller's election) necessary to enable Seller to restore the Hotel to the
condition it was in immediately prior to the occurrence of such Material Damage.
If prior to Closing there is any Material Damage to the Hotel and such Material
Damage is not, in the reasonable estimation of Seller, capable of restoration
within one year following the occurrence of such Material Damage, neither Buyer
nor Seller shall have any further obligation or liability to the other under
this Contract.
ARTICLE XIV
Default
-------
SECTION 14.01. Buyer's Default; Liquidated Damages. In the event
------------------------------------
that the transaction fails to close solely due to Buyer's failure to comply with
its obligations hereunder (after giving effect to the cure period in Section
7.04), the Deposit (including any interest earned thereon) shall be immediately
paid to Seller by the Escrow Agent and Buyer shall have no further rights with
respect thereto. Buyer recognizes that the Property will be removed from the
market during the existence of this Contract and, if Buyer fails to perform its
obligations hereunder, Seller shall be entitled to compensation for the
detriment caused thereby. However, Buyer and Seller agree that it is extremely
difficult and impractical to ascertain the extent of the detriment and, to avoid
such difficulties, Buyer and Seller agree that Seller shall be entitled to
retain the Deposit (including any interest earned thereon) as liquidated damages
(and not as a penalty) in accordance with this Section 14.01. All parties agree
that such amount stated as liquidated damages shall be in lieu of any other
relief to which Seller might otherwise be entitled by virtue of this Contract or
by operation of law.
SECTION 14.02. Seller's Default. In the event that the transaction
-----------------
fails to close solely due to the failure of Seller to comply with its
obligations hereunder (after giving effect to the cure period in Section 7.02)
or a material breach of its representations or warranties hereunder, Buyer shall
have the right to either (i) terminate this Contract and receive a refund of the
Deposit (ii) commence an action for the specific performance of this Contract or
(iii) in the case of a prior sale or encumbrance of the Hotel by Seller to any
Person other than Buyer or its successors or permitted assigns in breach of this
Contract or in the case of any wilful or knowing material breach by Seller of
its representations, warranties
<PAGE>
39
or covenants hereunder, Buyer shall also be entitled to seek damages. Except as
provided in the preceding clause (iii), Buyer hereby waives any right to sue
Seller for damages for any default by Seller hereunder, but if the Closing
occurs, subject to the provisions of Section 6.13 such waiver shall not apply to
damages to which Buyer may be entitled hereunder by reason of any breach by
Seller of any of its representations, warranties or covenants hereunder which
survive the Closing and that first became known to Buyer after Closing.
ARTICLE XV
Real Estate and Other Commissions and Fees
------------------------------------------
Seller and Buyer each represent and warrant to the other that there
are no brokers, salespersons, advisors or finders involved in this transaction
by reason of agreement with such representing party, except for Hodges Ward
Elliott pursuant to an agreement with Seller. The provisions of this Article
shall survive the Closing or termination of this Contract.
Seller agrees to, and hereby does, indemnify and save harmless Buyer
and its Affiliates and their respective successors and assigns against and from
any loss, liability or expense, including Attorneys' Fees, arising out of any
claim or claims for commissions or other compensation for bringing about this
Contract or the transaction contemplated hereby, or advice in connection
herewith, made by any broker, finder, consultant or like agent if such claim or
claims made by any such broker, finder, consultant or like agent are based in
whole or in part on any agreements entered into with Seller or its
representatives for a commission or other compensation. Buyer agrees to, and
hereby does, indemnify and save harmless Seller, its Affiliates and their
respective successors and assigns against and from any loss, liability or
expense, including Attorneys' Fees, arising out of any claim or claims for
commissions or other compensation for bringing about this Contract or the
transaction contemplated hereby, or advice in connection herewith, made by any
broker, finder, consultant or like agent if such claim or claims by any such
broker, finder, consultant or like agent are based on any agreements entered
into with Buyer or its representatives for a commission or other compensation.
<PAGE>
40
ARTICLE XVI
Notices
-------
Any notice, request, demand, instruction or other communication to be
given to any party hereunder, except where required to be delivered at the
Closing, shall be in writing and shall be hand-delivered or sent by Federal
Express or a comparable overnight mail service, or mailed by U.S. registered or
certified mail, return receipt requested, postage prepaid, to Buyer, Seller,
Buyer's Attorney, Seller's Attorney and Escrow Agent at their respective
addresses set forth in Article I of this Contract. Notice shall be deemed to
have been given upon receipt or refusal of delivery of said notice. Notices may
be given by confirmed telecopy provided a hard copy of such notice is sent by
another means in accordance with this Article on the next business day following
such telecopy delivery. The addressees and addresses for the purpose of this
Article may be changed by giving notice. Unless and until such written notice
is received, the last addressee and address stated herein shall be deemed to
continue in effect for all purposes hereunder.
ARTICLE XVII
Assignment
----------
This Contract may be assigned by Buyer without the prior written
consent of Seller; provided, however, that (i) such assignee shall assume the
Assumed Liabilities on the terms and conditions contained herein and shall
otherwise acquire all of the right, title and interest to the Property that
Buyer would have acquired, under the conditions and subject to the obligations
that Buyer would have undertaken and (ii) Buyer shall remain fully liable to
Seller hereunder as if such transfer and assumption were made directly to and by
Buyer.
ARTICLE XVIII
Escrow Agent
------------
SECTION 18.01. Duties and Authorization. The payment of the Deposit,
-------------------------
Cash to Close and all other funds provided hereunder to the Escrow Agent is for
the accommodation of the parties to this Contract. The duties of the Escrow
Agent shall be determined solely by the express provisions of this Contract.
The Escrow Agent shall
<PAGE>
41
invest the Deposit (to the extent delivered in cash) as directed in writing by
the Buyer and Seller. If this Contract has been terminated in accordance with
Section 4.02(b), Escrow Agent shall return the Deposit to Buyer within two (2)
business days after such termination without further notice to any party to this
Contract. In the event the Escrow Agent receives a written demand from either
Seller or Buyer for the Deposit after the expiration of the Review Period (which
demand shall include an explanation setting forth the factual basis for such
party's demand for the Deposit), Escrow Agent shall give 10 days written notice
to the other party (i.e., Buyer or Seller) of such demand and of Escrow Agent's
----
intention to remit the Deposit to the party making the demand on the stated
date. If Escrow Agent does not receive a written objection within 10 days after
such notice, the Escrow Agent is hereby authorized to so remit the Deposit. If,
however, the Escrow Agent receives written objection from the other party within
10 days after such notice, the Escrow Agent shall continue to hold the Deposit
until otherwise directed by joint written instructions from Seller and Buyer, or
until a final judgment of an appropriate court or arbitrator is issued. Buyer
and Seller authorize the Escrow Agent, without creating any obligation on the
part of the Escrow Agent, in the event this Contract or the Deposit becomes
involved in litigation, to deposit the Deposit with the clerk of the court in
which the litigation is pending and thereupon the Escrow Agent shall be fully
relieved and discharged of any further responsibility under this Contract. Buyer
and Seller also authorize the Escrow Agent, if it is threatened with litigation,
to interplead all interested parties in any court of competent jurisdiction and
to deposit the Deposit with the clerk of the court and thereupon the Escrow
Agent shall be fully relieved and discharged of any further responsibility
hereunder. Notwithstanding anything to the contrary contained herein, in the
event there is any controversy as to which party is entitled to the Deposit and
all or any portion of the Deposit is comprised of a Letter of Credit, then,
prior to the expiration of any such Letter of Credit, the Escrow Agent shall (i)
instruct Seller to submit a drawing under such Letter of Credit and deposit the
proceeds of such drawing into the escrow or (ii) accept from Buyer a substituted
Letter of Credit which is in the same form and from the same financial
institution as the previously deposited Letter of Credit with an expiration date
no less than six months after the date of replacement.
SECTION 18.02. Liability. The Escrow Agent shall not be liable for
----------
any mistake of fact or error of judgment or any acts or omissions of any kind
unless caused by its own wilful misconduct or negligence. The Escrow Agent
shall
<PAGE>
42
be entitled to rely on any instrument or signature reasonably believed by it to
be genuine and may assume that any Person purporting to give any writing, notice
or instruction in connection with this Contract is duly authorized to do so by
the party on whose behalf such writing, notice, or instruction is given.
SECTION 18.03. Hold Harmless. Buyer and Seller will, and hereby
--------------
agree to, jointly and severally, indemnify the Escrow Agent for and hold it
harmless against any loss, liability or expense, including Attorneys' Fees,
incurred on the part of the Escrow Agent arising out of or in connection with
the acceptance of, or the performance of, its duties under this Contract, as
well as the costs and expenses of defending against any claim or liability
arising under this Contract other than as a result of its own wilful misconduct
or negligence. This provision shall survive the Closing or earlier termination
of this Contract.
SECTION 18.04. FDIC Coverage. The parties are informed that the
--------------
Federal Deposit Insurance Corporation (FDIC) coverage applies only to a maximum
amount of One hundred thousand Dollars ($100,000) for each individual depositor,
and that the Escrow Agent assumes no responsibility for any loss occurring which
arises from the fact that the amount held by the Escrow Agent in any account may
cause the aggregate amount of any individual depositor's accounts to exceed One
hundred thousand Dollars ($100,000) and that the excess amount is not insured by
the Federal Deposit Insurance Corporation.
ARTICLE XIX
Buyer's Representations
-----------------------
SECTION 19.01. Organization and Corporate Authority. Buyer
-------------------------------------
represents and warrants to Seller, as of the date hereof and as of the Closing
Date: Buyer is duly organized, validly existing and in good standing under the
laws of the state of its formation; Buyer has the requisite power and authority
to execute, deliver and perform this Contract and the other documents and
agreements contemplated hereby; and Buyer has duly authorized the execution and
delivery of this Contract by the end of the Review Period (assuming this
Contract has not been terminated), the performance of its obligations hereunder
will have been duly authorized; and the entry into, the performance of, or
compliance with this Contract by Buyer will not, to Buyer's knowledge, result in
any violation of, default under, or acceleration of any obligation under any
existing
<PAGE>
43
partnership agreement, mortgage indenture, agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to Buyer.
SECTION 19.02. Resources. Buyer has or will have by Closing the
----------
requisite cash, cash equivalents, equity commitment or other sources of
financing available to consummate the transaction contemplated hereby.
ARTICLE XX
Miscellaneous
-------------
SECTION 20.01. Counterparts. This Contract may be executed in any
-------------
number of counterparts, any one and all of which shall constitute the contract
of the parties and each of which shall be deemed an original.
SECTION 20.02. Section and Paragraph Headings. The section and
-------------------------------
paragraph headings herein contained are for the purposes of identification only
and shall not be considered in construing this Contract.
SECTION 20.03. Amendment. No modification or amendment of this
----------
Contract shall be of any force or effect unless in writing executed by both
Seller and Buyer.
SECTION 20.04. Attorneys' Fees. If any party obtains a judgment
----------------
against any other party by reason of breach of this Contract, Attorneys' Fees
and costs shall be included in such judgment.
SECTION 20.05. Governing Law. This Contract shall be interpreted in
--------------
accordance with the internal laws of the State of New York both substantive and
remedial, excluding laws governing conflicts of laws.
SECTION 20.06. Entire Contract. This Contract, including all
----------------
Schedules and Exhibits which are incorporated by reference, sets forth the
entire agreement between Seller and Buyer relating to the Property and all
subject matter herein and supersedes all prior and contemporaneous negotiations,
understandings and agreements, written or oral, between the parties.
SECTION 20.07. Time of the Essence. Time is of the essence in the
--------------------
performance of all obligations by Buyer and Seller under this Contract.
<PAGE>
44
SECTION 20.08. Computation of Time. Any reference herein to time
--------------------
periods of less than six (6) days shall exclude Saturdays, Sundays and legal
holidays in the computation thereof. Any time period provided for in this
Contract which ends on a Saturday, Sunday or legal holiday shall extend to 5:00
p.m. on the next full business day.
SECTION 20.09. Successors and Assigns. This Contract shall inure to
-----------------------
the benefit of and be binding upon the successors and permitted assigns of the
parties hereto.
SECTION 20.10. No Party Draftsman. This Contract has been drafted
-------------------
jointly by Buyer and Seller and, accordingly, shall not be construed or
interpreted against either Buyer or Seller.
SECTION 20.11. No Third Party Benefitted. This Contract is solely
--------------------------
for the benefit of the parties hereto and there shall be no third party
beneficiaries of the terms hereof.
SECTION 20.12. Public Announcements. Subject to disclosure
---------------------
obligations required by law or advised by its counsel to be required by law,
neither Seller nor any of its Affiliates shall issue any press release or
otherwise make public any information with respect to this Contract or the
transaction contemplated hereby prior to the Closing Date without the prior
written consent of Buyer. Subject to disclosure obligations required pursuant to
securities laws or stock exchange rules or regulations, or otherwise required by
law or advised by its counsel to be required by law, neither Buyer nor any of
its Affiliates shall issue any press release or otherwise make public any
information with respect to this Contract or the transaction contemplated hereby
prior to the expiration of the Review Period without the prior written consent
of the Seller. If a party is required or permitted to issue a press release or
other public announcement pursuant to the foregoing, it shall advise the other
party in advance thereof and use reasonable best efforts to cause a mutually
agreeable release or announcement to be issued; provided, however, that with
-------- -------
respect to any press release, Seller must approve those aspects relating to a
description of Seller or its Affiliates. Until such time as a press release has
been issued by Buyer, neither Seller nor Buyer shall discuss or disclose the
existence of this transaction, the terms of this Contract or the identity of the
parties hereto with any other Person, except for those employees, prospective
lenders, advisors, attorneys, consultants and other professionals required to
implement the terms of this Contract or to assist in Buyer's due diligence and
who have
<PAGE>
45
agreed to maintain the confidentiality of the transaction and the information
they receive, and except to the extent required by law or advised by counsel to
be required by law.
SECTION 20.13. Recordation. The parties agree that neither this
------------
Contract nor any memorandum or notice hereof shall be recorded or filed in any
public records. If Buyer violates the terms of this Section, Seller, in
addition to any other rights or remedies it may have, may immediately terminate
this Contract by giving notice to Buyer of its election to do so and, in the
event of such termination, Seller shall be entitled to receive the Deposit
(including any interest earned thereon) from the Escrow Agent as liquidated
damages for Buyer's breach. The provisions of this Section shall survive the
Closing or any termination of this Contract.
<PAGE>
46
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of the day and year first written above.
ZETA MYSTIC HOTEL, INC.,
by /s/ Alex Makowski
-----------------------
Name: Alex Makowski
Title: Vice President
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.,
by AGH GP, INC., its
general partner
by /s/ Bruce G. Wiles
----------------------
Name: Bruce G. Wiles
Title: Executive Vice President
THE UNDERSIGNED HEREBY
EXECUTES THIS CONTRACT
TO EVIDENCE ITS AGREEMENT TO ACT
AS ESCROW AGENT HEREUNDER.
LAWYERS TITLE INSURANCE
CORPORATION,
by /s/ Michael D. Galliner
-----------------------
Name: Michael D. Galliner
Title: Title Agent
<PAGE>
EXHIBIT A
Title Descriptions
------------------
See Attached Exhibit "A"
<PAGE>
SCHEDULE A
Hotel and Restaurant Lease:
Beginning at the northeasterly corner of the herein described tract;
Said point of beginning being the intersection of the westerly street line of
Route 27 (Greenmanville Avenue) and the southerly line of the State of
Connecticut I-95 ramp, said point of beginning having the coordinates North
197887.23 and East 816661.76 on the Connecticut Coordinate System;
Thence running southerly by and with said westerly street line of Route 27, a
distance of 205.00 feet to a spike;
Thence turning an interior angle of 167 degrees 19 feet 10 inches and running
southerly by and with said westerly street line, a distance of 33.26 feet to an
iron pipe;
Thence turning an interior angle of 160 degrees 35 feet 20 inches and running
southerly by and with said westerly street line, a distance of 42.40 feet to an
iron pipe;
Thence turning an interior angle of 199 degrees 31 feet 25 inches and running
southerly by and with said westerly street line, a distance of 7.48 feet to the
southeasterly corner of the herein described tract and the northeasterly corner
of land now or formerly of Fred and Lillian Kauppinen;
Thence turning and interior angle of 93 degrees 19 feet 47 inches and running
westerly bounded southerly by said Kauppinen land a distance of 685.28 feet to
a point on a curve in the southerly line of the State of Connecticut I-95 ramp;
Thence turning angle of 33 degrees 30 feet 20 inches to the chord of said curve
and running generally northeasterly by and with said southerly I-95 ramp line
and the arc of said curve deflecting to the right having a radius of 1710.00
feet, a central angle of 14 degrees 43 feet 24 inches, a chord of 438.21 feet,
a tangent of 220.93 feet, a distance of 439.42 to an iron pipe at the end of
said curve;
Thence turning an angle of 172 degrees 38 feet 18 inches from the chord of said
curve and running northeasterly by and with said southerly I-95 ramp line, a
distance of 211.01 feet to a Connecticut Highway Department monument;
Thence turning an interior angle of 129 degrees 17 feet 50 inches and running
southeasterly by and with said I-95 ramp line a distance of 127.15 feet to the
point and place of beginning;
Said last mentioned course forming an interior angle of 123 degrees 57 feet 50
inches with said first mentioned course;
Containing 144,114 square feet (3.31 acres).
<PAGE>
Restaurant Lease: All that certain lot, piece or parcel of land situate, lying
and being in the Town of Stonington, County of New London, State of Connecticut,
located at the intersection of Interstate 95 and Route 27 and shown upon map
entitled Town of Stonington Map Showing Land & Rights of Access Acquired from
Helen H. Sitwick by the State of Connecticut Interstate Route I-95 Scale 1' 40'
October 1961 Howard S. Ives Highway Commissioner Rev., on file in the office of
the Town Clerk of the Town of Stonington, and more particularly bounded and
described as follows: Beginning on the northerly line of land formerly of Eliza
C. Barnes and now or formerly of Peter C. Ross and Janet D. Ross on the westerly
highway limit of Route 27, sometimes known as Greenmanville Avenue, and thence
running WESTERLY, by the said northerly line of said Barnes land seven hundred
(700) feet, more or less, to land of the State of Connecticut known as
Interstate Route 95; and thence turning, by an interior angle of about 38
degrees, running EASTERLY, by said I-95 by a line ninety (90) feet southerly
from as measured radially to the base line of Ramp (E) of said Interstate Route
95 six hundred forty-three (643) feet, more or less, to a point opposite P.C.
station 22 + 65 + 09; and thence running SOUTHEASTERLY, one hundred thirty (130)
feet, more or less, to a point seventy-five (75) feet westerly as measured at
right angles to the base line of the improvement of Route 27 at station 26; and
thence running SOUTHERLY, two hundred four (204) feet, more or less, to a point
thirty (30) feet westerly from station 28 on said Route 27 as measured at right
angles therefrom; and thence de?eeting about 13 degrees to the right and
continuing southerly by a line thirty (30) feet westerly from and parallel to
the base line of said Route 27 seventy-two (72) feet, more or less, to the point
of beginning & land now or formerly of Edward N. Voss a distance of 208.40 feet
to an iron pipe in a stone wall; thence running South 36 degrees 04 feet West
along other land now or formerly of George Punzelt a distance of 58.33 feet to
an iron pipe; thence running South 66 degrees 21 feet East along the Northerly
boundary of Plot B on map hereinafter more fully described a distance of 109.84
feet to an iron pipe; thence running South 40 degrees 23 feet East along said
Northerly boundary of Plot B a distance 72.29 feet to an iron pipe on the
Northwesterly side of Boston Post Road; thence running North 49 degrees 43 feet
East along said Northwesterly side of the Boston Post Road a distance of 112.81
feet to an iron pipe; thence running North 40 degrees 17 feet West a distance of
4.92 feet to the point or place of beginning.
<PAGE>
EXHIBIT B
Intentionally Omitted.
<PAGE>
EXHIBIT C
HOWARD JOHNSON
LODGE AT THE SEAPORT
MYSTIC, CT
Assumed Contracts
-----------------
1 Lease Agreement dated March 25,
1965, between C & N Company and
Howard D. Johnson Company.
2 First Amendment to Lease dated
June 16, 1969 between The Mystic
Company and Howard D. Johnson
Company.
3 Service Contract dated September
17, 1996 between Marvin F. Poer &
Company and Zeta Mystic Hotel,
Stonington, CT.
4 Summary of Service Contracts for
Howard Johnson, Mystic, CT - see
attached.
<PAGE>
- --------------------------------------------------------------------------------
HOWARD JOHNSON
- --------------------------------------------------------------------------------
Service Agreements - Mystic
<TABLE>
<CAPTION>
Company Description Terms
- --------------------------------------------------------------------------------
<S> <C> <C>
ASP Security Fire alarm Inspection Hotel's commitment has been
fulfilled for 1997
- --------------------------------------------------------------------------------
Simplex Time Clocks Annual service charge.
Hotel's commitment has been
fulfilled for 1997.
- --------------------------------------------------------------------------------
Computel Property Management System $461.00 monthly/30 Day out
- --------------------------------------------------------------------------------
Ferraro & Sons Rubbish Hauling $304.75 monthly/Company is
unable to produce a contract.
AGHI has not signed any
documents with this company.
It is assumed that a month to
month relationship exists.
- --------------------------------------------------------------------------------
Exit Guide Interstate discount book ad Financial obligations have
been satisfied for 1997.
Hotel's commitment has been
fulfilled.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT D
Intentionally Omitted.
<PAGE>
EXHIBIT E
Litigation
----------
<TABLE>
<CAPTION>
- ---------------------------------------------------------
Property Description of Litigation
- ---------------------------------------------------------
<S> <C>
Howard Johnson Financial Security Assurance
Lodge at the Seaport Inc., et al. v. ELXSI Adv. Pro.
Mystic, Connecticut No. 96/5147A (in In re Livonia
-------------
Realty, Inc., et al., Case Nos.
--------------------
92 B 20547 through 92 B 20551
(ASH), U.S. Bankruptcy Court,
Southern District of New York
(White Plains Division)), on
appeal to U.S. District Court,
Southern District of New York
(White Plains Division), 96 Civ.
9283 (WP), in which plaintiffs
seek declaration that defendant
Mystic restaurant lessee does not
have ownership of free-standing
signs on the Mystic property or
leasehold interests in such
signs' "footprints". Plaintiffs
are currently appealing adverse
Bankruptcy Court ruling.
----------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT F
---------
Form of Letter of Credit
------------------------
See attached.
<PAGE>
ADDITIONAL ITEMS FOR INCLUSION
IN
BANK ONE LETTER OF CREDIT NO. STI 07460
. Except as stated herein, this undertaking is not subject to any condition
or qualification. Our obligation under this Letter of Credit is our individual
obligation and is in no way contingent upon reimbursement with respect thereto.
. Payment of amounts drawn under this Letter of Credit shall be made by wire
transfer solely to you, as set forth in your draft in the form attached as
Exhibit A, in the amount demanded, not exceeding the face amount of this Letter
of Credit, in immediately available funds, on (I) the date of receipt by us of
the draft in conformity with the terms of this Letter of Credit for such
payment, if presented during business hours no later than 1:00 p.m. (CST) on a
business day, or (II) on the business day next following the date of receipt by
us of such draft if presented during business hours after 1:00 p.m. (CST).
. If a demand for payment made by you hereunder does not, in any instance,
conform to the terms and conditions of this Letter of Credit, we shall give you
prompt notice within one (1) business day that the purported negotiation was not
effected in accordance with the terms and conditions of this Letter of Credit,
stating the reasons therefor and that we are holding any documents at your
disposal or are returning them to you, as we may elect. Upon being notified that
the purported negotiation was not effected in conformity with this Letter of
Credit, you may attempt to correct any such nonconforming demand for payment.
. This credit shall be governed by and construed in accordance with the laws
of the State of ____________.
<PAGE>
[LOGO OF BANKONE APPEARS HERE]
- --------------------------------------------------------------------------------
BANK ONE, TEXAS, N.A.1717 MAIN STREET, 11TH FLOOR, DALLAS, TEXAS 75201
TELEPHONE: 1-908-924-5436
IRREVOCABLE STANDBY LETTER OF CREDIT NO.ST107460
PLACE AND DATE OF ISSUE DATE AND PLACE OF EXPIRY:
DALLAS, TEXAS 11/11/97 03/31/98 IN DALLAS TEXAS
APPLICANT: ADVISING BANK:
AMERICAN GENERAL HOSPITALITY NOT APPLICABLE
OPERATING PARTNERSHIP.LP.
5605 MCARTHUR BLVD., SUITS 1300
IRVING, TEXAS 75038
BENEFICIARY: AMOUNT: USD 2,700,000,00
FINANCIAL SECURITY ASSURANCE INC., TWO MILLION SEVEN HUNDRED
AS AGENT FOR THE VARIOUS PROPERTY OWNERS THOUSAND & NO/100 U.S. DOLLARS
c/o ADAMS, GALLINAR & IGLESIAS
701 BRICKELL AVENUE, SUITE 2150
MIAMI, FL. 33131
ATTENTION: MICHAEL D. GALLINAR
GENTLEMAN:
THIS CREDIT IS AVAILABLE BY BENEFICIARY'S SIGHT DRAFT IN THE FORM OF DRAFT
ATTACHED HERETO AS EXHIBIT A, DRAWN ON BANK ONE, TEXAS N.A WHEN ACCOMPANIES BY
---------
THE ORIGINAL OF THIS CREDIT.
THIS IS A CLEAN LETTER OF CREDIT. NOT OTHER DOCUMENTS ARE REQUIRED.
DRAFT MUST BE MARKED: DRAWN UNDER BANK ONE, TEXAS, N.A. CREDIT NO. 81707460.
WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT
THIS OFFICE LOCATED AT 1717 MAIN STREET, 11TH FLOOR, DALLAS, TEXAS 75201 ATTN:
STANDBY LETTERS OF CREDIT SECTION ON OR BEFORE THE EXPIRATION OF THIS CREDIT:
THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO.500.
/s/ Geraldine M. Bundy
- -----------------------
AUTHORIZED SIGNATURE
BANK ONE, TEXAS, N.A
ISSUING BANK
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
Bank One, Texas, N.A.
1717 Main Street, 11th Floor
Dallas, Texas 75201
Attn: Standby Letters of Credit Section
Data:
Amount:
Payable at sight by wire transfer to:
(WIRE INSTRUCTIONS)
Financial Security Assurance Inc.
[as Agent for the various property owners]
By: _____________________________________
Name:
Authorized Signatory
Drawn under:
Bank One, Texas, N.A. Credit No. STI07450
1717 Main Street, 11th Floor
Dallas, Texas 75201
Attn: Standby Letters of Credit Section
<PAGE>
EXECUTION COPY
CERTIFICATION OF NONFOREIGN STATUS
(Entity - Transferor)
Section 1445 of the Internal Revenue Code provides that a transferee
(buyer) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (buyer) that withholding
tax is not required upon the disposition of a U.S. real property interest by
ZETA Mystic Hotel, Inc., the undersigned hereby certifies the following:
(a) ZETA Mystic Hotel, Inc. is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations);
(b) ZETA Mystic Hotel, Inc.'s U.S. employer identification number is
06-1359162;
(c) ZETA Mystic Hotel, Inc.'s office address is c/o Financial
Security Assurance Inc. ("FSA"), 350 Park Avenue, 13th Floor, New York, NY
10022; and
(d) The address of the real property being transferred is 179
Greenmanville Avenue, Stonington, Connecticut 06355.
ZETA Mystic Hotel, Inc., understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
____________________
Under penalties of perjury, the undersigned declares that he has
examined this Certification, and, to the best of his knowledge and belief, it is
true, correct
<PAGE>
and complete, and he further declares that he has authority to sign this
document on behalf of ZETA Mystic Hotel, Inc.
Dated: February , 1998
ZETA MYSTIC HOTEL, INC.,
by /s/ Alex Makowski
_______________________________
Name: Alex Makowski
Title: Vice President
Sworn to before me this
____ day of _______, 1998.
__________________________
Notary Public
<PAGE>
AMENDMENT NO. 2, dated as of February 13, 1998 (this "Second Amendment"),
to the Contract for Purchase and Sale of Hotel dated as of November 26, 1997, as
amended by an Amendment No. 1 dated as of December 15, 1997 (as so amended, the
"Contract"), between Zeta Mystic Hotel, Inc. (the "Seller") and American General
Hospitality Operating Partnership, L.P., a Delaware limited partnership (the
"Buyer"). Terms used herein but not otherwise defined have the meanings assigned
to such terms in the Contract.
Recitals
--------
WHEREAS, pursuant to the Contract, Seller has agreed to sell and Buyer
has agreed to buy the Property; and
WHEREAS Seller and Buyer now desire to amend the Contract to reflect
the provisions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the adequacy and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
1. Seller and Buyer agree to file Form 8594 under Section 1060 of
the Internal Revenue Code of 1986, as amended, in accordance with that certain
letter agreement among Seller and Buyer dated as of the date hereof.
2. Seller and Buyer acknowledge that they have executed and
delivered an Indemnity Fund Agreement and a letter agreement dated as of the
date hereof with respect to certain claims relating to the Indemnity Fund
established pursuant to Section 6.13 of the Contract.
3. Except as amended hereby, the terms of the Contract shall remain
in full force and effect. This Second Amendment shall be governed by, and
construed under, the internal laws of New York. This Second Amendment may be
executed and delivered by the parties by telecopy and may be signed in any
number of identical counterparts, each set of which executed by all parties
shall be deemed to be an original counterpart, and all such counterparts shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first written above.
<PAGE>
2
ZETA MYSTIC HOTEL, INC.,
by /s/ Alex Makowski
---------------------------
Name: Alex Makowski
Title: Vice President
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.,
by AGH GP, INC., its general
partner,
by /s/ Bruce G. Wiles
---------------------------
Name: Bruce G. Wiles
Title: Executive Vice
President
LAWYERS TITLE INSURANCE CORPORATION
by /s/ Michael D. Galliner
----------------------------
Name: Michael D. Galliner
Title: Title Agent
<PAGE>
EXHIBIT 10.1
U.S. $500,000,000
AMENDED AND RESTATED
SENIOR UNSECURED CREDIT AGREEMENT
Dated as of February 13, 1998
Among
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as the Borrower,
---------------
SOCIETE GENERALE, SOUTHWEST AGENCY
as Arranger, Syndication Agent, and Documentation Agent,
-------------------------------------------------------
BANK ONE, TEXAS, N.A.
as Administrative Agent,
-----------------------
and
THE BANK OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL ASSOCIATION
as Managing-Agents
------------------
and
THE BANKS NAMED HEREIN
as the Banks
------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms....................................... 2
Section 1.02 Computation of Time Periods.................................38
Section 1.03 Accounting Terms; Changes in GAAP...........................38
Section 1.04 Types of Advances...........................................38
Section 1.05 Miscellaneous...............................................38
Section 1.06 Recitals....................................................38
Section 1.07 Amendment and Restatement...................................39
ARTICLE II
THE ADVANCES AND THE LETTERS OF CREDIT
Section 2.01 The Advances................................................39
Section 2.02 Method of Borrowing.........................................40
Section 2.03 Fees........................................................44
Section 2.04 Reduction of the Commitments................................44
Section 2.05 Repayment of Advances.......................................45
Section 2.06 Interest, Late Payment Fee..................................45
Section 2.07 Prepayments.................................................47
Section 2.08 Breakage Costs..............................................49
Section 2.09 Increased Costs.............................................50
Section 2.10 Payments and Computations...................................52
Section 2.11 Taxes.......................................................54
Section 2.12 Illegality..................................................56
Section 2.13 Letters of Credit...........................................56
Section 2.14 Determination of Borrowing Base.............................60
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 2.15 Bank Replacement............................................60
Section 2.16 Sharing of Payments, Etc....................................62
ARTICLE III
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to initial Advance.....................63
Section 3.02 Conditions Precedent for each Borrowing
or Letter of Credit.........................................65
Section 3.03 Conditions Precedent to a Hotel Property Qualifying
as an Eligible Property.....................................66
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Existence; Qualification; Partners; Subsidiaries............71
Section 4.02 Partnership and Corporate Power.............................73
Section 4.03 Authorization and Approvals.................................74
Section 4.04 Enforceable Obligations.....................................74
Section 4.05 Parent Common Stock.........................................74
Section 4.06 Financial Statements........................................75
Section 4.07 True and Complete Disclosure................................75
Section 4.08 Litigation..................................................75
Section 4.09 Use of Proceeds.............................................76
Section 4.10 Investment Company Act......................................76
Section 4.11 Taxes.......................................................76
Section 4.12 Pension Plans...............................................77
Section 4.13 Condition of Hotel Property; Casualties; Condemnation.......77
Section 4.14 Insurance...................................................78
Section 4.15 No Burdensome Restrictions; No Defaults.....................78
Section 4.16 Environmental Condition.....................................79
Section 4.17 Legal Requirements, Zoning, Utilities, Access...............79
Section 4.18 Existing Indebtedness.......................................80
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 4.19 Title; Encumbrances.........................................80
Section 4.20 Leasing Arrangements........................................81
Section 4.21 Franchise Agreements........................................81
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01 Compliance with Laws, Etc...................................82
Section 5.02 Preservation of Corporate Existence; Corporate
Separateness, Etc...........................................82
Section 5.03 Payment of Taxes, Etc.......................................84
Section 5.04 Visitation Rights; Bank Meeting.............................84
Section 5.05 Reporting Requirements......................................84
Section 5.06 Maintenance of Property and Required Work...................89
Section 5.07 Insurance...................................................90
Section 5.08 Casualty; Condemnation......................................90
Section 5.09 Supplemental Guaranties.....................................90
Section 5.10 Participating Leases........................................90
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01 Liens, Etc..................................................91
Section 6.02 Indebtedness................................................91
Section 6.03 Agreements Restricting Distributions From Subsidiaries......93
Section 6.04 Restricted Payments.........................................93
Section 6.05 Fundamental Changes; Asset Dispositions.....................94
Section 6.06 Personal Property Leases....................................95
Section 6.07 Investments, Loans, Future Properties.......................95
Section 6.08 Affiliate Transactions......................................97
Section 6.09 Sale and Leaseback..........................................97
Section 6.10 Sale or Discount of Receivables.............................98
Section 6.11 No Further Negative Pledges.................................98
Section 6.12 Franchise Agreements........................................98
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
Section 6.13 Material Documents......................................... 98
Section 6.14 Limitations on Development, Construction, Renovation
and Purchase of Hotel Properties........................... 99
ARTICLE VII
FINANCIAL COVENANTS
7.01 Interest Coverage Ratio.............................................. 99
7.02 Debt Service Coverage Ratio.......................................... 99
7.03 Maintenance of Net Worth.............................................100
7.04 Limitations on Total Indebtedness....................................100
7.05 Limitations on Secured Recourse Indebtedness.........................100
7.06 Limitations on Secured Non-Recourse Indebtedness.....................101
7.07 Limitations on Secured Indebtedness..................................101
7.08 Permitted Non-Voting Stock Company Adjustment........................101
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default..........................................102
Section 8.02 Optional Acceleration of Maturity..........................108
Section 8.03 Automatic Acceleration of Maturity.........................108
Section 8.04 Cash Collateral Account....................................109
Section 8.05 Non-exclusivity of Remedies................................109
Section 8.06 Right of Set-off...........................................109
ARTICLE IX
AGENCY AND ISSUING BANK PROVISIONS
Section 9.01 Authorization and Action...................................110
Section 9.02 Agents' Reliance, Etc......................................111
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
Section 9.03 Each Agent and Its Affiliates..............................111
Section 9.04 Bank Credit Decision.......................................111
Section 9.05 Indemnification............................................112
Section 9.06 Successor Agent and Issuing Banks..........................112
Section 9.07 Arranger, Syndication Agent and Managing Agents............113
ARTICLE X
MISCELLANEOUS
Section 10.01 Amendments, Etc............................................113
Section 10.02 Notices, Etc...............................................116
Section 10.03 No Waiver; Remedies........................................116
Section 10.04 Costs and Expenses.........................................117
Section 10.05 Binding Effect.............................................117
Section 10.06 Bank Assignments and Participations........................117
Section 10.07 Indemnification............................................120
Section 10.08 Execution in Counterparts..................................121
Section 10.09 Survival of Representations, Indemnifications, etc.........121
Section 10.10 Severability...............................................121
Section 10.11 Business Loans.............................................122
Section 10.12 Usury Not Intended.........................................122
Section 10.13 Certain Office and Retail Space............................123
Section 10.14 Florida Liens..............................................123
Section 10.15 Governing Law..............................................123
Section 10.16 Consent to Jurisdiction....................................124
Section 10.17 Knowledge of Borrower......................................124
Section 10.18 Banks Not in Control.......................................124
Section 10.19 Headings Descriptive.......................................124
Section 10.20 Time is of the Essence.....................................125
Section 10.21 WAIVERS OF JURY TRIAL......................................125
Section 10.22 ENTIRE AGREEMENT...........................................125
</TABLE>
-vi-
<PAGE>
EXHIBITS:
Exhibit A - Form of Note
Exhibit B - Form of Assignment and Acceptance
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Environmental Indemnity
Exhibit F - Form of Guaranty
Exhibit G - Form of Notice of Borrowing
Exhibit H - Form of Notice of Conversion or Continuation
Exhibit I - Form of Property Adjustment Report
Exhibit J - Form of Battle Fowler L.L.P. Opinion
-vii-
<PAGE>
SCHEDULES:
Schedule 1.01(a) - Commitments
Schedule 1.01(b) - Initial Properties, Cost Basis and Hotel Value
Schedule 1.01(c) - Engineer Report Scope of Services
Schedule 1.01(d) - Approved Engineers
Schedule 1.01(e) - Environmental Report Scope of Services
Schedule 1.01(f) - Approved Environmental Consultants
Schedule 1.01(g) - Existing Letters of Credit
Schedule 1.01(h) - Franchisors
Schedule 1.01(i) - Ground Leases
Schedule 1.01(j) - Guarantors
Schedule 1.01(k) - Participating Leases
Schedule 3.03 - Conditions Precedent
Schedule 4.01 - Subsidiaries
Schedule 4.08 - Litigation
Schedule 4.17 - Legal Requirements; Zoning; Utilities; Access
Schedule 4.18 - Existing Indebtedness
Schedule 4.21 - Franchise Agreements
Schedule 4.22 - Management Agreements
Schedule 5.06 - Required Work
Schedule 5.07 - Insurance
Schedule 10.02 - Notice Information
-viii-
<PAGE>
AMENDED AND RESTATED
SENIOR UNSECURED CREDIT AGREEMENT
AMENDED AND RESTATED SENIOR UNSECURED CREDIT AGREEMENT, dated as of
February 13, 1998, is among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership, as the Borrower, SOCIETE GENERALE,
SOUTHWEST AGENCY, as Arranger, Syndication Agent, and Documentation Agent, BANK
ONE, TEXAS, N.A., as Administrative Agent, THE BANK OF NOVA SCOTIA and WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Managing Agents and the Banks.
PRELIMINARY STATEMENTS
WHEREAS, many of the parties hereto previously entered into the Existing
Credit Agreement pursuant to which the Existing Lenders have made Advances (as
defined in the Existing Credit Agreement) to the Borrower, and have issued or
participated in the Existing Letters of Credit, in each case on the terms and
conditions set forth therein;
WHEREAS, the Borrower has requested that the Existing Lenders amend the
Existing Credit Agreement and the other Existing Credit Documents in order to
revise certain terms thereof and the Existing Lenders have agreed to do so on
the terms and conditions set forth herein;
WHEREAS, the parties hereto have agreed to amend and restate the Existing
Credit Agreement as amended in its entirety for clarity only, and amend the
other Existing Credit Documents, in order to (i) add certain Banks as parties to
this Agreement, (ii) acknowledge that those Existing Lenders who will be repaid
in full in connection with this Agreement are no longer parties to this
Agreement, (iii) increase the Commitments under this Agreement to $500,000,000,
(iv) provide for the release of the Liens securing the Existing Credit Documents
except for the Florida Liens and (v) amend certain other provisions of the
Existing Credit Agreement and the other Existing Credit Documents as more fully
set forth in this Agreement;
WHEREAS, this Amended and Restated Senior Unsecured Credit Agreement
constitutes for all purposes an amendment to the Existing Credit Agreement and
not a new or substitute agreement and each reference to an "Advance" and "Letter
of Credit" herein shall mean such Advance made and each Letter of Credit issued
heretofore under the Existing Credit Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing recitals and the
provisions contained in this Agreement, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Accession Agreement" means an Accession Agreement in the form attached
-------------------
respectively to the Guaranty and Environmental Indemnity as Annex 1 thereto,
which agreement causes the Person executing and delivering the same to the
Administrative Agent to become a party to the Guaranty and Environmental
Indemnity.
"Acquisition Agreements" means for any Hotel Property the agreements
----------------------
entered into in connection with the acquisition of such Hotel Property.
"Adjusted EBITDA" means, for any Person or Hotel Property, as applicable,
---------------
for any period, the EBITDA of such Person or Hotel Property, as applicable, for
such period less the aggregate FF&E Reserves for such period in respect of, as
----
applicable, each Hotel Property owned by such Person or its Subsidiaries
(whether located on land owned by or land leased to such owner of the Hotel
Property) or such Hotel Property. For any New Property or any Person who owns or
leases a New Property, Adjusted EBITDA shall include the Adjusted EBITDA for
such New Property incurred before the date of acquisition of such New Property,
adjusted upward or downward to provide for a deemed management equal to a three
percent (3%) of gross revenues from such New Property incurred before the date
of acquisition of such New Property regardless of the actual management fees
paid in connection with such New Property incurred before the date of
acquisition of such New Property.
"Adjusted Net Worth" means, for the Parent as of any date, the sum of (a)
------------------
the Parent's Net Worth on such date plus (b) the minority interest of the Parent
----
on such date determined in accordance with GAAP.
-2-
<PAGE>
"Adjusted Prime Rate" means, for any day, the fluctuating rate per annum of
-------------------
interest equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus 1/2%.
"Adjustment Event" has the meaning set forth in Section 2.14(b).
----------------
"Administrative Agent" means Bank One, Texas, N.A. in its capacity as
--------------------
Administrative Agent for the Banks pursuant to Article IX and any successor
Administrative Agent appointed pursuant to Section 9.06.
"Advance" means an Advance by a Bank to the Borrower, any such Advance
-------
being either a Prime Rate Advance or a LIBOR Rate Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of a Control Percentage, by contract or otherwise.
"Agents" means the Administrative Agent and the Documentation Agent, and
------
"Agent" means either such agent.
-----
"AGHI" means American General Hospitality, Inc., a Texas corporation.
----
"AGH Leasing" means AGH Leasing, L.P., a Delaware limited partnership.
-----------
"AGH LP" means AGH LP, Inc., a Nevada corporation.
------
"Agreement" has the meaning given such term in the initial paragraph of
---------
this agreement.
"Allocation Percentage" means, for any Person, with respect to a Person's
---------------------
Non Wholly-Owned Subsidiary, the percentage ownership interest of such Person in
such Non Wholly-Owned Subsidiary.
-3-
<PAGE>
"Applicable Lending Office" means, with respect to each Bank, such Bank's
-------------------------
Domestic Lending Office in the case of a Prime Rate Advance and such Bank's
LIBOR Lending Office in the case of a LIBOR Rate Advance.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
-4-
<PAGE>
"Applicable Margin" means, (a) with respect to each Type of Advance at any
-----------------
date, the applicable percentage per annum set forth below based upon the Status
then in effect under the column for such Type of Advance and (b) with respect to
the commitment fee payable under Section 2.03(a) at any date, the applicable
percentage per annum set forth below under the column "Unused Commitment Fee,"
based upon the Status then in effect.
<TABLE>
<CAPTION>
Unused
Prime Rate LIBOR Commitment
Advances Rate Advances Fee
-------- -------------- -----------
<S> <C> <C> <C>
Level I 0% 1.00% .125%
Status
Level II 0% 1.125% .15%
Status
Level III 0% 1.25% .15%
Status
Level IV 0% 1.375% .20%
Status
Level V 0% 1.40% .20%
Status
Level VI 0% 1.50% .20%
Status
Level VII .125% 1.625% .25%
Status
Level VIII .25% 1.75% .30%
Status
Level IX .375% 1.875% .30%
Status
Level X .50% 2.00% .30%
Status
</TABLE>
"Asset Disposition" means (a) any sale, lease of substantially all of a
-----------------
Hotel Property (in which the Borrower or a Guarantor is lessor but exclusive of
the Participating Leases), conveyance,
-5-
<PAGE>
exchange, transfer, or assignment of any Property by the Borrower or a Guarantor
to a Person other than the Borrower or a Guarantor; and (b) any insured loss or
casualty of Hotel Property owned by the Borrower or any Guarantor if the
insurance proceeds in connection therewith are required by the provisions of
this Agreement to be used to repay Obligations.
"Assignment and Acceptance" means an assignment and acceptance entered into
-------------------------
by a Bank and an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of the attached Exhibit B.
"Associates" means, for any individual, the Associates (as such term is
----------
defined in Rule 12b-2 promulgated under the Exchange Act) of such individual.
"Banks" means the lenders listed on the signature pages of this Agreement
-----
and each Eligible Assignee that shall become a party to this Agreement pursuant
to Section 10.06.
"Blockage Period" means a period of time during which the subordination
---------------
terms of any Subordinated Indebtedness prevent such Subordinated Indebtedness
from being paid.
"Borrower" means American General Hospitality Operating Partnership, L.P.,
--------
a Delaware limited partnership.
"Borrower Controlled Group" means all members of a controlled group of
-------------------------
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Borrowing" means a borrowing consisting of simultaneous Advances of the
---------
same Type made by each Bank pursuant to Section 2.01 or Converted by each Bank
to Advances of a different Type pursuant to Section 2.02(b).
"Borrowing Base" means, at any date of its determination, an amount equal
--------------
to (a) the lesser of (i) the sum of the Adjusted EBITDA for the Rolling Period
immediately preceding such date for all Eligible Properties multiplied by five
(5) and (ii) 50% of the sum of the Hotel Values for all Eligible Properties on
such date minus (b) unsecured Indebtedness (except for the Obligations) of the
-----
Parent and its Subsidiaries outstanding on such date; provided, however, that
prior to December
-6-
<PAGE>
31, 1998, the first $125,000,000 of Subordinate Indebtedness shall not be
included in the calculation of this clause (b).
"Borrowing Base Certificate" means a certificate of the Borrower in
--------------------------
substantially the form of the attached Exhibit C, certified by a Responsible
Officer of Borrower to be true, correct and accurate in all material respects.
"Borrowing Base Determination Date" means any date the Borrowing Base is
---------------------------------
determined in accordance with Section 2.14.
"Borrowing Base Requirements" means collectively that (a) all Eligible
---------------------------
Properties must be located within the United States; (b) the Cost Basis for the
Eligible Properties which are located in any one state shall not exceed 20%
(except for Florida which (i) until the earlier of March 31, 1999 or the
acquisition of the second group of Hotel Properties from Prime Hospitality shall
not exceed 40%, and (ii) thereafter shall not exceed 35%) of the Cost Basis for
all Eligible Properties; (c) the Cost Basis for the Eligible Properties which
are limited service hotels or extended stay shall not collectively in the
aggregate exceed 20% of the Cost Basis for all Eligible Properties (for purposes
of this definition Courtyards by Marriott shall not be deemed limited service
hotels); (d) the Cost Basis for the Eligible Properties which are not operated
under any franchise or license agreement shall not exceed 15% of the Cost Basis
for all Eligible Properties; (e) no Hotel Property or other Property shall cause
the Parent to forfeit the Parent's tax status as a REIT; (f) the Cost Basis for
Eligible Properties which are subject to a ground lease shall not exceed 22.5%
of the Cost Basis or 22.5% of the total guest rooms for all Eligible Properties;
(g) the total guest rooms for Eligible Properties which are out of service at
any one time shall not exceed 15% of the total guest rooms for all Eligible
Properties; and (h) the Cost Basis for the Eligible Properties which are owned
by Non Wholly-Owned Subsidiaries of the Borrower shall not exceed 20% of the
Cost Basis for all Eligible Properties.
"Business Day" means a day of the year on which banks are not required or
------------
authorized to close in New York City or Dallas, Texas and, if the applicable
Business Day relates to any LIBOR Rate Advances, any day other than a Saturday
or Sunday or a day on which banking institutions are generally authorized or
obligated by law or executive order to close in the City of London, England.
"Capital Expenditure" means any payment made directly or indirectly for the
-------------------
purpose of acquiring or constructing fixed assets, Real Property or equipment
which in accordance with GAAP
-7-
<PAGE>
would be capitalized in the fixed asset accounts of such Person making such
expenditure, including, without limitation, amounts paid or payable for such
purpose under any conditional sale or other title retention agreement or under
any Capital Lease, but excluding repairs of Property in the normal and ordinary
course of business in keeping with the past practices of the Borrower.
"Capitalization Event" means either (a) any sale or issuance by the Parent
--------------------
or any of its Subsidiaries of equity securities except for the issuance of the
Borrower's operating partnership units in exchange for a direct or indirect
ownership interest in a Person that owns a Hotel Property, or (b) any issuance
or incurrence by the Parent or any of its Subsidiaries of any Indebtedness
except for Indebtedness permitted pursuant to the provisions of Section 6.02.
"Capital Lease" means, for any Person, any lease of any Property (whether
-------------
real, personal or mixed) by that Person as lessee which, in accordance with
GAAP, is or should be accounted for as a capital lease on the balance sheet of
that Person.
"Capitalized Lease Obligations" means, as to any Person, the capitalized
-----------------------------
amount of all obligations of such Person or any of its Subsidiaries under
Capitalized Leases, as determined on a consolidated basis in conformity with
GAAP.
"Cash Collateral Account" means a special cash collateral account
-----------------------
containing cash deposited pursuant to the terms of this Agreement to be
maintained at the Administrative Agent's office in accordance with Section 8.04.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
------
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.
"Closing Date" means February 13, 1998.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
successor statute.
"Commitment" means, with respect to any Bank, the amount set opposite such
----------
Bank's name on Schedule 1.01(a) as its Commitment, or if such Bank has entered
into any Assignment and Acceptance, the amount set forth for such Bank as its
Commitment in the Register maintained by
-8-
<PAGE>
the Administrative Agent pursuant to Section 10.06(c), as such amount may be
reduced pursuant to Section 2.04.
"Compliance Certificate" means a certificate of the Borrower in
----------------------
substantially the form of the attached Exhibit D.
"Conditions to Asset Disposition" shall for any Asset Disposition include
-------------------------------
all of the following requirements: (a) no Default has occurred and is continuing
or would occur upon the consummation of such Asset Disposition, as certified by
the Borrower; (b) the Borrower shall have delivered to the Administrative Agent
a Property Adjustment Report in connection with such Asset Disposition; and (c)
if required pursuant to the provisions of Section 2.07(c)(ii), the Borrower
makes a prepayment of the Advances in an amount of not less than the amount of
Advances that would need to be repaid, if any, to cure a Borrowing Base
deficiency under Section 2.07(c)(ii).
"Consolidated" refers to the consolidation of the accounts of the Borrower
------------
with the Borrower's Subsidiaries and the Parent with the Parent's Subsidiaries,
as applicable, in accordance with GAAP, including, when used in reference to the
Borrower, principles of consolidation consistent with those applied in the
preparation of the Financial Statements.
"Control Percentage" means, with respect to any Person, the percentage of
------------------
the outstanding capital stock of such Person having ordinary voting power which
gives the direct or indirect holder of such stock the power to elect a majority
of the Board of Directors of such Person.
"Controlled Group" means each of the Borrower Controlled Group, the
----------------
Participating Lessee Controlled Group and the Manager Controlled Group, and
"Controlled Groups" means, collectively, all of such groups.
-----------------
"Convert", "Conversion", and "Converted" each refers to a conversion of
------- ---------- ---------
Advances of one Type into Advances of another Type pursuant to Section 2.02(b).
"Cost Basis" means for any Hotel Property the sum of (a) for any Initial
----------
Property, the amount set forth for such Initial Property on Schedule 1.01(b)
attached hereto, and for any other Hotel Property, the aggregate purchase price
paid by the Borrower or its Subsidiary for such other Hotel Property (giving
effect to any securities used to purchase a Hotel Property at the fair market
value of the securities at the time of purchase based upon the price at which
such securities could be
-9-
<PAGE>
exchanged into the Parent's common stock assuming such exchange occurred on the
date of acquiring the Hotel Property), and (b) the actual cost of any Capital
Expenditures or expenditures for FF&E for such Hotel Property made by the
Borrower or its Subsidiaries pursuant to a Preliminary Property Plan; provided
--------
that with respect to the Cost Basis for a Hotel Property owned or leased by a
Non Wholly-Owned Subsidiary, the Cost Basis for such Hotel Property shall be
deemed to be the Allocation Percentage of the Cost Basis for such Hotel.
"Credit Documents" means this Agreement, the Notes, the Guaranties, the
----------------
Environmental Indemnities, the Fee Letter, and each other agreement, instrument
or document executed by the Borrower or any of its Subsidiaries at any time in
connection with this Agreement.
"Debt Service" means, for any Person for the period for which such amount
------------
is being determined, the amount (without duplication) of all mandatory principal
payments scheduled to be made (excluding optional prepayments and scheduled
principal payments in respect of any such Indebtedness which is payable in a
single installment at final maturity), Interest Expense and all payments
scheduled to be made in respect of Capital Leases of such Person.
"Debt Service Coverage Ratio" means, as of the end of any Rolling Period, a
---------------------------
ratio of (a) Adjusted EBITDA to (b) Debt Service, for such Rolling Period.
"Default" means (a) an Event of Default or (b) any event or condition which
-------
with notice or lapse of time or both would, unless cured or waived, become an
Event of Default.
"Documentation Agent" means Societe Generale, Southwest Agency in its
-------------------
capacity as Documentation Agent for the Banks pursuant to Article IX and any
successor Documentation Agent pursuant to Section 9.06.
"Dollar Equivalent" means the equivalent in another currency of an amount
-----------------
in U.S. Dollars to be determined by reference to the rate of exchange quoted by
the Administrative Agent, at 11:00 a.m. (Dallas, Texas time) on the date of
determination, for the spot purchase in the foreign exchange market of such
amount of Dollars with such other currency.
"Dollars" and "$" means lawful money of the United States of America.
------- -
-10-
<PAGE>
"Domestic Lending Office" means, with respect to any Bank, the office of
-----------------------
such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule 10.02 or such other office of such Bank as such Bank may from time to
time specify to the Borrower and the Administrative Agent.
"EBITDA" means for any Person or Hotel Property, as applicable, for any
------
period for which such amount is being determined, an amount equal to (a) the Net
Income for such Person or Hotel Property, as applicable, for such period plus
----
(b) to the extent deducted in determining Net Income, Interest Expense, income
taxes, depreciation, amortization, and other non-cash items for such period, as
determined in accordance with GAAP; provided that if any Property of a Person
--------
has been sold or conveyed by such Person in such period, the amounts referred to
in clauses (a)-(b) above arising from such Property shall be excluded from the
calculation of EBITDA for such Person for such period; and provided further that
----------------
if such Person has acquired any Property in such period, the amounts referred to
in clauses (a)-(b) above arising from such Property during such entire period
shall be included in the calculation of EBITDA for such Person for such period.
"Effective Date" means the date all of the conditions precedent set forth
--------------
in Section 3.01 have been satisfied.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
-----------------
the United States, or any State thereof, and having primary capital of not less
than $250,000,000 and approved by the Agents and the Issuing Bank, which
approvals will not be unreasonably withheld, (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development and having primary capital (or its
equivalent) of not less than $250,000,000 (or its Dollar Equivalent) and
approved by the Agents and the Issuing Bank, which approvals will not be
unreasonably withheld, (c) a Bank, and (d) an Affiliate of the respective
assigning Bank, without approval of any Person but otherwise meeting the
eligibility requirements of (a) or (b) above.
"Eligible Property" means, as of any Borrowing Base Determination Date, any
-----------------
Hotel Property which is owned by the Borrower or any Guarantor on such date and
was so owned on the date of the most recent Borrowing Base Certificate delivered
to the Banks, and which satisfies the conditions to qualifying as an Eligible
Property set forth in Section 3.03 on such Borrowing Base Determination Date.
-11-
<PAGE>
"Engineering Report" means with respect to any Hotel Property, an
------------------
engineering report in accordance with the scope of services attached hereto as
Schedule 1.01 (c) reasonably satisfactory to the Agents prepared for the Banks
by a Person set forth on Schedule 1.01(d) or otherwise satisfactory to the
Agents covering the physical condition of the Hotel Property, including without
limitation the structural, electrical, plumbing, mechanical and other essential
components of the Hotel Property.
"Environment" or "Environmental" shall have the meanings set forth in 42
----------- -------------
U.S.C. (S) 9601(8), as amended.
"Environmental Claim" means any third party (including governmental
-------------------
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"Environmental Indemnity" means one or more environmental indemnity
-----------------------
agreements dated of even date herewith in substantially the form of the attached
Exhibit E executed or to be executed by the Borrower, the Parent and all
Subsidiaries of the Borrower (excluding the Permitted Other Subsidiaries), and
any future environmental indemnities executed in connection with any Hotel
Property, as any of such environmental indemnities may be amended hereafter in
accordance with the terms of such agreements.
"Environmental Law" means all Legal Requirements arising from, relating to,
-----------------
or in connection with the Environment, health, or safety, including without
limitation CERCLA, relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment, processing,
recycling, reclamation, cleanup, storage, disposal or transportation; (c)
exposure to pollutants, contaminants, hazardous, medical, infectious, or toxic
substances, materials or wastes; (d) the safety or health of employees; or (e)
the manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical, infectious, or toxic substances,
materials or wastes.
"Environmental Permit" means any permit, license, order, approval or other
--------------------
authorization under Environmental Law.
-12-
<PAGE>
"Environmental Report" means with respect to any Hotel Property, an
--------------------
environmental report in accordance with the scope of services attached hereto as
Schedule 1.01 (e) prepared for the Banks by a Person set forth on Schedule
1.01(f) or otherwise satisfactory to the Agents certifying to the Agents and the
Banks that the Hotel Property and the soil and the groundwater thereunder do not
contain Hazardous Substances except for Permitted Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"Exchange Act" has the meaning set forth in Section 2.04.
------------
"Event of Default" has the meaning set forth in Section 8.01.
----------------
"Existing Credit Agreement" means that Amended and Restated Credit
-------------------------
Agreement, dated as of June 25, 1997, among the Borrower, Societe Generale,
Southwest Agency, as Arranger, Syndication Agent, and Documentation Agent, Bank
One, Texas, N.A., as Administrative Agent, the Bank of Nova Scotia and Wells
Fargo Bank, National Association, as Co-Agents and the Existing Lenders, as
amended by First Amendment to Credit Agreement dated as of December 23, 1997,
among such same Persons.
"Existing Credit Documents" means the Credit Documents (as defined in the
-------------------------
Existing Credit Agreement).
"Existing Lenders" means the banks and other financial institutions party
----------------
to the Existing Credit Agreement.
"Existing Letters of Credit" means the letters of credit outstanding on the
--------------------------
date of this Agreement issued for the account of the Borrower or its
Subsidiaries which are described in the attached Schedule 1.01(g), as the same
may be amended, supplemented, and otherwise modified from time to time.
"Existing Notes" means the promissory notes payable under the Existing
--------------
Credit Agreement.
-13-
<PAGE>
"Expiration Date" means, with respect to any Letter of Credit, the date on
---------------
which such Letter of Credit will expire or terminate in accordance with its
terms.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
------------------
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for any such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
---------------------
System or any of its successors.
"Fee Letter" means the letter agreement dated as of January 15, 1998 among
----------
the Borrower, the Documentation Agent, the Administrative Agent and the Managing
Agents, as amended.
"FF&E" means furniture, fixtures and equipment.
----
"FF&E Reserve" means, for any Person or any Hotel Property for any period,
------------
a reserve equal to four percent (4%) of gross revenues from any Hotel Property
owned by such Person or from such Hotel Property, as applicable, for such
period, excluding, however, from such calculation for the applicable Persons and
Hotel Properties the gross revenues generated by the office portion of the
Houston, Texas Marriott and the gross revenues generated by the retail portion
of the St. Tropez hotel, Las Vegas, Nevada.
"Financial Statements" means the financial statements of the Parent, the
--------------------
Borrower and their respective Subsidiaries dated as of September 30, 1997.
"Fiscal Quarter" means each of the three-month periods ending on March 31,
--------------
June 30, September 30 and December 31.
"Fiscal Year" means the twelve-month period ending on December 31.
-----------
-14-
<PAGE>
"Florida Liens" means the Liens securing the Existing Credit Documents on
-------------
the Initial Properties located in the State of Florida except for those Liens
pertaining to the cash management system used in the Existing Credit Documents.
"Franchise Agreements" means those certain Agreements listed on Schedule
--------------------
4.21 attached hereto and any future franchise or license agreement for an
Eligible Property with a Franchisor.
"Franchisor" means those certain franchisors listed on Schedule 1.01(h)
----------
attached hereto, or any other reputable, nationally known, third party
franchisor or licensor of a Hotel Property approved by the Agents in writing.
"Free Cash Flow" means, for any Person for any period, the Funds From
--------------
Operations for such period plus any amortization of deferred financing costs for
----
such period less (a) the aggregate FF&E Reserves for such Person and its
----
Subsidiaries for such period, and (b) the aggregate amount of scheduled
principal payments on the Total Indebtedness of such Person (excluding optional
prepayments and scheduled principal payments in respect of any such Indebtedness
which is payable in a single installment at final maturity) required to be made
during such period.
"Fund," "Trust Fund," or "Superfund" means the Hazardous Substance Response
---- ---------- ---------
Trust Fund, established pursuant to 42 U.S.C. (S) 9631 (1988) and the Post-
closure Liability Trust Fund, established pursuant to 42 U.S.C. (S) 9641 (1988),
which statutory provisions have been amended or repealed by the Superfund
Amendments and Reauthorization Act of 1986, and the "Fund," "Trust Fund," or
"Superfund" that are now maintained pursuant to 42 U.S.C. (S) 9507.
"Funds From Operations" means, for any Person for any period for which such
---------------------
amount is being determined, an amount equal to such Person's Net Income for such
period excluding gains (losses) from debt restructuring and sales of property
(including furniture and equipment) plus depreciation and amortization
(excluding amortization of deferred financing costs) and after adjustments for
unconsolidated partnerships and joint ventures.
"Future Property" means any Hotel Property except for the Initial
---------------
Properties which the Borrower or any Subsidiary of the Borrower acquires.
"GAAP" means United States generally accepted accounting principles as in
----
effect from time to time, applied on a basis consistent with the requirements of
Section 1.03.
-15-
<PAGE>
"General Partner" means AGH GP, Inc., a Nevada corporation.
---------------
"Governmental Authority" means any foreign governmental authority, the
----------------------
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Parent, the Borrower, any Subsidiaries of the Borrower or the
Parent, the Participating Lessee, the Manager or any of their respective
Properties.
"Governmental Proceedings" means any action or proceedings by or before any
------------------------
Governmental Authority, including, without limitation, the promulgation,
enactment or entry of any Legal Requirement.
"Ground Lease" means each of the ground leases or subground leases set
------------
forth on Schedule 1.01(i) hereto and for a Future Property means any ground
lease (a) which is a direct ground lease granted by the fee owner of real
property, (b) which may be transferred and/or assigned without the consent of
the lessor (or as to which the lease expressly provides that (i) such lease may
be transferred and/or assigned with the consent of the lessor and (ii) such
consent shall not be unreasonably withheld or delayed), (c) which has a
remaining term (including any renewal terms exercisable at the sole option of
the lessee) of at least twenty five (25) years, (d) under which no material
default has occurred and is continuing, (e) with respect to which a Lien may be
granted without the consent of the lessor, and (f) which contains lender
protection provisions acceptable to the Documentation Agent, including, without
limitation, provisions to the effect that (i) the lessor shall notify any holder
of a Lien in such lease of the occurrence of any default by the lessee under
such lease and shall afford such holder the option to cure such default, and
(ii) in the event that such lease is terminated, such holder shall have the
option to enter into a new lease having terms substantially identical to those
contained in the terminated lease.
"Guarantor" means Parent and each Subsidiary of the Borrower (except the
---------
Permitted Other Subsidiaries). The Guarantors on the Effective Date are
identified on Schedule 1.01(j).
"Guaranty" means one or more Guaranty and Contribution Agreements in
--------
substantially the form of the attached Exhibit F executed by the Borrower and
all of the Subsidiaries of the Borrower (excluding the Permitted Other
Subsidiaries), evidencing the joint and several guaranty by the signatories
thereto of the obligations of Borrower in respect of the Credit Documents and
the obligations of landlords under Participating Leases, and any future guaranty
and contribution
-16-
<PAGE>
agreement executed to secure Advances except for Supplemental Guaranties, as any
of such agreements may be amended hereafter in accordance with the terms of such
agreements.
"Hazardous Substance" means the substances identified as such pursuant to
-------------------
CERCLA and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products, radio
nuclides, radioactive materials, and medical and infectious waste.
"Hazardous Waste" means the substances regulated as such pursuant to any
---------------
Environmental Law.
"Hotel Capital Lease Limit" means for any Hotel Property $1,000 per room in
-------------------------
such Hotel Property or such other amount of Capital Leases as is approved by the
Agents in writing (which approval will not be unreasonably withheld).
"Hotel Operating Lease Limit" means for any Hotel Property $750 per room in
---------------------------
such Hotel Property or such other amount of operating leases as is approved by
the Agents in writing (which approval will not be unreasonably withheld).
"Hotel Property" for any hotel means the Real Property and the Personal
--------------
Property for such hotel, and the property referred to in Section 10.13.
"Hotel Value" means, with respect to any Hotel Property, at any date, the
-----------
value thereof to be calculated as follows:
(a) For a Seasoned Property, (i) the Adjusted EBITDA for such
Seasoned Property for the preceding Rolling Period divided by (ii) ten percent
----------
(10.0%); and
(b) For a New Property, the Cost Basis in such New Property.
The initial Hotel Value for the Initial Properties is set forth on Schedule
1.01(b) attached hereto.
"Improvements" for any hotel means all buildings, structures, fixtures,
------------
tenant improvements and other improvements of every kind and description now or
hereafter located in or on or attached
-17-
<PAGE>
to the Land for such hotel; and all additions and betterments thereto and all
renewals, substitutions and replacements thereof.
"Indebtedness" means (without duplication), at any time and with respect to
------------
any Person, (a) indebtedness of such Person for borrowed money (whether by loan
or the issuance and sale of debt securities) or for the deferred purchase price
of property or services purchased (other than amounts constituting trade
payables or bank drafts arising in the ordinary course); (b) indebtedness of
others in the amount which such Person has directly or indirectly assumed or
guaranteed or otherwise provided credit support therefor or for which such
Person is liable as a partner of such Person; (c) indebtedness of others in the
amount secured by a Lien on assets of such Person, whether or not such Person
shall have assumed such indebtedness; (d) obligations of such Person in respect
of letters of credit, acceptance facilities, or drafts or similar instruments
issued or accepted by banks and other financial institutions for the account of
such Person (other than trade payables or bank drafts arising in the ordinary
course); (e) obligations of such Person under Capital Leases; and (f)
obligations under interest rate swap agreements, interest rate cap agreements,
interest rate collar agreements or other similar agreements or arrangements
designed to protect against fluctuations in interest rates.
"Initial Properties" means collectively the Hotel Properties listed on
------------------
Schedule 1.01(b), and "Initial Property" means any of such Hotel Properties.
----------------
"Interest Coverage Ratio" means, as of the end of any Rolling Period, a
-----------------------
ratio of (a) Adjusted EBITDA to (b) Interest Expense, for such Rolling Period.
"Interest Expense" means, for any Person for any period for which such
----------------
amount is being determined, the total interest expense (including that properly
attributable to Capital Leases in accordance with GAAP) and all charges incurred
with respect to letters of credit determined on a consolidated basis in
conformity with GAAP, plus capitalized interest of such Person and its
----
Subsidiaries.
"Interest Period" means, for each LIBOR Rate Advance comprising part of the
---------------
same Borrowing, the period commencing on the date of such Advance or the date of
the Conversion of any Prime Rate Advance into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and Section 2.02 and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and Section
2.02.
-18-
<PAGE>
The duration of each such Interest Period shall be one, two, or three months, in
each case as the Borrower may select, upon notice received by the Administrative
Agent not later than 11:00 a.m. (Dallas, Texas time) on the third Business Day
prior to the first day of such Interest Period, provided, however, that:
-------- -------
(a) Interest Periods for Advances of the same Borrowing shall be of the
same duration;
(b) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided that if such
--------
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(c) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and
(d) each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires; and
(e) no Interest Period with respect to any portion of any Advance shall
extend beyond the Maturity Date.
"Interest Rate Agreements" means any interest rate swap agreement, interest
------------------------
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect the Borrower, the Parent or any of their
respective Subsidiaries against fluctuations in interest rates.
"Investment" means, with respect to any Person, (a) any loan or advance to
----------
any other Person, (b) the ownership, purchase or other acquisition of, any
Stock, Stock Equivalents, other equity interest, obligations or other securities
of, (i) any other Person, (ii) or all or substantially all of the assets of any
other Person, or (iii) all or substantially all of the assets constituting the
business of a division, branch or other unit operation of any other Person, or
(c) any joint venture or partnership with, or any capital contribution to, or
other investment in, any other Person or any real property.
-19-
<PAGE>
"Issuing Bank" means Bank One, Texas, N.A., or any Bank acting as a
------------
successor issuing bank pursuant to Section 9.06, and "Issuing Banks" means,
-------------
collectively, all of such Banks.
"Land" for any hotel means the real property upon which the hotel is
----
located, together with all rights, title and interests appurtenant to such real
property, including without limitation all rights, title and interests to (a)
all strips and gores within or adjoining such property, (b) the streets, roads,
sidewalks, alleys, and ways adjacent thereto, (c) all of the tenements,
hereditaments, easements, reciprocal easement agreements, rights-of-way and
other rights, privileges and appurtenances thereunto belonging or in any way
pertaining thereto, (d) all reversions and remainders, (e) all air space rights,
and all water, sewer and wastewater rights, (e) all mineral, oil, gas,
hydrocarbon substances and other rights to produce or share in the production of
anything related to such property, and (f) all other appurtenances appurtenant
to such property, including without limitation, any now or hereafter belonging
or in anywise appertaining thereto.
"Legal Requirement" means any law, statute, ordinance, decree, requirement,
-----------------
order, judgment, rule, regulation (or official interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
"Letter of Credit" means, individually, any letter of credit issued by the
----------------
Issuing Bank in accordance with the provisions of Section 2.13 of this Agreement
including any Existing Letter of Credit, and "Letters of Credit" means all such
-----------------
letters of credit collectively.
"Letter of Credit Documents" means, with respect to any Letter of Credit,
--------------------------
such Letter of Credit and any reimbursement or other agreements, documents, and
instruments entered into in connection with or relating to such Letter of
Credit.
"Letter of Credit Exposure" means, at any time, the sum of (a) the
-------------------------
aggregate undrawn maximum face amount of each Letter of Credit and (b) the
aggregate unpaid amount of all Reimbursement Obligations at such time.
"Letter of Credit Obligations" means all obligations of the Borrower
----------------------------
arising in respect of the Letter of Credit Documents, including the
Reimbursement Obligations.
-20-
<PAGE>
"Leverage Ratio" means the ratio of (a) the Parent's Total Indebtedness to
--------------
(b) the Hotel Value of the Parent's and the Parent's Subsidiaries' Hotel
Properties which meet the Parent Property Requirements.
"LIBOR Lending Office" means, with respect to any Bank, the office of such
--------------------
Bank specified as its "LIBOR Lending Office" opposite its name on Schedule 10.02
(or, if no such office is specified, its Domestic Lending Office) or such other
office of such Bank as such Bank may from time to time specify to the Borrower
and the Administrative Agent.
"LIBOR Rate" means, for the Interest Period for each LIBOR Rate Advance
----------
comprising part of the same Borrowing, an interest rate per annum (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum) equal to (A) the
rate per annum at which deposits in Dollars are offered to prime banks in the
London interbank market at 11:00 a.m. (London time) three Business Days before
the first day of such Interest Period as shown on the display designated
"British Banker's Association Interest Settlement Rates" on the Telerate System
("Telerate") at Page 3750 or Page 3740, or such other page or pages as may
replace such pages on Telerate for purposes of displaying such rate, in an
amount substantially equal to the Administrative Agent's LIBOR Rate Advance
comprising part of such Borrowing and for a period equal to such Interest Period
divided by (B) one minus the LIBOR Reserve Requirement; provided, however, that
if such rate is not available on Telerate then such offered rate shall be
otherwise independently determined by Administrative Agent from an alternate,
substantially similar source available to Administrative Agent or shall be
calculated by Administrative Agent by a substantially similar methodology as
that theretofore used to determine such offered rate in Telerate. It is agreed
that for purposes of this definition, LIBOR Rate Advances made hereunder shall
be deemed to constitute Eurocurrency Liabilities as defined in Regulation D and
to be subject to the reserve requirements of Regulation D.
"LIBOR Rate Advance" means any Advance which bears interest as provided in
------------------
Section 2.06(b).
"LIBOR Reserve Requirement" shall mean, on any day, that percentage
-------------------------
(expressed as a decimal fraction) which is in effect on such date, as provided
by the Federal Reserve System for determining the maximum reserve requirements
generally applicable to financial institutions regulated by the Federal Reserve
Board comparable in size and type to the Administrative Agent (including,
without limitation, basic, supplemental, marginal and emergency reserves) under
Regulation D with respect to "Eurocurrency liabilities" as currently defined as
Regulation D, or
-21-
<PAGE>
under any similar or successor regulation with respect to Eurocurrency
liabilities or Eurocurrency funding (or other category of liabilities which
includes deposits by reference to which the interest rate on a LIBOR Rate
Advance is determined or any category or extensions of credit which includes
loans by a non-United States office of the Administrative Agent to United States
residents). Each determination by the Administrative Agent of the LIBOR Reserve
Requirement, shall, in the absence of manifest error, be conclusive and binding
upon the Borrower.
"Lien" means any mortgage, lien, pledge, charge, deed of trust, security
----
interest, encumbrance or other type of preferential arrangement to secure or
provide for the payment of any obligation of any Person, whether arising by
contract, operation of law or otherwise (including, without limitation, the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement).
"Liquid Investments" means:
------------------
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States;
(b) (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 180 days from
the date of acquisition thereof ("bank debt securities"), issued by (A) any Bank
or (B) any other bank or trust company which has a combined capital surplus and
undivided profit of not less than $250,000,000 or the Dollar Equivalent thereof,
if at the time of deposit or purchase, such bank debt securities are rated not
less than "A" (or the then equivalent) by the rating service of S&P or of
Moody's, and (ii) commercial paper issued by (A) any Bank or (B) any other
Person if at the time of purchase such commercial paper is rated not less than
"A-2" (or the then equivalent) by the rating service of S&P or not less than "P-
2" (or the then equivalent) by the rating service of Moody's, or upon the
discontinuance of both of such services, such other nationally recognized rating
service or services, as the case may be, as shall be selected by the Borrower
with the consent of the Administrative Agent;
(c) repurchase agreements relating to investments described in clauses (a)
and (b) above with a market value at least equal to the consideration paid in
connection therewith, with any Person who regularly engages in the business of
entering into repurchase agreements and has a combined capital surplus and
undivided profit of not less than $250,000,000 or the Dollar Equivalent thereof,
-22-
<PAGE>
if at the time of entering into such agreement the debt securities of such
Person are rated not less than "A" (or the then equivalent) by the rating
service of S&P or of Moody's; and
(d) such other instruments (within the meaning of Article 9 of the Texas
Business and Commerce Code) as the Borrower may request and the Administrative
Agent may approve in writing, which approval will not be unreasonably withheld.
"Majority Banks" means, at any time, Banks holding at least 51% of the then
--------------
aggregate unpaid principal amount of the Notes and the Letter of Credit Exposure
of the Banks at such time, or, if no such principal amount of the Notes and
Letter of Credit Exposure is then outstanding, Banks having at least 51% of the
aggregate amount of the Commitments at such time.
"Management Agreements" means those certain Management Agreements listed on
---------------------
Schedule 4.22 attached hereto and any future management agreement for an
Eligible Property in substantially the same form or as otherwise approved by the
Agents in writing.
"Manager" means AGHI, or any other manager of a Hotel Property approved by
-------
the Agents in writing.
"Manager Controlled Group" means all members of a controlled group of
------------------------
corporations and all trades (whether or not incorporated) under common control
which, together with the Manager, are treated as a single employer under Section
414 of the Code.
"Managing Agents" means The Bank of Nova Scotia and Wells Fargo Bank,
---------------
National Association as Managing Agents, and any successor Managing Agents.
"Material Adverse Change" shall mean a material adverse change in the
-----------------------
business, financial condition, or results of operations of the Borrower, the
Parent or any Guarantor, in each case since the date of the most recent
financial statements of the Borrower or the Parent delivered to the Banks.
"Maturity Date" means February 13, 2001.
-------------
"Maximum Rate" means the maximum nonusurious interest rate under applicable
------------
law.
-23-
<PAGE>
"Minimum Tangible Net Worth" means, with respect to the Parent, at any
--------------------------
time, the sum of $450,000,000 plus (a) 75% of the aggregate net proceeds
----
received by the Parent or any of its Subsidiaries after the date of this
Agreement in connection with any offering of Stock or Stock Equivalents of the
Parent or its Subsidiaries taken as a whole and (b) 75% of the value of any
partnership interests in Borrower issued after the date of this Agreement for
the acquisition of a Hotel Property or any interest in a Hotel Property
permitted hereunder.
"Minority Interest Adjustment" means an amount equal to the fair market
----------------------------
value on the date of issuance of all partnership interests in the Borrower which
(a) are not directly or indirectly owned by the Parent and (b) have been
conveyed to Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr, James E. Sowell,
Louis W. Shaw, II, Kenneth W. Shaw or Persons owned or controlled by such
individuals in exchange for a Hotel Property or an ownership interest in a
Person which own a Hotel Property.
"Moody's" means Moody's Investor Service Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA to which the Borrower or any member of a Controlled Group is
making or accruing an obligation to make contributions.
"Net Cash Proceeds" means (a) the aggregate cash proceeds (including,
-----------------
without limitation, insurance proceeds) received by the Parent, the Borrower or
any of their respective Subsidiaries (as applicable) in connection with any
Asset Disposition or Capitalization Event, minus (b) the reasonable expenses of
-----
such Person in connection with such Asset Disposition or such Capitalization
Event.
"Net Income" means, for any Person or Hotel Property for any period for
----------
which such amount is being determined, the net income of such Person (on a
consolidated basis) or Hotel Property, as applicable, after taxes, as determined
in accordance with GAAP, excluding, however, extraordinary items, including but
not limited to (i) any net gain or loss during such period arising from the
sale, exchange, or other disposition of capital assets (such term to include all
fixed assets and all securities) other than in the ordinary course of business
and (ii) any write-up or write-down of assets; provided that with respect to Net
--------
Income received from a Non Wholly-Owned Subsidiary or for a Hotel Property owned
by a Non Wholly-Owned Subsidiary, such Person or Hotel Property shall only be
deemed to have received the Allocation Percentage of such Net Income, and
provided further that
- ----------------
-24-
<PAGE>
to the extent that the Net Income for any Hotel Property does not include a
reasonable allocation of administrative, accounting or other overhead of the
Person or Persons who directly or indirectly own or lease such Hotel Property
which directly pertains to the operation of Hotel Properties, then such
allocation amount shall be deemed subtracted from such Net Income for purposes
of the financial tests and other definitions contained in this Agreement which
utilize Hotel Property Net Income.
"Net Worth" means, for any Person, stockholders equity of such Person
---------
determined in accordance with GAAP.
"New Property" means, as at any date, any Hotel Property (including any
------------
Renovating Property) that is not a Seasoned Property.
"Non Wholly-Owned Subsidiary" of a Person means any Subsidiary of such
---------------------------
Person which is controlled and managed by such Person, except for a Wholly-Owned
Subsidiary.
"Note" means a promissory note of the Borrower payable to the order of any
----
Bank, in substantially the form of the attached Exhibit A, evidencing
indebtedness of the Borrower to such Bank resulting from Advances owing to such
Bank, and "Notes means all of such promissory notes.
-----
"Notice of Borrowing" means a notice of borrowing in the form of the
-------------------
attached Exhibit G signed by a Responsible Officer of the Borrower.
"Notice of Conversion or Continuation" means a notice of conversion or
------------------------------------
continuation in the form of the attached Exhibit H signed by a Responsible
Officer of the Borrower.
"Obligations" means all Advances, Letter of Credit Obligations, and other
-----------
amounts payable by the Borrower to the Documentation Agent, the Administrative
Agent, or the Banks under the Credit Documents.
"Parent" means American General Hospitality Corporation, a Maryland
------
corporation.
"Parent Common Stock" means the common stock of Parent, par value $.01 per
-------------------
share.
"Parent Properties" means all Hotel Properties owned or leased by the
-----------------
Parent or one of the Parent's Subsidiaries.
-25-
<PAGE>
"Parent Property Requirements" means collectively that (a) all Parent
----------------------------
Properties must be located within the United States; (b) the Cost Basis for the
Parent Properties which are located in any one state shall not exceed 20%
(except for Florida which shall not exceed 35%) of the Cost Basis for all Parent
Properties; (c) the Cost Basis for the Parent Properties which are limited
service hotels or extended stay shall not collectively in the aggregate exceed
20% of the Cost Basis for all Parent Properties (for purposes of this definition
Courtyards by Marriott shall not be deemed limited service hotels); (d) the
Cost Basis for the Parent Properties which are not operated under any franchise
or license agreement shall not exceed 15% of the Cost Basis for all Parent
Properties; (e) no Hotel Property or other Property shall cause the Parent to
forfeit the Parent's tax status as a REIT; and (f) the Cost Basis for Parent
Properties which are subject to a ground lease shall not exceed 22.5% of the
Cost Basis or 22.5% of the total guest rooms for all Parent Properties.
"Parent Total Cost Basis" means the sum of (a) the Minority Interest
-----------------------
Adjustment plus (b) the cost of all Hotel Properties owned or leased by the
----
Parent and its Subsidiaries on a Consolidated basis determined in accordance
with GAAP.
"Participating Leases" means those certain Participating Leases listed on
--------------------
Schedule 1.01(k) attached hereto and any future participating lease for an
Eligible Property approved by the Agents in writing (which approval shall not
be unreasonably withheld).
"Participating Lessee" means AGH Leasing, TT Leasing, Prime Hospitality and
--------------------
any future participating lessee for a Hotel Property approved by the Agents in
writing (which approval shall not be unreasonably withheld as long as such
Person is at least 65% owned by the same individuals required of a Participating
Lessee pursuant to the provisions of Section 8.01(r)).
"Participating Lessee Controlled Group" means all members of a controlled
-------------------------------------
group of corporations and all trades (whether or not incorporated) under common
control which, together with the Participating Lessee, are treated as a single
employer under Section 414 of the Code.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means the Liens permitted to exist pursuant to
----------------------
Section 6.01.
-26-
<PAGE>
"Permitted Hazardous Substances" means (a) Hazardous Substances, petroleum
------------------------------
and petroleum products which are (i) used in the ordinary course of business and
in typical quantities for a hotel and (ii) generated, used and disposed of in
accordance with all Legal Requirements and good hotel industry practice and (b)
non-friable asbestos to the extent (i) that no applicable Legal Requirements
require removal of such asbestos from the Hotel Property and (ii) such asbestos
is encapsulated in accordance with all applicable Legal Requirements and such
reasonable operations and maintenance program as may be required by the Agents.
"Permitted Hotel Sale" means the Asset Disposition of all, but not a
--------------------
portion, of (a) a Hotel Property or (b) the ownership interest in a Subsidiary
of the Borrower which owns a Hotel Property, in either case for which the
Conditions to Asset Disposition are satisfied or will be satisfied within the
time periods required under this Agreement; provided, however, that the Borrower
shall be entitled to sell the office building portion of the Houston, Texas
Marriott as long as the other Conditions to Asset Disposition are satisfied in
connection with such sale.
"Permitted Non-Eligible Property" means any Hotel Property (a) which either
-------------------------------
(i) does not satisfy the conditions to qualifying as an Eligible Property set
---
forth in Section 3.03 or (ii) has not been submitted to the Banks as a potential
Eligible Property or has been removed as an Eligible Property by the Borrower;
(b) which is owned by a Permitted Other Subsidiary; and (c) which neither is
subject to any Environmental Claim, nor contains any Hazardous Substance which
could reasonably be expected to cause a Material Adverse Change as evidenced by
an Environmental Report delivered to the Administrative Agent at least 10 days
prior to the acquisition of such Hotel Property by Borrower or one of Borrower's
Subsidiaries.
"Permitted Non-Voting Stock Company" means a corporation (a) which has one
----------------------------------
class of voting common stock which is 91% owned by Steven D. Jorns and 9% owned
by the Borrower or a Subsidiary of the Borrower and one class of non-voting
common stock (the "Non-Voting Stock") owned entirely by the Borrower or a
Subsidiary of the Borrower, (b) which has Steven D. Jorns as its president or
chief executive officer, (c) which has articles of incorporation, by-laws or
other organizational documents which provide that the Non-Voting Stock
stockholder is entitled to at least 95% of all dividends declared by the Board
of Directors of the Permitted Non-Voting Stock Company, (d) which has no Liens
on any of the Hotel Properties owned by such Person except Permitted
Encumbrances and Liens which are held by the Borrower, and (e) the ownership of
which by the Borrower or any Subsidiary of the Borrower would not cause a
Material Adverse Change.
-27-
<PAGE>
"Permitted Non-Voting Stock Investment" means (a) the Non-Voting Stock of a
-------------------------------------
Permitted Non-Voting Stock Company and (b) a loan to a Permitted Non-Voting
Stock Company which may or may not be secured by a Permitted Non-Voting Stock
Mortgage.
"Permitted Non-Voting Stock Mortgage" means a Lien on a Hotel Property
-----------------------------------
owned by a Permitted Non-Voting Stock Company which is held by the Borrower.
"Permitted Officer Assignment" means such sales, assignments or pledges of
----------------------------
such legal and beneficial interests in the Parent or the Borrower by Steven D.
Jorns, Bruce Wiles, Russ Valentine or Kenneth E. Barr or any of their respective
Associates which for any such individual and such individual's Associates either
(a) does not result in a decrease in such individual's or individual's
Associates' ownership interests below 50% of the ownership interests in the
Borrower and the Parent's common stock represented by the sum of (i) the
interests that are owned on the date of this Agreement by such individual or
such individual's Associates and which is not subject to forfeiture on the date
of this Agreement and (ii) for which such individual or such individual's
Associates have vested options to acquire as of the date of this Agreement, (b)
occurs following such individual's termination of employment with the Parent or
(c) involves the exchange of ownership interests in the Borrower for the
Parent's common stock.
"Permitted Other Subsidiaries" means a Wholly-Owned Subsidiary or a Non
----------------------------
Wholly-Owned Subsidiary of the Borrower which (a) does not own and has never
owned any Eligible Property, (b) is a newly-formed, single-purpose Person and
(c) if such Person has any Hotel Property pledged to secure any Secured Non-
Recourse Indebtedness or Secured Recourse Indebtedness, then such Person shall
not own any Hotel Properties other than those that secure such Indebtedness.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof or any trustee, receiver, custodian or
similar official.
"Personal Property" for any Hotel Property means all FF&E, inventory and
-----------------
other personal property of every kind, whether now existing or hereafter
acquired, tangible and intangible, now or hereafter located on or about the
Land, and used or to be used in the future in connection with the operation of
such Hotel Property.
-28-
<PAGE>
"Plan" means an employee benefit plan (other than a Multiemployer Plan)
----
maintained for employees of the Borrower or any member of a Controlled Group and
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code.
"Preliminary Property Plan" means for any Hotel Property, the preliminary
-------------------------
financial projections of the Capital Expenditures and the expenditures for FF&E
for such Hotel Property in connection with a renovation or expansion (but not
maintenance) of such Hotel Property, as such projections may be amended by the
Borrower from time to time.
"Prime Hospitality" means Prime Hospitality Corp. or an Affiliate of Prime
-----------------
Hospitality Corp.
"Prime Rate" means a fluctuating interest rate per annum as shall be in
----------
effect from time to time equal to the rate of interest publicly announced by the
Administrative Agent as its prime commercial lending rate (which may not be the
lowest rate offered to its customers), whether or not the Borrower has notice
thereof.
"Prime Rate Advance" means an Advance which bears interest as provided in
------------------
Section 2.06(a).
"Property" of any Person means any property or assets (whether real,
--------
personal, or mixed, tangible or intangible) of such Person.
"Property Adjustment Report" means a certificate of the Borrower in
--------------------------
substantially the form of the attached Exhibit I.
"Property Information" for any Hotel Property means the information and
--------------------
documentation for such Hotel Property listed in Sections 3.03(f), 3.03(g),
3.03(k)(i)-(iii) and (v) and a commitment for a Title Policy for such Hotel
Property, together with a legible copy of all documents referred to in such
commitment.
"Property Owner" for any Initial Property or Future Property, means the
--------------
Person who owns fee or leasehold title interest (as applicable) in, and to such
Property.
"Pro Rata Share" means, at any time with respect to any Bank, either (a)
--------------
the ratio (expressed as a percentage) of such Bank's Commitment at such time to
the aggregate Commitments at such
-29-
<PAGE>
time or (b) if the Commitments have been terminated, the ratio (expressed as a
percentage) of such Bank's aggregate outstanding Advances and participation
interest in the Letter of Credit Exposure at such time to the aggregate
outstanding Advances and Letter of Credit Exposure of all the Banks at such
time.
"Real Property" for any hotel means the Land and the Improvements for such
-------------
hotel, including without limitation, parking and other ancillary functions
necessary for the operation of such hotel, and, (a) with respect to the Houston,
Texas Marriott shall include the Land and the Improvements for the office
building owned by the Borrower or a Guarantor other than the Parent in
connection with such hotel and (b) with respect to the St. Tropez hotel, Las
Vegas, Nevada shall include the Land and the Improvements for the retail
property owned by the Borrower or a Guarantor other than the Parent in
connection with such hotel.
"Register" has the meaning set forth in paragraph (c) of Section 10.06.
--------
"Reimbursement Obligations" means all of the obligations of the Borrower
-------------------------
set forth in Section 2.13(c) and the Letter of Credit Documents.
"REIT" means a real estate investment trust under Sections 856-860 of the
----
Code.
"Release" shall have the meaning set forth in CERCLA or under any other
-------
Environmental Law.
"Renovating Property" means a Hotel Property (i) that has been owned for
-------------------
four or more, but less than six, consecutive full Fiscal Quarters by the
Borrower or by a Person that has been a Subsidiary of the Borrower during such
entire period and (ii) with respect to which renovation, consisting of
alterations, remodeling and other similar work having an aggregate cost
exceeding ten percent (10%) of the Cost Basis in such Hotel Property, was
commenced within 180 days of such acquisition and was completed, or is
reasonably expected to be completed, within eighteen (18) months of such
acquisition.
"Reportable Event" means any of the events set forth in Section 4043(b) of
----------------
ERISA.
"Response" shall have the meaning set forth in CERCLA or under any other
--------
Environmental Law.
-30-
<PAGE>
"Responsible Officer" means the Chief Executive Officer, President,
-------------------
Executive Vice President or Chief Financial Officer of any Person.
"Restricted Payment" means (a) any direct or indirect payment, prepayment,
------------------
redemption, purchase, or deposit of funds or Property for the payment (including
any sinking fund or defeasance), prepayment, redemption or purchase of
Indebtedness not permitted by this Agreement, and (b) the making by any Person
of any dividends or other distributions (in cash, property, or otherwise) on, or
payment for the purchase, redemption or other acquisition of, any shares of any
capital stock, any limited liability company interests or any partnership
interests of such Person, other than dividends or distributions payable in such
Person's stock, limited liability company interests or any partnership
interests.
"Required Work" means for any Initial Property, the work described on
-------------
Schedule 5.06 attached hereto as may be modified by agreement between the
Borrower and the Agents, and for any Future Property which the Borrower requests
be an Eligible Property, the work agreed upon by the Borrower and the Agents, if
any, as the Required Work for such Future Property, if any.
"Rolling Period" means, as of any date, the four Fiscal Quarters ending
--------------
immediately preceding such date.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
---
Inc., or any successor thereof.
"Seasoned Property" means, as at any date, a Hotel Property (excluding any
-----------------
Renovating Property) that has been owned for four (4) or more Fiscal Quarters,
by the Borrower or by a Person that has been a Subsidiary of the Borrower during
such entire period.
"Secured Non-Recourse Indebtedness" of any Person means all Indebtedness of
---------------------------------
such Person with respect to which recourse for payment is limited to specific
assets encumbered by a Lien securing such Indebtedness; provided, however, that
-------- -------
personal recourse of a holder of Indebtedness against any obligor with respect
thereto for fraud, misrepresentation, misapplication of cash, non-payment of
real estate taxes or ground lease rent, waste and other circumstances
customarily excluded from non-recourse provisions in non-recourse financing of
real estate shall not, by itself, prevent any Indebtedness from being
characterized as Secured Non-Recourse Indebtedness, provided
--------
-31-
<PAGE>
further that if a personal recourse claim is made in connection therewith, such
- ------- ----
claim shall not constitute Secured Non-Recourse Indebtedness for the purposes of
this Agreement.
"Secured Recourse Indebtedness" of any Person means any Total Indebtedness
-----------------------------
(excluding any Secured Non-Resource Indebtedness) of such Person for which the
obligations thereunder are secured by a Lien on any assets of such Person or its
Subsidiaries.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
-32-
<PAGE>
"Status" means the existence of Level I Status, Level II Status, Level III
------
Status, Level IV Status, Level V Status, Level VI Status, Level VII Status,
Level VIII Status, Level IX Status, Level X Status, as the case may be. As used
in this definition:
"Level I Status" exists at any date if, at such date, (a) the Leverage
--------------
Ratio is less than 50% and (b) the Parent has a long-term senior unsecured
actual or implied debt rating of A- or better by S&P and A3 or better by
Moody's;
"Level II Status" exists at any date if, at such date, (a) the
---------------
Leverage Ratio is less than 50% and (b) the Parent has a long-term senior
unsecured actual or implied debt rating of BBB+ by S&P and Baal by Moody's;
"Level III Status" exists at any date if, at such date, (a) the
----------------
Leverage Ratio is less than 50% and (b) the Parent has a long-term senior
unsecured actual or implied debt rating of BBB by S&P and Baa2 by Moody's;
"Level IV Status" exists at any date if, at such date, (a) the
---------------
Leverage Ratio is less than 50% and (b) the Parent has a long-term senior
unsecured actual or implied debt rating of BBB- by S&P and Baa3 by Moody's;
"Level V Status" exists at any date if, at such date, (a) none of
--------------
Level I Status through Level IV Status exist and (b) the Leverage Ratio is
less than 25%;
"Level VI Status" exists at any date if, at such date, (a) none of
---------------
Level I Status through Level IV Status exist and (b) the Leverage Ratio is
equal to or greater than 25% but less than 35%;
"Level VII Status" exists at any date if, at such date, (a) none of
----------------
Level I Status through Level IV Status exist and (b) the Leverage Ratio is
equal to or greater than 35% but less than 40%;
"Level VIII Status" exists at any date if, at such date, (a) none of
-----------------
Level I Status through Level IV Status exist and (b) the Leverage Ratio is
equal to or greater than 40% but less than 50%;
"Level IX Status" exists at any date if, at such date, (a) none of
---------------
Level I Status through Level IV Status exist and (b) the Leverage Ratio is
equal to or greater than 50% but less than 55%; and
"Level X Status" exists at any date if, at such date, (a) none of
--------------
Level I Status through Level IV Status exist and (b) the Leverage Ratio is
equal to or greater than 55%.
provided that (i) if S&P and/or Moody's shall cease to issue ratings of debt
- --------
securities of REITs generally or (after issuing ratings with respect to the
Parent) shall cease to issue ratings with respect to the Parent, then the
Administrative Agent and the Borrower shall negotiate in good faith to agree
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<PAGE>
upon a substitute rating agency or agencies (and to correlate the system of
ratings of each substitute rating agency with that of the rating agency for
which it is substituting) and (a) until such substitute rating agency or
agencies are agreed upon, Status shall be determined on the basis of the rating
assigned by the other rating agency (or, if both S&P and Moody's shall have so
ceased to issue such ratings, on the basis of the Status in effect immediately
prior thereto) and (b) after such substitute rating agency or agencies are
agreed upon, Status shall be determined on the basis of the rating assigned by
the other rating agency and such substitute rating agency or the two substitute
rating agencies, as the case may be; (ii) if the long-term senior unsecured
actual or implied debt ratings of the Parent by S&P and Moody's are not
equivalent, the higher rating will apply for the purposes of determining Status;
and (iii) if the long-term senior unsecured actual or implied debt ratings of
the Parent by S&P and Moody's are two or more Levels apart, the rating one Level
below the higher rating will apply for the purposes of determining Status.
Status shall be determined and changed as of the 50th day following any Fiscal
Quarter; provided that if any of Status I through Status IV is in effect and
-------------
either S&P, Moody's or a substitute rating agency changes such Person's debt
rating of the Parent, Status shall be determined and changed as of the 10th day
following such rating change. Notwithstanding the foregoing, until the 50th day
following the Fiscal Quarter ending March 31, 1998, the Status in effect under
this Agreement shall be Level IX Status.
"Stock" means shares of capital stock, beneficial or partnership interests,
-----
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or non-voting, and includes,
without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities (other than Stock) convertible
-----------------
into or exchangeable for Stock and all warrants, options or other rights to
purchase or subscribe for any stock, whether or not presently convertible,
exchangeable or exercisable.
"Subordinate Credit Agreement" means that Subordinate Unsecured Credit
----------------------------
Agreement dated as of even date herewith, between the Borrower and certain
lenders, as may be amended, modified or extended in accordance with the
provisions of this Agreement.
"Subordinate Credit Documents" means that Subordinate Credit Agreement and
----------------------------
the promissory notes, guaranties and other documents executed in connection with
the Subordinate Credit Agreement.
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<PAGE>
"Subordinate Indebtedness" means the Indebtedness of the Borrower, the
------------------------
Parent and their respective Subsidiaries under (a) the Subordinate Credit
Agreement and (b) any other unsecured Indebtedness of such Persons which (i)
shall not mature, become payable or require the payment of any principal amount
thereof (or any other amount in lieu thereof) or be mandatorily redeemable,
pursuant to a sinking fund or otherwise or redeemable at the option of the
holder thereof, in any case in whole or in part, before the date that is 91 days
after the Maturity Date and (ii) shall be junior and subordinate to the
Obligations and subject to an intercreditor agreement or subordination
provisions which is in accordance with the then prevailing customary market
terms and conditions.
"Subsidiary" of a Person means any corporation, association, partnership or
----------
other business entity of which more than 50% of the outstanding shares of
capital stock (or other equivalent interests) having by the terms thereof
ordinary voting power under ordinary circumstances to elect a majority of the
board of directors or Persons performing similar functions (or, if there are no
such directors or Persons, having general voting power) of such entity
(irrespective of whether at the time capital stock (or other equivalent
interests) of any other class or classes of such entity shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
Subsidiaries of such Person or by one or more Subsidiaries of such Person. A
Permitted Non-Voting Stock Company shall not be deemed a Subsidiary of either
the Borrower or the Parent for all purposes under this Agreement.
"Super Majority Banks" means, at any time, Banks holding at least 66 2/3%
--------------------
of the then aggregate unpaid principal amount of the Notes and the Letter of
Credit Exposure of the Banks at such time, or, if no such principal amount of
the Notes and Letter of Credit Exposure is then outstanding, Banks having at
least 66 2/3% of the aggregate amount of the Commitments at such time.
"Supplemental Guarantor" means any partner of the Borrower except for the
----------------------
Parent, the Guarantors, the General Partner or AGH LP that executes a
Supplemental Guaranty.
"Supplemental Guaranty" means any future assumption of liability in a form
---------------------
reasonably acceptable to the Agents executed by a Supplemental Guarantor to
secure Advances, as such future supplemental guaranties may be amended hereafter
in accordance with their terms.
"Termination Event" means (a) the occurrence of a Reportable Event with
-----------------
respect to a Plan, as described in Section 4043 of ERISA and the regulations
issued thereunder (other than a
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<PAGE>
Reportable Event not subject to the provision for 30-day notice to the PBGC
under such regulations), (b) the withdrawal of the Borrower or any of a
Controlled Group from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (c) the giving of a notice
of intent to terminate a Plan under Section 4041(c) of ERISA, (d) the
institution of proceedings to terminate a Plan by the PBGC, or (e) any other
event or condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"Total Assets" of any Person means, at any date, the total assets of such
------------
Person and its Subsidiaries at such date determined on a consolidated basis in
conformity with GAAP.
"Total Indebtedness" of any Person means the sum of the following (without
------------------
duplication): (a) all Indebtedness of such Person and its Subsidiaries
determined on a Consolidated basis in conformity with GAAP, plus (b) such
----
Person's Unconsolidated Entity Percentage of Indebtedness (including Secured
Non-Recourse Indebtedness) of such Person's Unconsolidated Entities, minus (c)
-----
to the extent included in the calculation of either of the preceding clauses (a)
or (b), trade payables and accruals permitted under the provisions of Section
6.02(e) hereof and the amount of any minority interests.
"TT Leasing" means Twin Towers Leasing, L.P., a Delaware limited
----------
partnership.
"Type" has the meaning set forth in Section 1.04.
----
"Unconsolidated Entity" means, with respect to any Person, at any date, any
---------------------
other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person, if such statements were prepared as of such date.
"Unconsolidated Entity Percentage" means, for any Person, with respect to a
--------------------------------
Person's Unconsolidated Entity, the percentage ownership interest of such Person
in such Unconsolidated Entity, provided that, in the event that such Person is
--------------
the general partner of such Unconsolidated Entity, such Person's Unconsolidated
Entity Percentage with respect to such Unconsolidated Entity shall be the
percentage of the general partner interests owned by such Person in such
Unconsolidated
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<PAGE>
Entity with respect to any Indebtedness for which recourse may be made against
any general partner of such Unconsolidated Entity.
"Unencumbered" means, with respect to any Hotel Property, at any date of
------------
determination, the circumstance that such Hotel Property on such date:
(a) is not subject to any Liens (including restrictions on
transferability or assignability) of any kind (including any such Lien or
restriction imposed by (i) any agreement governing Indebtedness, and (ii) the
organizational documents of the Borrower or any of its Subsidiaries, but
excluding Permitted Encumbrances and, in the case of any Ground Lease (to the
extent permitted by the definition thereof), restrictions on transferability or
assignability in respect of such Ground Lease);
(b) is not subject to any agreement (including (i) any agreement
governing Indebtedness, and (ii) if applicable, the organizational documents of
the Borrower or any of its Subsidiaries) which prohibits or limits the ability
of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon such Hotel Property, other than Permitted Encumbrances
(excluding any agreement or organizational document which limits generally the
amount of Indebtedness which may be incurred by the Borrower or its
Subsidiaries); and
(c) is not subject to any agreement (including any agreement
governing Indebtedness) which entitles any Person to the benefit of any Lien
(other than Permitted Encumbrances) on such Hotel Property, or would entitle any
Person to the benefit of any such Lien upon the occurrence of any contingency
(including, without limitation, pursuant to an "equal and ratable" clause).
For the purposes of this Agreement, any Hotel Property owned by a Subsidiary of
the Borrower shall not be deemed to be Unencumbered unless both (i) such Hotel
Property and (ii) all Stock owned directly or indirectly by Borrower in such
Subsidiary is Unencumbered.
"Wholly-Owned Subsidiary" of a Person means any Subsidiary for which such
-----------------------
Person's ownership interest is 99% or more.
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<PAGE>
Section 1.02 Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.03 Accounting Terms; Changes in GAAP.
---------------------------------
(a) All accounting terms not specifically defined in this Agreement shall
be construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the Financial Statements.
(b) Unless otherwise indicated, all financial statements of the Borrower
and the Parent, all calculations for compliance with covenants in this
Agreement, and all calculations of any amounts to be calculated under the
definitions in Section 1.01 shall be based upon the Consolidated accounts of the
Borrower, the Parent and their respective Subsidiaries (as applicable) in
accordance with GAAP.
(c) If any changes in accounting principles after December 31, 1997
required by GAAP or the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants or similar agencies results in a
change in the method of calculation of, or affects the results of such
calculation of, any of the financial covenants, standards or terms found in this
Agreement, then the parties shall enter into and diligently pursue negotiations
in order to amend such financial covenants, standards or terms so as to
equitably reflect such change, with the desired result that the criteria for
evaluating the financial condition of Borrower and its Subsidiaries (determined
on a Consolidated basis) shall be the same after such change as if such change
had not been made.
Section 1.04 Types of Advances. Advances are distinguished by "Type". The
-----------------
"Type" of an Advance refers to the determination whether such Advance is a LIBOR
Rate Advance or Prime Rate Advance, each of which constitutes a Type.
Section 1.05 Miscellaneous. Article, Section, Schedule and Exhibit
-------------
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.
Section 1.06 Recitals. The matters set forth in the recitals at the
--------
beginning of this Agreement are agreed to by the parties to this Agreement and
incorporated into this Agreement as if set forth in their entirety herein.
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<PAGE>
Section 1.07 Amendment and Restatement. The parties hereto agree to use
-------------------------
reasonable efforts to accomplish the matters set forth in the recitals at the
beginning of this Agreement and, without limitation, agree to the following:
(a) The Borrower shall execute Notes (the "Incremental Notes") in such
amounts and payable to such of the Banks that with the Existing Notes payable to
the Banks will provide for each Bank a Note or Notes which have an aggregate
stated principal amount equal to such Bank's Commitment. For each Bank which
has only an Incremental Note, such Incremental Note shall constitute the Note
the Borrower is obligated to deliver to such Bank as provided in Section 3.01.
(b) For each Bank which has an Existing Note, the Borrower will execute a
Note payable to such Bank in the amount of such Bank's Commitment which Note (i)
will replace in its entirety the Existing Note, and, if such Bank also has an
Incremental Note, consolidate such Bank's Incremental Note with its Existing
Note and (ii) constitute the Note the Borrower is obligated to deliver to such
Bank as provided in Section 3.01.
(c) Within a reasonable period of time following the Closing Date at the
Borrower's cost the Administrative Agent, together with Bank One, Texas, N.A.,
in its capacity as administrative agent under the Existing Credit Agreement
shall (i) release the Liens securing the Existing Credit Documents except for
the Florida Liens, including without limitation executing releases of liens to
be placed in the appropriate real estate records, executing appropriate UCC-3
termination financing statements and delivering to those Persons involved in the
cash management system under the Existing Credit Documents letters reflecting
that the Liens and rights provided for in such system have been terminated and
(ii) amend the Florida Liens to reflect that the Obligations have been increased
from the Existing Credit Documents without any change in the limitations on
recovery set forth in the Florida Liens, all in documentation reasonably
acceptable to the Agents and the Borrower.
ARTICLE II
THE ADVANCES AND THE LETTERS OF CREDIT
Section 2.01 The Advances. Each Bank severally agrees, on the terms and
------------
conditions set forth in this Agreement, to make Advances to the Borrower from
time to time on any Business Day up to 15 days prior to the Maturity Date in an
aggregate amount not to exceed at any time
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<PAGE>
outstanding an amount equal to such Bank's Commitment less such Bank's Pro Rata
----
Share of the Letter of Credit Exposure at such time. The aggregate amount of all
outstanding Advances and Letter of Credit Exposure at any time may not exceed
either the lesser of (i) the aggregate Commitments at such time or (ii) the
Borrowing Base at such time. Within the limits of each Bank's Commitment and the
Borrowing Base limitation set forth above, the Borrower may from time to time
prepay pursuant to Section 2.07 and reborrow under this Section 2.01.
Section 2.02 Method of Borrowing.
-------------------
(a) Notice. Each Borrowing shall be made pursuant to a Notice of
------
Borrowing, given not later than 11:00 a.m. (Dallas, Texas time) (i) on the third
Business Day before the date of the proposed Borrowing, in the case of a
Borrowing consisting of LIBOR Rate Advances, or (ii) on the Business Day before
the date of the proposed Borrowing, in the case of a Borrowing consisting of
Prime Rate Advances, by the Borrower to the Administrative Agent, which shall
give each Bank prompt notice on the day of receipt of such timely Notice of
Borrowing of such proposed Borrowing by telecopier. Each Notice of Borrowing
shall be in writing or by telecopier specifying the requested (i) date of such
Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate
amount of such Borrowing, and (iv) if such Borrowing is to be comprised of LIBOR
Rate Advances, the Interest Period for each such Advance. In the case of a
proposed Borrowing comprised of LIBOR Rate Advances, the Administrative Agent
shall promptly notify each Bank of the applicable interest rate under Section
2.06(b). Each Bank shall, before 11:00 a.m. (Dallas, Texas time) on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Administrative Agent at its address referred to in Section 10.02, or such
other location as the Administrative Agent may specify by notice to the Banks,
in same day funds, such Bank's Pro Rata Share of such Borrowing. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower at its account with the Administrative
Agent.
(b) Conversions and Continuations. In order to elect to Convert or
-----------------------------
continue Advances comprising part of the same Borrowing under this Section, the
Borrower shall deliver an irrevocable Notice of Conversion or Continuation to
the Administrative Agent at the Administrative Agent's office no later than
11:00 a.m. (Dallas, Texas time) (i) on the date which is at least three Business
Days in advance of the proposed Conversion or continuation date in the case of a
Conversion to or a continuation of a Borrowing comprised of LIBOR Rate Advances
and (ii) on the Business Day prior to the proposed conversion date in the case
of a Conversion to a Borrowing comprised of Prime
-40-
<PAGE>
Rate Advances. Each such Notice of Conversion or Continuation shall be in
writing or by telecopier, specifying (i) the requested Conversion or
continuation date (which shall be a Business Day), (ii) the Borrowing amount and
Type of the Advances to be Converted or continued, (iii) whether a Conversion or
continuation is requested, and if a Conversion, into what Type of Advances, and
(iv) in the case of a Conversion to, or a continuation of, LIBOR Rate Advances,
the requested Interest Period. Promptly after receipt of a Notice of Conversion
or Continuation under this paragraph, the Administrative Agent shall provide
each Bank with a copy thereof and, in the case of a Conversion to or a
continuation of LIBOR Rate Advances, notify each Bank of the applicable interest
rate under Section 2.06(b). For purposes other than the conditions set forth in
Section 3.02, the portion of Advances comprising part of the same Borrowing that
are Converted to Advances of another Type shall constitute a new Borrowing. If
the Borrower shall fail to specify an Interest Period for a LIBOR Rate Advance
including the continuation of a LIBOR Rate Advance, the Borrower shall be deemed
to have selected a Prime Rate Advance.
(c) Certain Limitations. Notwithstanding anything in paragraphs (a) and
-------------------
(b) above:
(i) in the case of LIBOR Rate Advances each Borrowing shall be in
an aggregate amount of not less than $2,000,000 or greater multiples of
$100,000;
(ii) except for Borrowings for the acquisition of Future Properties
by the Borrower or its Subsidiary, the Borrower may not request Borrowings
on more than three days in any calendar month.
(iii) at no time shall there be more than five Interest Periods
applicable to outstanding LIBOR Rate Advances;
(iv) the Borrower may not select LIBOR Rate Advances for any
Borrowing to be made, Converted or continued if a Default has occurred and
is continuing;
(v) if any Bank shall, at any time prior to the making of any
requested Borrowing comprised of LIBOR Rate Advances, notify the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any
central bank or other governmental authority asserts that it is unlawful,
for such Bank or its LIBOR Lending Office to perform its obligations under
this Agreement to make LIBOR Rate Advances or to fund or maintain LIBOR
Rate Advances, then such Bank's Pro
-41-
<PAGE>
Rata Share of such Borrowing shall be made as a Prime Rate Advance,
provided that such Prime Rate Advance shall be considered part of the same
Borrowing and interest on such Prime Rate Advance shall be due and payable
at the same time that interest on the LIBOR Rate Advances comprising the
remainder of such Borrowing shall be due and payable; and such Bank agrees
to use commercially reasonable efforts (consistent with its internal
policies and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such designation would avoid the
effect of this paragraph and would not, in the reasonable judgment of such
Bank, be otherwise materially disadvantageous to such Bank;
(vi) if the Administrative Agent is unable to determine the LIBOR
Rate for LIBOR Rate Advances comprising any requested Borrowing, the right
of the Borrower to select LIBOR Rate Advances for such Borrowing or for any
subsequent Borrowing shall be suspended until the Administrative Agent
shall notify the Borrower and the Banks that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing
shall be a Prime Rate Advance;
(vii) if the Majority Banks shall, at least one Business Day before
the date of any requested Borrowing, notify the Administrative Agent that
the LIBOR Rate for LIBOR Rate Advances comprising such Borrowing will not
adequately reflect the cost to such Banks of making or funding their
respective LIBOR Rate Advances, as the case may be, for such Borrowing, the
right of the Borrower to select LIBOR Rate Advances for such Borrowing or
for any subsequent Borrowing shall be suspended until the Administrative
Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist, and each Advance comprising such
Borrowing shall be a Prime Rate Advance; and
(viii) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any LIBOR Rate Advances in
accordance with the provisions contained in the definition of "Interest
Period" in Section 1.01 and paragraph (a) or (b) above, the Administrative
Agent will forthwith so notify the Borrower and the Banks and such Advances
will be made available to the Borrower on the date of such Borrowing as
Prime Rate Advances or, if an existing Advance, Converted into Prime Rate
Advances.
(d) Notices Irrevocable. Each Notice of Borrowing and Notice of
-------------------
Conversion or Continuation shall be irrevocable and binding on the Borrower. In
the case of any Borrowing which
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<PAGE>
the related Notice of Borrowing specifies is to be comprised of LIBOR Rate
Advances, the Borrower shall indemnify each Bank against any loss, out-of-pocket
cost or expense incurred by such Bank as a result of any condition precedent for
Borrowing set forth in Article III not being satisfied for any reason,
including, without limitation, any loss, cost or expense actually incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Bank to fund the Advance to be made by such Bank as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(e) Administrative Agent Reliance. Unless the Administrative Agent shall
-----------------------------
have received notice from a Bank before the date of any Borrowing that such Bank
will not make available to the Administrative Agent such Bank's Pro Rata Share
of the Borrowing, the Administrative Agent may assume that such Bank has made
its Pro Rata Share of such Borrowing available to the Administrative Agent on
the date of such Borrowing in accordance with paragraph (a) of this Section 2.02
and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made its Pro Rata Share of such
Borrowing available to the Administrative Agent, such Bank and the Borrower
severally agree to immediately repay to the Administrative Agent on demand such
corresponding amount, together with interest on such amount, for each day from
the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable on each such day to Advances comprising
such Borrowing and (ii) in the case of such Bank, the Federal Funds Rate for
each such day. If such Bank shall repay to the Administrative Agent such
corresponding amount and interest as provided above, such corresponding amount
so repaid shall constitute such Bank's Advance as part of such Borrowing for
purposes of this Agreement even though not made on the same day as the other
Advances comprising such Borrowing.
(f) Bank Obligations Several. The failure of any Bank to make the Advance
------------------------
to be made by it as part of any Borrowing shall not relieve any other Bank of
its obligation, if any, to make its Advance on the date of such Borrowing. No
Bank shall be responsible for the failure of any other Bank to make the Advance
to be made by such other Bank on the date of any Borrowing.
(g) Notes. The indebtedness of the Borrower to each Bank resulting from
-----
Advances owing to such Bank shall be evidenced by the Note of the Borrower
payable to the order of such Bank in substantially the form of Exhibit A.
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<PAGE>
Section 2.03 Fees.
----
(a) Commitment Fees. For the period from the Effective Date until the
---------------
Maturity Date the Borrower agrees to pay to the Administrative Agent for the
account of each Bank a commitment fee on the average daily amount by which such
Bank's Commitment exceeds the sum of such Bank's outstanding Advances and Pro
Rata Share of the Letter of Credit Exposure at a rate per annum equal to the
Applicable Margin based upon a 360-day year. Such fees shall be due and payable
quarterly in arrears (i) on the date which is 30 days following the end of the
last Business Day of each March, June, September and December and (ii) on the
Maturity Date.
(b) Letter of Credit Fees. The Borrower agrees to pay to the
---------------------
Administrative Agent for the benefit of the Banks, fees in respect of all
Letters of Credit outstanding at a rate per annum equal to one and 50/100
percent (1.50%) calculated based upon a 360-day year and in respect of the
maximum amount available from time to time to be drawn under such outstanding
Letters of Credit, payable in arrears (i) on the last Business Day of each
calendar month and (ii) on the Maturity Date. In addition, the Borrower agrees
to pay to the Issuing Bank for its own account $500 for each Letter of Credit
issued, reissued, amended, increased, or extended by such Issuing Bank, such
fees due and payable at the time of such issuance, reissuance, amendment,
increase or extension.
(c) Agents' and Managing Agents' Fees. The Borrower agrees to pay to the
---------------------------------
Agents and the Managing Agents for their benefit the fees set forth in the Fee
Letter as and when the same are due and payable pursuant to the terms of the Fee
Letter.
Section 2.04 Reduction of the Commitments.
----------------------------
(a) Upon the occurrence of any of the following:
(i) a change in control is reported by the Borrower, the Parent,
AGH Leasing or any other Participating Lessee which is an Affiliate of the
Borrower, or AGHI in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), or
(ii) any "person" (as such term is used in Section 13(d) and Section
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Borrower, the Parent, AGH
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<PAGE>
Leasing or any other Participating Lessee which is an Affiliate of the
Borrower, or AGHI representing the Control Percentage or more of the
combined voting power of the Borrower's, the Parent's, such Participating
Lessee's or AGHI's, as applicable, then outstanding securities;
then, in such event the Majority Banks may, at their sole option upon written
notice to the Borrower (a "Termination Notice"), declare the obligation of each
Bank to make Advances and the obligation of the Issuing Bank to issue, increase,
or extend Letters of Credit to be terminated, whereupon the same shall forthwith
terminate and the Commitments shall reduce to zero.
Notwithstanding the foregoing, a "change of control" shall not be deemed to
occur as a result of the acquisition of securities of the Borrower, the Parent,
AGH Leasing or any other Participating Lessee which is an Affiliate of the
Borrower or AGHI by any of Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr,
James E. Sowell, Louis W. Shaw, II, Kenneth W. Shaw or their respective
Associates (as such term is defined in Rule 12b-2 promulgated under the Exchange
Act) or controlled Affiliates.
(b) The Borrower may, upon at least three Business Days' prior notice to
the Administrative Agent, permanently terminate in whole or permanently reduce
ratably in part the Commitments of the Banks; provided, however, that (i) each
-------- -------
partial reduction shall be in the aggregate amount of not less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof, (ii) no such reduction
shall result in a Borrowing Base deficiency as provided in Section 2.07(c)(ii),
and (iii) no such reduction shall result in the total aggregate Commitments of
the Banks being less than $250,000,000.
Section 2.05 Repayment of Advances. The Borrower shall repay the
---------------------
outstanding principal amount of each Advance on the Maturity Date.
Section 2.06 Interest, Late Payment Fee. The Borrower shall pay interest
--------------------------
on the unpaid principal amount of each Advance made by each Bank from the date
of such Advance until such principal amount shall be paid in full, at the
following rates per annum:
(a) Prime Rate Advances. If such Advance is a Prime Rate Advance, a rate
-------------------
per annum (computed on the actual number of days elapsed, including the first
day and excluding the last, based on a 365 day year) equal at all times to the
lesser of (i) the Adjusted Prime Rate in effect from time
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<PAGE>
to time plus the Applicable Margin and (ii) the Maximum Rate, payable in arrears
----
on the last Business Day of each calendar month and on the date such Prime Rate
Advance shall be paid in full, provided that during the continuance of an Event
--------
of Default, Prime Rate Advances shall bear interest at a rate per annum equal at
all times to the lesser of (i) the rate required to be paid on such Advance
immediately prior to the date on which such amount becomes due plus three
----
percent (3%) and (ii) the Maximum Rate.
(b) LIBOR Rate Advances. If such Advance is a LIBOR Rate Advance, a rate
-------------------
per annum (computed on the actual number of days elapsed, including the first
day and excluding the last, based on a 360 day year) equal at all times during
the Interest Period for such Advance to the lesser of (i) the LIBOR Rate for
such Interest Period plus the Applicable Margin and (ii) the Maximum Rate,
----
payable in arrears on the last day of such Interest Period, and on the date such
LIBOR Rate Advance shall be paid in full, and, with respect to LIBOR Rate
Advances having an Interest Period in excess of 30 days, the last day of each
calendar month during such Interest Period excluding the month in which such
LIBOR Rate Advance shall be paid in full; provided that during the continuance
--------
of an Event of Default, LIBOR Rate Advances shall bear interest at a rate per
annum equal at all times to the lesser of (i) the rate required to be paid on
such Advance immediately prior to the date on which such amount became due plus
----
three percent (3%) and (ii) the Maximum Rate.
(c) Usury Recapture. In the event the rate of interest chargeable under
---------------
this Agreement or the Notes at any time is greater than the Maximum Rate, the
unpaid principal amount of the Notes shall bear interest at the Maximum Rate
until the total amount of interest paid or accrued on the Notes equals the
amount of interest which would have been paid or accrued on the Notes if the
stated rates of interest set forth in this Agreement had at all times been in
effect. In the event, upon payment in full of the Notes, the total amount of
interest paid or accrued under the terms of this Agreement and the Notes is less
than the total amount of interest which would have been paid or accrued if the
rates of interest set forth in this Agreement had, at all times, been in effect,
then the Borrower shall, to the extent permitted by applicable law, pay the
Administrative Agent for the account of the Banks an amount equal to the
difference between (i) the lesser of (A) the amount of interest which would have
been charged on the Notes if the Maximum Rate had, at all times, been in effect
and (B) the amount of interest which would have accrued on the Notes if the
rates of interest set forth in this Agreement had at all times been in effect
and (ii) the amount of interest actually paid or accrued under this Agreement on
the Notes. In the event the Banks ever receive, collect or apply as interest
any sum in excess of the Maximum Rate, such excess amount shall, to the extent
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<PAGE>
permitted by law, be applied to the reduction of the principal balance of the
Notes, and if no such principal is then outstanding, such excess or part thereof
remaining shall be paid to the Borrower.
(d) Other Amounts Overdue. If any amount payable under this Agreement
---------------------
other than the Advances is not paid when due and payable, including without
limitation, accrued interest and fees, then such overdue amount shall accrue
interest hereon due and payable on demand at a rate per annum equal to the
Adjusted Prime Rate plus three percent (3%), from the date such amount became
----
due until the date such amount is paid in full.
(e) Late Payment Fee. Subject to the provisions of Section 10.12, if any
----------------
interest payable under this Agreement is not paid when due and payable (after
taking into account any applicable grace period), then the Borrower will pay to
the Banks contemporaneously with the payment of such past due interest a late
payment fee equal to an amount equal to the product of (i) such overdue interest
times (ii) four percent (4%).
- -----
Section 2.07 Prepayments.
-----------
(a) Right to Prepay. The Borrower shall have no right to prepay any
---------------
principal amount of any Advance except as provided in this Section 2.07.
(b) Optional Prepayments. The Borrower may elect to prepay any of the
--------------------
Advances, after giving by 11:00 a.m. (Dallas, Texas time) (i) in the case of
LIBOR Rate Advances, at least three Business Days' or (ii) in case of Prime Rate
Advances, at least one Business Day's prior written notice to the Administrative
Agent stating the proposed date and aggregate principal amount of such
prepayment, and if applicable, the relevant Interest Period for the Advances to
be prepaid. If any such notice is given, the Borrower shall prepay Advances
comprising part of the same Borrowing in whole or ratably in part in an
aggregate principal amount equal to the amount specified in such notice, and
shall also pay accrued interest to the date of such prepayment on the principal
amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08
as a result of such prepayment being made on such date; provided, however, that
-------- -------
each partial prepayment shall be in an aggregate principal amount not less than
$1,000,000 and in integral multiples of $100,000.
(c) Mandatory Prepayments.
---------------------
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<PAGE>
(i) Change of Control. On the fifth Business Day following the
-----------------
Borrower's receipt of a Termination Notice pursuant to Section 2.04(a)
hereof, the Borrower shall be required to prepay all outstanding Advances
in full and to deposit with the Administrative Agent into the Cash
Collateral Account an amount equal to the Letter of Credit Exposure.
(ii) Borrowing Base Deficiency. (A) On or prior to the fifth (5th)
-------------------------
Business Day following a Borrowing Base Determination Date occurring under
the provisions of Section 2.14 which are not governed by the following
clause (B) and (B) on or prior to the thirtieth (30th) Business Day
following a Borrowing Base Determination Date occurring under the
provisions of Sections 2.14(a) or 2.14(b) to the extent such Adjustment
Event occurs because the Majority Banks determine that a Hotel Property no
longer qualifies as an Eligible Property as provided in Section 3.03, the
Borrower shall be required to prepay Advances in an aggregate amount equal
to the excess of (Y) the aggregate amount of outstanding Advances and
Letter of Credit Exposure on such date over (Z) the lesser of (1) the
Borrowing Base, as determined on such Borrowing Base Determination Date or
(2) the aggregate Commitments at such time (or, upon payment in full of all
outstanding Advances, to deposit with the Administrative Agent into the
Cash Collateral Account an amount equal to the amount of the Letter of
Credit Exposure which exceeds the Borrowing Base).
(iii) Capitalization Event. Upon the occurrence of any
--------------------
Capitalization Event, the Borrower shall prepay Advances on the Business
Day such Net Cash Proceeds are received by the Borrower or the Parent, as
applicable, in an amount equal to the lesser of (A) the amount of the
outstanding Advances on such Business Day and (B) 100% of the Net Cash
Proceeds of such Capitalization Event; provided that if no Blockage Period
is in effect, the Borrower may use such Net Cash Proceeds to repay
Subordinate Indebtedness.
(iv) Accrued Interest. Each prepayment pursuant to this Section
----------------
2.07(c) shall be accompanied by accrued interest on the amount prepaid to
the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.08 as a result of such prepayment being made on such
date.
(v) Avoidance of Breakage Costs. In the event that the amount of
---------------------------
any mandatory prepayment of Advances under this Section 2.07(c) exceeds the
aggregate principal amount of Advances which consist of Prime Rate Advances
(the amount of such excess being the "Excess Amount"), the Borrower shall
-------------
have the right, in lieu of making such prepayment in
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<PAGE>
full, to prepay such outstanding Advances which are Prime Rate Advances and
to deposit an amount equal to the Excess Amount with the Administrative
Agent in the Cash Collateral Account maintained by and in the sole dominion
and control of the Administrative Agent for the ratable benefit of the
Banks. Any amount so deposited shall be held by the Administrative Agent as
collateral for the Obligations, earn interest on behalf of the Borrower and
be applied to the prepayment of Advances which are LIBOR Rate Advances at
the end of the current Interest Period(s) applicable thereto. On any day on
which amounts collected in the Cash Collateral Account remain on deposit in
or to the credit of the Cash Collateral Account after giving effect to the
payment made on such day pursuant to this Section 2.07(c), and the Borrower
shall have delivered to the Administrative Agent a written request or a
telephonic request (which shall be promptly confirmed in writing) prior to
11:00 am (Dallas, Texas time) that such remaining collected amounts be
invested in cash equivalents specified in such request, the Administrative
Agent shall invest such funds, to the extent the Administrative Agent is
reasonably able to do so, in such cash equivalents as are acceptable to,
and with no risk to, the Administrative Agent on an overnight basis or with
maturities such that amounts will be available to pay the Obligations
secured thereby as they become due, whether at maturity, by acceleration or
otherwise; provided, however, that any loss resulting from such investments
-------- -------
shall be charged to and be immediately payable by the Borrower on demand by
the Administrative Agent.
(d) Ratable Payments. Each payment of any Advance pursuant to this Section
-----------------
2.07 or any other provision of this Agreement shall be made in a manner such
that all Advances comprising part of the same Borrowing are paid in whole or
ratably in part.
(e) Effect of Notice. All notices given pursuant to this Section 2.07
----------------
shall be irrevocable and binding upon the Borrower.
(f) Payments with respect to Florida Liens. Notwithstanding anything in
---------------------------------------
this Agreement or any other Credit Document to the contrary, each payment of any
Advance pursuant to this Section 2.07 or any other provision of this Agreement
shall be made in a manner such that all Advances secured by Florida Liens shall
be deemed the last Advances repaid.
Section 2.08 Breakage Costs. If (a) any payment of principal of any
--------------
LIBOR Rate Advance is made other than on the last day of the Interest Period for
such Advance as a result of any payment pursuant to Section 2.07 or the
acceleration of the maturity of the Notes pursuant to Article VIII or
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<PAGE>
otherwise; (b) any Conversion of a LIBOR Rate Advance is made other than on the
last day of the Interest Period for such Advance pursuant to Section 2.12 or
otherwise; or (c) the Borrower fails to make a principal or interest payment
with respect to any LIBOR Rate Advance on the date such payment is due and
payable, the Borrower shall, within 10 days of any written demand sent by any
Bank to the Borrower through the Administrative Agent, pay to the Administrative
Agent for the account of such Bank any amounts (without duplication of any other
amounts payable in respect of breakage costs) required to compensate such Bank
for any additional losses, out-of-pocket costs or expenses which it may
reasonably incur as a result of such payment or nonpayment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Bank to fund or maintain
such Advance.
Section 2.09 Increased Costs.
---------------
(a) LIBOR Rate Advances. If, due to either (i) the introduction of or any
-------------------
change (other than any change by way of imposition or increase of reserve
requirements included in the calculation of the LIBOR Rate) in or in the
interpretation of any law or regulation following the date of this Agreement or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) not complied
with prior to the date of this Agreement, there shall be any increase in the
cost to any Bank of agreeing to make or making, funding or maintaining LIBOR
Rate Advances, then the Borrower shall from time to time, upon demand by such
Bank (with a copy of such demand to the Administrative Agent), immediately pay
to the Administrative Agent for the account of such Bank additional amounts
(without duplication of any other amounts payable in respect of increased costs)
sufficient to compensate such Bank for such increased cost; provided, however,
-------- -------
that, before making any such demand, each Bank agrees to use commercially
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost and would not, in the reasonable judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate as to the amount of such
increased cost and detailing the calculation of such cost submitted to the
Borrower and the Administrative Agent by such Bank at the time such Bank demands
payment under this Section shall be conclusive and binding for all purposes,
absent manifest error.
(b) Capital Adequacy. If any Bank or the Issuing Bank determines in good
----------------
faith that compliance with any law or regulation or any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law) implemented or effective after the
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<PAGE>
date of this Agreement affects or would affect the amount of capital required or
expected to be maintained by such Bank or the Issuing Bank and that the amount
of such capital is increased by or based upon the existence of such Bank's
commitment to lend or the Issuing Bank's commitment to issue Letters of Credit
or any Bank's commitment to risk participate in Letters of Credit and other
commitments of this type, then, upon 30 days prior written notice by such Bank
or the Issuing Bank (with a copy of any such demand to the Administrative
Agent), the Borrower shall immediately pay to the Administrative Agent for the
account of such Bank or to the Issuing Bank, as the case may be, from time to
time as specified by such Bank or the Issuing Bank, additional amounts (without
duplication of any other amounts payable in respect of increased costs)
sufficient to compensate such Bank or the Issuing Bank, in light of such
circumstances, (i) with respect to such Bank, to the extent that such Bank
reasonably determines such increase in capital to be allocable to the existence
of such Bank's commitment to lend under this Agreement or its commitment to risk
participate in Letters of Credit and (ii) with respect to the Issuing Bank, to
the extent that such Issuing Bank reasonably determines such increase in capital
to be allocable to the issuance or maintenance of the Letters of Credit. A
certificate as to such amounts and detailing the calculation of such amounts
submitted to the Borrower and the Administrative Agent by such Bank or the
Issuing Bank shall be conclusive and binding for all purposes, absent manifest
error.
(c) Letters of Credit. If any change in any law or regulation or in the
-----------------
interpretation thereof by any court or administrative or Governmental Authority
charged with the administration thereof following the date of this Agreement
shall either (i) impose, modify, or deem applicable any reserve, special
deposit, or similar requirement against letters of credit issued by, or assets
held by, or deposits in or for the account of, Issuing Bank or any Bank or (ii)
impose on Issuing Bank or any Bank any other condition regarding the provisions
of this Agreement relating to the Letters of Credit or any Letter of Credit
Obligations, and the result of any event referred to in the preceding clause (i)
or (ii) shall be to increase the cost to Issuing Bank of issuing or maintaining
any Letter of Credit, or increase the cost to such Bank of its risk
participation in any Letter of Credit (which increase in cost shall be
determined by Issuing Bank's or such Bank's reasonable allocation of the
aggregate of such cost increases resulting from such event), then, upon demand
by Issuing Bank or such Bank (with a copy sent to the Administrative Agent), as
the case may be, the Borrower shall pay to the Administrative Agent for the
account of Issuing Bank or Bank, as the case may be, from time to time as
specified by Issuing Bank or such Bank, additional amounts which shall be
sufficient to compensate such Issuing Bank or such Bank for such increased cost.
Issuing Bank and each Bank agrees to use commercially reasonable efforts
(consistent with internal policy and legal and regulatory restrictions) to
designate a different Applicable Lending Office for the booking of its
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<PAGE>
Letters of Credit or risk participations if the making of such designation would
avoid the effect of this paragraph and would not, in the reasonable judgment of
Issuing Bank or such Bank, be otherwise disadvantageous to Issuing Bank or such
Bank, as the case may be. A certificate as to such increased cost incurred by
Issuing Bank or such Bank, as the case may be, as a result of any event
mentioned in clause (i) or (ii) above, and detailing the calculation of such
increased costs submitted by Issuing Bank or such Bank to the Borrower and the
Administrative Agent, shall be conclusive and binding for all purposes, absent
manifest error.
Section 2.11 Payments and Computations.
-------------------------
(a) Payment Procedures. Except if otherwise set forth herein, the Borrower
------------------
shall make each payment under this Agreement and under the Notes not later than
11:00 a.m. (Dallas, Texas time) on the day when due in Dollars to the
Administrative Agent at the location referred to in the Notes (or such other
location as the Administrative Agent shall designate in writing to the Borrower)
in same day funds. The Administrative Agent will on the same day cause to be
distributed like funds relating to the payment of principal, interest or fees
ratably (other than amounts payable solely to the Administrative Agent, the
Issuing Banks, or a specific Bank pursuant to Section 2.03(b), 2.03(c), 2.06(c),
2.08, 2.09, 2.11, 2.12, or 2.13(c) but after taking into account payments
effected pursuant to Section 10.04) to the Banks in accordance with each Bank's
Pro Rata Share for the account of their respective Applicable Lending Offices,
and like funds relating to the payment of any other amount payable to any Bank
or Issuing Bank for the account of its Applicable Lending Office, in each case
to be applied in accordance with the terms of this Agreement.
(b) Computations. All computations of interest based on the Adjusted Prime
------------
Rate shall be made by the Administrative Agent on the basis of a year of 365
days and all computations of fees and interest based on the LIBOR Rate and the
Federal Funds Rate shall be made by the Administrative Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day, but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent of
an interest rate shall be conclusive and binding for all purposes, absent
manifest error.
(c) Non-Business Day Payments. Whenever any payment shall be stated to be
-------------------------
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of
- --------
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<PAGE>
interest on or principal of LIBOR Rate Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
(d) Administrative Agent Reliance. Unless the Administrative Agent shall
-----------------------------
have received written notice from the Borrower prior to the date on which any
payment is due to the Banks that the Borrower will not make such payment in
full, the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such date an amount equal to the amount then due such Bank. If and to
the extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Bank, together with
interest, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Administrative Agent, at the
Federal Funds Rate for each such day.
(e) Application of Payments. Unless otherwise specified in Section 2.07
-----------------------
hereof, whenever any payment received by the Administrative Agent under this
Agreement is insufficient to pay in full all amounts then due and payable under
this Agreement and the Notes, such payment shall be distributed and applied by
the Administrative Agent and the Banks in the following order: first, to the
-----
payment of fees and expenses due and payable to the Administrative Agent under
and in connection with this Agreement or any other Credit Document; second, to
------
the payment of all expenses due and payable under Section 2.11(c), ratably among
the Banks in accordance with the aggregate amount of such payments owed to each
such Bank; third, to the payment of fees due and payable to the Issuing Bank
-----
pursuant to Section 2.03(b); fourth, to the payment of all other fees due and
------
payable under Section 2.03; and fifth, to the payment of the interest accrued on
-----
and the principal amount of all of the Notes and the interest accrued on and all
Reimbursement Obligations, regardless of whether any such amount is then due and
payable, ratably among the Banks in accordance with the aggregate accrued
interest plus the aggregate principal amount owed to such Bank.
(f) Register. The Administrative Agent shall record in the Register the
--------
Commitment and the Advances from time to time of each Bank and each repayment or
prepayment in respect to the principal amount of such Advances of each Bank.
Any such recordation shall be conclusive and binding on the Borrower and each
Bank, absent manifest error; provided however, that failure to make any such
-------- -------
recordation, or any error in such recordation, shall not affect the Borrower's
obligations hereunder in respect of such Advances.
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<PAGE>
Section 2.11 Taxes.
-----
(a) No Deduction for Certain Taxes. Any and all payments by the Borrower
------------------------------
shall be made, in accordance with Section 2.10, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Bank, Issuing Bank, and the Administrative Agent, taxes imposed
on its income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Bank, Issuing Bank, or the Administrative Agent (as the case
may be) is organized or any political subdivision of the jurisdiction (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes") and, in the case of each
Bank and Issuing Bank, Taxes by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision of such jurisdiction. If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable to any Bank, Issuing Bank, or the Administrative Agent, (i) the sum
payable shall be increased as may be necessary so that, after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.11), such Bank, Issuing Bank, or the Administrative Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made; provided, however, that if the Borrower's
--------
obligation to deduct or withhold Taxes is caused solely by such Bank's, Issuing
Bank's, or the Administrative Agent's failure to provide the forms described in
paragraph (e) of this Section 2.11 and such Bank, Issuing Bank, or the
Administrative Agent could have provided such forms, no such increase shall be
required; (ii) the Borrower shall make such deductions; and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Legal Requirements.
(b) Other Taxes. In addition, the Borrower agrees to pay any present or
-----------
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification. The Borrower indemnifies each Bank, Issuing Bank, and
---------------
the Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.11) paid by such Bank, Issuing
Bank, or the Administrative Agent (as the case may be) and any liability
(including interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Each payment required to be
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<PAGE>
made by the Borrower in respect of this indemnification shall be made to the
Administrative Agent for the benefit of any party claiming such indemnification
within 30 days from the date the Borrower receives written demand detailing the
calculation of such amounts therefor from the Administrative Agent on behalf of
itself as Administrative Agent, Issuing Bank, or any such Bank. If any Bank, the
Administrative Agent, or Issuing Bank receives a refund in respect of any Taxes
or Other Taxes paid by the Borrower under this paragraph (c), such Bank, the
Administrative Agent, or Issuing Bank, as the case may be, shall promptly pay to
the Borrower the Borrower's share of such refund.
(d) Evidence of Tax Payments. The Borrower will pay prior to delinquency
------------------------
all Taxes and Other Taxes payable in respect of any payment. Within 30 days
after the date of any payment of Taxes, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 10.02, the original
or a certified copy of a receipt evidencing payment of such Taxes or Other
Taxes.
(e) Foreign Bank Withholding Exemption. Each Bank and each Issuing Bank
----------------------------------
that is not incorporated under the laws of the United States of America or a
state thereof agrees that it will deliver to the Borrower and the Administrative
Agent on the date of this Agreement or upon the effectiveness of any Assignment
and Acceptance (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Bank is entitled to receive payments under
this Agreement and the Notes payable to it, without deduction or withholding of
any United States federal income taxes, (ii) if applicable, an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax, and (iii) any
other governmental forms which are necessary or required under an applicable tax
treaty or otherwise by law to reduce or eliminate any withholding tax, which
have been reasonably requested by the Borrower. Each Bank which delivers to the
Borrower and the Administrative Agent a Form 1001 or 4224 and Form W-8 or W-9
pursuant to the next preceding sentence further undertakes to deliver to the
Borrower and the Administrative Agent two further copies of Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower and
the Administrative Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower and the Administrative Agent certifying
in the case of a Form 1001 or 4224 that such Bank is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes. If an event (including without limitation any
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<PAGE>
change in treaty, law or regulation) has occurred prior to the date on which any
delivery required by the preceding sentence would otherwise be required which
renders all such forms inapplicable or which would prevent any Bank from duly
completing and delivering any such letter or form with respect to it and such
Bank advises the Borrower and the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax, such Bank shall not be required to deliver
such forms. The Borrower shall withhold tax at the rate and in the manner
required by the laws of the United States with respect to payments made to a
Bank failing to timely provide the requisite Internal Revenue Service forms.
Section 2.12 Illegality. If any Bank shall notify the Administrative
----------
Agent and the Borrower that the introduction of or any change in or in the
interpretation of any Legal Requirement makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful for such Bank
or its LIBOR Lending Office to perform its obligations under this Agreement to
maintain any LIBOR Rate Advances of such Bank then outstanding hereunder, then,
notwithstanding anything herein to the contrary, the Borrower shall, if demanded
by such Bank by notice to the Borrower and the Administrative Agent no later
than 11:00 a.m. (Dallas, Texas time), (a) if not prohibited by Legal Requirement
to maintain such LIBOR Rate Advances for the duration of the Interest Period, on
the last day of the Interest Period for each outstanding LIBOR Rate Advance of
such Bank or (b) if prohibited by Legal Requirement to maintain such LIBOR Rate
Advances for the duration of the Interest Period, on the second Business Day
following its receipt of such notice from such Bank, Convert all LIBOR Rate
Advances of such Bank then outstanding to Prime Rate Advances, and pay accrued
interest on the principal amount Converted to the date of such Conversion and
amounts, if any, required to be paid pursuant to Section 2.08 as a result of
such Conversion being made on such date. Each Bank agrees to use commercially
reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of such Bank, be otherwise disadvantageous
to such Bank.
Section 2.13 Letters of Credit.
-----------------
(a) Issuance. From time to time from the date of this Agreement until
--------
three months before the Maturity Date, at the request of the Borrower, the
Issuing Bank shall, on any Business Day and on the terms and conditions
hereinafter set forth, issue, increase, decrease, amend, or extend the
expiration date of Letters of Credit for the account of the Borrower (for its
own benefit or for the
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<PAGE>
benefit of any of its Subsidiaries). Upon the Effective Date, but subject to the
limitations contained in the following sentence, each Existing Letter of Credit
shall be automatically converted to a Letter of Credit. No Letter of Credit will
be issued, increased, or extended and no Existing Letter of Credit will be
converted to a Letter of Credit (i) if such issuance, increase, extension or
conversion would cause the Letter of Credit Exposure to exceed the lesser of (x)
$60,000,000 or (y) an amount equal to (A) the lesser of the Borrowing Base or
the aggregate Commitments less (B) the aggregate outstanding Advances and Letter
----
of Credit Exposure at such time; (ii) unless such Letter of Credit has an
Expiration Date not later than the earlier of (A) one year after the date of
issuance thereof and (B) one day prior to the Maturity Date; (iii) unless such
Letter of Credit is in form and substance acceptable to the respective Issuing
Bank; (iv) unless such Letter of Credit is a standby letter of credit not
supporting the repayment of indebtedness for borrowed money of any Person; (v)
unless the Borrower has delivered to the respective Issuing Bank the completed
and executed Letter of Credit Documents (other than the Letter of Credit) on
such Issuing Bank's standard form, which shall contain terms no more restrictive
than the terms of this Agreement; (vi) unless such Letter of Credit is governed
by the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 ("UCP") or any successor
to the UCP; and (vii) no Default has occurred and is continuing or would result
from the issuance of such Letter of Credit. If the terms of any of the Letter of
Credit Documents referred to in the foregoing clause (v) conflicts with the
terms of this Agreement, the terms of this Agreement shall control.
(b) Participations. On the date of the issuance or increase of any Letter
--------------
of Credit on or after the Effective Date or the conversion of any Existing
Letter of Credit to a Letter of Credit in accordance with provisions of the
preceding Section 2.13(a), each Issuing Bank shall be deemed to have sold to
each other Bank and each other Bank shall have been deemed to have purchased
from such Issuing Bank a participation in the Letter of Credit Exposure related
to the Letters of Credit issued by such Issuing Bank equal to such Bank's Pro
Rata Share at such date and such sale and purchase shall otherwise be in
accordance with the terms of this Agreement. Each Issuing Bank shall promptly
notify each such participant Bank by telex, telephone, or telecopy of each
Letter of Credit of such Issuing Bank issued, increased or decreased, and the
actual dollar amount of such Bank's participation in such Letter of Credit.
Each Bank's obligation to purchase participating interests pursuant to this
Section and to reimburse the respective Issuing Bank for such Bank's Pro Rata
Share of any payment under a Letter of Credit by such Issuing Bank not
reimbursed in full by the Borrower shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any of
the circumstances described in paragraph (d) below, (ii) the occurrence and
continuance of a Default, (iii) an adverse change in the financial condition of
the
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Borrower or any Guarantor, or (iv) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing, except for any such
circumstance, happening or event constituting or arising from gross negligence
or willful misconduct on the part of such Issuing Bank.
(c) Reimbursement. The Borrower shall have the right (but not the
-------------
obligation) to pay promptly on demand to each Issuing Bank in respect of each
Letter of Credit issued by such Issuing Bank an amount equal to any amount paid
by such Issuing Bank under or in respect of such Letter of Credit. In the event
any Issuing Bank makes a payment pursuant to a request for draw presented under
a Letter of Credit and such payment is not promptly reimbursed by the Borrower
upon demand, such Issuing Bank shall give notice of such payment to the
Administrative Agent and the Banks, and each Bank shall promptly reimburse such
Issuing Bank for such Bank's Pro Rata Share of such payment, and such
reimbursement shall be deemed for all purposes of this Agreement to constitute a
Prime Rate Advance to the Borrower from such Bank. If such reimbursement is not
made by any Bank to any Issuing Bank on the same day on which such Issuing Bank
shall have made payment on any such draw, such Bank shall pay interest thereon
to such Issuing Bank for each such day from the date such payment should have
been made until the date repaid at a rate per annum equal to the Federal Funds
Rate for each such day. The Borrower hereby unconditionally and irrevocably
authorizes, empowers, and directs the Administrative Agent and the Banks to
record and otherwise treat each payment under a Letter of Credit not immediately
reimbursed by the Borrower as a Borrowing comprised of Prime Rate Advances to
the Borrower.
(d) Obligations Unconditional. The obligations of the Borrower under this
-------------------------
Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, notwithstanding the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit
Documents;
(ii) any amendment or waiver of or any consent to departure from any
Letter of Credit Documents;
(iii) the existence of any claim, set-off, defense or other right
which the Borrower or any Bank or any other Person may have at any time
against any beneficiary or transferee of such Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be
acting), the respective Issuing Bank or any other Person or entity, whether
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in connection with this Agreement, the transactions contemplated in this
Agreement or in any Letter of Credit Documents or any unrelated
transaction;
(iv) any statement or any other document presented under such Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
to the extent the respective Issuing Bank would not be liable therefor
pursuant to the following paragraph (e);
(v) payment by the respective Issuing Bank under such Letter of
Credit against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit; or
(vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(e) Liability of Issuing Banks. The Borrower assumes all risks of the acts
--------------------------
or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. No Issuing Bank, nor any other
Bank, nor any of their respective officers or directors shall be liable or
responsible for:
(i) the use which may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection therewith;
(ii) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by such Issuing Bank against presentation of documents
which do not comply with the terms of a Letter of Credit, including failure
of any documents to bear any reference or adequate reference to the
relevant Letter of Credit; or
(iv) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit (including such Issuing Bank's own
negligence),
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except that the Borrower shall have a claim against such Issuing Bank, and such
- ------
Issuing Bank shall be liable to, and shall promptly pay to, the Borrower, to the
extent of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by (A) such Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (B) such Issuing Bank's gross negligence in failing to make lawful
payment under any Letter of Credit after the presentation to it of a draft and
certificate strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, any Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 2.14 Determination of Borrowing Base. The Borrowing Base shall
-------------------------------
be determined by the Administrative Agent, as follows:
(a) Quarterly. On the 50th day following each calendar quarter the
---------
Administrative Agent shall determine the Borrowing Base upon receipt of a
Borrowing Base Certificate setting forth the components of the Borrowing Base
dated as of the last day of the immediately preceding calendar quarter.
(b) Property Adjustments. Following each addition or deletion of a Hotel
--------------------
Property as an Eligible Property (an "Adjustment Event"), and the Administrative
----------------
Agent's receipt of a Property Adjustment Report with respect thereto, the
Administrative Agent shall adjust the Borrowing Base accordingly.
(c) Reduction of Commitments. Following each reduction of the Commitments
------------------------
pursuant to the provisions of Section 2.04.
(d) Notice of Borrowing Base Change. Promptly following any date the
-------------------------------
Borrowing Base is redetermined in accordance with the preceding paragraphs, the
Administrative Agent shall give notice to the Banks and the Borrower of the new
Borrowing Base.
Section 2.15 Bank Replacement.
----------------
(a) Right to Replace. The Borrower shall have the right to replace each
----------------
Bank affected by a condition under Section 2.02(c)(v), 2.09, 2.11, or 2.12 for
more than 90 days (each such affected
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Bank, an "Affected Bank") in accordance with the procedures in this Section 2.15
and provided that no reduction of the total Commitments occurs as a result
thereof.
(b) First Right of Refusal; Replacement.
-----------------------------------
(i) Upon the occurrence of any condition permitting the replacement
of a Bank, each Bank which is not an Affected Bank shall have the right,
but not the obligation, to elect to increase its respective Commitment by
an amount not to exceed the amount of the Commitments of the Affected
Banks, which election shall be made by written notice from each such Bank
to the Administrative Agent and the Borrower given within 30 days after the
date such condition occurs specifying the amount of such proposed increase
in such Bank's Commitment.
(ii) If the aggregate amount of the proposed increases in
Commitments of all such Banks making such an election is in excess of the
Commitments of the Affected Banks, (A) the Commitments of the Affected
Banks shall be allocated pro rata among such Banks based on the respective
amounts of the proposed increases to Commitments elected by each of such
Banks, and (B) the respective Commitments of such Banks shall be increased
by the respective amounts as so allocated so that after giving effect to
such termination and increases the aggregate amount of the Commitments of
the Banks will be the same as prior to such termination.
(iii) If the aggregate amount of the proposed increases to
Commitments of all Banks making such an election equals the Commitments of
the Affected Banks, the respective Commitments of such Banks shall be
increased by the respective amounts of their proposed increases, so that
after giving effect to such termination and increase the aggregate amount
of the Commitments of all of the Banks will be the same as prior to such
termination.
(iv) If the aggregate amount of the proposed increases to
Commitments of all Banks making such an election is less than the
Commitments of the Affected Banks, (A) the respective Commitments of such
Banks shall be increased by the respective amounts of their proposed
increases, and (B) the Borrower shall have the right to add additional
Banks which are Eligible Assignees to this Agreement to replace such
Affected Banks, which additional Banks would have aggregate Commitments no
greater than those of the Affected Banks minus the amounts thereof assumed
-----
by the other Banks pursuant to such increases.
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(c) Procedure. Any assumptions of Commitments pursuant to this Section
---------
2.15 shall be (i) made by the purchasing Bank or Eligible Assignee and the
selling Bank entering into an Assignment and Assumption and by following the
procedures in Section 10.06 for adding a Bank. In connection with the increase
of the Commitments of any Bank pursuant to the foregoing paragraph (b), each
Bank with an increased Commitment shall purchase from the Affected Banks at par
such Bank's ratable share of the outstanding Advances of the Affected Banks and
assume such Bank's ratable share of the Affected Banks' Letter of Credit
Exposure.
Section 2.16 Sharing of Payments, Etc. If any Bank shall obtain any
------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of its Advances or its share of Letter of
Credit Obligations in excess of its Pro Rata Share of payments on account of the
Advances or Letter of Credit Obligations obtained by all the Banks, such Bank
shall notify the Administrative Agent and forthwith purchase from the other
Banks such participations in the Advances made by them or Letter of Credit
Obligations held by them as shall be necessary to cause such purchasing Bank to
share the excess payment ratably in accordance with the requirements of this
Agreement with each of them; provided, however, that if all or any portion of
--------
such excess payment is thereafter recovered from such purchasing Bank, such
purchase from each Bank shall be rescinded and such Bank shall repay to the
purchasing Bank the purchase price to the extent of such Bank's ratable share
(according to the proportion of (a) the amount of the participation sold by such
Bank to the purchasing Bank as a result of such excess payment to (b) the total
amount of such excess payment) of such recovery, together with an amount equal
to such Bank's ratable share (according to the proportion of (a) the amount of
such Bank's required repayment to the purchasing Bank to (b) the total amount of
all such required repayments to the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.16 may, to the fullest extent permitted
by Legal Requirement, unless and until rescinded as provided above, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
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ARTICLE III
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to initial Advance. The obligation of
---------------------------------------
each Bank to make its initial Advance as part of the initial Borrowing and of
the Issuing Bank to issue the initial Letter of Credit are subject to the
following conditions precedent being satisfied on or prior to February 28, 1998:
(a) Documentation. The Documentation Agent or the Administrative Agent
-------------
shall have received counterparts of this Agreement executed by the Borrower and
the Banks, and the following duly executed by all the parties thereto, in form
and substance satisfactory to the Agents, and, with respect to this Agreement,
all Guaranties and the Environmental Indemnity, in sufficient copies for each
Bank:
(i) the Notes, all Guaranties, and the Environmental Indemnity;
(ii) a certificate from the Chief Executive Officer, President or
Chief Financial Officer of the General Partner on behalf of the Borrower
dated as of the Effective Date stating that as of the Effective Date (A)
all representations and warranties of the Borrower set forth in this
Agreement and the Credit Documents are true and correct in all material
respects; (B) no Default has occurred and is continuing; (C) the conditions
in this Section 3.01 have been met or waived in writing; and (D) to the
best of the Borrower's knowledge there are no claims, defenses,
counterclaims or offsets against the Banks under the Credit Documents;
(iii) a certificate of the Secretary or an Assistant Secretary of the
General Partner on behalf of the Borrower and each Guarantor dated as of
the date of this Agreement certifying as of the date of this Agreement (A)
the names and true signatures of officers or authorized representatives of
the general partner of the Borrower and such Guarantor authorized to sign
the Credit Documents to which such Person is a party as general partner of
such Person, (B) resolutions of the Board of Directors or the members of
the general partner of such Person with respect to the transactions herein
contemplated, (C) either (x) the copies of the organizational documents of
the general partner of such Person delivered to the Banks are still true
and correct and have not been amended or modified since such date or
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<PAGE>
(y) copies of any modification or amendment to the organizational documents
of the general partner of such Person made since such date, (D) a true and
correct copy of the partnership agreement for such Person, (E) a true and
correct copy of all partnership authorizations necessary or desirable in
connection with the transactions herein contemplated and (F) a true and
correct copy of all Subordinate Credit Documents;
(iv) a certificate of the Secretary or an Assistant Secretary of the
Parent dated as of the date of this Agreement certifying as of the date of
this Agreement (A) resolutions of the Board of Directors of such Person
with respect to the transactions herein contemplated, and (B) the copies of
the charter and bylaws of the Parent and any modification or amendment to
the articles or certificate of incorporation or bylaws of the Parent made
since such date;
(v) (A) one or more favorable written opinions of Battle Fowler
L.L.P., special counsel for the Borrower, the Parent, and their
Subsidiaries, substantially in the form of the attached Exhibit J, in each
case dated as of the Closing Date and with such changes as the Agents may
approve, (B) one or more favorable written opinions of Kane, Russell,
Coleman & Logan, special Texas counsel for the Borrower, the Parent, and
the Manager and their Subsidiaries, in a form reasonably acceptable to the
Agents, in each case dated as of the Closing Date and with such changes as
the Agents may approve, and (C) such other legal opinions as either of the
Agents shall reasonably request, in each case dated as of the Closing Date
and with such changes as the Agents may approve;
(vi) a Borrowing Base Certificate dated as of the Closing Date, each
duly completed and executed by the Chief Financial Officer or Treasurer of
the General Partner on behalf of the Borrower; and
(vii) such other documents, governmental certificates, agreements,
lien searches as either Agent may reasonably request.
(b) Representations and Warranties. The representations and warranties
------------------------------
contained in Article IV hereof, the Guaranties, and the Environmental
Indemnities shall be true and correct in all material respects.
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<PAGE>
(c) Certain Payments. The Borrower shall have paid the fees required to be
----------------
paid as of the execution of this Credit Agreement pursuant to the Fee Letter.
(d) Subordinate Credit Agreement. The Subordinate Credit Documents shall
----------------------------
have been fully-executed.
Section 3.02 Conditions Precedent for each Borrowing or Letter of Credit.
-----------------------------------------------------------
The obligation of each Bank to fund an Advance on the occasion of each Borrowing
(other than the Conversion or continuation of any existing Borrowing) and of any
Issuing Bank to issue or increase or extend any Letter of Credit shall be
subject to the further conditions precedent that on the date of such Borrowing
or the issuance or increase or extension of such Letter of Credit:
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing or the issuance or increase or extension of such
Letter of Credit shall constitute a representation and warranty by the Borrower
that on the date of such Borrowing or the issuance or increase or extension of
such Letter of Credit such statements are true):
(i) the representations and warranties contained in Article IV
hereof, the Guaranties, and the Environmental Indemnities and are correct
in all material respects on and as of the date of such Borrowing or the
issuance or increase or extension of such Letter of Credit, before and
after giving effect to such Borrowing or to the issuance or increase or
extension of such Letter of Credit and to the application of the proceeds
from such Borrowing, as though made on and as of such date; and
(ii) no Default has occurred and is continuing or would result from
such Borrowing or from the application of the proceeds therefrom;
(b) the Borrower shall have executed and delivered to the Administrative
Agent a Borrowing Base Certificate dated not earlier than the date 10 days prior
to the anticipated date of such Borrowing; and
(c) the Administrative Agent shall have received such other approvals,
opinions or documents deemed necessary or desirable by any Bank, the
Documentation Agent or the Administrative Agent as such party may reasonably
request.
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Section 3.03 Conditions Precedent to a Hotel Property Qualifying as an
---------------------------------------------------------
Eligible Property. In order for an Initial Property or a Future Property to
- -----------------
qualify initially and thereafter to continue to qualify as an Eligible Property,
the following conditions precedent must be satisfied and remain satisfied for
that Property:
(a) Title. Such Hotel Property (i) is Unencumbered, (ii) free of all
-----
material title defects, and (iii) either (A) owned (together with the land on
which it is located) in fee simple by the Borrower or its direct or indirect
Wholly-Owned Subsidiary or Non Wholly-Owned Subsidiary or (B) owned by the
Borrower or its direct or indirect Wholly-Owned Subsidiary or Non Wholly-Owned
Subsidiary and located on land leased to the Borrower or such Subsidiary
pursuant to a Ground Lease, all as evidenced by a copy of the most recent ALTA
Owner's Policy of Title Insurance (or commitment to issue such a policy to the
Borrower or its Subsidiary owning or to own such Hotel Property) relating to
such Hotel Property showing the identity of the fee titleholder thereto and all
matters of record as of its date.
(b) New Guarantor. In addition, if the Property Owner for such Hotel
-------------
Property is not the Borrower or a Guarantor, the following:
(i) The Property Owner shall be either a Wholly-Owned Subsidiary or
a Non Wholly-Owned Subsidiary of the Borrower whose sole asset is the
Future Property, who is not liable for any Indebtedness other than the
Obligations, who complies in all material respects with all of the
covenants and requirements of Guarantors under the Credit Documents and who
has delivered to the Documentation Agent either (A) an original Guaranty
and Environmental Indemnity executed by such Subsidiary or (B) an Accession
Agreement executed by such Subsidiary; and
(ii) a written opinion of the Borrower's counsel or counsels
covering such matters relating to the Property Owner as the Agents
reasonably require.
(c) Participating Lease. (i) Such Hotel Property is leased to a
-------------------
Participating Lessee pursuant to a Participating Lease, (ii) no material default
by the Participating Lessee or the Property Owner under the Participating Lease
exists beyond any applicable cured period (provided that for purposes of this
subsection (c) such cure period will be deemed to commence running when the
Borrower, the Parent or a Guarantor has knowledge of such default), (iii) the
Participating Lease remains in full force and effect, and (iv) any claims of the
Participating Lessee under a Participating
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Lease against the Property Owner shall be subordinated to the Obligations in a
manner reasonably acceptable to the Documentation Agent.
(d) Management Agreement. Except for those Hotel Properties managed by
--------------------
Prime Hospitality pursuant to the Participating Lease for such Hotel Property,
(i) such Hotel Property is managed by a Manager pursuant to a Management
Agreement, and (ii) any claims of the Manager under Management Agreement against
the Property Owner shall be subordinated to the Obligations in a manner
reasonably acceptable to the Documentation Agent;
(e) Franchise Agreement. Except for the Ramada Inn - Danbury,
-------------------
Connecticut and Ramada Inn - Elmsford, New York which can continue to be
operated as Ramada Inns pursuant to a franchise or license agreement with Ramada
Inn, if at the time of acquisition of a Hotel Property such Hotel Property is
operated pursuant to a franchise or license agreement with a Person who is not a
Franchisor, then (i) with respect to any of the Ramada-branded Hotel Properties
contained within the Prime Hospitality portfolio (excluding Ramada Inn -
Danbury, CT and Ramada Inn - Elmsford, NY), such Hotel Property must be subject
to a Franchise Agreement within 18 months from the date of acquisition, and (ii)
with respect to any other Hotel Property, on or prior to the first anniversary
(18 months for a Hotel Property if with the other Hotel Properties which at such
time similarly need in excess of 12 months to convert to a Franchise Agreement
with a Franchisor all such Hotel Properties have an aggregate Cost Basis of less
than or equal to $100,000,000) of the acquisition thereof such Hotel Property is
converted to a Franchise Agreement with a Franchisor. If a Hotel Property is
subject to a Franchise Agreement and the Borrower has not provided written
notice to the Administrative Agent that such Hotel Property is one of the Hotel
Properties being converted to another Franchise Agreement as provided in the
preceding sentence, then (i) no material default by the franchisee under the
Franchise Agreement exists, and (ii) the Franchise Agreement remains in full
force and effect.
(f) Property Condition. Such Hotel Property is free of all material
------------------
structural defects, as evidenced by an Engineering Report.
(g) Environmental Condition. Such Hotel Property is (1) in compliance, in
-----------------------
all material respects, with all applicable Environmental Laws, and (2) not
subject to any material Environmental Claim, all as evidenced by an
Environmental Report.
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(h) Rooms in Operation. Such Hotel Property is fully operating without any
------------------
guest rooms out of service (whether due to casualty loss or as a consequence of
repairs, alterations or additions or otherwise) except in connection with other
Eligible Properties as provided in clause (g) of the definition of Borrowing
Base Requirements; provided, however, that if the Property Owner is receiving
insurance proceeds under any business interruption (not property) insurance in
connection with such event, then such Hotel Property shall not become ineligible
as an Eligible Property because of such event though the Adjusted EBITDA for the
Person who owns or leases such Hotel Property will be adjusted downward to the
extent such proceeds result in a lower Adjusted EBITDA.
(i) Location. Such Hotel Property is located in the United States of
--------
America.
(j) Cost Basis. Except in the case of the Radisson Twin Towers -
----------
Orlando, Florida; Crowne Plaza - Hasbrouck, New Jersey; Doubletree - Clearwater,
Florida; Courtyard by Marriott -Lake Buena Vista, Florida; and the Holiday Inn
O'Hare - Rosemont, Illinois, the Cost Basis in such Hotel Property does not
exceed $50,000,000 unless otherwise approved by the Majority Banks in their sole
and absolute discretion.
(k) Documents and Information. The Documentation Agent shall have
-------------------------
received each of the following executed by the Borrower, the Property Owner or
other appropriate person, in form and substance reasonably satisfactory to the
Agents:
(i) a copy of each of the following for such Hotel Property certified
as true and correct by the Borrower:
A. If the Hotel Property is subject to a Franchise Agreement, the
Franchise Agreement and any requirements or conditions imposed by the
Franchisor at such time in connection with the Franchise Agreement,
including without limitation any requirements with respect to Capital
Expenditures or expenditures for FF&E for the Hotel Property;
B. Management Agreement;
C. Participating Lease;
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D. If the Hotel Property is subject to a Ground Lease, the Ground
Lease; and
E. The Property Owner's articles of incorporation, by-laws,
partnership agreements, as applicable, and certificates of existence,
good standing and authority to do business from each appropriate state
authority, and partnership or corporate, as applicable, authorizations
authorizing the execution, delivery and performance of the Accession
Agreement all certified to be true and complete by a duly authorized
officer of such Property Owner;
(ii) if the Borrower has received a survey of the Real Property, a
copy of such survey;
(iii) (A) a description of such Hotel Property, such description to
include the age, location and number of rooms or suites of such Hotel
Property, and (B) to the extent available, statistics with respect to the
occupancy of the Hotel Property, operating statements, and an analysis of
the revenue per available room, in each case for the prior Fiscal Year and
the completed Fiscal Quarters of the current Fiscal Year;
(iv) certificates and policies of insurance evidencing that the
Hotel Property is covered by the insurance required pursuant to Section
5.07 hereof, provided that for the required earthquake insurance for the
Initial Properties the policy or policies for such earthquake insurance
need only be delivered within 30 days of the date of this Agreement; and
(v) all other documents reasonably required by either Agent.
(l) Adverse Property Situation. Neither all nor any material portion of
--------------------------
the Hotel Property shall be the subject of any proceeding by a governmental
authority for the condemnation, seizure or appropriation thereof, nor the
subject of any negotiations for sale in lieu of condemnation, seizure or
appropriation.
(m) Ground Leases. In addition, if the Hotel Property is subject to a
-------------
Ground Lease, no default by the lessee under the Ground Lease exists and the
Ground Lease remains in full force and effect.
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(n) Management Agreement Fees and Participating Lessee Net Income. The
-------------------------------------------------------------
Management Agreement and the Participating Lease shall be structured with the
intent that the sum of (i) the management fees payable to the Manager under the
Management Agreement for a Hotel Property whether payable by the Participating
Lessee or the Property Owner of such Hotel Property and (ii) the expected Net
Income for the Participating Lessee after deduction of management fees for such
Hotel Property shall not in the aggregate exceed 6% of the gross revenues for
such Hotel Property based upon the pro forma projections for such Hotel Property
made at the time of acquisition of such Hotel Property.
(o) Other Requirements. In addition, the following:
------------------
(i) As certified in writing by the Borrower to the Administrative
Agent and the Banks at least 10 Business Days prior to the date the
Borrower proposes such Hotel Property qualify as an Eligible Property, the
Hotel Property individually qualifies as an Eligible Property and the
addition of the Hotel Property as an Eligible Property shall not (A) cause
the Eligible Properties in the aggregate to violate the Borrowing Base
Requirements, (B) cause a Default, or (C) cause or result in the Borrower
or the Parent failing to comply with any of the financial covenants
contained herein; and
(ii) The Borrower shall have delivered to the Administrative Agent
and the Banks the Property Information for such Hotel Property 10 days
prior to the date the Borrower proposes such Hotel Property qualify as an
Eligible Property.
(p) Other Actions. Borrower shall have executed and acknowledged (or
-------------
caused to be executed and acknowledged) and delivered to the Documentation
Agent, on behalf of the Banks, all documents, and taken all actions reasonably
required by Agents from time to time to confirm the rights created or now or
hereafter intended to be created under the Credit Documents, or otherwise to
carry out the purposes of the Credit Documents, and the transactions
contemplated thereunder. The Agents shall have received all other evidence and
information that they may reasonably require.
Upon 10 days prior written notice from the Borrower to the Administrative Agent,
but no more often than once in any calendar month for a particular Hotel
Property, the Borrower can designate that a Hotel Property be added (subject to
the other requirements for a Hotel Property qualifying as an Eligible Property)
or deleted as an Eligible Property. Such notice shall be accompanied by a
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Property Adjustment Report with respect to such addition or deletion and (a)
with respect to an addition, the certificate required under Section 3.03(o)(i)
and (b) with respect to a deletion, Borrower's certification in such detail as
reasonably required by the Administrative Agent that such deletion shall not (A)
cause the Eligible Properties in the aggregate to violate the Borrowing Base
Requirements, (B) cause a Default, or (C) cause or result in the Borrower or the
Parent failing to comply with any of the financial covenants contained herein.
Notwithstanding anything contained in this Agreement to the contrary, the
Majority Banks in their reasonable discretion may upon 30 days prior written
notice to the Borrower designate that a Hotel Property is no longer an Eligible
Property upon their determination that such Hotel Property does not satisfy the
Borrowing Base Requirements.
If no Default exists at such time, then in connection with any deletion of a
Hotel Property from qualifying as an Eligible Property, any Borrower's
Subsidiary which owned or leased such Hotel Property, but not any other Eligible
Property, shall be released from such Subsidiaries obligations under the
Guaranty.
Schedule 3.03 sets forth a list of conditions precedent to certain Hotel
Properties qualifying as Eligible Properties which have not been satisfied as of
the Effective Date. Such outstanding conditions precedent shall not prevent
each such Hotel Property from being deemed an Eligible Property as of and after
the Effective Date; provided that for any such Hotel Property the conditions
precedent listed on Schedule 3.03 for such Hotel Property are satisfied prior
to the satisfaction date stated for such condition precedent on Schedule 3.03.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.01 Existence; Qualification; Partners; Subsidiaries.
------------------------------------------------
(a) The Borrower is a limited partnership duly organized, validly
existing, and in good standing under the laws of Delaware and in good standing
and qualified to do business in each jurisdiction where its ownership or lease
of property or conduct of its business requires such
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qualification, except where the failure to so qualify would not have a material
adverse effect on the Borrower.
(b) The Parent is a corporation duly organized, validly existing, and in
good standing under the laws of Maryland and in good standing and qualified to
do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Parent. The Parent
owns 100% of the issued and outstanding shares of the General Partner and AGH
LP. The Parent has no first tier Subsidiaries (other than the General Partner
and AGH LP).
(c) The General Partner is the Borrower's sole general partner with full
power and authority to bind the Borrower. The General Partner is a corporation
duly organized, validly existing, and in good standing under the laws of Nevada
and in good standing and qualified to do business in each jurisdiction where its
ownership or lease of property or conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the General Partner.
(d) AGH LP is a limited partnership duly organized, validly existing, and
in good standing under the laws of Nevada and in good standing and qualified to
do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on AGH LP.
(e) As of the date of this Agreement, the General Partner owns a 1%
general partner interest in and AGH LP owns an approximately 83.83% limited
partnership interest in the Borrower.
(f) Each Subsidiary of the Borrower is a limited partnership, general
partnership or limited liability company duly organized, validly existing, and
in good standing under the laws of its jurisdiction of formation and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on such Subsidiary. The Borrower has no Subsidiaries on the date of this
Agreement other than the Subsidiaries listed on the attached Schedule 4.01, and
Schedule 4.01 lists the jurisdiction of formation and the address of the
principal office of each such Subsidiary existing on the date of this Agreement.
As of the date of
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this Agreement, the Borrower owns, directly or indirectly, at least 99% of the
interests in each such Subsidiary.
(g) To the knowledge of the Borrower, each Participating Lessee is a
limited partnership duly organized, validly existing, and in good standing under
the laws of the state of its creation and in good standing and qualified to do
business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Participating Lessee.
To the knowledge of the Borrower, the sole general partner of AGH Leasing is
AGHL GP, Inc. As of the date of this Agreement, to the knowledge of Borrower,
James Sowell, Louis Shaw and Kenneth Shaw legally and beneficially own, directly
or indirectly, approximately 77% of the partnership interests in AGH Leasing.
As of the date of this Agreement, to the knowledge of Borrower, Steven D. Jorns,
Bruce G. Wiles, and Kenneth E. Barr legally and beneficially own approximately
23% of the partnership interests in AGH Leasing. To the knowledge of the
Borrower, the sole general partner of TT Leasing is AGH Leasing. As of the date
of this Agreement, to the knowledge of Borrower, AGH Leasing legally and
beneficially owns, directly or indirectly, approximately 51% of the partnership
interests in TT Leasing.
(h) To the knowledge of Borrower, AGHI is a corporation duly organized,
validly existing, and in good standing under the laws of Texas and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on AGHI. To the knowledge of the Borrower, as of the date of this Agreement,
James Sowell, Louis Shaw and Kenneth Shaw legally and beneficially own, directly
or indirectly, approximately 79% of the outstanding shares of AGHI common stock.
To the knowledge of the Borrower, as of the date of this Agreement, Steven D.
Jorns and Bruce G. Wiles legally and beneficially own approximately 21% of the
outstanding shares of AGHI common stock.
Section 4.02 Partnership and Corporate Power. The execution, delivery,
-------------------------------
and performance by the Borrower, the Parent, and each Guarantor of the Credit
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby (a) are within such Persons' partnership,
limited liability company and corporate powers, as applicable, (b) have been
duly authorized by all necessary corporate, limited liability company and
partnership action, as applicable, (c) do not contravene (i) such Person's
certificate or articles, as the case may be, of incorporation or by-laws,
operating agreement or partnership agreement, as applicable, or (ii) any law or
any
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contractual restriction binding on or affecting any such Person, the
contravention of which could reasonably be expected to cause a Material Adverse
Change, and (d) will not result in or require the creation or imposition of any
Lien prohibited by this Agreement. At the time of each Borrowing, such Borrowing
and the use of the proceeds of such Borrowing will be within the Borrower's
partnership powers, will have been duly authorized by all necessary partnership
action, (a) will not contravene (i) the Borrower's partnership agreement or (ii)
any law or any contractual restriction binding on or affecting the Borrower, the
contravention of which could reasonably be expected to cause a Material Adverse
Change, and (b) will not result in or require the creation or imposition of any
Lien prohibited by this Agreement.
Section 4.03 Authorization and Approvals. No authorization or approval
---------------------------
or other action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery and performance by the Borrower, the
Parent, or any Guarantor of the Credit Documents to which it is a party or the
consummation of the transactions contemplated thereby. At the time of each
Borrowing, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority will be required for such Borrowing or
the use of the proceeds of such Borrowing the absence of which could reasonably
be expected to cause a Material Adverse Change.
Section 4.04 Enforceable Obligations. This Agreement, the Notes, and the
-----------------------
other Credit Documents to which the Borrower is a party have been duly executed
and delivered by the Borrower; each Guaranty and the other Credit Documents to
which each Guarantor and the Parent is a party have been duly executed and
delivered by such Guarantor and the Environmental Indemnity has been duly
executed and delivered by the parties thereto. Each Credit Document is the
legal, valid, and binding obligation of the Borrower, the Parent, and each
Guarantor which is a party to it enforceable against the Borrower, the Parent,
and each such Guarantor in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights generally
and by general principles of equity (whether considered in proceeding at law or
in equity).
Section 4.05 Parent Common Stock. The entire authorized capital stock of
-------------------
the Parent consists of 100,000,000 shares of Parent Common Stock of which
21,804,480 shares of Parent Common Stock are duly and validly issued and
outstanding, fully paid and nonassessable as of February 1, 1998. The issuance
and sale of such Parent Common Stock either (i) has been registered under
applicable federal and state securities laws or (ii) was issued pursuant to an
exemption therefrom. The Parent Common Stock shall at all times be duly listed
on the New York Stock Exchange, Inc. and the Parent shall use commercially
reasonable efforts to timely file all reports required to be filed by it with
the New York Stock
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Exchange, Inc. and the Securities and Exchange Commission. The Parent qualifies
as a REIT.
Section 4.06 Financial Statements.
--------------------
The Consolidated balance sheet of the Parent and its Subsidiaries, and
the related Consolidated statements of operations, shareholders' equity and cash
flows, of the Parent and its Subsidiaries contained in the Financial Statements,
fairly present the financial condition in all material respects and reflects the
Indebtedness of the Parent and its Subsidiaries as of the dates indicated in the
Financial Statements and the results of the operations of the Parent and its
Subsidiaries for the periods indicated, and such balance sheet and statements
were prepared in accordance with GAAP, subject to year-end adjustments. Since
the date of such statements, no Material Adverse Change has occurred. The
Minority Interest Adjustment amount as of December 31, 1997 is approximately
$10,300,000.
Section 4.07 True and Complete Disclosure. No representation, warranty,
----------------------------
or other statement made by the Borrower (or on behalf of the Borrower) in this
Agreement or any other Credit Document contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made as of the date of this Agreement. There is no fact known
to any Responsible Officer of the Borrower or the Parent on the date of this
Agreement that has not been disclosed to the Agents which could reasonably be
expected to cause a Material Adverse Change. All projections, estimates, and
pro forma financial information furnished by the Borrower and the Parent or on
behalf of the Borrower or the Parent were prepared on the basis of assumptions,
data, information, tests, or conditions believed to be reasonable at the time
such projections, estimates, and pro forma financial information were furnished.
No representation, warranty or other statement made in the Parent's latest 10K,
the 10Q or the annual report contains any untrue statement of material fact or
omits to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made as
of the date same were made. Borrower and/or Parent have made all filings
required by the Exchange Act.
Section 4.08 Litigation. Except as set forth in the attached Schedule
----------
4.08, there is no pending or, to the best knowledge of the Borrower, threatened
action or proceeding affecting the Borrower, the Parent, the Manager, any
Participating Lessee or any of their respective Subsidiaries
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before any court, Governmental Authority or arbitrator (provided that with
respect to the giving of this representation after the date of this Agreement,
the representation shall only be deemed to apply to those matters for which
Administrative Agent would have been entitled to notice under Section 5.05(n)).
Section 4.09 Use of Proceeds.
---------------
(a) Advances. The proceeds of the Advances have been, and will be used by
--------
the Borrower (i) to repay the Existing Lenders who are not Banks, (ii) to
refinance other existing Indebtedness secured by Hotel Properties, (iii) to make
investments permitted pursuant to the provisions of Section 6.07, (iv) to
finance the renovation, repair, restoration and expansion of Hotel Properties,
Capital Expenditures for and expenditures for FF&E for any Hotel Properties in
accordance with the provisions of Section 5.06 and as permitted pursuant to the
provisions of Sections 6.07 and 6.14, (v) for general corporate purposes of the
Borrower and its Subsidiaries, (vi) for costs incurred in connection with any
Capitalization Event done in compliance with this Agreement, and (vii) if no
Blockage Period is then in effect, then to repay Subordinate Indebtedness.
(b) Regulations. No proceeds of Advances will be used to purchase or
-----------
carry any margin stock in violation of Regulations G, T, U or X of the Federal
Reserve Board, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof. The Borrower is not engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Federal Reserve Board).
Section 4.10 Investment Company Act. Neither the Borrower, the Parent
----------------------
nor any of their respective Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 4.11 Taxes. All federal, state, local and foreign tax returns,
-----
reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by the Borrower, its Subsidiaries, or
any member of a Controlled Group have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns, reports and
statements are required to be filed, and where the failure to file could
reasonably be expected to cause a Material Adverse Change, except where
contested in good faith and by appropriate proceedings; and all taxes and other
impositions due and payable (which are material in amount) have been timely paid
prior to the date on which any fine, penalty, interest, late charge or loss
(which are material in amount)
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may be added thereto for non-payment thereof except where contested in good
faith and by appropriate proceedings. As of the date of this Agreement, neither
the Borrower nor any member of a Controlled Group has given, or been requested
to give, a waiver of the statute of limitations relating to the payment of any
federal, state, local or foreign taxes or other impositions. None of the
Property owned by the Borrower or any other member of a Controlled Group is
Property which the Borrower or any member of a Controlled Group is required to
be treated as being owned by any other Person pursuant to the provisions of
Section 168(f)(8) of the Code. Proper and accurate amounts have been withheld by
the Borrower and all members of each Controlled Group from their employees for
all periods to comply in all material respects with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law. Timely payment of all material sales and use taxes required by
applicable law have been made by the Borrower and all other members of each
Controlled Group, the failure to timely pay of which could reasonably be
expected to cause a Material Adverse Change. The amounts shown on all tax
returns to be due and payable have been paid in full or adequate provision
therefor is included on the books of the appropriate member of the applicable
Controlled Group.
Section 4.12 Pension Plans. All Plans are in compliance in all material
-------------
respects with all applicable provisions of ERISA. No Termination Event has
occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) has occurred and there has been no excise tax imposed
under Section 4971 of the Code. To the knowledge of any Responsible Officer of
the Borrower, no Reportable Event has occurred with respect to any Multiemployer
Plan, and each Multiemployer Plan has complied with and been administered in all
material respects with applicable provisions of ERISA and the Code. To the
knowledge of any Responsible Officer of the Borrower, neither the Borrower nor
any member of a Controlled Group has had a complete or partial withdrawal from
any Multiemployer Plan for which there is any material withdrawal liability. As
of the most recent valuation date applicable thereto, neither the Borrower nor
any member of a Controlled Group has received notice that any Multiemployer Plan
is insolvent or in reorganization.
Section 4.13 Condition of Hotel Property; Casualties; Condemnation.
-----------------------------------------------------
Except as disclosed in an Engineering Report, each Initial Property and any
Future Property except a Permitted Non-Eligible Property (a) is and will
continue to be in good repair, working order and condition, normal wear and tear
excepted, (b) is free of structural defects, (c) is not subject to material
deferred maintenance and (d) has and will have all building systems contained
therein and all other FF&E
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in good repair, working order and condition, normal wear and tear excepted. None
of the Properties of the Borrower or of any of its Subsidiaries has been
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by a Governmental Authority, riot, activities
of armed forces or acts of God or of any public enemy. No condemnation or other
like proceedings that has had, or could reasonably be expected to result in, a
Material Adverse Effect, are pending and served nor, to the knowledge of the
Borrower, threatened against any Property in any manner whatsoever. No casualty
has occurred to any Property that could reasonably be expected to have a
Material Adverse Effect.
Section 4.14 Insurance. The Borrower and each of its Subsidiaries carry
---------
the insurance required pursuant to the provisions of Section 5.07.
Section 4.15 No Burdensome Restrictions; No Defaults.
---------------------------------------
(a) Except in connection with Indebtedness which is (i) either permitted
pursuant to the provisions of Section 6.02, or (ii) being repaid with the
proceeds of the initial Borrowing, neither the Borrower nor any of its
Subsidiaries is a party to any indenture, loan or credit agreement. Neither the
Borrower, the Parent nor any of their respective Subsidiaries is a party to any
agreement or instrument or subject to any charter or corporate restriction or
provision of applicable law or governmental regulation which could reasonably be
expected to cause a Material Adverse Change. Neither the Borrower, the Parent
nor any of their Subsidiaries is in default under or with respect to (i) any
contract, agreement, lease or other instrument which could reasonably be
expected to cause a Material Adverse Change or (ii) any Ground Lease,
Participating Lease, Franchise Agreement or Management Agreement except as
disclosed to the Administrative Agent in writing prior to the date such
representation is deemed given. Neither the Borrower, the Parent nor any of
their Subsidiaries has received any notice of default under any material
contract, agreement, lease or other instrument which is continuing and which, if
not cured, could reasonably be expected to cause a Material Adverse Change.
(b) No Default has occurred and is continuing (or with respect to the
giving of this representation after the date of this Agreement, as otherwise
disclosed to the Administrative Agent in writing after the date of this
Agreement and prior to the date such representation is deemed given).
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Section 4.16 Environmental Condition.
-----------------------
(a) Except as disclosed in the Environmental Reports (or with respect to
the giving of this representation after the date of this Agreement, as otherwise
disclosed to the Administrative Agent in writing after the date of this
Agreement and prior to the date such representation is deemed given), to the
knowledge of the Borrower, the Borrower and its Subsidiaries (i) have obtained
all Environmental Permits material for the ownership and operation of their
respective Properties and the conduct of their respective businesses; (ii) have
been and are in material compliance with all terms and conditions of such
Environmental Permits and with all other requirements of applicable
Environmental Laws; (iii) have not received notice of any violation or alleged
violation of any Environmental Law or Environmental Permit; and (iv) are not
subject to any actual or contingent Environmental Claim.
(b) Except as set forth in the Environmental Reports or the surveys for
the Hotel Properties, to the knowledge of Borrower, none of the present or
previously owned or operated Property of the Borrower or of any of its present
or former Subsidiaries, wherever located, (i) has been placed on or proposed to
be placed on the National Priorities List, the Comprehensive Environmental
Response Compensation Liability Information System list, or their state or local
analogs, or have been otherwise investigated, designated, listed, or identified
as a potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity under any Environmental Laws which could
reasonably be expected to cause a Material Adverse Change; (ii) is subject to a
Lien, arising under or in connection with any Environmental Laws, that attaches
to any revenues or to any Property owned or operated by the Borrower or any of
its Subsidiaries, wherever located; (iii) has been the site of any Release, use
or storage of Hazardous Substances or Hazardous Wastes from present or past
operations except for Permitted Hazardous Substances, which Permitted Hazardous
Substances have not caused at the site or at any third-party site any condition
that has resulted in or could reasonably be expected to result in the need for
Response or (iv) none of the Improvements are constructed on land designated by
any Governmental Authority having land use jurisdiction as wetlands.
Section 4.17 Legal Requirements, Zoning, Utilities, Access. Except as
---------------------------------------------
set forth on Schedule 4.17 attached hereto, the use and operation of each Hotel
Property as a commercial hotel with related uses constitutes a legal use under
applicable zoning regulations (as the same may be modified by special use
permits or the granting of variances) and complies in all material respects with
all Legal Requirements, and does not violate in any material respect any
material approvals,
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material restrictions of record or any material agreement affecting any Hotel
Property (or any portion thereof). The Borrower and its Subsidiaries possess all
certificates of public convenience, authorizations, permits, licenses, patents,
patent rights or licenses, trademarks, trademark rights, trade names rights and
copyrights (collectively "Permits") required by Governmental Authority to own
and operate the Hotel Properties, except for those Permits if not obtained would
not cause a Material Adverse Change. The Borrower and its Subsidiaries own and
operate their business in material compliance with all applicable Legal
Requirements. To the extent necessary for the full utilization of each Hotel
Property in accordance with its current use, telephone services, gas, steam,
electric power, storm sewers, sanitary sewers and water facilities and all other
utility services are available to each Hotel Property, are adequate to serve
each such Hotel Property, exist at the boundaries of the Land and are not
subject to any conditions, other than normal charges to the utility supplier,
which would limit the use of such utilities. All streets and easements necessary
for the occupancy and operation of each Hotel Property are available to the
boundaries of the Land.
Section 4.18 Existing Indebtedness. Except for the Obligations, the only
---------------------
Indebtedness of the Borrower, the Parent or any of their respective Subsidiaries
existing as of the Effective Date is the Secured Non-Recourse Indebtedness,
Secured Recourse Indebtedness and Subordinate Indebtedness set forth on Schedule
4.18 attached hereto. No "default" or "event of default", however defined, has
occurred and is continuing under any such Indebtedness (or with respect to the
giving of this representation after the date of this Agreement, as otherwise
disclosed to the Administrative Agent in writing after the date of this
Agreement and prior to the date such representation is deemed given).
Section 4.19 Title; Encumbrances. With respect to the Initial
-------------------
Properties, the Borrower or any Guarantor, as the case may be, has (i) good and
marketable fee simple title to the Real Property (other than for Real Property
subject to a ground lease, as to which it has a valid leasehold or subleasehold
interest) and (ii) good and marketable title to the Personal Property (other
than Personal Property for any Hotel Property (A) which has been leased which
does not in the aggregate exceed the Hotel Operating Lease Limit or the Hotel
Capital Lease Limit, as applicable, for such Hotel Property and (B) for which
the Property Owner has a valid leasehold interest) free and clear of all Liens,
and there exists no Liens or other charges against such Property or leasehold
interest or any of the real or personal, tangible or intangible, Property of the
Borrower or any Guarantor (including without limitation statutory and other
Liens of mechanics, workers, contractors, subcontractors, suppliers, taxing
authorities and others; provided that certain Capital Expenditures have been
made to the Hotel Properties prior to the Effective Date for which the payment
is not past due), except (A)
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Permitted Encumbrances and (B) the Personal Property (plus any replacements
thereof) owned by the Participating Lessee.
Section 4.20 Leasing Arrangements. The only material leases of Real
--------------------
Property for which either the Borrower or a Guarantor is a lessee are the Ground
Leases. The Property Owner for a Real Property subject to a Ground Lease is the
lessee under such Ground Lease and no consent is necessary to such Person being
the lessee under such Ground Lease which has not already been obtained. The
Ground Leases are in full force and effect and no defaults exist thereunder. The
only material leases burdening the Hotel Properties for which the lessee is
entitled to participate in the increased revenues of the Hotel Properties are
the Participating Leases. The Participating Leases are in full force and effect
and no defaults by the Borrower or any Subsidiary exist thereunder.
Section 4.21 Franchise Agreements. The only hotel franchise agreements
--------------------
burdening the Initial Properties (excluding the Permitted Non-Eligible
Properties) are the Franchise Agreements. The Participating Lessee for a Hotel
Property subject to a Franchise Agreement is the licensee under such Franchise
Agreement and no consent is necessary to such Person being the licensee under
such Franchise Agreement which has not already been obtained. The Franchise
Agreements are in full force and effect and no material defaults by the Borrower
or any Subsidiary exist thereunder (or with respect to the giving of this
representation after the date of this Agreement, as otherwise disclosed to the
Administrative Agent in writing after the date of this Agreement and prior to
the date such representation is deemed given). Schedule 4.21 sets forth, as of
the date of this Agreement, (a) which Franchise Agreements the Borrower expects
to terminate, (b) the expected date of such termination, (c) the expected fees,
if any, which will be owed to the Franchisor being terminated in connection with
such termination and (d) the expected replacement Franchisor and the material
terms of the expected replacement Franchise Agreement.
Section 4.22 Management Agreements. The only management agreements
---------------------
burdening the Initial Properties (excluding the Permitted Non-Eligible
Properties) are the Management Agreements. To the knowledge of the Borrower, the
Participating Lessee for a Hotel Property subject to a Management Agreement is
the owner under such Management Agreement and no consent is necessary to such
Person being the owner under such Management Agreement which has not already
been obtained. To the knowledge of the Borrower, the Management Agreements are
in full force and effect and no material defaults by the Participating Lessee
exist thereunder (or with respect to the giving of this representation after the
date of this Agreement, as otherwise disclosed
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to the Administrative Agent in writing after the date of this Agreement and
prior to the date such representation is deemed given).
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Bank shall have
any Commitment hereunder, unless the Administrative Agent shall otherwise
consent in writing, the Borrower agrees to comply with the following covenants.
Section 5.01 Compliance with Laws, Etc. The Borrower will comply, and
-------------------------
cause each of its Subsidiaries to comply, in all material respects with all
Legal Requirements.
Section 5.02 Preservation of Corporate Existence; Corporate Separateness,
------------------------------------------------------------
Etc.
- ---
(a) The Borrower will preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its partnership, limited liability
company or corporate (as applicable) existence, rights, franchises and
privileges in the jurisdiction of its formation, and qualify and remain
qualified, and cause each such Subsidiary to qualify and remain qualified, as a
foreign partnership or corporation as applicable in each jurisdiction in which
qualification is necessary or desirable in view of its business and operations
or the ownership of its properties, and, in each case, where failure to qualify
or preserve and maintain its rights and franchises could reasonably be expected
to cause a Material Adverse Change.
(b) The Borrower shall cause the Permitted Other Subsidiaries which have
Indebtedness and own a Hotel Property to, (i) maintain financial statements,
payroll records, accounting records and other corporate records and other
documents separate from each other and any other Person, (ii) maintain its own
bank accounts in its own name, separate from each other and any other Person,
(iii) pay its own expenses and other liabilities from its own assets and incur
(or endeavor to incur) obligations to other Persons based solely upon its own
assets and creditworthiness and not upon the creditworthiness of each other or
any other Person, and (iv) file its own tax returns or, if part of a
consolidated group, join in the consolidated tax return of such group as a
separate member thereof. The Borrower shall use reasonable efforts to correct
any known misunderstanding or
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misrepresentation regarding the independence of the Permitted Other Subsidiaries
from the Borrower and the Borrower's other Subsidiaries.
(c) The Borrower shall, and shall cause the Permitted Other Subsidiaries
which have Indebtedness and own a Hotel Property to, take all actions necessary
to keep such Permitted Other Subsidiaries, separate from the Borrower and the
Borrower's other Subsidiaries, including, without limitation, (i) the taking of
action under the direction of the Board of Directors, members or partners, as
applicable, of such Permitted Other Subsidiaries and, if so required by the
Certificate of Incorporation or the Bylaws, operating agreement or partnership
agreement, as applicable, of such Permitted Other Subsidiaries or by any Legal
Requirement, the approval or consent of the stockholders, members or partners,
as applicable, of such Permitted Other Subsidiaries, (ii) the preparation of
corporate, partnership or limited liability company minutes for or other
appropriate evidence of each significant transaction engaged in by such
Permitted Other Subsidiaries, (iii) the observance of separate approval
procedures for the adoption of resolutions by the Board of Directors or consents
by the partners, as applicable, of such Permitted Other Subsidiaries, on the one
hand, and of the Borrower and the Borrower's other Subsidiaries, on the other
hand, (iv) the holding of the annual stockholders meeting, if applicable, of
such Permitted Other Subsidiaries, which are corporations on a date other than
the date of the annual stockholders' meeting of the General Partner or AGH LP,
and (v) preventing the cash, cash equivalents, credit card receipts or other
revenues of the Hotel Properties owned by such Permitted Other Subsidiaries or
any other assets of such Permitted Other Subsidiaries from being commingled with
the cash, cash equivalents, credit card receipts or other revenues collected by
the Borrower or the Borrower's other Subsidiaries.
(d) The Borrower shall, and shall cause the Permitted Other Subsidiaries
to, manage the business of and conduct the administrative activities of the
Permitted Other Subsidiaries independently from the business of the Borrower,
any of the Borrower's other Subsidiaries and any other Person. Any moneys earned
by the Permitted Other Subsidiaries on their assets or proceeds of the sale of
any of their assets shall be deposited in bank accounts separate from any of the
assets of the Borrower, any of the Borrower's other Subsidiaries and any other
Person, and no assets of the Permitted Other Subsidiaries shall become
commingled with assets of such Persons.
(e) The Borrower shall hold itself out, and shall continue to hold itself
out, to the public and to its creditors as a legal entity, separate and distinct
from all other entities, and shall continue to take all steps reasonably
necessary to avoid (i) misleading any other Person as to the identity of the
entity with which such Person is transacting business or (ii) implying that the
Borrower is,
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directly or indirectly, absolutely or contingently, responsible for the
Indebtedness or other obligations of the Permitted Other Subsidiaries or any
other Person.
Section 5.03 Payment of Taxes, Etc. The Borrower will pay and discharge,
---------------------
and cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or Property that are material in
amount, prior to the date on which penalties attach thereto and (b) all lawful
claims that are material in amount which, if unpaid, might by Legal Requirement
become a Lien upon its Property; provided, however, that neither the Borrower
-------- -------
nor any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim (a) which is being contested in good faith
and by appropriate proceedings, (b) with respect to which reserves in conformity
with GAAP have been provided, (c) such charge or claim does not constitute and
is not secured by any choate Lien on any portion of any Hotel Property and no
portion of any Hotel Property is in jeopardy of being sold, forfeited or lost
during or as a result of such contest, (d) neither the Agents nor any Bank could
become subject to any civil fine or penalty or criminal fine or penalty, in each
case as a result of non-payment of such charge or claim and (e) such contest
does not, and could not reasonably be expected to, result in a Material Adverse
Change.
Section 5.04 Visitation Rights; Bank Meeting. At any reasonable time and
-------------------------------
from time to time and so long as any visit or inspection will not unreasonably
interfere with the Borrower's or any of its Subsidiaries' operations, upon
reasonable notice, the Borrower will, and will cause its Subsidiaries to, permit
the Agents and any Bank or any of its agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit and inspect at its reasonable discretion the properties of, the
Borrower and any such Subsidiary, to discuss the affairs, finances and accounts
of the Borrower and any such Subsidiary with any of their respective officers or
directors. Without in any way limiting the foregoing, the Borrower will, upon
the request of either Agent, participate in a meeting with the Agents and the
Banks once during each calendar year to be held at the Borrower's office in
Dallas, Texas (or such other location as may be agreed to by the Borrower and
the Agents) at such time as may be agreed to by the Borrower and the Agents.
Section 5.05 Reporting Requirements. The Borrower will furnish to the
----------------------
Administrative Agent and each Bank:
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(a) Quarterly Financials. As soon as available and in any event not later
--------------------
than 50 days after the end of each Fiscal Quarter of the Parent, the unaudited
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such quarter and the related unaudited statements of income, shareholders'
equity and cash flows of the Parent and its Subsidiaries for the period
commencing at the end of the previous year and ending with the end of such
Fiscal Quarter, and the corresponding figures as at the end of, and for, the
corresponding period in the preceding Fiscal Year, all duly certified with
respect to such statements (subject to year-end audit adjustments) by a
Responsible Officer of the Parent as having been prepared in accordance with
GAAP, together with (i) a Compliance Certificate duly executed by a Responsible
Officer of the Parent, (ii) a completed Borrowing Base Certificate duly executed
by a Responsible Officer of the Parent setting forth the components of the
Borrowing Base as of the last day of the immediately preceding Fiscal Quarter,
(iii) a certificate in form similar to the Borrowing Base Certificate duly
executed by a Responsible Officer of the Parent setting forth for those Hotel
Properties owned or leased by the Parent or any of its Subsidiaries except for
the Eligible Properties the Adjusted EBITDA for the Rolling Period just ended
and Cost Basis, separately totaled for those Hotel Properties which are
unencumbered, those Hotel Properties which secure Secured Recourse Indebtedness
and those Hotel Properties which secure Secured Non-Recourse Indebtedness, (iv)
written notice of any anticipated material variation to an operating budget
prepared pursuant to Section 5.05(e) and (v) a report certified by a Responsible
Officer of the Parent setting forth for each of the Hotel Properties owned or
leased by the Parent or any of its Subsidiaries for the Fiscal Quarter just
ended the average daily rate, the average occupancy, the RevPAR, the total gross
revenues, the total expenses and the Adjusted EBITDA for such Hotel Properties.
(b) Annual Financials. As soon as available and in any event not later
-----------------
than 95 days after the end of each Fiscal Year of the Parent, a copy of the
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such Fiscal Year and the related Consolidated statements of income,
shareholders' equity and cash flows of the Parent and its Subsidiaries for such
Fiscal Year, and the corresponding figures as at the end of, and for, the
preceding Fiscal Year, and certified by Coopers & Lybrand L.L.P. or other
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Agents in an opinion, without qualification as to
the scope, and including, if requested by either Agent, any management letters
delivered by such accountants to the Parent in connection with such audit,
together with (i) a Compliance Certificate duly executed by a Responsible
Officer of the Parent, (ii) a completed Borrowing Base Certificate duly executed
by a Responsible Officer of the Parent setting forth the components of the
Borrowing Base as of the day
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of such financial statements and (iii) the documents required in clauses (iii),
(iv) and (v) of the preceding Section 5.05(a).
(c) Manager Financials. As soon as available and in any event not later
------------------
than 120 days after the end of each Fiscal Year of AGHI, as applicable, a copy
of the annual audit report for such year for AGHI and its Subsidiaries, if any,
including therein an audited Consolidated balance sheet of AGHI and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
Consolidated statements of income, shareholders' equity and cash flows of AGHI
and its Subsidiaries for such Fiscal Year, and the corresponding figures as at
the end of, and for, the preceding Fiscal Year, in each case certified by an
independent certified public accountant reasonably acceptable to the Agents and
including, if requested by either Agent, any management letters delivered by
such accountants to AGHI in connection with such audit.
(d) AGH Leasing Financials. As soon as available and in any event not
----------------------
later than 50 days after the end of each Fiscal Quarter of AGH Leasing, the
unaudited Consolidated balance sheets of AGH Leasing and its Subsidiaries as of
the end of such quarter and the related unaudited statements of income,
shareholders' equity and cash flows of AGH Leasing and its Subsidiaries for the
period commencing at the end of the previous year and ending with the end of
such Fiscal Quarter, and the corresponding figures as at the end of, and for,
the corresponding period in the preceding Fiscal Year, all duly certified with
respect to such statements (subject to year-end audit adjustments) by a
Responsible Officer of AGH Leasing as having been prepared in accordance with
GAAP. As soon as available and in any event not later than 120 days after the
end of each fiscal year of AGH Leasing, as applicable, (i) a copy of the annual
audit report for such year for AGH Leasing and its Subsidiaries, if any,
including therein audited Consolidated balance sheets of AGH Leasing and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
Consolidated statements of income, shareholders' equity and cash flows of AGH
Leasing and its Subsidiaries for such fiscal year, and the corresponding figures
as at the end of, and for, the preceding fiscal year, in each case certified by
an independent certified public accountant reasonably acceptable to the Agents
and including, if requested by either Agent, any management letters delivered by
such accountants to AGH Leasing in connection with such audit.
(e) Annual Budgets. Prior to the start of each Fiscal Year, the
--------------
Consolidated annual operating budget of the Parent and its Subsidiaries for such
upcoming Fiscal Year in reasonable detail and duly certified by a Responsible
Officer of the Parent as the budgets presented or to be presented to the
Parent's Board of Directors for their review.
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(f) Securities Law Filings. Promptly and in any event within 15 days after
----------------------
the sending or filing thereof, copies of all proxy material, reports and other
information which the Borrower, the Parent or any of their respective
Subsidiaries sends to or files with the United States Securities and Exchange
Commission or sends to all shareholders of the Parent or partners of the
Borrower.
(g) Defaults. As soon as possible and in any event within five days after
--------
the occurrence of each Default known to a Responsible Officer of the Borrower,
the Parent or any of their respective Subsidiaries, a statement of an authorized
financial officer or Responsible Officer of the Borrower setting forth the
details of such Default and the actions which the Borrower has taken and
proposes to take with respect thereto.
(h) ERISA Notices. As soon as possible and in any event (i) within 30 days
-------------
after the Borrower or any of a Controlled Group knows to know that any
Termination Event described in clause (a) of the definition of Termination Event
with respect to any Plan has occurred, (ii) within 10 days after the Borrower or
any of a Controlled Group knows that any other Termination Event with respect to
any Plan has occurred, a statement of the Chief Financial Officer of the
Borrower describing such Termination Event and the action, if any, which the
Borrower or such member of such Controlled Group proposes to take with respect
thereto; (iii) within 10 days after receipt thereof by the Borrower or any of a
Controlled Group from the PBGC, copies of each notice received by the Borrower
or any such member of such Controlled Group of the PBGC's intention to terminate
any Plan or to have a trustee appointed to administer any Plan; and (iv) within
10 days after receipt thereof by the Borrower or any member of a Controlled
Group from a Multiemployer Plan sponsor, a copy of each notice received by the
Borrower or any member of such Controlled Group concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA.
(i) Environmental Notices. Promptly upon the knowledge of any Responsible
---------------------
Officer of the Borrower of receipt thereof by the Borrower or any of its
Subsidiaries, a copy of any form of notice, summons or citation received from
the United States Environmental Protection Agency, or any other Governmental
Authority concerning (i) violations or alleged violations of Environmental Laws,
which seeks to impose liability therefor, (ii) any action or omission on the
part of the Parent or Borrower or any of their present or former Subsidiaries in
connection with Hazardous Waste or Hazardous Substances which, based upon
information reasonably available to the Borrower, could reasonably be expected
to cause a Material Adverse Change or an Environmental Claim in excess of
$1,000,000, (iii) any notice of potential responsibility under CERCLA, or (iv)
concerning the
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filing of a Lien upon, against or in connection with the Parent, Borrower, their
present or former Subsidiaries, or any of their leased or owned Property,
wherever located.
(j) Other Governmental Notices or Actions. Promptly and in any event
-------------------------------------
within five Business Days after receipt thereof by the Borrower, the Parent or
any of their respective Subsidiaries, (i) a copy of any notice, summons,
citation, or proceeding seeking to adversely modify in any material respect,
revoke, or suspend any license, permit, or other authorization from any
Governmental Authority, which action could reasonably be expected to cause a
Material Adverse Change, and (ii) any revocation or involuntary termination of
any license, permit or other authorization from any Governmental Authority,
which revocation or termination could reasonably be expected to cause a Material
Adverse Change.
(k) Reports Affecting the Borrowing Base. On or prior to the 5th day
------------------------------------
following any Adjustment Event, a Property Adjustment Report with respect to
such Adjustment Event.
(l) Press Releases. Promptly and in any event within 5 days after the
--------------
sending or releasing thereof, copies of all press releases or other releases of
information to the public by the Borrower, the Parent or any of their respective
Subsidiaries or releases of information to the Parent's shareholders.
(m) Other Notices.
-------------
(i) Upon the request of either Agent, a certified rent roll listing
all of the Real Property of the Borrower and the Guarantors that are
subject to leases and containing such other information regarding such
leases that such Agent may reasonably request,
(ii) As soon as received, a copy of any notice of default or any
other material notice (including without limitation property condition
reviews) received by the Borrower or any Guarantor from any holder of any
Subordinate Indebtedness or any Franchisor, Manager, or any ground lessor
under a Ground Lease, and
(iii) Promptly following any merger or dissolution of any Subsidiary
of the Borrower which is permitted hereunder or event which would make any
of the representations in Section 4.01-4.04 untrue, notice thereof.
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(n) Material Litigation. As soon as possible and in any event within five
-------------------
days of any Responsible Officer of the Borrower, the Parent or any of their
respective Subsidiaries having knowledge thereof, notice of any litigation,
claim or any other event which could reasonably be expected to cause a Material
Adverse Change.
(o) Preliminary Property Plan. Prior to making Capital Expenditures or
-------------------------
FF&E expenditures for the renovation or expansion of a Hotel Property, the
Preliminary Property Plan for such renovation or expansion in sufficient detail
as the Documentation Agent shall reasonably request.
(p) Other Information. Such other information respecting the business or
-----------------
Properties, or the condition or operations, financial or otherwise, of the
Borrower, the Parent or any of their respective Subsidiaries, as any Bank
through the Administrative Agent may from time to time reasonably request.
Section 5.06 Maintenance of Property and Required Work. The Borrower
-----------------------------------------
will, and will cause each of its Subsidiaries to, (a) maintain their owned,
leased, or operated Property in a manner consistent for hotel properties and
related property of the same quality and character and shall keep or cause to be
kept every part thereof and its other properties in good condition and repair,
reasonable wear and tear excepted, and make all reasonably necessary repairs,
renewals or replacements thereto as may be reasonably necessary to conduct the
business of the Borrower and its Subsidiaries, (b) not remove, demolish or
structurally alter, or permit or suffer the removal, demolition or structural
alteration of, any of the Improvements except for the renovation or expansion of
a Hotel Property (i) for which the Borrower has delivered a Preliminary Property
Plan to the Administrative Agent and (ii) complies with the limitations set
forth in this Agreement on the aggregate amount of renovations and expansions
the Borrower, the Parent and their Subsidiaries are permitted at any one time,
(c) not knowingly or willfully permit the commission of waste or other injury,
or the occurrence of pollution, contamination or any other condition in, on or
about any Hotel Property, (d) maintain and repair each Hotel Property as
required by any Franchise Agreement, Management Agreement or ground lease for
such Hotel Property, and (e) commence the Required Work for any Hotel Property
by a date which would allow a reasonable period of time to complete such work on
or prior to the deadline set for such Required Work in Schedule 5.06 or
otherwise agreed to by the Borrower and the Agents, (f) after any commencement
of any of work for any Hotel Property diligently perform such work (i) for the
Required Work, by the required deadline and as described in the Engineering
Reports and/or the Environmental Reports referred to in Schedule 5.06
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or as otherwise described for any Future Property, (ii) in a good and
workmanlike manner and (iii) in compliance in all material respects with all
Legal Requirements. Except as may be required to maintain the Parent's status as
a REIT under the Code, any Capital Expenditures or expenditures or leases for
FF&E made for any Hotel Property shall be in the name of the Property Owner for
such Hotel Property.
Section 5.07 Insurance. The Borrower will maintain, and cause each of its
---------
Subsidiaries to maintain, the insurance required pursuant to Schedule 5.07.
Section 5.08 Casualty; Condemnation. Any proceeds collected (the
----------------------
"Proceeds") under any fire or other physical damage insurance policy described
in this Agreement pertaining to any Hotel Property (excluding the Permitted Non-
Eligible Properties) shall be disbursed as provided in this Section 5.08. If
such casualty would result in a decrease to the Borrowing Base which would
require a prepayment of the Obligations pursuant to the provisions of this
Agreement, then the Borrower shall deliver such Proceeds, up to the amount of
the required prepayment, to the Administrative Agent as a prepayment of the
Obligations. If the Proceeds do not need to be applied against the Obligations
pursuant to the foregoing sentence, then the Borrower is entitled to retain such
Proceeds.
Section 5.09 Supplemental Guaranties. The Borrower has requested and the
-----------------------
Agents have agreed that any partner of the Borrower except the General Partner,
AGH LP or any Guarantor may execute a Supplemental Guaranty. However, the
execution of or release of any Supplemental Guaranty shall not be construed as a
release or modification of any obligation of a Guarantor under a Guaranty or
Environmental Indemnity.
Section 5.10 Participating Leases. Upon knowledge of a material default
--------------------
by a Participating Lessee under a Participating Lease, the Borrower will send,
or will cause the Guarantor who is a party to such Participating Lease to send,
a notice of such default to such Participating Lessee as provided in the
document under which such default has occurred.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Bank shall have
any Commitment, the Borrower
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agrees, unless the Administrative Agent shall otherwise consent in writing, to
comply with the following covenants.
Section 6.01 Liens, Etc. The Borrower will not create, assume, incur or
----------
suffer to exist, or permit any of its Subsidiaries (except for Permitted Other
Subsidiaries) to create, assume, incur, or suffer to exist, any Lien on or in
respect of any of its Property whether now owned or hereafter acquired, or
assign any right to receive income, except that the Borrower and its
Subsidiaries may create, incur, assume or suffer to exist Liens:
(a) securing the Obligations;
(b) for taxes, assessments or governmental charges or levies on Property
of the Borrower or any Guarantor to the extent not required to be paid pursuant
to Sections 5.03;
(c) Liens imposed by law (such as landlords', carriers', warehousemen's
and mechanics' liens or otherwise arising from litigation) (a) which are being
contested in good faith and by appropriate proceedings, (b) with respect to
which reserves in conformity with GAAP have been provided, (c) which have not
resulted in any Hotel Property being in jeopardy of being sold, forfeited or
lost during or as a result of such contest, (d) neither the Agents nor any Bank
could become subject to any civil fine or penalty or criminal fine or penalty,
in each case as a result of non-payment of such charge or claim and (e) such
contest does not, and could not reasonably be expected to, result in a Material
Adverse Change;
(d) on leased personal property to secure solely the lease obligations
associated with such property;
(e) Liens securing Secured Recourse Indebtedness and Secured Non-Recourse
Indebtedness permitted pursuant to the provisions of Section 6.02; and
(f) Liens under the Permitted Non-Voting Stock Mortgages.
Section 6.02 Indebtedness. The Borrower, the Parent and their respective
------------
Subsidiaries will not incur or permit to exist any Indebtedness other than the
Obligations and the following:
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(a) Subordinate Indebtedness for which the cumulative principal
outstanding prior to the Maturity Date is less than or equal to $125,000,000;
provided that no such Indebtedness may be repaid through the incurrence of other
- --------
Indebtedness and provided further that once any such Indebtedness is repaid such
----------------
Indebtedness cannot be reborrowed;
(b) If all Subordinate Indebtedness is repaid in full and no more
Subordinate Indebtedness may be incurred pursuant to the provisions of the
preceding clause (a), then Indebtedness which is less than or equal to
$30,000,000;
(c) Secured Recourse Indebtedness and Secured Non-Recourse Indebtedness
incurred by Permitted Other Subsidiaries (and possibly guaranteed by the Parent)
to the extent (i) that the covenants contained in Article VII are complied with,
(ii) the Secured Recourse Indebtedness secured by a Hotel Property does not
exceed 65% of the market value of such Hotel Property and all Secured Recourse
Indebtedness in the aggregate secured by Hotel Properties does not exceed 65% of
the aggregate market value of such Hotel Properties, and (iii) the Secured Non-
Recourse Indebtedness secured by a Hotel Property does not exceed 70% of the
market value of such Hotel Property and all Secured Non-Recourse Indebtedness in
the aggregate secured by Hotel Properties does not exceed 70% of the aggregate
market value of such Hotel Properties;
(d) Indebtedness in the form of Capital Leases for any particular Hotel
Property which have over the term of such Capital Leases payments in the
aggregate for all such Capital Leases for such Hotel Property for an amount
which does not exceed the Hotel Capital Lease Limit for such Hotel Property;
(e) Indebtedness in the form of Interest Rate Agreements; provided that
(i) such agreements shall be unsecured, (ii) the dollar amount of indebtedness
subject to such agreements and the indebtedness subject to Interest Rate
Agreements in the aggregate shall not exceed the sum of the amount of the
Commitments and the amount of Subordinate Indebtedness, and (iii) the agreements
shall be at such interest rates and otherwise in form and substance reasonably
acceptable to the Agents.
(f) Any of the following Indebtedness incurred by the Parent:
(i) guaranties in connection with the Indebtedness secured by a
Hotel Property of (A) if the Hotel Property is subject to a ground lease,
the payment of rent under such
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ground lease, (B) real estate taxes relating to such Hotel Property, (C)
capital reserves required under such Indebtedness, and (D) after a default
under such Indebtedness, the rent under the applicable Participating Lease
will be applied to such Indebtedness;
(ii) indemnities for certain acts of malfeasance, misappropriation
and misconduct and an environmental indemnity for the lender under
Indebtedness permitted under to this Agreement;
(iii) indemnities for certain acts of malfeasance, misappropriation
and misconduct by the Permitted Other Subsidiaries and environmental
indemnities, all for the benefit of the lenders of other Permitted Other
Subsidiary Indebtedness in connection with such Indebtedness; and
(iv) guaranties of the Franchise Agreements.
(g) extensions, renewals and refinancing of any of the Indebtedness
specified in paragraphs (b) - (f) above so long as the principal amount of such
Indebtedness is not thereby increased.
Notwithstanding anything in this Credit Agreement to the contrary, neither the
Borrower, the Parent, nor any of their respective Subsidiaries shall (a) amend
or modify the subordination or payment terms or financial covenants of any
Subordinated Indebtedness or (b) during any Blockage Period make any payments of
principal of and interest on any Subordinated Indebtedness or make any
redemptions of any Subordinated Indebtedness.
Section 6.03 Agreements Restricting Distributions From Subsidiaries. The
------------------------------------------------------
Borrower will not, nor will it permit any of its Subsidiaries (other than
Permitted Other Subsidiaries) to, enter into any agreement (other than a Credit
Document or the Subordinate Credit Documents) which limits distributions to or
any advance by any of the Borrower's Subsidiaries to the Borrower.
Section 6.04 Restricted Payments. Neither the Parent, the Borrower, nor
-------------------
any of their respective Subsidiaries, will make any Restricted Payment, except
that:
(a) provided no Default has occurred and is continuing or would result
therefrom, the Parent may in any Fiscal Quarter, based on the immediately
preceding Rolling Period, make cash
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payments to its shareholders (including in connection with the repurchase of
Stock or Stock Equivalents) which with the previous such cash payments in the
three immediately preceding Fiscal Quarters are not in excess of the greater of
(i) the lesser of (A) ninety percent (90%) of the Funds From Operations of the
Parent during such Rolling Period or (B) one hundred percent (100%) of Free Cash
Flow of the Parent during such Rolling Period and (ii) the amount required for
the Parent to maintain its status as a REIT;
(b) provided no Default has occurred and is continuing or would result
therefrom, the Borrower shall be entitled to make cash distributions to its
partners and such partners shall be entitled to make cash distributions to the
Parent;
(c) a Subsidiary of the Borrower may make a Restricted Payment to the
Borrower,
(d) the limited partners of the Borrower shall be entitled to exchange
limited partnership interests in the Borrower for the Parent's stock;
(e) the Borrower shall be entitled to issue limited partnership interests
in the Borrower in exchange of ownership interests in Subsidiaries and
Unconsolidated Entities which own a Future Property to the extent such
Investment is permitted pursuant to the provisions of Section 6.07; and
(f) If no Blockage Period is in effect, the Borrower may repay the
Subordinate Indebtedness.
Section 6.05 Fundamental Changes; Asset Dispositions. Neither the
---------------------------------------
Parent, the Borrower, nor any of their respective Subsidiaries (other than the
Permitted Other Subsidiaries) will, (a) merge or consolidate with or into any
other Person, unless (i) a Guarantor is merged into the Borrower and the
Borrower is the surviving Person or a Subsidiary (other than a Permitted Other
Subsidiary which has Indebtedness other than the Obligations) is merged into any
Subsidiary (other than a Permitted Other Subsidiary which has Indebtedness other
than the Obligations), and (ii) immediately after giving effect to any such
proposed transaction no Default would exist; (b) sell, transfer, or otherwise
dispose of all or any of the such Person's material property except for a
Permitted Hotel Sale, dispositions or replacements of personal property in the
ordinary course of business, or Hotel Properties which are not Eligible
Properties; (c) enter into a lease (other than a Participating Lease) of all or
substantially all of any Eligible Property with any Person without the consent
of the Agents; (d) sell or otherwise dispose of any material shares of capital
stock, membership interests or
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partnership interests of any Subsidiary (except for a Permitted Other
Subsidiary); (e) except for sales of ownership interests permitted under this
Agreement and the issuance of limited partnership interests in the Borrower in
exchange for ownership interests in Subsidiaries and Unconsolidated Entities to
the extent permitted pursuant to the provisions of Section 6.04, materially
alter the corporate, capital or legal structure of any such Person (except for a
Permitted Other Subsidiary); (f) liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution) provided that nothing herein shall
prohibit the Borrower from dissolving any Subsidiary which has no assets on the
date of dissolution or (g) materially alter the character of their respective
businesses from that conducted as of the date of this Agreement.
Section 6.06 Personal Property Leases. For any Eligible Property, the
------------------------
Borrower will not, and will not permit any of its Subsidiaries to (a) enter into
leases of Personal Property which constitute Capital Leases in excess of the
Hotel Capital Lease Limit or (b) enter into leases of Personal Property which do
not constitute Capital Leases in excess of the Hotel Operating Lease Limit.
Section 6.07 Investments, Loans, Future Properties. Neither the Parent
-------------------------------------
nor the Borrower shall, or shall permit any of their respective Subsidiaries to,
acquire by purchase or otherwise all or substantially all the business, property
or fixed assets of any Person or any Hotel Property, make or permit to exist any
loans, advances or capital contributions to, or make any Investments in
(including without limitation, loans and advances to, and other Investments in,
Subsidiaries), or purchase or commit to purchase any evidences of indebtedness
of, stock or other securities, partnership interests, member interests or other
interests in any Person, except the following (provided that after giving effect
thereto there shall exist no Default):
(a) the purchase of Liquid Investments with any Person which qualifies as
an Eligible Assignee;
(b) trade and customer accounts receivable (including in connection with
the sale of used FF&E) which are for goods furnished or services rendered in the
ordinary course of business and are payable in accordance with customary trade
terms;
(c) a Future Property which qualifies as an Eligible Property or a
Permitted Non-Eligible Property;
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(d) Investments in unimproved land that either (i) is under development
for operation of a Hotel Property or with respect to which such Hotel Property
development is planned to commence within twelve months of the acquisition of
such land or (ii) does not qualify under the preceding clause (i) and does not
in the aggregate have a Cost Basis which exceeds $20,000,000;
(e) Stock or Stock Equivalents (i) received in settlement of liabilities
created in the ordinary course of business, and (ii) if the Leverage Ratio on
the date of such Investment is less than or equal to 50%, then additional Stock
or Stock Equivalents of publicly-traded Unconsolidated Entities which in the
aggregate do not exceed $25,000,000;
(f) Stock, Stock Equivalents, and other Investments in Unconsolidated
Entities which are not publicly-traded Persons, and Permitted Non-Voting Stock
Investments, provided that the aggregate of all such Stock, Stock Equivalents,
Investments and Permitted Non-Voting Stock Investments shall not exceed
$50,000,000 in the aggregate without the approval of the Majority Banks;
(g) Indebtedness of a Person to the Borrower or to a Subsidiary of the
Borrower that is secured by a Lien on one or more Hotel Properties owned by such
Person, which Hotel Properties (A) were previously owned by the Borrower or a
Subsidiary of the Borrower or (B) the Borrower reasonably expects to acquire
(through trustee's sale, foreclosure, deed in lieu of foreclosure or otherwise),
provided, however, that the aggregate amount of all Investments permitted under
- -------- -------
this clause (g) shall not at any time exceed an amount equal to five percent
(5%) of the Cost Basis in all the Parent's or the Parent's Subsidiaries Hotel
Properties;
(h) Investments in real estate other than Hotel Properties, provided that
--------
(i) excluding the Borrower's Investment in the office portion of the Marriott
Hotel in Houston, Texas, such Investments do not, in the aggregate, exceed five
percent (5%) of the Total Assets of the Parent or (ii) the Borrower intends to
convert such real estate into Hotel Properties, provided that the Borrower (A)
--------
so notifies the Administrative Agent within ninety (90) days after the date of
such acquisition and (B) commences construction of such conversion within twelve
(12) months after the date of such acquisition;
(i) a loan to a Participating Lessee in amount sufficient to allow such
Participating Lessee to purchase Personal Property from the Property Owners of
the Hotel Properties which qualify as either an Eligible Property or a Permitted
Non-Eligible Property so that the ownership of
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Personal Property by such Property Owners does not cause the Parent to forfeit
the Parent's status as a REIT under the Code;
(j) receivables purchased in connection with the acquisition of a Hotel
Property; and
(k) other assets owned in the ordinary course of owning the Parent's and
the Parent's Subsidiaries' Hotel Properties.
Notwithstanding the foregoing, neither the Borrower, nor the Parent, nor their
respective Subsidiaries shall make an Investment which would (a) cause the
Eligible Properties in the aggregate to violate the Borrowing Base Requirements,
(b) cause the Parent Properties in the aggregate to violate in any material way
the Parent Property Requirements without the Agents' written consent, (c) cause
a Default, or (d) cause or result in the Borrower or the Parent failing to
comply with any of the financial covenants contained herein.
Section 6.08 Affiliate Transactions. Except for the Management
----------------------
Agreements, the Participating Lease Agreements, certain liquor license
agreements, the transactions described in Section 6.07(i) and the purchase by
the Borrower or one of its Subsidiaries of the Madison, Wisconsin Ramada at a
purchase price equal to or less than (a) the fair market value for such property
at the time of entering into such purchase agreement, as confirmed by an
appraisal plus (b) the costs of Capital Expenditures and FF&E for such property
incurred in connection with the major renovation of such property contemplated
by such agreement, the costs of financing such expenditures, and carrying costs
and pre-opening costs for such property during the period of construction, and
as expressly permitted elsewhere in this Agreement, the Borrower will not, and
will not permit any of its Subsidiaries to, make, directly or indirectly: (a)
any transfer, sale, lease, assignment or other disposal of any assets to any
Affiliate of the Borrower which is not a Guarantor or any purchase or
acquisition of assets from any such Affiliate except for sales of new Personal
Property (i) which in any calendar year do not exceed $1,000,000 in the
aggregate and (ii) for which the sales price is the actual cost to the party
selling; or (b) any arrangement or other transaction directly or indirectly with
or for the benefit of any such Affiliate (including without limitation,
guaranties and assumptions of obligations of an Affiliate), other than in the
ordinary course of business and at market rates.
Section 6.09 Sale and Leaseback. The Borrower will not, and will not
------------------
permit any of its Subsidiaries to, enter into any arrangement with any Person,
whereby in contemporaneous
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transactions the Borrower or such Subsidiary sells essentially all of its right,
title and interest in a material asset and the Borrower or such Subsidiary
acquires or leases back the right to use such property.
Section 6.10 Sale or Discount of Receivables. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value thereof,
any of its notes or accounts receivable.
Section 6.11 No Further Negative Pledges. Except for those restrictions
---------------------------
stated in the Subordinate Credit Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, enter into or suffer to exist any agreement
(other than this Agreement and the Credit Documents) (a) prohibiting the
creation or assumption of any Lien upon the Properties of the Borrower or any of
its Subsidiaries (except for the Permitted Other Subsidiaries), whether now
owned or hereafter acquired, or (b) requiring an obligation to be secured if
some other obligation is or becomes secured.
Section 6.12 Franchise Agreements. The Borrower will not, nor will it
--------------------
permit any of its Subsidiaries (other than Permitted Other Subsidiaries) or any
Participating Lessee (other than as a lessee of a Permitted Non-Eligible
Property) to enter into any termination, material modification or amendment of
any Franchise Agreement except in connection with the conversion of a Hotel
Property from a Franchise Agreement with one Franchisor to a Franchise Agreement
with another Franchisor.
Section 6.13 Material Documents. The Borrower will not, nor will it
------------------
permit any of its Subsidiaries (other than Permitted Other Subsidiaries) or any
Participating Lessee (other than as a lessee of a Permitted Non-Eligible
Property) to, enter into any termination, material modification or amendment of
any:
(a) Management Agreement;
(b) Participating Lease;
(c) Ground Lease; and
(d) Any other material agreement.
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Any termination, modification or amendment prohibited under this Section 6.13
without the Administrative Agent's written consent shall, to the extent
permitted by applicable law, be void and of no force and effect.
Section 6.14 Limitations on Development, Construction, Renovation and
--------------------------------------------------------
Purchase of Hotel Properties. Neither the Parent nor the Borrower shall or
- ----------------------------
shall permit any of their respective Subsidiaries to engage in the development,
construction or expansion of any Hotel Properties with respect to which the cost
to complete the same shall at any time exceed $75,000,000 for all such
development, construction and expansion in the aggregate or enter into any
agreements to purchase Hotel Properties or other assets, unless the Parent, the
Borrower or such Subsidiary (as applicable) at all times has available sources
of capital equal to the total cost to complete such development or construction
and to pay in full the cost of the purchase of such Hotel Properties or other
assets (to the extent that the payment of such cost of purchase constitutes a
recourse obligation of the Parent, the Borrower or its Subsidiary), which
available sources of capital may include Advances to the extent that the
Borrower may borrow the same for the purposes required or other Indebtedness
permitted by the terms of this Agreement.
ARTICLE VII
FINANCIAL COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, any Letter of Credit shall remain outstanding, or any Bank shall have
any Commitment hereunder, unless the Super Majority Banks shall otherwise
consent in writing, the Borrower agrees to comply and cause the Parent and the
Parent's Subsidiaries to comply with the following covenants.
7.01 Interest Coverage Ratio. The Parent shall maintain at the end of
-----------------------
each Rolling Period (a) for the Rolling Periods ending on March 31, 1998 through
December 31, 1998, an Interest Coverage Ratio of not less than 2.15 to 1.0 and
(b) for any Rolling Period thereafter, an Interest Coverage Ratio of not less
than 2.50 to 1.0.
7.02 Debt Service Coverage Ratio. The Parent shall maintain at the end of
---------------------------
each Rolling Period commencing with the Rolling Period ending on March 31, 1998,
a Debt Service Coverage Ratio of not less than 2.0 to 1.0.
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7.03 Maintenance of Net Worth. The Parent shall at all times maintain an
------------------------
Adjusted Net Worth of not less than the Minimum Tangible Net Worth.
7.04 Limitations on Total Indebtedness. The Parent shall not on any date
---------------------------------
permit the Total Indebtedness (including, without limitation, the Obligations
and all Capitalized Lease Obligations) of the Parent to exceed the lesser of:
------
(a) the sum of (i) for Seasoned Properties, (A) Adjusted EBITDA (on a
Consolidated basis) of such Seasoned Properties for the preceding Rolling
Period multiplied by (B) for the Rolling Periods ending on or before
-------------
September 30, 1998, six (6), and for any Rolling Periods ending thereafter,
five (5); and (ii) for New Properties (including Hotel Properties to be
immediately acquired using the proceeds from any Indebtedness), (A) the
Cost Basis in such New Properties multiplied by (B) on or before September
-------------
30, 1998, sixty percent (60%), and for any date thereafter, fifty percent
(50%); and
(b) (i) the Parent Total Cost Basis (including Hotel Properties to be
immediately acquired using the proceeds from any Indebtedness) multiplied
----------
by (ii) on or before September 30, 1998, sixty percent (60%), and for any
--
date thereafter, fifty percent (50%);
provided that, in no event shall the Borrower or the Parent permit the Total
- -------- ----
Indebtedness of the Parent to exceed the amount permitted under the Articles of
Incorporation of the Parent.
7.05 Limitations on Secured Recourse Indebtedness. The Parent shall not on
--------------------------------------------
any date on a Consolidated basis permit the Secured Recourse Indebtedness
(excluding the Obligations) of the Parent, to exceed the lesser of:
------
(a) the sum of (i) for Seasoned Properties, Adjusted EBITDA (on a
consolidated basis) of such Seasoned Properties for the preceding Rolling
Period multiplied by two (2), and (ii) for New Properties (including Hotel
Properties to be immediately acquired using the proceeds from any
Indebtedness), twenty percent (20%) of the Cost Basis in such New
Properties; and
(b) fifteen percent (15%) of the Parent Total Cost Basis (including
Hotel Properties to be immediately acquired using the proceeds from any
Indebtedness).
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<PAGE>
7.06 Limitations on Secured Non-Recourse Indebtedness. The Parent shall
------------------------------------------------
not on any date on a Consolidated basis permit the Secured Non-Recourse
Indebtedness of the Parent, to exceed the lesser of:
------
(a) the sum of (i) for Seasoned Properties, Adjusted EBITDA (on a
consolidated basis) of such Seasoned Properties for the preceding Rolling
Period multiplied by three (3), and (B) for New Properties (including Hotel
Properties to be immediately acquired using the proceeds from any
Indebtedness), thirty percent (30%) of the Cost Basis in such New
Properties; and
(b) thirty percent (30%) of the Parent Total Cost Basis (including
Hotel Properties to be immediately acquired using the proceeds from any
Indebtedness).
7.07 Limitations on Secured Indebtedness. The Parent shall not at any time
-----------------------------------
on a Consolidated basis permit the sum of the Parent's Secured Non-Recourse
Indebtedness and Secured Recourse Indebtedness to exceed thirty percent (30%) of
the Parent Total Cost Basis (including Hotel Properties to be immediately
acquired using the proceeds from any Indebtedness).
7.08 Permitted Non-Voting Stock Company Adjustment. If the Parent or any
---------------------------------------------
of its Subsidiaries have a Permitted Non-Voting Stock Investment, then (a) to
the extent not already included in the Adjusted EBITDA of the Parent and its
Subsidiaries the lesser of (i) the dividends and interest received by the Parent
or any of its Subsidiaries from a Permitted Non-Voting Stock Company and (ii)
the Adjusted EBITDA of the Hotel Properties owned or leased by such Permitted
Non-Voting Stock Company shall be included in Adjusted EBITDA for purposes of
the financial covenants in this Article VII, and (b) the Cost Basis of a Hotel
Property owned by such Permitted Non-Voting Stock Company shall be included, as
applicable, in those financial covenants in this Article VII which use Cost
Basis and Parent Total Cost Basis. Applicability for a particular test shall be
based upon whether a Hotel Property owned by such Permitted Non-Voting Stock
Company constitutes either a Seasoned Property or a New Property.
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<PAGE>
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default. The occurrence of any of the following
-----------------
events shall constitute an "Event of Default" under any Credit Document:
(a) Principal or Letter of Credit Obligation Payment. The Borrower shall
------------------------------------------------
fail to pay any principal of any Note or any Letter of Credit Obligation when
the same becomes due and payable as set forth in this Agreement;
(b) Interest or Other Obligation Payment. The Borrower shall fail to pay
------------------------------------
any interest on any Note or any fee or other amount payable hereunder or under
any other Credit Document when the same becomes due and payable as set forth in
this Agreement, provided however that the Borrower will have a grace period of
five days after the payments covered by this Section 8.01(b) becomes due and
payable for the first two defaults under this Section 8.01(b) in every calendar
year;
(c) Representation and Warranties. Any representation or warranty made or
-----------------------------
deemed to be made (i) by the Borrower in this Agreement or in any other Credit
Document, (ii) by the Borrower (or any of its officers) in connection with this
Agreement or any other Credit Document, or (iii) by any Subsidiary in any Credit
Document shall prove to have been incorrect in any material respect when made or
deemed to be made;
(d) Covenant Breaches. (i) The Borrower shall fail to perform or observe
-----------------
any covenant contained in Sections 5.02, 5.03, or 5.08, Section 5.05 (f), (g),
(h), (i), (l) or (n), Article VI or Article VII of this Agreement or the
Borrower shall fail to perform or observe, or shall fail to cause any Guarantor
to perform or observe any covenant in any Credit Document beyond any notice
and/or cure period for such default expressly provided in such Credit Document
or (ii) the Borrower or any Guarantor shall fail to perform or observe any term
or covenant set forth in any Credit Document which is not covered by clause (i)
above or any other provision of this Section 8.01, in each case if such failure
shall remain unremedied for 30 days after the earlier of the date written notice
of such default shall have been given to the Borrower or such Guarantor by the
Administrative Agent or any Bank or the date a Responsible Officer of the
Borrower or any Guarantor has actual knowledge of such default, unless such
default in this clause (ii) cannot be cured in such 30 day period and the
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<PAGE>
Borrower is diligently proceeding to cure such default, in which event the cure
period shall be extended to 90 days;
(e) Cross-Defaults.
--------------
(i) any "Event of Default" as defined in the Subordinate Credit
Agreement shall occur; or
(ii) with respect to (A) any Secured Non-Recourse Indebtedness which
is outstanding in a principal amount of at least $20,000,000 individually
or when aggregated with all such Secured Non-Recourse Indebtedness of the
Borrower, the Parent or any of their respective Subsidiaries or (B) any
other Indebtedness (but excluding Indebtedness evidenced by the Notes)
which is outstanding in a principal amount of at least $5,000,000
individually or when aggregated with all such Indebtedness of the Borrower,
the Parent or any of their respective Subsidiaries any of the following:
(1) any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof,
(2) the Borrower, the Parent or any of their respective
Subsidiaries shall fail to pay any principal of or premium or interest
of any of such Indebtedness (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness, or
(3) any other event shall occur or condition shall exist under
any agreement or instrument relating to such Indebtedness, and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is
to permit the holders of such Indebtedness to accelerate the maturity
of such Indebtedness;
(f) Insolvency. The Borrower, the Parent, any of their respective
----------
Subsidiaries, or the Participating Lessee (except for Prime Hospitality) for
four (4) or more Eligible Properties shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
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<PAGE>
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower, the
Parent, any of their respective Subsidiaries, or the Participating Lessee
(except for Prime Hospitality) for four (4) or more Eligible Properties seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against the Borrower, the Parent, any of their respective
Subsidiaries, or the Participating Lessee (except for Prime Hospitality) for
four (4) or more Eligible Properties, either such proceeding shall remain
undismissed for a period of 60 days or any of the actions sought in such
proceeding shall occur; or the Borrower, the Parent, any of their respective
Subsidiaries, or the Participating Lessee (except for Prime Hospitality) for
four (4) or more Eligible Properties shall take any corporate action to
authorize any of the actions set forth above in this paragraph (f);
(g) Judgments. Any judgment or order for the payment of money in excess of
---------
$5,000,000 (reduced for purposes of this paragraph for the amount in respect of
such judgment or order that a reputable insurer has acknowledged being payable
under any valid and enforceable insurance policy) shall be rendered against the
Borrower, the Parent or any of their respective Subsidiaries which, within 30
days from the date such judgment is entered, shall not have been discharged or
execution thereof stayed pending appeal;
(h) ERISA. (i) Any Person shall engage in any "prohibited transaction" (as
-----
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is likely to result in the termination of such Plan for
purposes of Title IV of ERISA, unless such Reportable Event, proceedings or
appointment are being contested by the Borrower in good faith and by appropriate
proceedings. (iv) any Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any member of a Controlled Group shall incur any liability
in connection with a withdrawal from a Multiemployer Plan or the insolvency
(within the meaning of Section 4245 of ERISA) or reorganization (within the
meaning of Section 4241 of ERISA) of a Multiemployer Plan, unless such liability
is being contested by the Borrower in good faith and by appropriate
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<PAGE>
proceedings, or (vi) any other event or condition shall occur or exist, with
respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if any,
could subject the Borrower or any Guarantor to any tax, penalty or other
liabilities in the aggregate exceeding $10,000,000;
(i) Guaranty. Any provision of any Guaranty except a Supplemental Guaranty
--------
shall for any reason cease to be valid and binding on any Guarantor or any
Guarantor shall so state in writing;
(j) Environmental Indemnity. Any Environmental Indemnity shall for any
-----------------------
reason cease to be valid and binding on any Person party thereto or any such
Person shall so state in writing;
(k) Invalidity of Subordination Provisions. The provisions or documents
--------------------------------------
which provide for the subordination of any claims by a Participating Lessee
under the Participating Leases against the applicable Property Owner to the
Obligations or the Subordinate Indebtedness shall be invalidated or otherwise
cease to be in full force and effect;
(l) Franchise Agreement. With respect to any Hotel Properties owned or
-------------------
leased by the Parent or any of its Subsidiaries (i) any of the Ramada-branded
Hotel Properties contained within the Prime Hospitality portfolio (excluding
Ramada Inn - Danbury, CT and Ramada Inn - Elmsford, NY) fail to be subject to a
Franchise Agreement within 18 months from the date of acquisition, (ii) if at
the time of acquisition of any other Hotel Property such Hotel Property is
operated pursuant to a franchise or license agreement with a Person who is not a
Franchisor, then on or prior to the first anniversary (18 months for Hotel
Properties which in the aggregate at any one time have a Cost Basis of less than
or equal to $100,000,000) of the acquisition thereof such Hotel Property fails
to be converted to a Franchise Agreement with a Franchisor, and (iii) any four
(4) Franchise Agreements shall be in default at the same time;
(m) Default Under Ground Lease. The occurrence of a default under any
--------------------------
Ground Lease (other than a Ground Lease affecting a Permitted Non-Eligible
Property) which has not been cured or waived (i) 10 days prior to the date the
ground lessor under such Ground Lease would have the right to terminate such
Ground Lease and (ii) in any event within 30 days of the occurrence of such
default;
(n) Manager. The Participating Lessee of a Hotel Property other than a
-------
Permitted Non-Eligible Property shall not have replaced the Manager with a
reputable, nationally known, third party
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<PAGE>
manager acceptable to the Agents within 120 days of the occurrence of any of the
following: Any Management Agreement shall have been terminated except in
connection with an Asset Disposition, or any Manager shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Manager or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against the Manager or any of its
Subsidiaries, either such proceeding shall remain undismissed for a period of 60
days or any of the actions sought in such proceeding shall occur; or the Manager
or any of its Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this paragraph (n);
(o) Parent's REIT Status. There shall be a determination from the
--------------------
applicable Governmental Authority from which no appeal can be taken that the
Parent's tax status as a REIT has been lost;
(p) Parent Common Stock; Capitalization Event The Parent at any time
-----------------------------------------
hereafter fails to (a) cause the Parent Common Stock to be duly listed on the
New York Stock Exchange, Inc. and (b) file timely all reports required to be
filed by the Parent with the New York Stock Exchange, Inc. and the Securities
and Exchange Commission and, with respect to a failure under clause (b), such
failure remains uncured on the date which is the earlier of (i) the date 30 days
following the initial occurrence of such failure and (ii) the date specified by
the New York Stock Exchange, Inc. or the Securities and Exchange Commission as
the date such failure needs to be cured by. Upon the receipt by the Parent of
any Net Cash Proceeds from a Capitalization Event, (a) the Parent fails to
immediately make a capital contribution to the Borrower in the aggregate amount
of such Net Cash Proceeds or (b) the Borrower fails to apply such Net Cash
Proceeds in accordance with this Agreement and the Subordinate Credit Documents
either (i) to repay any outstanding principal of the Notes, and accrued and
unpaid interest thereon and other amounts payable by the Borrower in respect
thereof, (ii) to repay any Subordinate Indebtedness or (iii) to make Investments
permitted by this Agreement;
(q) Changes in Ownership and Control. Any of the following occur without
--------------------------------
the written consent of the Agents: (a) the Parent owns less than 100% of the
stock and beneficial ownership
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<PAGE>
interest in the General Partner and AGH LP; (b) the General Partner and AGH LP
(i) amend the Borrower's partnership agreement in any material respect, (ii)
admit a new general partner to the Borrower, or (iii) own less than 51% of the
partnership interests in and beneficial ownership of the Borrower; (c) the
General Partner resigns as general partner of the Borrower; (d) Steven D. Jorns,
Bruce G. Wiles and their respective Associates legally and beneficially own less
than 20% of the outstanding shares of the Manager common stock; (e) Steven D.
Jorns, Bruce G. Wiles or any of their respective Associates sells or assigns
either the legal or beneficial interest in any outstanding shares of the Manager
common stock except to Steven D. Jorns, Bruce G. Wiles or any of their
respective Associates; (f) Steven D. Jorns, Bruce G. Wiles, and Kenneth E. Barr
and their respective Associates legally and beneficially owns less than 20% of
the partnership interests in AGH Leasing; (g) Steven D. Jorns, Bruce G. Wiles,
Kenneth E. Barr or any of their respective Associates sells or assigns either
the legal or beneficial interest in any partnership interests in AGH Leasing
except to Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr or any of their
respective Associates; (h) Steven D. Jorns or Kenneth E. Barr or any of their
respective Associates sells or assigns either the legal or beneficial interest
in the Parent or the Borrower except (1) to their respective Associates and (2)
in connection with a Permitted Officer Assignment; (i) the Parent shall cease to
employ Steven D. Jorns as the president and chief executive officer of the
Parent and, within 180 days following the termination of such employment of Mr.
Jorns for any reason, another person acceptable to the Majority Banks in their
sole discretion is not employed as the president and chief executive officer of
the Parent; (j) the Parent shall cease to employ Kenneth E. Barr as the chief
financial officer of the Parent and, within 180 days following the termination
of such employment of Mr. Barr for any reason, another person acceptable to the
Majority Banks in their sole discretion is not employed as the chief financial
officer of the Parent; (k) unless TT Leasing is no longer a Participating Lessee
or has been merged into AGH Leasing, AGH Leasing sells or assigns either the
legal or beneficial interest in any partnership interests in TT Leasing except
to Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr or any of their respective
Associates or (l) AGH Leasing, Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr
or any of their respective Associates is no longer the sole general partner of
TT Leasing, provided, however, TT Leasing can be merged into AGH Leasing; or
(r) Participating Lessee. Either (i) a material default by the
--------------------
Participating Lessee shall occur under any Participating Lease related to four
(4) or more Eligible Properties which shall remain uncured following any notice
and cure period under such document, (ii) with respect to four (4) or more
Eligible Properties, the Participating Lease for any Hotel Property is
terminated, or (iii) the Participating Lessee enters into a Participating Lease
or other material agreement except those directly related to a Hotel Property
owned by the Borrower or any of the Borrower's Subsidiaries.
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<PAGE>
Section 8.02 Optional Acceleration of Maturity. If any Event of Default
---------------------------------
(other than an Event of Default pursuant to paragraph (f) of Section 8.01) shall
have occurred and be continuing, then, and in any such event,
(a) the Administrative Agent (i) shall at the request, or may with the
consent, of the Super Majority Banks, by notice to the Borrower, declare the
obligation of each Bank to make Advances and the obligation of each Issuing Bank
to issue, increase, or extend Letters of Credit to be terminated, whereupon the
same shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Super Majority Banks, by notice to the Borrower, declare the
Notes, all interest thereon, the Letter of Credit Obligations, and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Notes, all such interest, all such Letter of Credit Obligations and all such
amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest or further notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrower,
(b) the Borrower shall, on demand of the Administrative Agent at the
request or with the consent of the Super Majority Banks, deposit with the
Administrative Agent into the Cash Collateral Account an amount of cash equal to
the Letter of Credit Exposure as security for the Obligations to the extent the
Letter of Credit Obligations are not otherwise paid at such time, and
(c) the Administrative Agent shall at the request of, or may with the
consent of, the Super Majority Banks proceed to enforce its rights and remedies
under the Credit Documents for the ratable benefit of the Banks by appropriate
proceedings.
Section 8.03 Automatic Acceleration of Maturity. If any Event of Default
----------------------------------
pursuant to paragraph (f) of Section 8.01 shall occur,
(a) the obligation of each Bank to make Advances and the obligation of each
Issuing Bank to issue, increase, or extend Letters of Credit shall immediately
and automatically be terminated and the Notes, all interest on the Notes, all
Letter of Credit Obligations, and all other amounts payable under this Agreement
shall immediately and automatically become and be due and payable in full,
without presentment, demand, protest or any notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Borrower and
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(b) to the extent permitted by law or court order, the Borrower shall
deposit with the Administrative Agent into the Cash Collateral Account an amount
of cash equal to the outstanding Letter of Credit Exposure as security for the
Obligations to the extent the Letter of Credit Obligations are not otherwise
paid at such time.
Section 8.04 Cash Collateral Account.
-----------------------
(a) Pledge. The Borrower hereby pledges, and grants to the Administrative
------
Agent for the benefit of the Banks, a security interest in all funds held in the
Cash Collateral Account from time to time and all proceeds thereof, as security
for the payment of the Obligations, including without limitation all Letter of
Credit Obligations owing to any Issuing Bank or any other Bank due and to become
due from the Borrower to any Issuing Bank or any other Bank under this Agreement
in connection with the Letters of Credit.
(b) Application against Letter of Credit Obligations. The Administrative
------------------------------------------------
Agent may, at any time or from time to time apply funds then held in the Cash
Collateral Account to the payment of any Letter of Credit Obligations owing to
any Issuing Bank, in such order as the Administrative Agent may elect, as shall
have become or shall become due and payable by the Borrower to any Issuing Bank
under this Agreement in connection with the Letters of Credit.
(c) Duty of Care. The Administrative Agent shall exercise reasonable care
------------
in the custody and preservation of any funds held in the Cash Collateral Account
and shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Administrative Agent
accords its own property, it being understood that the Administrative Agent
shall not have any responsibility for taking any necessary steps to preserve
rights against any parties with respect to any such funds.
Section 8.05 Non-exclusivity of Remedies. No remedy conferred upon the
---------------------------
Administrative Agent or the Banks is intended to be exclusive of any other
remedy, and each remedy shall be cumulative of all other remedies existing by
contract, at law, in equity, by statute or otherwise.
Section 8.06 Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent, if any, specified by Section 8.02 to authorize the
Administrative Agent to declare the Notes and any other amount payable hereunder
due and payable pursuant to the provisions of Section 8.02 or the automatic
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acceleration of the Notes and all amounts payable under this Agreement pursuant
to Section 8.03, each Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement, the Note held by such
Bank, and the other Credit Documents, irrespective of whether or not such Bank
shall have made any demand under this Agreement, such Note, or such other Credit
Documents, and although such obligations may be unmatured. Each Bank agrees to
promptly notify the Borrower after any such set-off and application made by such
Bank, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
Section are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which such Bank may have.
ARTICLE IX
AGENCY AND ISSUING BANK PROVISIONS
Section 9.01 Authorization and Action. Each Bank hereby appoints and
------------------------
authorizes each Agent to take such action as Agent on its behalf and to exercise
such powers under this Agreement and the other Credit Documents as are delegated
to such Agent by the terms hereof and of the other Credit Documents, together
with such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement or any other Credit Document
(including, without limitation, enforcement or collection of the Notes), the
Agents shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Majority
Banks, and such instructions shall be binding upon all Banks and all holders of
Notes; provided, however, that neither Agent shall be required to take any
--------
action which exposes such Agent to personal liability or which is contrary to
this Agreement, any other Credit Document, or applicable law. The functions of
the Agents are administerial in nature and in no event shall the Agents have a
fiduciary or trustee relation in respect of any Bank by reason of this Agreement
or any other Credit Document. Within 5 Business Days of the Administrative
Agent receiving actual notice (without any duty to investigate) of a Default,
the Administrative Agent will provide written notice of such Default to the
Banks.
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Section 9.02 Agents' Reliance, Etc. Neither the Agents nor any of their
---------------------
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken (including such Person's own negligence) by
it or them under or in connection with this Agreement or the other Credit
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, each Agent: (a) may
treat the payee of any Note as the holder thereof until such Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to the Administrative Agent; (b) may consult with legal
counsel (including counsel for the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Bank and shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with this Agreement or the other Credit
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any other Credit Document on the part of the Borrower or its
Subsidiaries or to inspect the property (including the books and records) of the
Borrower or its Subsidiaries; (e) shall not be responsible to any Bank for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Credit Document; and (f) shall incur no
liability under or in respect of this Agreement or any other Credit Document by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopier, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
Section 9.03 Each Agent and Its Affiliates. With respect to its
-----------------------------
Commitment, the Advances made by it and the Notes issued to it, each Agent shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not an Agent. The term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include each Agent in its
individual capacity. Each Agent and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower or any of its Subsidiaries, and any Person
who may do business with or own securities of the Borrower or any such
Subsidiary, all as if such Agent were not an Agent hereunder and without any
duty to account therefor to the Banks.
Section 9.04 Bank Credit Decision. Each Bank acknowledges that it has,
--------------------
independently and without reliance upon either Agent or any other Bank and based
on the financial statements referred to in Section 4.06 and such other documents
and information as it has deemed appropriate,
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made its own credit analysis and decision to enter into this Agreement. Each
Bank also acknowledges that it will, independently and without reliance upon
either Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.
Section 9.05 Indemnification. The Banks severally agree to indemnify
---------------
each Agent and each Issuing Bank (to the extent not reimbursed by the Borrower),
according to their respective Pro Rata Shares from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against such Agent or such Issuing Bank in
any way relating to or arising out of this Agreement or any action taken or
omitted by such Agent or such Issuing Bank under this Agreement or any other
Credit Document (including such Agent's or such Issuing Bank's own negligence),
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's or such Issuing Bank's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank agrees to reimburse each Agent promptly upon demand for its Pro Rata
Share of any out-of-pocket expenses (including counsel fees) incurred by such
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Credit Document, to the
extent that such Agent is not reimbursed for such expenses by the Borrower.
Section 9.06 Successor Agent and Issuing Banks. Either Agent or any
---------------------------------
Issuing Bank may resign at any time by giving written notice thereof to the
Banks and the Borrower and may be removed at any time with cause by the Super
Majority Banks upon receipt of written notice from the Super Majority Banks to
such effect. Upon receipt of notice of any such resignation or removal, the
Super Majority Banks shall have the right to appoint a successor Agent or
Issuing Bank. If no successor Agent or Issuing Bank shall have been so
appointed, and shall have accepted such appointment, within 30 days after the
retiring Agent's or Issuing Bank's giving of notice of resignation or the Super
Majority Banks' removal of the retiring Agent or Issuing Bank, then the retiring
Agent or Issuing Bank may, on behalf of the Banks and the Borrower, appoint a
successor Agent or Issuing Bank, which shall be a commercial bank meeting the
financial requirements of an Eligible Assignee and, in the case of an Issuing
Bank, a Bank. Upon the acceptance of any appointment as Agent or Issuing Bank
by a successor Agent or Issuing Bank, such successor Agent or Issuing Bank shall
thereupon succeed to and become vested with all the rights, powers, privileges
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and duties of the retiring Agent or Issuing Bank, and the retiring Agent or
Issuing Bank shall be discharged from its duties and obligations under this
Agreement and the other Credit Documents, except that the retiring Issuing Bank
shall remain an Issuing Bank with respect to any Letters of Credit issued by
such Issuing Bank and outstanding on the effective date of its resignation or
removal and the provisions affecting such Issuing Bank with respect to such
Letters of Credit shall inure to the benefit of the retiring Issuing Bank until
the termination of all such Letters of Credit. After any retiring Agent's or
Issuing Bank's resignation or removal hereunder as Documentation Agent,
Administrative Agent or Issuing Bank, the provisions of this Article IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was such Agent or Issuing Bank under this Agreement and the other Credit
Documents.
Section 9.07 Arranger, Syndication Agent and Managing Agents. The Bank
-----------------------------------------------
of Nova Scotia and Wells Fargo Bank, National Association shall each be named a
Managing Agent under the Credit Documents, but the Managing Agents shall have no
right or duty to act as agent on behalf of the Banks. Societe Generale,
Southwest Agency shall be named Arranger and Syndication Agent under the Credit
Documents, but the Arranger and the Syndication Agent shall have no right or
duty to act as agent on behalf of the Banks in such capacities; provided that
the provisions of this sentence shall in no way effect Societe Generale,
Southwest Agency's rights or duties as Documentation Agent on behalf of the
Banks.
ARTICLE X
MISCELLANEOUS
Section 10.01 Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Documentation
Agent, the Administrative Agent or the Agents, as specified in the particular
provisions of the Credit Documents, and the Borrower, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment shall increase the
--------
Commitment of any Bank without the written consent of such Bank, and no
amendment, waiver or consent shall, unless in writing and signed by all the
Banks, do any of the following: (a) increase the aggregate Commitments of the
Banks, (b) reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder or under any other Credit Document or otherwise
release the Borrower from any Obligations,
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(c) postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, (d) change the number of
Banks which shall be required for the Banks or any of them to take any action
hereunder or under any other Credit Document, (e) amend this Section 10.01, (f)
amend the definition of "Majority Banks" or "Super Majority Banks", (g) amend
the definition of "Borrowing Base", "Hotel Value", "Subordinate Indebtedness",
or "Adjusted EBITDA", but not the definitions that are used in such definitions,
or (h) release the Parent from its obligations under the Guaranty; and provided,
--------
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Documentation Agent, the Administrative Agent, or any Issuing Bank
in addition to the Banks required above to take such action, affect the rights
or duties of the Documentation Agent, the Administrative Agent, or such Issuing
Bank, as the case may be, under this Agreement or any other Credit Document. In
addition, none of the following decisions shall be made without the written
consent of the Super Majority Banks:
(a) release any Guarantor except the Parent from its obligations under
any of the Guaranties (provided that the Administrative Agent can (i)
release any Supplemental Guarantor from its obligations under any of the
Supplemental Guaranties and (ii) if no Default then exists, release any
Subsidiary of the Borrower which no longer is a Property Owner of an
Eligible Property);
(b) release any Person from its obligations under any of the
Environmental Indemnities;
(c) any determination to make a Borrowing after the occurrence and
during the continuance of an Event of Default;
(d) increases the maximum duration of Interest Periods permitted under
this Agreement;
(e) any waiver for a period of more than 60 days of, or any material
amendment to, the financial covenants contained in Article VII of this
Agreement;
(f) any material waiver of the covenants contained in Sections 6.01,
6.02 or 6.04;
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(g) amends any of the definitions that are used in the definition of
"Borrowing Base";
(h) any amendment, supplement or modification to, or waiver of, the
provisions of Section 8.01 of this Agreement;
(i) any determination to send notice to the Borrower of, or otherwise
declare, an Event of Default pursuant to Section 8.01 of this Agreement;
(j) any determination to accelerate the Obligations pursuant to
Section 8.02 of this Agreement; and
(k) any exercise remedies under any Credit Document, provided,
however, that if an Event of Default has occurred and is continuing and the
Super Majority Banks cannot agree on a course of action within 60 days
following the occurrence of such Event of Default, the Administrative Agent
shall commence exercising remedies against the Borrower, the Parent and the
other Guarantors.
In addition, none of the following decisions shall be made without the written
consent of the Majority Banks:
(a) any waiver for more than 30 days of, or any material amendment to,
of the reporting requirements set forth in clauses (a)-(f) or (h) of
Section 5.05 of this Agreement;
(b) any material waiver of, or any material amendment to any section
of Article VI not previously referenced in this Section 10.01;
(c) any approval pursuant to subsection 3.03 of this Agreement of a
Hotel Property as a possible Eligible Property;
(d) any material waiver of the conditions to a Hotel Property
qualifying as either an Eligible Property or a Permitted Non-Eligible
Property; and
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(e) any material decision regarding the operation, maintenance, sale
or other disposition of any Property after the foreclosure upon such
Property, provided that Administrative Agent shall be able to take any
action it determines necessary to preserve or maintain any such Property
and provided further that if the Majority Banks cannot agree on the sale or
disposition of such Property, the Administrative Agent shall not sell or
dispose of such Property, but shall continue to hold such Property for the
benefit of the Banks.
Any amendment to a covenant of the Parent or any of its Subsidiaries or
amendment to a definition shall require the Borrower's written consent.
Section 10.02 Notices, Etc. All notices and other communications shall be
------------
in writing (including telecopy or telex) and mailed, telecopied, telexed, hand
delivered or delivered by a nationally recognized overnight courier, if to the
Borrower, at its address at 5605 MacArthur Blvd., Suite 1200, Irving, Texas
75038, Attention: Steven D. Jorns; if to any Bank at its Domestic Lending
Office specified opposite its name on Schedule 10.02; if to the Documentation
Agent, at its address at 4900 Trammell Crow Center, 2001 Ross Avenue, Dallas,
Texas 75201, Attention: Thomas K. Day, Vice President (telecopy: (214) 979-
2727; telephone: (214) 979-2774); if to Bank One, Texas, N.A., in its capacity
as Administrative Agent or an Issuing Bank, at its office at 1717 Main Street,
4th Floor, Dallas, Texas 75201, Attention: Commercial Real Estate Department -
Jeff Etter, Vice President (telecopy: (214) 290-7205; telephone: (214) 290-
2385); or, as to each party, at such other address or teletransmission number as
shall be designated by such party in a written notice to the other parties. All
such notices and communications shall, when mailed, telecopied, telexed or hand
delivered or delivered by overnight courier, be effective three days after
deposited in the mails, when telecopy transmission is completed, when confirmed
by telex answer-back or when delivered, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II or Article IX
shall not be effective until received by the Administrative Agent.
Section 10.03 No Waiver; Remedies. No failure on the part of any Bank,
-------------------
any Agent, or any Issuing Bank to exercise, and no delay in exercising, any
right hereunder or under any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
this Agreement and the other Credit Documents are cumulative and not exclusive
of any remedies provided by law.
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Section 10.04 Costs and Expenses. The Borrower agrees to pay on demand
------------------
all out-of-pocket costs and expenses of the Agents in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other Credit Documents and syndication
(syndication costs shall not exceed $5,000 per Eligible Assignee) of the
Obligations including, without limitation, (a) the reasonable fees and out-of-
pocket expenses of Bracewell & Patterson, L.L.P., counsel for the Documentation
Agent, and, with respect to advising either Agent as to its rights and
responsibilities under this Agreement, the Agents, (b) the reasonable fees and
out-of-pocket expenses of Donohoe, Jameson & Carroll, P.C., counsel for the
Administrative Agent, and (c) all reasonable out-of-pocket costs and expenses,
if any, of each Agent, each Issuing Bank, and each Bank (including, without
limitation, reasonable counsel fees and expenses of each Agent, such Issuing
Bank, and each Bank) in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other
Credit Documents, and (d) to the extent not included in the foregoing, the costs
of any local counsel, travel expenses, Engineering Reports, Environmental
Reports, mortgage and intangible taxes (if any), and any title or Uniform
Commercial Code search costs, any flood plain search costs, insurance consultant
costs and other costs usual and customary in connection with a credit facility
of this type.
Section 10.05 Binding Effect. This Agreement shall become effective when
--------------
it shall have been executed by the Borrower and the Agents, and when the
Documentation Agent shall have, as to each Bank, either received a counterpart
hereof executed by such Bank or been notified by such Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, each Agent, each Issuing Bank, and each Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights or delegate its duties under this Agreement or any interest in
this Agreement without the prior written consent of each Bank.
Section 10.06 Bank Assignments and Participations.
-----------------------------------
(a) Assignments. Any Bank may assign to one or more banks or other
-----------
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances
owing to it, the Notes held by it, and the participation interest in the Letter
of Credit Obligations held by it); provided, however, that (i) each such
-------- -------
assignment shall be of a constant, and not a varying, percentage of all of such
Bank's rights and obligations under this Agreement and shall involve a ratable
assignment of such Bank's Commitment and such Bank's Advances, (ii) the amount
of the resulting Commitment and Advances of the
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assigning Bank (unless it is assigning all its Commitment) and the assignee Bank
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$10,000,000 and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with the Notes subject to such assignment, (v) the Agents shall consent to such
assignment, which consent shall not be unreasonably withheld or delayed, and
(vi) each Eligible Assignee (other than the Eligible Assignee of either Agent or
an Eligible Assignee which is an Affiliate of the assigning Bank) shall pay to
the Administrative Agent a $2,500 administrative fee. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (B) such Bank thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such Bank's
rights and obligations under this Agreement, such Bank shall cease to be a party
hereto). Notwithstanding anything herein to the contrary, any Bank may assign,
as collateral or otherwise, any of its rights under the Credit Documents to any
Federal Reserve Bank.
(b) Term of Assignments. By executing and delivering an Assignment and
-------------------
Acceptance, the Bank thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency of
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
Guarantors or the performance or observance by the Borrower or the Guarantors of
any of their obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Sections 4.06 and 5.05, if applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision
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to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon either Agent, such Bank or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee appoints and authorizes each
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to such Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Bank.
(c) The Register. The Administrative Agent shall maintain at its address
------------
referred to in Section 10.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the
Advances owing to, each Bank from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, each Agent, the Issuing Banks, and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(d) Procedures. Upon its receipt of an Assignment and Acceptance executed
----------
by a Bank and an Eligible Assignee, together with the Note subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of the attached Exhibit B,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Administrative Agent in exchange
for the surrendered Note, a new Note payable to the order of such Eligible
Assignee in amount equal to, respectively, the Commitment and the outstanding
Advances assumed by it pursuant to such Assignment and Acceptance, and if the
assigning Bank has retained any Commitment hereunder, a new Note payable to the
order of such Bank in an amount equal to, respectively, the Commitment and the
outstanding Advances retained by it hereunder. Such new Note shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the attached Exhibit A.
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(e) Participations. Each Bank may sell participations to one or more banks
--------------
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it, its participation interest in the Letter
of Credit Obligations, and the Notes held by it); provided, however, that (i)
-------- -------
such Bank's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Bank shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, each Agent, and the
Issuing Banks and the other Banks shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Agreement, (v) such Bank shall not require the participant's consent to any
matter under this Agreement, except for change in the principal amount of any
Note in which the participant has an interest, reductions in fees or interest,
or extending the Maturity Date except as permitted in this Agreement, and (vi)
such Bank shall give prompt notice to the Borrower of each such participation
sold by such Bank. The Borrower hereby agrees that participants shall have the
same rights under Sections 2.08, 2.09, 2.11(c), and 10.07 hereof as the Bank to
the extent of their respective participations.
(f) Confidentiality. Each Bank may furnish any information concerning the
---------------
Borrower and its Subsidiaries in the possession of such Bank from time to time
to assignees and participants (including prospective assignees and
participants); provided that, prior to any such disclosure, the assignee or
--------
participant or proposed assignee or participant shall agree in writing to
preserve the confidentiality of any confidential information relating to the
Borrower and its Subsidiaries received by it from or on behalf of such Bank.
Such Bank shall promptly deliver a signed copy of any such confidentiality
agreement to the Borrower.
Section 10.07 Indemnification. The Borrower shall indemnify each Agent,
---------------
the Banks (including any lender which was a Bank hereunder prior to any full
assignment of its Commitment), the Issuing Banks, and each affiliate thereof and
their respective directors, officers, employees and agents from, and discharge,
release, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of or result from (i)
any actual or proposed use by the Borrower or any Affiliate of the Borrower of
the proceeds of any Advance, (ii) any breach by the Borrower or any Guarantor of
any provision of this Agreement or any other Credit Document, (iii) any
investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing, or (iv) any
Environmental Claim or requirement of
-120-
<PAGE>
Environmental Laws concerning or relating to the present or previously-owned or
operated properties, or the operations or business, of the Borrower or any of
its Subsidiaries, and the Borrower shall reimburse each Agent, each Issuing
Bank, and each Bank, and each affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any reasonable out-of-pocket
expenses (including legal fees) incurred in connection with any such
investigation, litigation or other proceeding; and expressly including any such
losses, liabilities, claims, damages, or expense incurred by reason of the
Person being indemnified's own negligence, but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
THE BORROWER ACKNOWLEDGES AND AGREES THAT CERTAIN OF ITS OBLIGATIONS AND
INDEMNITIES UNDER THIS AGREEMENT INCLUDE ANY CLAIMS RESULTING FROM THE
NEGLIGENCE OR ALLEGED NEGLIGENCE OF THE DOCUMENTATION AGENT, THE ADMINISTRATIVE
AGENT, THE BANKS, OR ANY OTHER PERSON BEING INDEMNIFIED.
Section 10.08 Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 10.09 Survival of Representations, Indemnifications, etc. All
--------------------------------------------------
representations, warranties contained in this Agreement or made in writing by or
on behalf of the Borrower in connection herewith shall survive the execution and
delivery of this Agreement and the Credit Documents, the making of the Advances
and any investigation made by or on behalf of the Banks, none of which
investigations shall diminish any Bank's right to rely on such representations
and warranties. All obligations of the Borrower provided for in Sections 2.08,
2.09, 2.11(c), 9.05 and 10.07 shall survive any termination of this Agreement
and repayment in full of the Obligations.
Section 10.10 Severability. In case one or more provisions of this
------------
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
not be affected or impaired thereby.
-121-
<PAGE>
Section 10.11 Business Loans. The Borrower warrants and represents that
--------------
the Advances evidenced by the Notes are and shall be for business, commercial,
investment or other similar purposes and not primarily for personal, family,
household or agricultural use, as such terms are used in Chapter One of the
Texas Credit Code. For purposes of determining the Maximum Rate under the
applicable laws of the State of Texas, the applicable rate ceiling shall be the
indicated rate ceiling computed in accordance with Article 5069-1H of the Texas
Revised Civil Statutes, if applicable, and, if Article 5069-1H is not
applicable, then Article 5069-1D of the Texas Revised Civil Statutes; provided
that, to the extent permitted by applicable laws and subject to any notice or
other requirements under applicable laws, the Administrative Agent may from time
to time change the rate ceiling; and provided, further, that the "Maximum Rate"
for purposes of this Agreement shall not be limited to the applicable rate
ceiling under Article 5069-1D or Article 5069-1H if the United States federal
law or Texas law now or hereafter in effect and applicable to this Agreement
(and the interest contracted for, charged and collected hereunder) shall permit
a higher rate of interest.
Section 10.12 Usury Not Intended. It is the intent of the Borrower and
------------------
each Bank in the execution and performance of this Agreement and the other
Credit Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the Advances of each Bank
including such applicable laws of the State of Texas and the United States of
America from time to time in effect. In furtherance thereof, the Banks and the
Borrower stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes
hereof "interest" shall include the aggregate of all charges which constitute
interest under such laws that are contracted for, charged or received under this
Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Advances, include amounts which by applicable law are deemed interest
which would exceed the Maximum Rate, then such excess shall be deemed to be a
mistake and each Bank receiving same shall credit the same on the principal of
its Notes (or if such Notes shall have been paid in full, refund said excess to
the Borrower). In the event that the maturity of the Notes is accelerated by
reason of any election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Notes (or, if the applicable Notes shall have been paid in full,
refunded to the Borrower). The
-122-
<PAGE>
provisions of this Section shall control over all other provisions of this
Agreement or the other Credit Documents which may be in apparent conflict
herewith.
Section 10.13 Certain Office and Retail Space. The Banks acknowledge and
-------------------------------
agree that the office portion of the Houston, Texas Marriott and the retail
portion of the St. Tropez hotel in Las Vegas, Nevada (a) will or may not be
subject to a Participating Lease, Franchise Agreement or Management Agreement,
(b) will, if complying with the other requirements for qualifying as an Eligible
Property, be included in the calculation of the Borrowing Base, and (c) may be
sold or transferred separately from the hotel portion of such Hotel Property in
accordance with the requirements of a Permitted Hotel Sale. If in connection
with any such sale or transfer, the office or retail, as applicable, portions
and hotel portions of such Hotel Property need to enter into any agreements
pertaining to the joint use of facilities, such agreements will be subject to
the reasonable approval of the Documentation Agent.
Section 10.14 Florida Liens. The Banks and the Agents agree that the
-------------
Administrative Agent will release the Florida Liens or deposit releases of the
Florida Liens with any Person designated by the Borrower within 5 Business Days
of written request by the Borrower which the Borrower can make in its sole and
absolute discretion. In addition, if no Default then exists, the Banks and the
Agents agree to cooperate with the Borrower in connection with a written request
by the Borrower to assign all or a portion of the Florida Liens to another
Person; provided that the deletion of Eligible Properties in connection with
such assignment will not result in a Borrowing Base deficiency for which the
Borrower has insufficient funds to cure, taking into account the net proceeds
raised by the Borrower in connection with such assignment. Without limitation
of the foregoing, (a) the Banks and the Agents agree to sell without recourse a
portion of the Notes to the Person directed by the Borrower in connection with
such an assignment, (b) the Banks and the Agents agree to temporarily reduce the
Banks' respective Commitments Pro Rata by the portion of the Notes sold, (c) the
Banks, the Agents and the Borrower agree to cause the portion of the Notes sold
to be converted into term notes which are independent of this Credit Agreement,
(d) the Banks, the Agents and the Borrower agree to immediately thereafter cause
the Banks' respective Commitments to be increased to the amounts which existed
prior to such assignment, and (e) the Banks, the Agents and the Borrower agree
to execute such documents as are necessary or desirable to accomplish the
foregoing, all in form and substance reasonably acceptable to the Agents and the
Borrower.
Section 10.15 Governing Law. This Agreement, the Notes and the other
-------------
Credit Documents shall be governed by, and construed and enforced in accordance
with, the laws of the State of Texas.
-123-
<PAGE>
Section 10.16 Consent to Jurisdiction. The Borrower hereby irrevocably
-----------------------
submits to the jurisdiction of any Texas state or federal court sitting in
Dallas, Texas in any action or proceeding arising out of or relating to this
Agreement, the Notes and the other Credit Documents, and the Borrower hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such court. The Borrower hereby irrevocably waives,
to the fullest extent it may effectively do so, any right it may have to the
defense of an inconvenient forum to the maintenance of such action or
proceeding. The Borrower hereby agrees that service of copies of the summons
and complaint and any other process which may be served in any such action or
proceeding may be made by mailing or delivering a copy of such process to the
Borrower at its address specified in Section 10.02. The Borrower agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the rights of any Bank,
the Documentation Agent, or the Administrative Agent to serve legal process in
any other manner permitted by the law or affect the right of any Bank, the
Documentation Agent or the Administrative Agent to bring any action or
proceeding against the Borrower or its Property in the courts of any other
jurisdiction.
Section 10.17 Knowledge of Borrower. For purposes of this Agreement,
---------------------
"knowledge of the Borrower" means the actual knowledge of any of the executive
officers and all other Responsible Officers of the Parent or the general manager
of each Hotel Property except the general manager for those Hotel Properties for
which Prime Hospitality is the Participating Lessee.
Section 10.18 Banks Not in Control. None of the covenants or other
--------------------
provisions contained in the Credit Documents shall or shall be deemed to, give
the Banks the rights or power to exercise control over the affairs and/or
management of the Borrower, any of its Subsidiaries or any Guarantor, the power
of the Banks being limited to the right to exercise the remedies provided in the
Credit Documents; provided, however, that if any Bank becomes the owner of any
stock, or other equity interest in, any Person whether through foreclosure or
otherwise, such Bank shall be entitled (subject to requirements of law) to
exercise such legal rights as it may have by being owner of such stock, or other
equity interest in, such Person.
Section 10.19 Headings Descriptive. The headings of the several Sections
--------------------
and paragraphs of the Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
-124-
<PAGE>
Section 10.20 Time is of the Essence. Time is of the essence under the
----------------------
Credit Documents.
SECTION 10.21 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE
---------------------
BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT
OR TO ANY COUNTERCLAIM THEREIN.
SECTION 10.22 ENTIRE AGREEMENT. PURSUANT TO SECTION 26.02 OF THE TEXAS
----------------
BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE
LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S
AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THE BORROWER ACKNOWLEDGES AND AGREES THAT CERTAIN OF ITS OBLIGATIONS AND
INDEMNITIES UNDER THIS AGREEMENT INCLUDE ANY CLAIMS RESULTING FROM THE
NEGLIGENCE OR ALLEGED NEGLIGENCE OF THE DOCUMENTATION AGENT, THE ADMINISTRATIVE
AGENT, THE BANKS, OR ANY OTHER PERSON BEING INDEMNIFIED.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
EXECUTED as of the date first referenced above.
BORROWER:
--------
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By: /s/ KENNETH E. BARR
-------------------------------
Name: KENNETH E. BARR
-----------------------------
Title: EXECUTIVE VICE PRESIDENT
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
BANK ONE, TEXAS, N.A., individually and as
Administrative Agent
/s/ Jeff Etter
----------------------------------------
By: /s/ Jeff Etter
------------------------------------
Title: Vice President
---------------------------------
SOCIETE GENERALE, SOUTHWEST AGENCY,
individually and as Arranger, Syndication
Agent, and Documentation Agent
________________________________________
By:_____________________________________
Title:__________________________________
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
BANK ONE, TEXAS, N.A., individually and as
Administrative Agent
________________________________________
By: ____________________________________
Title:__________________________________
SOCIETE GENERALE, SOUTHWEST AGENCY,
individually and as Arranger, Syndication
Agent, and Documentation Agent
/s/ Thomas K. Day
----------------------------------------
By: /s/ Thomas K. Day
------------------------------------
Title: Vice President
---------------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
WELLS FARGO BANK, NATIONAL
ASSOCIATION, individually and as
Managing Agent
/s/ David McNeill
-----------------------------
By: David McNeill
-------------------------
Title: VICE PRESIDENT
----------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
THE BANK OF NOVA SCOTIA, individually and as
Managing Agent
/s/ Paul Stiplosek
-------------------------------------
By: /s/ Paul Stiplosek
---------------------------------
Title: Relationship Manager
------------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
NATIONSBANK OF TEXAS, N.A.
/s/ David Howard
-----------------------------------
By: /s/ David Howard
-------------------------------
Title: Vice President
----------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
BANKERS TRUST COMPANY
/s/ Garrett Thelander
-----------------------------------
By: /s/ Garrett Thelander
-------------------------------
Title: Vice President
----------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
BANKBOSTON, N.A.
/s/ Steven Selbo
----------------------------------------
By: /s/ Steven Selbo
------------------------------------
Title: Vice President
---------------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
AMSOUTH BANK
/s/ Arthur J. Sharpe II
----------------------------------------
By: /s/ Arthur J. Sharpe II
------------------------------------
Title: Vice President
---------------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
DRESDNER BANK, AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
/s/ Michael A. Saton
----------------------------------
By: /s/ Michael A. Saton
------------------------------
Title: Assistant Vice President
---------------------------
/s/ Johannes Boeckmann
----------------------------------
By: /s/ Johannes Boeckmann
------------------------------
Title: Vice President
---------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
FIRST AMERICAN BANK TEXAS, S.S.B
/s/ DAVID A. BARR
--------------------------------
By: /s/ DAVID A. BARR
----------------------------
Title: VICE PRESIDENT
-------------------------
<PAGE>
[SIGNATURE PAGE OF SENIOR UNSECURED CREDIT AGREEMENT]
FIRST NATIONAL BANK OF COMMERCE
/s/ Louis Ballero
-------------------------------
By: Louis Ballero
---------------------------
Title: Vice President
-------------------------
<PAGE>
EXHIBIT A
FORM OF NOTE
$__________ ___________, 1998
For value received, the undersigned American General Hospitality Operating
Partnership L.P., a Delaware limited partnership ("Borrower"), hereby promises
to pay to the order of _________________________ ("Bank") the principal amount
of _______________ and ____/100 Dollars ($__________) or, if less, the aggregate
outstanding principal amount of each Advance (as defined in the Credit Agreement
referred to below) made by the Bank to the Borrower, together with interest on
the unpaid principal amount of each such Advance from the date of such Advance
until such principal amount is paid in full, at such interest rates, and at such
times, as are specified in the Credit Agreement.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Amended and Restated Senior
Unsecured Credit Agreement dated as of February 13, 1998 (as the same may be
amended or modified from time to time, the "Credit Agreement"), among the
Borrower, the Banks, Bank One, Texas, N.A., as Administrative Agent, Societe
Generale, Southwest Agency, as Arranger, Syndication Agent, and Documentation
Agent, the Bank of Nova Scotia, as Managing Agent, and Wells Fargo Bank,
National Association, as Managing Agent. Capitalized terms used in this Note
that are defined in the Credit Agreement and not otherwise defined in this Note
have the meanings assigned to such terms in the Credit Agreement. The Credit
Agreement, among other things, (a) provides for the making of Advances by the
Bank to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the Dollar amount first above mentioned, the indebtedness
of the Borrower resulting from each such Advance being evidenced by this Note
and (b) contains provisions for acceleration of the maturity of this Note upon
the happening of certain events stated in the Credit Agreement and for
prepayments of principal prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Administrative Agent at 1717 Main Street, P.O. Box
655415, 4th Floor, Commercial Real Estate Department, Dallas, Texas 75201 (or at
such other location or address as may be specified by the Administrative Agent
to the Borrower) in same day funds. The Bank shall record all Advances and
payments of principal made under this Note, but no
<PAGE>
failure of the Bank to make such recordings shall affect the Borrower's
repayment obligations under this Note.
Except as specifically provided in the Credit Agreement, the Borrower
hereby waives presentment, demand, protest, notice of intent to accelerate,
notice of acceleration, and any other notice of any kind. No failure to
exercise, and no delay in exercising, any rights hereunder on the part of the
holder of this Note shall operate as a waiver of such rights.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the state of Texas (except that Chapter 346 of the Texas
Finance Code, which regulates certain revolving credit loan accounts shall not
apply to this Note).
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:_______________________________
Name:_____________________________
Title:____________________________
-2-
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ______, 19
Reference is made to the Subordinate Unsecured Credit Agreement dated as of
February 13, 1998 (as the same may be amended or modified from time to time, the
"Credit Agreement") among American General Hospitality Operating Partnership,
L.P., a Delaware limited partnership (the "Borrower"), the Banks, Bank One,
Texas, N.A., as Administrative Agent, Societe Generale, Southwest Agency, as
Arranger, Syndication Agent, and Documentation Agent (the "Documentation
Agent"), the Bank of Nova Scotia, as Managing Agent, and Wells Fargo Bank,
National Association, as Managing Agent. Capitalized terms not otherwise defined
in this Assignment and Acceptance shall have the meanings assigned to them in
the Credit Agreement.
Pursuant to the terms of the Credit Agreement, __________ wishes to assign
and delegate ___%/1/ of its rights and obligations under the Credit Agreement.
Therefore, _________________ ("Assignor"), ___________________ ("Assignee"), and
the Administrative Agent agree as follows:
1. As of the Effective Date (as defined below), the Assignor hereby sells
and assigns and delegates to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, without recourse to the Assignor and without
representation or warranty except for the representations and warranties
specifically set forth in clauses (i), (ii), and (iii) of Section 2, a ____%
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement in connection with its Commitment, including, without limitation, such
percentage interest in the Assignor's Commitment and the Advances owing to the
Assignor, the participation interest in the Letter of Credit Obligations held by
the Assignor, and the Note held by the Assignor.
2. The Assignor (i) represents and warrants that, prior to executing this
Assignment and Acceptance, its Commitment is $____________________, the
aggregate outstanding principal amount of Advances owed to it by the Borrower is
$___________________, and its Pro Rata Share of the Letter of Credit Exposure is
___________________
/1/ Specify percentage in no more than 5 decimal points.
<PAGE>
$_________________; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (iii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with the Credit
Agreement or any other Credit Document or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit Agreement or
any other Credit Document or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or any Guarantor or the
performance or observance by the Borrower or any Guarantor of any of its
obligations under the Credit Agreement or any other Credit Document or any other
instrument or document furnished pursuant thereto; and (v) attaches the Note
referred to in paragraph 1 above and requests that the Administrative Agent
exchange such Note for a new Note dated ____________, 19__ in the principal
amount of $_____________, payable to the order of the Assignee, [and a new Note
dated ___________, 19__ in the principal amount of $_________________, payable
to the order of Assignor].
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.06 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Documentation Agent, the Administrative Agent, either of the
Managing Agents, the Assignor, or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other Credit Document; (iii) appoints and authorizes the Administrative
Agent to take such action as administrative agent on its behalf and to exercise
such powers under the Credit Agreement and any other Credit Document as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (iv) appoints and authorizes the
Documentation Agent to take such action as documentation agent on its behalf and
to exercise such powers under the Credit Agreement and any other Credit Document
as are delegated to the Documentation Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement or any other Credit Document are required to be
performed by it as a Bank; (vi) specifies as its Domestic
-2-
<PAGE>
Lending Office (and address for notices) and LIBOR Lending Office the offices
set forth beneath its name on the signature pages hereof; (vii) attaches the
forms prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement and its Note or such other documents as are necessary
to indicate that all such payments are subject to such rates at a rate reduced
by an applicable tax treaty/2/, and (viii) represents that it is an Eligible
Assignee.
4. The effective date for this Assignment and Acceptance shall be
________________ (the "Effective Date")/3/ and following the execution of this
Assignment and Acceptance, the Administrative Agent will record it.
5. Upon such recording, and as of the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement for all purposes, and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Bank thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights (other than rights against the
Borrower pursuant to Sections 2.09, 2.11(c) and 9.07 of the Credit Agreement,
which shall survive this assignment) and be released from its obligations under
the Credit Agreement.
6. Upon such recording, from and after the Effective Date, the
Administrative Agent shall make all payments under the Credit Agreement and the
Notes in respect of the interest assigned hereby (including, without limitation,
all payments of principal, interest, and commitment fees) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
______________________
/2/ If the Assignee is organized under the laws of a jurisdiction outside the
United States.
/3/ See Section 9.06. Such date shall be at least three Business Days after
the execution of this Assignment and Acceptance.
-3-
<PAGE>
The parties hereto have caused this Assignment and Acceptance to be duly
executed as of the date first above written.
[ASSIGNOR]
By:____________________________
Name:__________________________
Title:_________________________
Address: _____________________
_____________________
Attention:_____________________
Telecopy:______________________
Telephone:_____________________
[ASSIGNEE]
By:____________________________
Name:__________________________
Title:_________________________
Domestic Lending Office:
Address: _____________________
_____________________
Attention:_____________________
Telecopy:______________________
Telephone:_____________________
-4-
<PAGE>
LIBOR Lending Office:
Address: ______________________
______________________
Attention:______________________
Telecopy:_______________________
Telephone:______________________
Bank One, Texas, N.A.,
as Administrative Agent
By:_____________________________
Jeff Etter
Vice President
Address: 1717 Main Street, 4th Floor
P.O. Box 655415
Commercial Real Estate Department
Dallas, Texas 75201
Attention: Jeff Etter
Telecopy: 214-290-7205
Telephone: 214-290-2385
-5-
<PAGE>
EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
This Borrowing Base Certificate is executed this 11th day of February, 1998
and is prepared pursuant to Section 2.14 of that certain Amended and Restated
Senior Unsecured Credit Agreement (the "Agreement") between AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Borrower"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger, Syndication Agent
and Documentation Agent, BANK ONE, TEXAS, N.A., as Administrative Agent, THE
BANK OF NOVA SCOTIA, as Co-Agent, AND WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Co-Managers, and the Banks party to the Credit Agreement. Capitalized terms used
herein but not otherwise defined herein shall have the meanings specified by the
Agreement:
<TABLE>
<S> <C>
1. Aggregate Hotel Value of all Eligible Properties $ 910,667,288
-------------
2. Line 1 above multiplied by 50% $ 455,333,644
-------------
3. The Rolling Period Borrowing Base Adjusted EBITDA
generated by the Eligible Properties $ 82,001,777
-------------
4. Line 3 above multiplied by five (5) $ 410,008,884
-------------
5. Borrowing Base (before Subordinate Indebtedness)
(Lesser of Lines 2 and 4) $ 410,008,884
-------------
6. Subordinate Indebtedness counted for Borrowing Base calculation $ ___________
7. BORROWING BASE (Line 5 minus Line 6) $ 410,008,884
-------------
</TABLE>
The Borrower has caused this Borrowing Base Certificate to be executed this
11th day of February, 1998.
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By: /s/ Kenneth E. Barr
--------------------------------------
Name: Kenneth E. Barr
------------------------------------
Title: Executive Vice President
-----------------------------------
<PAGE>
1. Holiday Inn, DFW West, Bedford, TX
2. Hampton Inn, Richmond Airport, Sandston, VA
3. Hilton Hotel, Toledo, OH
4. Holiday Inn-N.O. Airport, Kenner, LA
5. Crowne Plaza, Madison, WI
6. Holiday Inn Park Center Plaza, San Jose, CA
7. Wyndham, Albuquerque, NM
8. Hotel Maison de Ville, New Orleans, LA
9. Hampton Inn, Ocean City, MD
10. Holiday Inn, Mission Valley, San Diego, CA
11. Wyndham Hotel, San Jose, CA
12. Days Inn Lake Buena Vista Resort, Orlando, FL
13. Holiday Inn Resort, Monterey, CA
14. Durham Hilton, Durham, NC
15. Wyndham Gardens, Marietta, GA
16. Westin Resort, Key Largo, FL
17. Holiday Inn, Phoenix, AZ
18. Hilton Hotel, Grand Rapids, MI
19. Marriott West Loop, Houston, TX
19a .Office Building West Loop, Houston, TX
20. Radisson Twin Towers, Orlando, FL
21. Hilton Hotel, Cocoa Beach, FL
22. Holiday Inn, Bucks County, FL
23. St. Tropez Hotel, Las Vegas, NV
24. Crowne Plaza, Las Vegas, NV
25. Sheraton Crossroads, Mahwah, NJ
26. Ramada Inn, Mahwah, NJ
27. Ramada Plaza, Meriden, CT
28. Courtyard by Marriott, Durham, NC
<PAGE>
SCHEDULE 1.01(c)
ENGINEER REPORT
SCOPE OF SERVICES
PROPERTY CONDITION REVIEW
(PCR)
ASSIGNMENT OBJECTIVES
- ---------------------
The purpose of the Property Condition Review (PCR) is: To determine the existing
conditions of the building(s) and its systems including structural, plumbing,
heating and ventilating, air conditioning, electrical, fire protection, finish
materials, exterior facades, roof, and site amenities. To identify any areas of
materials which may require repair or corrective action due to deferred
maintenance or present deficient conditions. To identify and list any
outstanding code violations against the property on file with the various
Municipal and Federal agencies, including the local building department, fire
department, etc. To evaluate the adequacy of the capacities of the HVAC and
electrical systems. To perform an Americans with Disabilities Act (ADA) survey
of the existing building(s) and property to determine compliance with the
legislation. To estimate the cost of the required remedial work indicated by any
of the preceding determinations. Note: The Property Condition Review (PCR)
assignment does not include any work with environmental issues, but Consultant
should be generally aware of and note any obvious existing or potential
conditions. Consultant shall utilize personnel having the appropriate
professional designations for those tasks outlined above (at a minimum, an ALA
and PE).
The Property Condition Review (PCR) assignment should include, at a minimum, a
review and description of the following aspects of the Project:
1. A description of the site and all improvements thereon, based upon field
observations as well as a review of all available documents.
2. Determine the general conformance of visible construction of the building
and site development to the construction documents, soils report, and
industry standards for such construction.
3. Consultant shall list all codes, regulations and public sector criteria
with which the Project must comply, including special permits, zoning,
development orders and other actions of local, state, and federal
authorities. Copies of the actual documents (building permits,
certificates of occupancy, etc.) should be included in the report.
4. Review of existing conditions of the building including exterior, roof,
interior spaces, MEP systems, structural members (including seismic
conditions, where applicable), site drainage, parking, landscaping and site
utilities; with conclusions and recommendations for conceivable repairs and
deficiencies along with cost estimates for the suggested repairs.
Estimates should be provided in the following format: IMMEDIATE, SHORT-
TERM (1-5 years), and LONG-TERM REPAIRS (1-10 years).
<PAGE>
Exhibit "D"
COMPLIANCE CERTIFICATE
----------------------
This Compliance Certificate is executed this ____ day of ___________,
__________, and is prepared pursuant to that certain Senior Unsecured Credit
Agreement (the "Agreement") between AMERICAN GENERAL HOSPITALITY OPERATING
---------
PARTNERSHIP, L.P., a Delaware limited partnership (the "Borrower"), SOCIETE
--------
GENERALE, SOUTHWEST AGENCY, as Arranger, Syndication Agent and Documentation
Agent. BANK ONE, TEXAS, N.A., as Administrative Agent, THE BANK OF NOVA SCOTIA
and WELLS FARGO BANK, NATIONAL ASSOCIATION, a Managing Agents, and the Banks
parties to the Agreement. Capitalized terms used herein but not otherwise
defined herein shall have the meanings specified by the Agreement.
1. Representations, Covenants, Defaults: Borrower hereby certifies to
------------------------------------
the Agents and the Banks, effective as of the date of execution of
this Compliance Certificate, as follows:
1.1 Covenants. All covenants of Borrower set forth in Articles V and
---------
VI of the Agreement required to be performed as of the date
hereof have been performed and maintained in all material
respects, and such Covenants continue to be performed and
maintained as of the execution date of this certificate, except
as follows:
______________________ [specify]
______________________
1.2 Representations and Warranties. All representations and
------------------------------
warranties of Borrower set forth in Article IV of the Agreement
are true and correct in all material respects as of the execution
date of this certificate, except as follows:
______________________ [specify]
______________________
1.3 Event of Default. There exists no Event of Default except as
----------------
follows:
______________________ [specify]
______________________
COMPLIANCE CERTIFICATE - Page 1 of 17
- ----------------------
<PAGE>
2. Operating Covenants. Borrower hereby certifies to the Agents and the
-------------------
Banks, effective as of the calendar quarter ending _______, ___, that
the amounts and calculations made hereunder pursuant to Article VII of
the Agreement are true and correct. Borrower acknowledges that if the
Parent or any of its Subsidiaries have a Permitted Preferred Stock
Investment, then (a) the Permitted Preferred Stock Percentage of the
Adjusted EBITDA of the Hotel Properties owned by such Permitted
Preferred Stock Company shall be included, as applicable, in those
calculations herein which use Adjusted EBITDA, and (b) the Cost Basis
of a Hotel Property owned by such Permitted Preferred Stock Company
shall be included, as applicable in those calculations herein which
use Cost Basis or Parent Total Cost Basis.
2.1 Parent Interest Coverage Ratio (Section 7.01 of the Agreement).
------------------------------
The Interest Coverage Ratio for the Parent, as of the Rolling
Period ending on __________, ___, is as set forth in (c) below,
based on the ratio of:
(a) Adjusted EBITDA, to $__________
(b) Interest Expense $__________
(c) Interest Coverage Ratio of (a) to (b) above,
maintained by the Parent for the stated
Rolling equals: __________
Required by the Agreement:
For any Rolling Period ending on March 31, 1998
through December 31, 1998, a ratio of not less
than 2.15 to 1.0 2.15 to 1.0
For any Rolling Period thereafter, a ratio of not
less than 2.50 to 1.0 2.50 to 1.0
2.2 Parent Debt Service Coverage Ratio (Section 7.02 of the
----------------------------------
Agreement).
The Debt Service Coverage Ratio for the Parent, as
of the Rolling Period ending on ________, ___, is
as set forth in (c) below, based on the ratio of:
(a) Adjusted EBITDA, to $__________
COMPLIANCE CERTIFICATE - Page 2 of 17
- ----------------------
<PAGE>
(b) Debt Service $__________
(c) Debt Service Coverage Ratio maintained by the
Parent for the stated Rolling Period equals: $__________
Required by the Agreement:
For any Rolling Period commencing with the Rolling
Period ending on March 31, 1998, a ratio of not less
than 2.0 to 1.0 2.1 to 1.0
2.3 Maintenance of Net Worth (Section 7.03 of the Agreement).
------------------------
The Adjusted Net Worth for the Parent, as of the
Rolling Period ending on _________, ___, is as set forth
in (c) below, based on the sum of:
(a) Net Worth (determined in accordance with GAAP) $__________
(b) Minority Interest Adjustment $__________
(c) Adjusted Net Worth for the Parent equals
(a) + (b) $__________
The Minimum Tangible Net Worth for the Parent is of
the Rolling Period ending on ________, ___, is as
set forth in (d) below, based on the sum of:
(a) $450,000, plus $450,000.00,
(b) 75% of aggregate net proceeds received by
Parent or any of its Subsidiaries after the
date of the Agreement in connection with any
offering of Stock or Stock Equivalents of the
Parent or its Subsidiaries taken as a whole,
plus $__________
COMPLIANCE CERTIFICATE - Page 3 of 17
- ----------------------
<PAGE>
(c) 75% of the consideration for any partnership
interests in Borrower issued after the date of
the Agreement for the acquisition of a Hotel
Property or any interest in a Hotel Property
permitted under the Agreement. $________
(d) The Minimum Tangible Net Worth of Parent
equals
(a) + (b) + (c) above
$________
Required by the Agreement:
The Parent shall at all times maintain an Adjusted
Net Worth of not less than the Minimum Tangible
Net Worth.
2.4 Limitations on Total Indebtedness of Parent (Section 7.04 of the
-------------------------------------------
Agreement).
Required by the Agreement:
Total Indebtedness (including, without limitation,
the Obligations and all Capitalized Lease
Obligations) of the Parent shall not exceed at any
time the Lesser of the (a) and (b) below:
------
(a) The sum of:
(i) for Seasoned Properties, (A) Adjusted EBITDA
(on a Consolidated basis) of such Seasoned
Properties for the preceding Rolling Period
multiplied by (B) for the Rolling Periods
-------------
ending on or before September 30, 1998, six
(6), and for any Rolling period ending
thereafter, five (5); and
COMPLIANCE CERTIFICATE - Page 4 of 17
- ----------------------
<PAGE>
..................................... $__________
(ii) for New Properties (including Hotel
Properties to be immediately
acquired using the proceeds from any
Indebtedness). (A) the Cost Basis in
such New Properties multiplied by (B)
-------------
for the Rolling Periods ending on or
before September 30, 1998, sixty
percent (60%), or (B) for any Rolling
Periods ending thereafter, fifty
percent (50%):
..................................... $__________
(iii) Total of (ii) and (iii) above........ $__________
OR
(b) The Parent Total Cost Basis
(including Hotel Properties to be
immediately acquired using the
proceeds from any Indebtedness)
multiplied by, for the Rolling
Periods ending on or before September
30, 1998, sixty percent (60%), and
for any Rolling Periods ending
thereafter, fifty (50%) based upon
the following calculation:
(A) $__________ (Minority
Interest Adjustment)
(B) Cost Basis of all Hotel
Properties which meet the
Parent Property Requirements
(C) Parent Total Cost Basis
equals the sum of (A) + (B)
above = $__________
multiplied by ___% which is $__________
(c) Lesser of (a) and (b) above.......... $__________
COMPLIANCE CERTIFICATE - Page 5 of 17
- ----------------------
<PAGE>
Required by the Agreement:
-------------------------
In no event shall the Borrower or the Parent
permit the Total Indebtedness of the Parent
to exceed the amount permitted under the
Articles of Incorporation of the Parent.
THE TOTAL INDEBTEDNESS OF PARENT, BASED UPON
THE FOREGOING CALCULATION, AS OF THE DATE OF
EXECUTION OF THIS COMPLIANCE CERTIFICATE
EQUALS: $__________
2.5 Limitations on Secured Recourse Indebtedness of Parent (Section
------------------------------------------------------
7.05 of the Agreement).
Required by the Agreement:
The Secured Recourse Indebtedness (excluding
the Obligations) of the Parent shall not at
any time on a Consolidated basis, exceed the
lesser of (a) or (b) below:
(a) The sum of:
(i) for Seasoned Properties, Adjusted
EBITDA (on a Consolidated basis)
of such Seasoned Properties for
the preceding Rolling Period
multiplied by two (2); and
....................................... $__________
(ii) for New Properties (including
Hotel Properties to be immediately
acquired using the proceeds from
any Indebtedness), twenty percent
(20%) of the Cost Basis in such
New Properties;
....................................... $__________
(iii) Total of (i) and (ii) above............ $__________
OR
COMPLIANCE CERTIFICATE - Page 6 of 17
- ----------------------
<PAGE>
(b) Fifteen percent (15%) of the
Parent Total Cost Basis
(including Hotel Properties
to be immediately acquired
using the proceeds from any
Indebtedness);
....................................... $__________
THE SECURED RECOURSE INDEBTEDNESS OF PARENT
AS OF THE DATE OF EXECUTION OF THIS
COMPLIANCE CERTIFICATE EQUALS: $__________
2.6 Limitations on Secured Non-Recourse Indebtedness of Parent
----------------------------------------------------------
(Section 7.06 of the Agreement).
Required by the Agreement:
The Secured Non-Recourse Indebtedness of the
Parent shall not at any time on a Consolidated
basis, exceed the lesser of (a) or (b) below:
(a) The sum of:
(i) for Seasoned Properties, Adjusted
EBITDA (on a Consolidated basis)
of such Seasoned Properties for
the preceding Rolling Period
multiplied by three (3); and
.................................... $__________
(ii) for New Properties (including
Hotel Properties to be
immediately acquired using the
proceeds from any Indebtedness),
thirty percent (30%) of the Cost
Basis in such New Properties
.................................... $__________
(iii) Total of (i) and (ii) above......... $__________
OR
COMPLIANCE CERTIFICATE - Page 7 of 17
- ----------------------
<PAGE>
(b) Thirty percent (30%) of the Parent
Total Cost Basis (including Hotel
Properties to be immediately
acquired using the proceeds from
any Indebtedness)
.................................. $ _________
THE SECURED NON-RECOURSE INDEBTEDNESS
OF PARENT AS OF THE DATE OF EXECUTION
OF THIS COMPLIANCE CERTIFICATE EQUALS: $ _________
2.7 Limitations on Secured Indebtedness of Parent (Section 7.07 of
---------------------------------------------
the Agreement).
Required by the Agreement:
The Parent shall not at any time on a Consolidated
basis permit the sum of the Parent's Secured Non-
Recourse Indebtedness and Secured Recourse to
exceed thirty percent (30%) of the Parent Total
Cost Basis (including Hotel Properties to be
immediately acquired using the proceeds from any
Indebtedness).
Calculation of Parent Total Cost Basis:
(a) 10,420,273 $ 10,420,273.00
(b) The sum of the Cost Basis of all
Hotel Properties which meet the
--------------
Parent Property Requirements. $ _________
----------------------------
(c) Parent Total Cost Basis equals the
sum of (a) and (b) above: $ _________
(d) 30% of Parent Total Cost Basis: $ _________
(e) Secured Non-Recourse Indebtedness: $ _________
(f) Secured Recourse Indebtedness: $ _________
(g) Sum of (e) + (f) $ _________
COMPLIANCE CERTIFICATE - Page 8 of 17
- ----------------------
<PAGE>
2.8 Borrowing Limitation (Section 2.01 of the Agreement)
Required by the Agreement:
The maximum aggregate amount outstanding under the
facility (for Advances and Letters of Credit) shall
not exceed the Borrowing Base
(a) The Borrowing Base for the Rolling Period
ending on ___________, ______ equals $ ________
(b) Actual amount outstanding under the
facility (for Advances and Letters of
Credit) $ ________
2.9 Total Availability (Section 2.01 of the
Subordinate Agreement)
Required by the Subordinate Agreement:
The aggregate amount of all outstanding advances
under the Subordinate Credit Agreement at any one
time may not exceed the lesser of the aggregate
Commitments under the Subordinate Credit
Agreement at such time or the Total Availability
at such time.
The Adjusted Net Worth as of the date of this
Compliance Certificate is as set forth in (f)
below, based on the following calculation:
(a) The Parent's and the Parent's Subsidiaries
Consolidated Adjusted EBITDA for the Rolling
Period ending equals $ ________
(b) Line (a) above multiplied by (i) on or
before December 31, 1998, six (6) and (ii)
after December 31, 1998, five (5) equals $ ________
COMPLIANCE CERTIFICATE - Page 9 of 17
- ----------------------
<PAGE>
(c) All Indebtedness of the Parent and
its Subsidiaries outstanding as of
such date, including without
limitation, the Senior Obligations,
Secured Recourse Indebtedness and
Secured Non-Recourse Indebtedness
equals $
(d) Line (b) above minus Line (c) above
equals $
(e) The aggregate face amount of all
Letters of Credit issued under the
Agreement equals $
(f) Total Availability equals Line (d)
above minus Line (e) above $
3. Other Covenants. Borrower hereby certifies to the Agents and the
---------------
Banks, effective as of the Rolling Period ending _________, ___, that
the following amounts and calculations made pursuant to the Agreement
are true and correct.
3.1 Leverage Ratio (Article 1 of the Agreement)
--------------
The Leverage Ratio for the Parent, as of the
Rolling Period ending on __________, _____, is
as set forth in (c) below, based on the ratio of:
(a) Parent's Total Indebtedness: $ ________
to
(b) Hotel Value of Hotel Properties owned
by the Parent and Parent's Subsidiaries
which meet the Parent Property
------------------------------
Requirements: $ ________
------------
(c) The Leverage Ratio based on the ratio
------------------
of (a) to (b) above, maintained by the
Parent for the stated Rolling Period
equals: $ ________
COMPLIANCE CERTIFICATE - Page 10 of 17
- ----------------------
<PAGE>
3.2 Status: Applicable Margin (Article 1 of the Agreement)
-------------------------
Pursuant to Article 1 of the Agreement, the Status
applicable to the loan facility is __________, based upon a
Leverage Ratio of _________ (as calculated above). Based on
the foregoing, the Applicable Margin for each subsequent
Advance is as follows:
Prime Rate Advances: $__________
LIBOR Rate Advances: $__________
Unused Commitment Fee: $__________
3.3 Parent Property Requirements (Article 1 of the Agreement)
Attach schedule with detail for each Parent Property
(a) The Cost Basis for any of the Parent Properties located in one
state shall not exceed 20% (except Florida which shall not exceed
35%) of the Cost Basis for all of the Parent Properties:
(i) Highest Cost Basis for
all Parent Properties
in any one state. $
(ii) Total Cost Basis for all Parent Properties $
(iii) Ratio of (i) to (ii) above
(iv) Cost Basis of Parent Properties in Florida $
(b) The Cost Basis for all of the Parent
Properties which are limited service
hotels or extended stay hotels (Marriott
Courtyards shall not be deemed limited
service hotels) shall not exceed, in the
aggregate 20% of the Cost Basis for all
of the Parent Properties:
COMPLIANCE CERTIFICATE - Page 11 of 17
- ----------------------
<PAGE>
(i) Cost Basis for Parent Properties which are limited
service of extended stay hotels $
(ii) Cost Basis of all of the Parent Properties $
(iii) Ratio of (i) to (ii) above
(c) The Cost Basis for Hotel Properties which do not
have franchise or license agreements shall not
exceed 15% of the Cost Basis for all Parent Properties:
(i) Cost Basis for Parent Properties which do not have
franchise or license agreements $
(ii) Cost Basis of all Parent Properties $
(iii) Ratio of (i) to (ii) above
(d) The cost for Hotel Properties which are subject to a
ground lease shall not exceed 22.5% of the Cost Basis
for all of the Parent Properties or 22.5% of the total
guest rooms for all Parent Properties:
(i) Cost Basis of all Parent Properties which are
subject to aground lease $
(ii) Total guest rooms for all Parent Properties
(iii) Cost Basis for all of the Parent Properties $
COMPLIANCE CERTIFICATE - Page 12 of 17
- ----------------------
<PAGE>
(iv) Ratio of (iii) to (i) above
(v) Ratio of (iii) to (ii) above
3.4 Parent Total Cost Basis (Article 1 of the Agreement)
Parent Total Cost Basis, as of the Rolling Period ending
on ______, ____, is as set forth in (c) below, based on
the sum of:
(a) Cost Basis of all Parent Properties which meet
the Parent Property Requirements $
(b) Minority Interest Adjustment $
(c) Sum of (a) and (b) above $
3.4 Restricted Liens (Section 6.01 of the Agreement)
Required by the Agreement:
Borrower will not create, assume, incur or suffer to
exist, or permit any of its Subsidiaries (except for
Permitted Other Subsidiaries) to create, assume,
incur, or suffer to exist, any Lien, except as
permitted under Section 6.01 of the Agreement.
Indicate whether Borrower is in compliance with
Section 6.01 of the Agreement. If not, explain why
and provide detail.
3.5 Indebtedness (Section 6.02 of the Agreement)
Required by the Agreement:
Borrower, Parent and their respective Subsidiaries
will not incur or permit to exist any Indebtedness
other than the Obligations and the following:
COMPLIANCE CERTIFICATE - Page 13 of 17
- ----------------------
<PAGE>
(a) Subordinate Indebtedness for which the
cumulative principal outstanding prior
to the Maturity Date is less than or equal
to $125,000.000
Actual principal balance of Subordinate
Indebtedness as of the date of this Compliance
Certificate $
(b) If all of the Subordinate Indebtedness is
repaid in full and no more Subordinate
Indebtedness may be incurred pursuant to (a)
above, then Indebtedness which is less than
or equal to $30,000.000
Actual other Indebtedness incurred in accordance
with (b) above $
(c) Secured Recourse Indebtedness and Secured
Non-Recourse Indebtedness incurred by Permitted
Other Subsidiaries to the extent (i) the covenants
in Article VII of the Agreement are complied
with (ii) the Secured Recourse Indebtedness
secured by a Hotel Property does not exceed 65%
of the market value of such Hotel Property, (iii)
all Secured Recourse Indebtedness in the aggregate
secured by Hotel Properties does not exceed 65% of
the aggregate market value of such Hotel Properties,
and (iv) the Secured Non-Recourse Indebtedness secured
by a Hotel Property does not exceed 70% of the market
value of such Hotel Property, (iii) all Secured Recourse
Indebtedness in the aggregate secured by Hotel Properties
does not exceed 70% of the aggregate market value of such
Hotel Properties
COMPLIANCE CERTIFICATE - Page 14 of 17
- ----------------------
<PAGE>
Indicate whether Borrower is in compliance with the foregoing and
attach schedule of values and Indebtedness. If not, explain why
and provide detail.
(d) Certain other restrictions detailed in Section 6.02(d)
through (g) of the Agreement
Indicate whether Borrower is in compliance with the foregoing
restrictions. If not, explain why and provide detail.
3.6 Agreements Regarding Distributions From Subsidiaries (Section
6.03 of the Agreement)
Required by the Agreement:
Borrower will not, nor will it permit any of its Subsidiaries
(other than Permitted Other Subsidiaries) to, enter into any
agreement (other than a Credit Document) which limits
distributions to or any advance by an of the Borrower's
Subsidiaries to Borrower
Indicated whether Borrower is in compliance with the foregoing
restriction. If not, explain why and provide detail.
3.7 Restricted Payments (Section 6.04 of the Agreement)
Required by the Agreement:
Neither the Parent, Borrower, nor any of their respective
Subsidiaries, will make any Restricted Payment, except as
provided in Section 6.04 of the Agreement.
COMPLIANCE CERTIFICATE - Page 15 of 17
- ----------------------
<PAGE>
Parent may, if no Default has occurred and is continuing or
would result therefrom make payments to its shareholders
(including in connection with the repurchase of Stock or
Stock Equivalents) which with the previous such cash
payments in the three immediately preceding Fiscal Quarters
are not in excess of the greater of (i) the lesser of (A)
ninety percent (90%) of the Funds From Operations of the
Parent during such Rolling Period or (B) one hundred percent
(100%) of Free Cash Flow of the Parent during such Rolling
Period and (ii) the amount required for the Parent to
maintain its status as a REIT:
(a) Payments to Shareholders during the Rolling
Period ending on
$
(b) Funds From Operations of the Parent during the
Rolling Period ending on
$
(C) Ratio of Payments from Funds From Operations
(d) Free Cash Flow of the Parent during the Rolling
Period ending on
$
Certain other restrictions detailed in Section 6.04(b)
through (e) of the Agreement
Indicate whether Borrower is in compliance with
the foregoing restrictions. If not, explain why and
provide detail.
3.8 Other Restrictions and Covenants (Article 6 of the
Agreement)
Indicate whether Borrower is in compliance with the
covenants and restrictions set forth in Sections 6.05
through 6.14 of the Agreement. If not, explain why and
provide detail.
COMPLIANCE CERTIFICATE -Page 16 of 17
- ----------------------
<PAGE>
EXHIBIT "E"
FORM OF ENVIRONMENTAL INDEMNIFICATION AGREEMENT
This Environmental Indemnification Agreement (this "Agreement") is made
and entered into effective for all purposes as of the 13th day of February,
1998, by the parties signatory hereto or to an Accession Agreement (as
hereinafter defined) (collectively, the "Indemnitor" whether one or more), to
and for the benefit of BANK ONE, TEXAS, N.A., as Administrative Agent (the
"Administrative Agent"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger,
Syndication Agent, and Documentation Agent (the "Documentation Agent"), THE BANK
OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Managing Agents
(the "Managing Agents"), and the banks and other lenders named in the Credit
Agreement herein described.
INTRODUCTION
WHEREAS, this Agreement is given in connection with that certain Amended
and Restated Senior Unsecured Credit Agreement dated as of February 13, 1998
("Credit Agreement"), among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership (the "Borrower"), Administrative Agent,
Documentation Agent, Managing Agents and the banks and other lenders party
thereto (collectively the "Banks") pursuant to which the Banks are considering
making a loan in an amount up to $500,000,000.00 (the "Loan") to Borrower as
more specifically described therein;
WHEREAS, the Borrower and Subsidiaries of the Borrower now or hereafter
will own certain Hotel Properties which include without limitation the Initial
Properties, the Future Properties, the Permitted Non-Eligible Properties and the
properties owned by the Permitted Other Subsidiaries (said properties together
with all property owned by the Participating Lessees in connection with such
Hotel Properties, all rights and appurtenances to such Hotel Properties and all
improvements presently located or hereafter constructed on such Hotel Properties
are hereinafter collectively called the "Properties");
WHEREAS, the Borrower is the principal financing entity for capital
requirements of its Subsidiaries, and from time to time the Borrower has made
and will continue to make capital contributions and advances to its
Subsidiaries, including the Subsidiaries which are parties hereto. Other than
the Parent, each Indemnitor is a direct or indirect subsidiary of the Borrower.
Each Indemnitor will derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement; and
<PAGE>
WHEREAS, the Banks have required the execution and delivery of this
Agreement as a condition precedent to the execution of the Credit Agreement.
The Banks would not be willing to execute the Credit Agreement in the absence of
the execution and delivery by Indemnitor of this Agreement.
AGREEMENT
---------
NOW, THEREFORE, Indemnitor, as an inducement to the Banks to make the Loan,
hereby covenants and agrees to and for the benefit of the Banks as follows:
1. Defined Terms. All terms used in this Agreement, but not defined
-------------
herein, shall have the meaning given such terms in the Credit Agreement.
2. Hazardous Material. As used in this Agreement, the term "Hazardous
------------------
Materials" shall mean any flammable explosives, radioactive materials, hazardous
wastes, hazardous materials, hazardous or toxic substances, or related materials
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. (S) 9601 et. seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. (S) 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. (S) 6901 et seq.),
and in the regulations adopted and publications promulgated pursuant thereto,
and all friable asbestos, petroleum derivatives, polychlorinated biphenyls, and
materials defined as hazardous materials under any federal, state or local laws,
ordinances, codes, rules, orders, regulations or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal thereof (collectively, "Environmental Laws").
3. Representation. Except as set forth in the Environmental Reports,
--------------
Indemnitor warrants and represents to the Banks that it has no knowledge of (a)
the presence of any Hazardous Materials on any of the Properties except for
Permitted Hazardous Substances; or (b) any material spills, releases, discharges
or disposal of Hazardous Materials that have occurred or are presently occurring
off any of the Properties as a result of any construction on or operation and
use of any of the Properties. In connection with the operation and use of any
of the Properties, Indemnitor warrants and represents that, as of the date of
this Agreement, it has no knowledge of any failure to comply in all material
respects with all applicable law, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders relating to the
generation, recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials other than as set forth in the Environmental Reports.
-2-
<PAGE>
4. Covenant. Indemnitor covenants and agrees not to cause or permit the
--------
presence, use, generation, release, discharge, storage, disposal or
transportation of any Hazardous Materials on, under, in, about, to or from any
of the Properties except for Permitted Hazardous Substances.
5. Indemnification. Indemnitor shall exonerate, indemnify, pay and
---------------
protect, defend (with counsel approved pursuant to the Credit Agreement) and
save the Administrative Agent, the Documentation Agent, the Managing Agents, the
Banks, and their respective directors, trustees, beneficiaries, officers,
shareholders, employees and agents of the Banks (collectively, the "Indemnified
Parties"), harmless from and against any claims (including, without limitation,
third party claims for personal injury or real or personal Properties damage),
actions, administrative proceedings (including informal proceedings), judgments,
damages, punitive damages, penalties, fines, costs, taxes, assessments,
liabilities (including, without limitation, sums paid in settlements of claims),
interest or losses, including reasonable attorneys' fees and expenses
(including, without limitation, any such reasonable fees and expenses incurred
in enforcing this Agreement or collecting any sums due hereunder), consultant
fees, and expert fees, together with all other reasonable costs and expenses of
any kind or nature (collectively, the "Costs") that arise directly or indirectly
in connection with the presence, suspected presence, release or suspected
release of any Hazardous Materials in or into the air, soil, ground water,
surface water or improvements at, on, about, under or within any of the
Properties, or any portion thereof, or elsewhere in connection with the
transportation of Hazardous Materials to or from any of the Properties (any such
release being referred to herein as a "Release"; provided however that
Indemnitor shall not be so liable for any Costs arising because of the gross
negligence or wilful misconduct of an Indemnified Party or Costs arising because
of a Release for a Property after the Administrative Agent or the Administrative
Agent's nominee acquires title to such Property. INDEMNITOR'S OBLIGATION TO SO
INDEMNIFY THE INDEMNIFIED PARTIES SHALL INCLUDE INDEMNIFICATION FOR ANY OF SUCH
MATTERS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED
PARTIES. The indemnification provided in this Section shall specifically apply
to and include claims or actions brought by or on behalf of tenants or employees
of Indemnitor; Indemnitor hereby expressly waives (with respect to any claims of
the Indemnified Parties arising under this Agreement) any immunity to which
Indemnitor may otherwise be entitled under any industrial or worker's
compensation laws. In the event any of the Indemnified Parties shall suffer or
incur any such Costs, Indemnitor shall pay to the Administrative Agent for the
benefit of the Indemnified Party the total of all such Costs suffered or
incurred by such Indemnified Party within ten (10) days after demand therefor,
such payment to be disbursed by the Administrative Agent in accordance with the
Credit Agreement. Without limiting the generality of the foregoing, the
indemnification provided by this Section 5 shall specifically cover Costs,
including, without limitation, capital, operating and maintenance costs,
incurred in connection with any investigation or monitoring of site conditions,
any clean-up, containment, remedial, removal or restoration work
-3-
<PAGE>
Section 5.06
PCR REQUIRED WORK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AMERICAN GENERAL HOSPITALITY TRUST
- ----------------------------------------------------------------------------------------------------
PROPERTY CONDITION REVIEW (PCR)
- ----------------------------------------------------------------------------------------------------
REQUIRED REPAIRS
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FIRM REPORT DATE
- ----------------------------------------------------------------------------------------------------
PROPERTY NAME LOCATION NAME DATE DESCRIPTION REQ'D
- ------------- -------- ---- ---- ----------- -----
<S> <C> <C> <C> <C> <C>
None required
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
7. Permitted Contests. Notwithstanding any provision of this Agreement
------------------
to the contrary, Indemnitor may contest by appropriate action any Remedial Work
requirement imposed by any Governmental Agency provided that (a) if the Loan
then remains outstanding, no "Event of Default" has occurred and is continuing
under the Credit Agreement or any Credit Documents, (b) Indemnitor has given the
Banks written notice that Indemnitor is contesting or shall contest and
Indemnitor does in fact contest the application, interpretation or validity of
the law, regulation, order or agreement pertaining to the Remedial Work by
appropriate legal or administrative proceedings conducted in good faith and with
due diligence and dispatch, (c) such contest shall not subject any of the
Indemnified Parties nor any assignee of all or any portion of the Banks'
interest in the Loan nor any of the Properties to civil or criminal liability
and does not jeopardize any such party's lien upon or interest in any of the
Properties and (d) if the estimated cost of the Remedial Work is greater than
$2,500,000, Indemnitor shall give such security or assurances as may be
reasonably required by the Banks as determined pursuant to the Credit Agreement
to ensure ultimate compliance with all legal or contractual requirements
pertaining to the Remedial Work (and payment of all costs, expenses, interest
and penalties in connection therewith) and to prevent any sale, forfeiture or
loss by reason of nonpayment or noncompliance.
8. Reports and Claims. Indemnitor shall deliver to the Banks copies of
------------------
any reports, analyses, correspondence, notices, licenses, approvals, orders or
other written materials relating to the environmental condition of any of the
Properties promptly upon receipt, completion or delivery thereof. Indemnitor
shall give notice to the Banks of any claim, action, administrative proceeding
(including, without limitation, informal proceedings) or other demand by any
governmental agency or other third party involving Costs or Remedial Action at
the time such claim or other demand first becomes known to Indemnitor. Receipt
of any such notice shall not be deemed to create any obligation on the Banks to
defend or otherwise respond to any claim or demand. All notices, approvals,
consents, requests and demands upon the respective parties hereto shall be in
writing, including telegraphic communication and delivered or teletransmitted to
the Administrative Agent, as set forth in the Credit Agreement and to each
Indemnitor, at the address set forth beneath such Indemnitor's signature or in
the Accession Agreement executed by such Indemnitor, or to such other address as
shall be designated by any Indemnitor or the Administrative Agent in written
notice to the other parties. All such notices and other communications shall be
effective when delivered or teletransmitted to the above addresses.
9. Banks as Owner. If for any reason, the Administrative Agent or any
--------------
of the Banks (or any successor or assign of such parties) becomes the fee owner
of any of the Properties and any claim, action, notice, administrative
proceeding (including, without limitation, informal proceedings) or other demand
is made by any governmental agency or other third party which implicate Costs or
Remedial Work, Indemnitor shall cooperate with such party in any defense or
other appropriate
-5-
<PAGE>
response to any such claim or other demand; provided however that Indemnitor
shall not be so liable for any Costs arising because of the gross negligence or
wilful misconduct of an Indemnified Party. Indemnitor's duty to cooperate and
right to participate in the defense or response to any such claim or demand
shall not be deemed to limit or otherwise modify Indemnitor's obligations under
this Agreement. Any party subject to a claim or other proceeding referenced in
the first sentence of this Section 9 shall give notice to Indemnitor of any
claim or demand governed by this Section 9 at the time such claim or other
demand first becomes known to such party.
10. Subrogation of Indemnity Rights. If Indemnitor fails to fully perform
-------------------------------
its obligations under Sections 5 and 6 above, the Indemnified Parties shall be
subrogated to any rights or claims Indemnitor may have against any present,
future or former owners, tenants or other occupants or users of any of the
Properties, any portion thereof or any adjacent or proximate properties,
relating to the recovery of Costs or the performance of Remedial Work.
11. Assignment by Agents and Banks. No consent by Indemnitor shall be
------------------------------
required for any assignment or reassignment of the rights of the Administrative
Agent, the Documentation Agent, the Managing Agents or the Banks under this
Agreement to any successor of such party or a purchaser of the Loan or any
interest in or portion of the Loan including participation interests.
12. Merger, Consolidation or Sale of Assets. In the event Indemnitor is
---------------------------------------
dissolved, liquidated or terminated or all or substantially all the assets of
Indemnitor are sold or otherwise transferred to one or more persons or other
entities, the surviving entity or transferee or assets, as the case may be, (i)
shall be formed and existing under the laws of a state, (ii) shall deliver to
the Banks an acknowledged instrument in recordable form assuming all
obligations, covenants and responsibilities of Indemnitor under this Agreement.
13. Independent Obligations; Survival. The obligations of Indemnitor
---------------------------------
under this Agreement shall survive the consummation of the Loan transaction
described above and the repayment of the Loan. The obligations of Indemnitor
under this Agreement are separate and distinct from the obligations of
Indemnitor under the Credit Documents. This Agreement may be enforced by the
Banks without regard to or affecting any rights and remedies the Administrative
Agent and/or the Banks may have against Indemnitor under the Credit Documents
and without regard to any limitations on the Administrative Agent's or Banks'
recourse for recovery of the Loan as may be provided in the Credit Documents.
Enforcement of this Agreement is not and shall not be deemed to constitute an
action for recovery of the indebtedness of the Loan.
14. Default Interest. In addition to all other rights and remedies of the
----------------
Banks against Indemnitor as provided herein, or under applicable law, Indemnitor
shall pay to the Administrative
-6-
<PAGE>
Agent, immediately upon demand therefor, Default Interest (as defined below) on
any Costs and other payments required to be paid by Indemnitor to the Banks
under this Agreement which are not paid within ten (10) days after demand
therefor, such payments to be disbursed by the Administrative Agent in
accordance with the Credit Agreement. Default Interest shall be paid by
Indemnitor from the date such payment becomes delinquent through and including
the date of payment of such delinquent sums. "Default Interest" shall mean a per
annum interest rate equal to three points above the Adjusted Prime Rate or
reference rate for the then current calendar month, as of the first day of such
calendar month, which is publicly announced from time to time by the
Administrative Agent.
15. Contribution. As a result of the transactions contemplated by the
------------
Credit Agreement, each of the Indemnitors will benefit, directly and indirectly,
from the Obligations and in consideration thereof desire to enter into a
contribution agreement among themselves as set forth in this Section 15 to
allocate such benefits among themselves and to provide a fair and equitable
arrangement to make contributions in the event any payment is made by any
Indemnitor hereunder to the Administrative Agent, the Documentation Agent, the
Managing Agents or the Banks (such payment being referred to herein as a
"Contribution," and for purposes of this Agreement, includes any exercise of
recourse by the Administrative Agent against any Property of a Contributor
designated as collateral under any Credit Document and application of proceeds
of such collateral in satisfaction of such Indemnitor's obligations under this
Agreement). The Indemnitors hereby agree as follows:
15.01 Calculation of Contribution. In order to provide for just and
---------------------------
equitable contribution among the Indemnitors in the event any Contribution
is made by a Indemnitor (a "Funding Indemnitor"), such Funding Indemnitor
shall be entitled to a contribution from certain other Indemnitors for all
payments, damages and expenses incurred by that Funding Indemnitor in
discharging any of the obligations under this Agreement (the
"Obligations"), in the manner and to the extent set forth in this Section.
The amount of any Contribution under this Agreement shall be equal to the
payment made by the Funding Indemnitor to the Administrative Agent or any
other beneficiary pursuant to this Agreement and shall be determined as of
the date on which such payment is made.
15.02 Benefit Amount Defined. For purposes of this Agreement, the
----------------------
"Benefit Amount" of any Indemnitor as of any date of determination shall be
the net value of the benefits to such Indemnitor and all of its
Subsidiaries (including any Subsidiaries which may be Indemnitors) from
extensions of credit made by the Banks to the Borrower under the Credit
Agreement; provided, that in determining the contribution liability of any
Indemnitor which is a Subsidiary to its direct or indirect parent
corporation or of any Indemnitor to its
-7-
<PAGE>
direct or indirect Subsidiary, the Benefit Amount of such Subsidiary and
its Subsidiaries, if any, shall be subtracted in determining the Benefit
Amount of the parent corporation. Such benefits shall include benefits of
funds constituting proceeds of Advances made to the Borrower by the Banks
which are in turn advanced or contributed by the Borrower to such
Indemnitor or its Subsidiaries and benefits of Letters of Credit issued
pursuant to the Credit Agreement on behalf of, or the proceeds of which are
advanced or contributed or otherwise benefit, directly or indirectly, such
Indemnitor and its Subsidiaries (collectively, the "Benefits"). In the case
of any proceeds of Advances or Benefits advanced or contributed to a Person
(an "Owned Entity") any of the equity interests of which are owned directly
or indirectly by a Indemnitor, the Benefit Amount of a Indemnitor with
respect thereto shall be that portion of the net value of the benefits
attributable to Advances or Benefits equal to the direct or indirect
percentage ownership of such Indemnitor in its Owned Entity.
15.03 Contribution Obligation. Each Indemnitor shall be liable to a
-----------------------
Funding Indemnitor in an amount equal to the greater of (A) the (i) ratio
of the Benefit Amount of such Indemnitor to the total amount of
Obligations, multiplied by (ii) the amount of Obligations paid by such
Funding Indemnitor and (B) 95% of the excess of the fair saleable value of
the property of such Indemnitor over the total liabilities of such
Indemnitor (including the maximum amount reasonably expected to become due
in respect of contingent liabilities) determined as of the date on which
the payment made by a Funding Indemnitor is deemed made for purposes of
this Agreement (giving effect to all payments made by other Funding
Indemnitors as of such date in a manner to maximize the amount of such
contributions).
15.04 Allocation. In the event that at any time there exists more
----------
than one Funding Indemnitor with respect to any Contribution (in any such
case, the "Applicable Contribution"), then payment from other Indemnitors
pursuant to this Agreement shall be allocated among such Funding
Indemnitors in proportion to the total amount of the Contribution made for
or on account of the Borrower by each such Funding Indemnitor pursuant to
the Applicable Contribution. In the event that at any time any Indemnitor
pays an amount under this Agreement in excess of the amount calculated
pursuant to clause (A) of Subsection 15.03 above, that Indemnitor shall be
deemed to be a Funding Indemnitor to the extent of such excess and shall be
entitled to contribution from the other Indemnitors in accordance with the
provisions of this Section.
15.08 Subsidiary Payment. The amount of contribution payable under
------------------
this Section by any Indemnitor shall be reduced by the amount of any
contribution paid hereunder by a Subsidiary of such Indemnitor.
-8-
<PAGE>
15.06 Equitable Allocation. If as a result of any reorganization,
--------------------
recapitalization, or other corporate change in the Borrower or any of its
Subsidiaries, or as a result of any amendment, waiver or modification of
the terms and conditions of other Sections of this Agreement or the
Obligations, or for any other reason, the contributions under this Section
become inequitable as among the Indemnitors, the Indemnitors shall promptly
modify and amend this Section to provide for an equitable allocation of
contributions. Any of the foregoing modifications and amendments shall be
in writing and signed by all Indemnitors.
15.07 Asset of Party to Which Contribution is Owing. The Indemnitors
---------------------------------------------
acknowledge that the right to contribution hereunder shall constitute an
asset in favor of the Indemnitor to which such contribution is owing.
15.08 Subordination. No payments payable by a Indemnitor pursuant to
-------------
the terms of this Section 15 shall be paid until all amounts then due and
payable by the Borrower to the Administrative Agent, the Documentation
Agent, the Managing Agents or any Bank, pursuant to the terms of the Credit
Documents, are paid in full in cash. Nothing contained in this Section 15
shall affect the obligations of any Indemnitor to the Administrative Agent,
the Documentation Agent, the Managing Agents or any Bank under the Credit
Agreement or any other Credit Documents.
16. Miscellaneous. If there shall be more than one Indemnitor hereunder,
-------------
or pursuant to any other indemnification of Banks relating to Hazardous
Materials arising out of or in connection with the Loan ("Other Indemnitor"),
each Indemnitor and Other Indemnitor agrees that (a) the obligations of the
Indemnitor hereunder, and each Other Indemnitor, are joint and several, (b) a
release of any one or more Indemnitors or Other Indemnitors or any limitation of
this Agreement in favor of or for the benefit of one or more Indemnitors or
Other Indemnitors shall not in any way be deemed a release of or limitation in
favor of or for the benefit of any other Indemnitor or Other Indemnitor and (c)
a separate action hereunder may be brought and prosecuted against any or all
Indemnitors or Other Indemnitors. If any term of this Agreement or any
application thereof shall be invalid, illegal or unenforceable, the remainder of
this Agreement and any other application of such term shall not be affected
thereby. No delay or omission in exercising any right hereunder shall operate
as a waiver of such right or any other right. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by Indemnitor and the Banks,
and their respective successors and assigns, including (without limitation) any
assignee or purchaser of all or any portion of the Banks' interest in (i) the
Loan, (ii) the Credit Documents, or (iii) any of the Properties.
17. Governing Law. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with, the laws of the State of Texas. Each Indemnitor
hereby irrevocably submits to
-9-
<PAGE>
the jurisdiction of any Texas state or federal court sitting in Dallas, Texas in
any action or proceeding arising out of or relating to this Agreement and the
other Credit Documents, and such Indemnitor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such court. Each Indemnitor hereby irrevocably waives, to the fullest extent it
may effectively do so, any right it may have to the defense of an inconvenient
forum to the maintenance of such action or proceeding. Each Indemnitor hereby
agrees that service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding may be made by mailing or
delivering a copy of such process to such Indemnitor at its address specified
below. Each Indemnitor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section shall affect the rights of any of the Banks to serve legal process in
any other manner permitted by the law or affect the right of any of the Banks to
bring any action or proceeding against any Indemnitor or its Property in the
courts of any other jurisdiction.
18. Waivers of Jury Trials. EACH INDEMNITOR HEREBY IRREVOCABLY AND
----------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT OR TO ANY COUNTERCLAIM
THEREIN.
19. Amendments/Accession Agreement. No waiver of any provision of this
-------------------------------
Agreement nor consent to any departure by any Indemnitor therefrom shall be
effective unless the same shall be in writing and signed by the Administrative
Agent and the Majority Banks, and no amendment of this Agreement shall be
effective unless the same shall be in writing and signed by the Administrative
Agent, with the consent of the Majority Banks; provided that any amendment or
--------
waiver releasing any Indemnitor from any liability hereunder shall be signed by
all the Banks; and provided further that any waiver or consent shall be
----------------
effective only in the specific instance and for the specific purpose for which
given. Notwithstanding the foregoing, in the event that any Subsidiary or
Affiliate of the Borrower hereafter is required in accordance with the terms of
the Credit Agreement or otherwise agrees to become a Indemnitor under this
Agreement, then such Subsidiary or Affiliate may become a party to this
Agreement by executing an Accession Agreement ("Accession Agreement") in the
form attached hereto as Annex 1, and each Indemnitor and the Administrative
-------
Agent hereby agrees that upon such Subsidiary's or Affiliate's execution of such
Accession Agreement, this Agreement shall be deemed to have been amended to make
such Person an Indemnitor hereunder for all purposes and a party hereto and no
signature is required on behalf of the other Indemnitors or the Administrative
Agent to make such an amendment to this Agreement effective.
-10-
<PAGE>
[INTENTIONALLY BLANK]
-11-
<PAGE>
IN WITNESS WHEREOF, Indemnitor has caused this Agreement to be executed as
of the day and year first written above.
INDEMNITORS:
AMERICAN GENERAL HOSPITALITY
CORPORATION, a Maryland corporation
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
AGH UPREIT, LLC, a Delaware limited liability company
By: American General Hospitality Corporation, member
By:____________________________________
Name:__________________________________
Title:_________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-12-
<PAGE>
3100 GLENDALE JOINT VENTURE,
an Ohio general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:__________________________________
Name:________________________________
Title:_______________________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-13-
<PAGE>
MDV LIMITED PARTNERSHIP,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-14-
<PAGE>
MADISON MOTEL ASSOCIATES,
a Wisconsin general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-15-
<PAGE>
183 HOTEL ASSOCIATES, LTD.,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-16-
<PAGE>
RICHMOND WILLIAMSBURG ASSOCIATES, LTD., a Texas limited
partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-17-
<PAGE>
2929 WILLIAMS LIMITED LIABILITY COMPANY, a Delaware
limited liability company
By: AGH UPREIT, LLC, its member
By: American General Hospitality
Corporation, member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., general partner
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:______________________________________
Name:____________________________________
Title:___________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-18-
<PAGE>
LAKE BUENA VISTA PARTNERS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, general partner
By: American General Hospitality
Corporation, member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-19-
<PAGE>
BCHI ACQUISITION, L.L.C.,
a Delaware limited liability company
By: AGH UPREIT LLC, its member
By: American General Hospitality
Corporation, member
By:_____________________________________
Name:___________________________________
Title:__________________________________
By: American General Hospitality
Operating Partnership, L.P., member
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-20-
<PAGE>
COCOA BEACH HOTELS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:_________________________________
Name:_______________________________
Title:______________________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:____________________________
Name:__________________________
Title:_________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-21-
<PAGE>
DURHAM I-85 LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:_________________________________
Name:_______________________________
Title:______________________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:____________________________
Name:__________________________
Title:_________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-22-
<PAGE>
ANNEX 1
Environmental Indemnification Agreement
ACCESSION AGREEMENT
____________ [NAME OF ENTITY], a [limited partnership/corporation] (the
"Company"), hereby agrees with (i) BANK ONE, TEXAS, N.A., as Administrative
Agent (the "Administrative Agent") under the Amended and Restated Senior
Unsecured Credit Agreement dated as of February 13, 1998 (the "Credit
Agreement") among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership, as the Borrower, BANK ONE, TEXAS, N.A., as
Administrative Agent, SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger,
Syndication Agent, and Documentation Agent, BANK OF NOVA SCOTIA and WELLS FARGO
BANK, NATIONAL ASSOCIATION, as Managing Agents and the Banks; (ii) the parties
to the Environmental Indemnity Agreement (the "Environmental Indemnity") dated
as of February 13, 1998 executed in connection with the Credit Agreement, (iii)
the parties to the Guaranty and Contribution Agreement (the "Guaranty") dated as
of February 13, 1998 executed in connection with the Credit Agreement, as
follows:
The Company hereby agrees and confirms that, as of the date hereof, it (a)
intends to be a party to the Environmental Indemnity and the Guaranty and
undertakes to perform all the obligations expressed therein, respectively, of an
Indemnitor and a Guarantor (as defined in the Environmental Indemnity and the
Guaranty, respectively), (b) agrees to be bound by all of the provisions of the
Environmental Indemnity and the Guaranty as if it had been an original party to
such agreements, (c) confirms that the representations and warranties set forth
in the Environmental Indemnity and the Guaranty, respectively, with respect to
the Company, a party thereto, are true and correct in all material respects as
of the date of this Accession Agreement and (d) has received and reviewed copies
of each of the Environmental Indemnity and the Guaranty.
For purposes of notices under the Environmental Indemnity and the Guaranty
the address for the Company is as follows:
_____________________________________________
_____________________________________________
Attention:___________________________________
Telephone:___________________________________
Telecopy:____________________________________
This Accession Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF this Accession Agreement was executed and delivered as
of the ___ day of _________, 19__.
[NAME OF ENTITY]
_____________________________________________
By:__________________________________________
Title:_______________________________________
<PAGE>
EXHIBIT "F"
FORM OF GUARANTY AND CONTRIBUTION AGREEMENT
This Guaranty and Contribution Agreement (this "Agreement") is made and
entered into effective for all purposes as of the 13th day of February, 1998, by
the parties signatory hereto or to an Accession Agreement (as hereinafter
defined) (collectively, the "Guarantor" whether one or more) to and for the
benefit of BANK ONE, TEXAS, N.A., as Administrative Agent (the "Administrative
Agent"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger, Syndication Agent,
and Documentation Agent (the "Documentation Agent"), THE BANK OF NOVA SCOTIA and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Managing Agents (the "Managing
Agents"), and the banks and other lenders named in the Credit Agreement herein
described.
INTRODUCTION
WHEREAS, this Agreement is given in connection with that certain Amended
and Restated Senior Unsecured Credit Agreement dated as of February 13, 1998
("Credit Agreement"), among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership (the "Borrower"), Administrative Agent,
Documentation Agent, the Managing Agents and the banks and other lenders party
thereto (collectively the "Banks");
WHEREAS, pursuant to the Credit Agreement the Banks are considering making
a loan (the "Loan") to Borrower as more specifically described therein;
WHEREAS, the Borrower is the principal financing entity for capital
requirements of its Subsidiaries, and from time to time the Borrower has made
and will continue to make capital contributions and advances to its
Subsidiaries, including the Subsidiaries which are parties hereto. Other than
the Parent, each Guarantor is a direct or indirect subsidiary of the Borrower.
Each Guarantor will derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement; and
WHEREAS, the Banks have required the execution and delivery of this
Agreement as a condition precedent to the execution of the Credit Agreement.
The Banks would not be willing to execute the Credit Agreement in the absence of
the execution and delivery by Guarantor of this Agreement.
<PAGE>
AGREEMENT
---------
NOW, THEREFORE, in order to induce the Banks to make the Advances and the
Issuing Bank to issue its Letters of Credit, each Guarantor hereby agrees as
follows:
Section 1. Defined Terms. All terms used in this Agreement, but not
-------------
defined herein, shall have the meaning given such terms in the Credit Agreement.
Section 2. Guaranty. Each Guarantor hereby unconditionally and
--------
irrevocably guarantees (a) the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Borrower now
or hereafter existing under the Credit Agreement, the Notes and any other Credit
Document, whether for principal, interest, fees, expenses, or otherwise and (b)
the payment and performance of the lessor's obligations under the Participating
Leases (such obligations being the "Guaranteed Obligations") and any and all
expenses (including reasonable counsel fees and expenses) incurred by the
Administrative Agent, the Documentation Agent, the Managing Agents or any Bank
in enforcing any rights under this Agreement. Each Guarantor agrees that its
guaranty obligation under this Agreement is a guarantee of payment, not of
collection and that such Guarantor is primarily liable for the payment of the
Guaranteed Obligations.
Section 3. Limit of Liability. Each Guarantor that is a Subsidiary of
------------------
the Borrower shall be liable under this Agreement with respect to the Guaranteed
Obligations only for amounts aggregating up to the largest amount that would not
render its guaranty obligation hereunder subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provisions of any state
law.
Section 4. Guaranty Absolute. Each Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid and performed strictly in accordance with
the terms of the Credit Agreement, the other Credit Documents and the
Participating Leases, as applicable, regardless of any law, regulation, or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent, the Documentation Agent, the Managing
Agents, the Banks or the Participating Lessees with respect thereto. The
liability of each Guarantor under this Agreement shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement, any
other Credit Document, any Participating Lease or any other agreement or
instrument relating thereto;
(b) any change in the time, manner, or place of payment of, or in any other
term of, any of the Guaranteed Obligations, or any other amendment or waiver of
or any consent to departure from the Credit Agreement, any Credit Document or
any Participating Lease;
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<PAGE>
(c) any exchange, release, or nonperfection of any collateral, if
applicable, or any release or amendment or waiver of or consent to departure
from any other agreement or guaranty, for any of the Guaranteed Obligations; or
(d) any other circumstances which might otherwise constitute a defense
available to, or a discharge of the Borrower or a Guarantor.
Section 5. Continuation and Reinstatement, Etc. Each Guarantor agrees
------------------------------------
that, to the extent that the Borrower makes payments to the Administrative
Agent, the Documentation Agent, the Managing Agents or any Bank or the
Administrative Agent, the Documentation Agent, the Managing Agents or any Bank
receives any proceeds of any property of Borrower or any Guarantor and such
payments or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, or otherwise required to be repaid,
then to the extent of such repayment the Guaranteed Obligations shall be
reinstated and continued in full force and effect as of the date such initial
payment or collection of proceeds occurred. The Guarantor shall defend and
indemnify the Administrative Agent, the Documentation Agent, the Managing Agents
and each Bank from and against any claim or loss under this Section 5 (including
reasonable attorneys' fees and expenses) in the defense of any such action or
suit.
Section 6. Certain Waivers.
---------------
6.01. Notice. Each Guarantor hereby waives promptness, diligence, notice
------
of acceptance, notice of acceleration, notice of intent to accelerate and any
other notice with respect to any of the Guaranteed Obligations and this
Agreement.
6.02. Other Remedies. Each Guarantor hereby waives any requirement that
--------------
the Administrative Agent, the Documentation Agent, the Managing Agents or any
Bank protect, secure, perfect, or insure any Lien or any Property subject
thereto or exhaust any right or take any action against the Borrower or any
other Person or any collateral, if any, including any action required by Chapter
34 of the Texas Business and Commerce Code.
6.03. Waiver of Subrogation.
---------------------
(a) Each Guarantor hereby irrevocably waives, until payment in full of all
Guaranteed Obligations and termination of all Commitments, any claim or other
rights which it may acquire against the Borrower that arise from such
Guarantor's obligations under this Agreement or any other Credit Document,
including, without limitation, any right of subrogation (including, without
limitation, any statutory rights of subrogation under Section 509 of the
Bankruptcy Code, 11 U.S.C.
-3-
<PAGE>
(S) 509, or otherwise), reimbursement, exoneration, contribution,
indemnification, or any right to participate in any claim or remedy of the
Administrative Agent, the Documentation Agent, the Managing Agents or any Bank
against the Borrower or any collateral which the Administrative Agent, the
Documentation Agent, the Managing Agents or any Bank now has or acquires. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full and all of the
Commitments terminated, such amount shall be held in trust for the benefit of
the Administrative Agent, the Documentation Agent, the Managing Agents or any
Bank and shall promptly be paid to the Administrative Agent for the benefit of
Administrative Agent, the Documentation Agent, the Managing Agents and the Banks
to be applied to the Guaranteed Obligations, whether matured or unmatured, as
the Administrative Agent may elect. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in this
Section 6.03(a) is knowingly made in contemplation of such benefits.
(b) Each Guarantor further agrees that it will not enter into any
agreement providing, directly or indirectly, for any contribution,
reimbursement, repayment, or indemnity by the Borrower or any other Person on
account of any payment by such Guarantor to the Administrative Agent, the
Documentation Agent, the Managing Agents or the Banks under this Agreement.
6.04. California Waivers.
------------------
(a) Guarantor understands and agrees that the waivers contained in this
Section 6.04 are waivers of substantive rights and defenses to which Guarantor
might otherwise be entitled under state and federal law. The rights and
defenses waived include, without limitation, those provided by California laws
of suretyship and guaranty, antideficiency laws, and the Uniform Commercial
Code. Guarantor acknowledges that Guarantor has provided these waivers of
rights and defenses with the intention that they be fully relied upon by the
Banks and/or Agents.
(b) Guarantor waives Guarantor's rights of subrogation, reimbursement,
indemnity and contribution, and any other rights and defenses available to
Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil
Code, as amended or recodified from time to time, including without limitation
(i) any defenses Guarantor may have to the Guaranteed Obligations by reason of
an election of remedies by the Banks and/or Agents, and (ii) any rights or
defenses Guarantor may have by reason of protection afforded to Borrower with
respect to the Guaranteed Obligations pursuant to the antideficiency or other
laws of the State of California limiting or discharging Borrower's indebtedness,
including, without limitation, Sections 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure, as amended or recodified from time to time.
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<PAGE>
(c) If and to the extent such waivers of Guarantor's rights of
subrogation, reimbursement, indemnity and contribution, and any other rights and
defenses waived by Guarantor hereunder are unenforceable, Guarantor hereby
agrees that all such rights shall be junior and subordinate to the rights of the
Banks and/or Agents to obtain payment and performance of the Guaranteed
Obligations and to all rights of the Banks and/or Agents in and to any property,
including the Property, which now or hereafter serves or could serve as
collateral security for the Guaranteed Obligations.
(d) The above waivers include, but are not limited to, the waiver by
Guarantor of:
(i) all rights and defenses arising out of an election of remedies
by the Banks and/or Agents, even though that election of remedies has
destroyed Guarantor's rights or subrogation and/or reimbursement against
Borrower by the operation of Section 580d of the California Code of Civil
Procedure or otherwise;
(ii) all rights and protections of any kind which Guarantor may have
for any reason which would affect or limit the amount of any recovery by
the Banks and/or Agents from Guarantor including, without limitation, the
right to any fair market value hearing pursuant to Section 580a of the
California Code of Civil Procedure.
(iii) any and all benefits available to sureties and creditors which
might otherwise be available to Guarantor under California Civil Code
Sections 2809 (reduction of surety's obligation where larger than
principal's), 2810 (liability of surety when principal is not liable), 2815
(revocation of continuing guaranty), 2819 (exoneration of surety), 2839
(performance of principal obligation or offer of performance), 2845
(requiring creditor to proceed against principal), 2849 (security for
performance of principal obligation), 2850 (hypothecation of surety's
property), 2899 (order of resort to property), and 3433 (creditor's
entitlement to satisfy claim from several funds), as amended or recodified
from time to time; and
(e) Guarantor shall not be discharged, released or exonerated, in any way,
from its absolute, unconditional and independent liabilities hereunder, even
though any rights or defenses which Guarantor may have against Borrower, the
Banks, the Agents or others may be destroyed, diminished or otherwise affected,
by:
(i) Any declaration by the Banks and/or Agents of a default in
respect of any of the Guaranteed Obligations;
(ii) The exercise by the Banks and/or Agents of any rights or
remedies against Borrower or any other person;
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<PAGE>
(iii) The failure of the Banks and/or Agents to exercise any rights or
remedies against Borrower or any other person; or
Section 7. Representations and Warranties. Each Guarantor hereby
------------------------------
represents and warrants as follows:
7.01 Corporate Authority. Such Guarantor is either a corporation, limited
-------------------
liability company or limited partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization. The
execution, delivery and performance by such Guarantor of this Agreement are
within such Guarantor's organizational powers, have been duly authorized by all
necessary organizational action and do not contravene (a) such Guarantor's
organizational authority or (b) any law or material contractual restriction
affecting such Guarantor or its Property.
7.02 Government Approval. No authorization or approval or other action by
-------------------
and no notice to or filing with, any Governmental Authority is required for the
due execution, delivery and performance by such Guarantor of this Agreement.
7.03 Binding Obligations. This Agreement is the legal, valid and binding
-------------------
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights (whether
considered in a proceeding at law or in equity).
Section 8. Covenants. Each Guarantor will comply with all covenant
---------
provisions of Article V and Article VI of the Credit Agreement to the extent
such provisions are applicable.
8.01 Additional Covenant. As soon as possible and in any event within five
-------------------
days after the incurrence of any Indebtedness by the Parent or any Subsidiary of
the Parent other than the Obligations or any other Indebtedness permitted under
the Credit Agreement, the Parent shall notify the Administrative Agent in
writing of such incurrence.
Section 9. Contribution. As a result of the transactions contemplated
------------
by the Credit Agreement, each of the Guarantors will benefit, directly and
indirectly, from the Guaranteed Obligations and in consideration thereof desire
to enter into a contribution agreement among themselves as set forth in this
Section 9 to allocate such benefits among themselves and to provide a fair and
equitable arrangement to make contributions in the event any payment is made by
any Guarantor hereunder to the Administrative Agent, the Documentation Agent,
the Managing Agents or the Banks (such payment being referred to herein as a
"Contribution," and for purposes of this Agreement, includes any exercise of
recourse by the Administrative Agent against any Property of
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<PAGE>
a Contributor and application of proceeds of such Property in satisfaction of
such Guarantor's obligations under this Agreement). The Guarantors hereby agree
as follows:
9.01. Calculation of Contribution. In order to provide for just and
---------------------------
equitable contribution among the Guarantors in the event any Contribution is
made by a Guarantor (a "Funding Guarantor"), such Funding Guarantor shall be
entitled to a contribution from certain other Guarantors for all payments,
damages and expenses incurred by that Funding Guarantor in discharging any of
the Guaranteed Obligations, in the manner and to the extent set forth in this
Section. The amount of any Contribution under this Agreement shall be equal to
the payment made by the Funding Guarantor to the Administrative Agent or any
other beneficiary pursuant to this Agreement and shall be determined as of the
date on which such payment is made.
9.02. Benefit Amount Defined. For purposes of this Agreement, the "Benefit
----------------------
Amount" of any Guarantor as of any date of determination shall be the net value
of the benefits to such Guarantor and all of its Subsidiaries (including any
Subsidiaries which may be Guarantors) from extensions of credit made by the
Banks to the Borrower under the Credit Agreement and the benefit of entering
into the Participating Leases; provided, that in determining the contribution
liability of any Guarantor which is a Subsidiary to its direct or indirect
parent corporation or of any Guarantor to its direct or indirect Subsidiary, the
Benefit Amount of such Subsidiary and its Subsidiaries, if any, shall be
subtracted in determining the Benefit Amount of the parent corporation. Such
benefits shall include benefits of funds constituting proceeds of Advances made
to the Borrower by the Banks which are in turn advanced or contributed by the
Borrower to such Guarantor or its Subsidiaries and benefits of Letters of Credit
issued pursuant to the Credit Agreement on behalf of, or the proceeds of which
are advanced or contributed or otherwise benefit, directly or indirectly, such
Guarantor and its Subsidiaries (collectively, the "Benefits"). In the case of
any proceeds of Advances or Benefits advanced or contributed to a Person (an
"Owned Entity") any of the equity interests of which are owned directly or
indirectly by a Guarantor, the Benefit Amount of a Guarantor with respect
thereto shall be that portion of the net value of the benefits attributable to
Advances or Benefits equal to the direct or indirect percentage ownership of
such Guarantor in its Owned Entity.
9.03. Contribution Obligation. Each Guarantor shall be liable to a Funding
-----------------------
Guarantor in an amount equal to the greater of (A) the (i) ratio of the Benefit
Amount of such Guarantor to the total amount of Guaranteed Obligations,
multiplied by (ii) the amount of Guaranteed Obligations paid by such Funding
Guarantor and (B) 95% of the excess of the fair saleable value of the property
of such Guarantor over the total liabilities of such Guarantor (including the
maximum amount reasonably expected to become due in respect of contingent
liabilities) determined as of the date on which the payment made by a Funding
Guarantor is deemed made for purposes of this Agreement (giving effect to all
payments made by other Funding Guarantors as of such date in a manner to
maximize the amount of such contributions).
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<PAGE>
9.04. Allocation. In the event that at any time there exists more than one
----------
Funding Guarantor with respect to any Contribution (in any such case, the
"Applicable Contribution"), then payment from other Guarantors pursuant to this
Agreement shall be allocated among such Funding Guarantors in proportion to the
total amount of the Contribution made for or on account of the Borrower by each
such Funding Guarantor pursuant to the Applicable Contribution. In the event
that at any time any Guarantor pays an amount under this Agreement in excess of
the amount calculated pursuant to clause (A) of Subsection 9.03 above, that
Guarantor shall be deemed to be a Funding Guarantor to the extent of such excess
and shall be entitled to contribution from the other Guarantors in accordance
with the provisions of this Section.
9.05. Subsidiary Payment. The amount of contribution payable under this
------------------
Section by any Guarantor shall be reduced by the amount of any contribution paid
hereunder by a Subsidiary of such Guarantor.
9.06. Equitable Allocation. If as a result of any reorganization,
--------------------
recapitalization, or other corporate change in the Borrower or any of its
Subsidiaries, or as a result of any amendment, waiver or modification of the
terms and conditions of other Sections of this Agreement or the Guaranteed
Obligations, or for any other reason, the contributions under this Section
become inequitable as among the Guarantors, the Guarantors shall promptly modify
and amend this Section to provide for an equitable allocation of contributions.
Any of the foregoing modifications and amendments shall be in writing and signed
by all Guarantors.
9.07. Asset of Party to Which Contribution is Owing. The Guarantors
---------------------------------------------
acknowledge that the right to contribution hereunder shall constitute an asset
in favor of the Guarantor to which such contribution is owing.
9.08. Subordination. No payments payable by a Guarantor pursuant to the
-------------
terms of this Section 9 shall be paid until all amounts then due and payable by
the Borrower to any Bank, pursuant to the terms of the Credit Documents, are
paid in full in cash. Nothing contained in this Section 9 shall affect the
obligations of any Guarantor to any Bank under the Credit Agreement or any other
Credit Documents.
Section 10. Miscellaneous.
-------------
10.01. Addresses for Notices. All notices and other communications provided
---------------------
for hereunder shall be in writing, including telegraphic communication and
delivered or teletransmitted to the Administrative Agent, as set forth in the
Credit Agreement and to each Guarantor, at the address set forth under such
Guarantor's signature hereto or in the Accession Agreement executed by such
Guarantor, or to such other address as shall be designated by any Guarantor or
the Administrative
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<PAGE>
Agent in written notice to the other parties. All such notices and other
communications shall be effective when delivered or teletransmitted to the above
addresses.
10.02. Amendments, Etc. No waiver of any provision of this Agreement nor
----------------
consent to any departure by any Guarantor therefrom shall be effective unless
the same shall be in writing and signed by the Administrative Agent, the
Majority Banks and the Borrower and no amendment of this Agreement shall be
effective unless the same shall be in writing and signed by each Guarantor and
the Administrative Agent, with the consent of the Majority Banks; provided that
--------
any amendment or waiver releasing any Guarantor from any liability hereunder
shall be signed by all the Banks; and provided further that any waiver or
----------------
consent shall be effective only in the specific instance and for the specific
purpose for which given. Notwithstanding the foregoing, in the event that any
Subsidiary or Affiliate of the Borrower hereafter is required in a accordance
with the terms of the Credit Agreement or otherwise agrees to become a guarantor
of the Borrower's obligations under the Credit Documents, then such Subsidiary
or Affiliate may become a party to this Agreement by executing an Accession
Agreement ("Accession Agreement") in the form attached hereto as Annex 1 and
-------
each Guarantor and the Administrative Agent hereby agrees that upon such
Subsidiary's or Affiliate's execution of such Accession Agreement, this
Agreement shall be deemed to have been amended to make such Person a Guarantor
hereunder for all purposes and a party hereto and no signature is required on
behalf of the other Guarantors or the Administrative Agent to make such an
amendment to this Agreement effective.
10.03. No Waiver; Remedies. No failure on the part of Administrative Agent,
-------------------
the Documentation Agent, the Managing Agents or any Bank to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
10.04. Right of Set-Off. Upon the occurrence and during the continuance of
----------------
any Event of Default, the Administrative Agent, the Documentation Agent, the
Managing Agents and the Banks are hereby authorized at any time, to the fullest
extent permitted by law, to set off and apply any deposits (general or special,
time or demand, provisional or final) and other indebtedness owing by the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
to the account of any Guarantor against any and all of the obligations of such
Guarantor under this Agreement, irrespective of whether or not the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
shall have made any demand under this Agreement and although such obligations
may be contingent and unmatured. The Administrative Agent, the Documentation
Agent, the Managing Agents and the Banks agree promptly to notify each Guarantor
affected by any such set-off after any such set-off and application made by the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
provided that the failure to give such
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<PAGE>
notice shall not affect the validity of such set-off and application. The rights
of the Administrative Agent, the Documentation Agent, the Managing Agents and
the Banks under this Section 10.05 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent, the Documentation Agent, the Managing Agents and the Banks
may have.
10.05. Continuing Guaranty; Transfer of Interest. This Agreement shall
-----------------------------------------
create a continuing guaranty and shall (a) remain in full force and effect until
payment in full and termination of the Guaranteed Obligations, (b) be binding
upon each Guarantor, its successors and assigns, and (c) inure, together with
the rights and remedies of the Administrative Agent hereunder, to the benefit of
the Administrative Agent, the Documentation Agent, the Managing Agents, the
Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause, when any Bank assigns or
otherwise transfers any interest held by it under the Credit Agreement or other
Credit Document to any other Person pursuant to the terms of the Credit
Agreement or other Credit Document, that other Person shall thereupon become
vested with all the benefits held by such Bank under this Agreement. Upon the
payment in full and termination of the Guaranteed Obligations, the guaranties
granted hereby shall terminate and all rights hereunder shall revert to each
Guarantor to the extent such rights have not been applied pursuant to the terms
hereof. Upon any such termination, the Administrative Agent will, at each
Guarantor's expense, execute and deliver to such Guarantor such documents as
such Guarantor shall reasonably request and take any other actions reasonably
requested to evidence or effect such termination.
10.06. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with, the laws of the State of Texas. Each Guarantor
hereby irrevocably submits to the jurisdiction of any Texas state or federal
court sitting in Dallas, Texas in any action or proceeding arising out of or
relating to this Agreement and the other Credit Documents and such Guarantor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such court. Each Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, any right it
may have to the defense of an inconvenient forum to the maintenance of such
action or proceeding. Each Guarantor hereby agrees that service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding may be made by mailing or delivering a copy of such process
to such Guarantor at its address specified below. Each Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the rights of any Bank,
the Documentation Agent or the Administrative Agent to serve legal process in
any other manner permitted by the law or affect the right of any Bank, the
Documentation Agent or the Administrative Agent to bring any action or
proceeding against any Guarantor or its Property in the courts of any other
jurisdiction.
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<PAGE>
10.07 WAIVERS OF JURY TRIAL. THE GUARANTORS HEREBY IRREVOCABLY AND
---------------------
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT OR TO ANY COUNTERCLAIM
THEREIN.
10.08. ENTIRE AGREEMENT. PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS
----------------
AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE LOAN
AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN AGREEMENT
IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED
REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
[INTENTIONALLY BLANK]
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<PAGE>
Each Guarantor has caused this Agreement to be duly executed as of the date
first above written.
GUARANTORS:
AMERICAN GENERAL HOSPITALITY
CORPORATION, a Maryland corporation
By:________________________________
Name:______________________________
Title:_____________________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
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<PAGE>
AGH UPREIT, LLC, a Delaware limited liability company
By: American General Hospitality Corporation, member
By:______________________________________
Name:____________________________________
Title:___________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
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<PAGE>
3100 GLENDALE JOINT VENTURE,
an Ohio general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-14-
<PAGE>
MDV LIMITED PARTNERSHIP,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:_______________________________
Name:_____________________________
Title:____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:_______________________________
Name:_____________________________
Title:____________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-15-
<PAGE>
MADISON MOTEL ASSOCIATES,
a Wisconsin general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-16-
<PAGE>
183 HOTEL ASSOCIATES, LTD.,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-17-
<PAGE>
RICHMOND WILLIAMSBURG ASSOCIATES, LTD.,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-18-
<PAGE>
2929 WILLIAMS LIMITED LIABILITY COMPANY, a
Delaware limited liability company
By: AGH UPREIT, LLC, its member
By: American General Hospitality
Corporation, member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., general partner
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-19-
<PAGE>
LAKE BUENA VISTA PARTNERS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, general partner
By: American General Hospitality
Corporation, member
By:______________________
Name:____________________
Title:___________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., general partner
By:______________________
Name:____________________
Title:___________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-20-
<PAGE>
BCHI ACQUISITION, L.L.C.,
a Delaware limited liability company
By: AGH UPREIT LLC, its member
By: American General Hospitality
Corporation, member
By:______________________
Name:____________________
Title:___________________
By: American General Hospitality
Operating Partnership, L.P., member
By: AGH GP, Inc., general partner
By:______________________
Name:____________________
Title:___________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:______________________
Name:____________________
Title:___________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-21-
<PAGE>
COCOA BEACH HOTELS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-22-
<PAGE>
DURHAM I-85 LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:__________________________
Name:________________________
Title:_______________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:__________________________
Name:________________________
Title:_______________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-23-
<PAGE>
ANNEX 1
Guaranty and Contribution Agreement
ACCESSION AGREEMENT
_______________________ [NAME OF ENTITY], a [limited partnership/corporation]
(the "Company"), hereby agrees with (i) BANK ONE, TEXAS, N.A., as Administrative
Agent (the "Administrative Agent") under the Amended and Restated Senior
Unsecured Credit Agreement dated as of February 13, 1998 (the "Credit
Agreement") among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership, as the Borrower, BANK ONE, TEXAS, N.A., as
Administrative Agent, SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger,
Syndication Agent, and Documentation Agent, BANK OF NOVA SCOTIA and WELLS FARGO
BANK, NATIONAL ASSOCIATION, as Managing Agents and the Banks; (ii) the parties
to the Environmental Indemnity Agreement (the "Environmental Indemnity") dated
as of February 13, 1998 executed in connection with the Credit Agreement, (iii)
the parties to the Guaranty and Contribution Agreement (the "Guaranty") dated as
of February 13, 1998 executed in connection with the Credit Agreement, as
follows:
The Company hereby agrees and confirms that, as of the date hereof, it (a)
intends to be a party to the Environmental Indemnity and the Guaranty and
undertakes to perform all the obligations expressed therein, respectively, of an
Indemnitor and a Guarantor (as defined in the Environmental Indemnity and the
Guaranty, respectively), (b) agrees to be bound by all of the provisions of the
Environmental Indemnity and the Guaranty as if it had been an original party to
such agreements, (c) confirms that the representations and warranties set forth
in the Environmental Indemnity and the Guaranty, respectively, with respect to
the Company, a party thereto, are true and correct in all material respects as
of the date of this Accession Agreement and (d) has received and reviewed copies
of each of the Environmental Indemnity and the Guaranty.
For purposes of notices under the Environmental Indemnity and the Guaranty
the address for the Company is as follows:
______________________________________
______________________________________
Attention:____________________________
Telephone:____________________________
Telecopy:_____________________________
This Accession Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF this Accession Agreement was executed and delivered as
of the ___ day of ___________________, 19__.
[NAME OF ENTITY]
____________________________
By:_________________________
Title:______________________
<PAGE>
EXHIBIT G
FORM OF NOTICE OF BORROWING
_________, 19__
Bank One, Texas, N.A.,
as Administrative Agent under the Credit Agreement herein described
1717 Main Street, 4th Floor
P.O. Box 655415
Commercial Real Estate Department
Dallas, Texas 75201
Attention: Mr. Jeff Etter
Ladies and Gentlemen:
The undersigned, American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "Borrower"), refers to the Amended and
Restated Senior Unsecured Credit Agreement dated as of February 13, 1998 (as the
same may be amended or modified from time to time, the "Credit Agreement," the
defined terms of which are used in this Notice of Borrowing unless otherwise
defined in this Notice of Borrowing) among the Borrower, the Banks, the
Arranger, Syndication Agent and Documentation Agent, the Administrative Agent
and the Managing Agents, and hereby gives you irrevocable notice pursuant to
Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a
Borrowing, and in connection with that request sets forth below the information
relating to such Borrowing (the "Proposed Borrowing") as required by Section
2.02(a) of the Credit Agreement:
(a) Business Day of the Proposed Borrowing is _____________, 19_____.
(b) The Proposed Borrowing will be a Borrowing composed of [Prime Rate
Advances] [LIBOR Rate Advances].
(c) The aggregate amount of the Proposed Borrowing is $____________.
(d) The Interest Period for each LIBOR Rate Advance made as part of the
Proposed Borrowing is [_____ month[s]].
<PAGE>
Bank One, Texas. N.A.
[Date]
Page 2
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(a) the representations and warranties contained in the Credit Agreement
and the other Credit Documents are correct in all material respects, before
and after giving effect to the Proposed Borrowing and the application of
the proceeds therefrom, as though made on the date of the Proposed
Borrowing; and
(b) no Default has occurred and remains uncured, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom.
Very truly yours,
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE>
EXHIBIT H
FORM OF NOTICE OF CONVERSION OR CONTINUATION
[Date]
Bank One, Texas, N.A.,
as Administrative Agent under the Credit Agreement herein described
1717 Main Street, 4th Floor
P.O. Box 655415
Real Estate Department
Dallas, Texas 75201
Attention: Mr. Jeff Etter
Ladies and Gentlemen:
The undersigned, American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "Borrower"), refers to the Amended and
Restated Senior Unsecured Credit Agreement dated as of February 13, 1998 (as the
same may be amended or modified from time to time, the "Credit Agreement," the
defined terms of which are used in this Notice of Conversion or Continuation
unless otherwise defined in this Notice of Conversion or Continuation), among
the Borrower, the Banks, the Arranger, Syndication Agent and Documentation
Agent, the Administrative Agent, and the Managing Agents, and hereby gives you
irrevocable notice pursuant to Section 2.02(b) of the Credit Agreement that the
undersigned hereby requests a Conversion or continuation of an outstanding
Borrowing, and in connection with that request sets forth below the information
relating to such Conversion or continuation (the "Proposed Borrowing") as
required by Section 2.02(b) of the Credit Agreement:
(a) The Business Day of the Proposed Borrowing is _______________, 19 ____.
(b) The Proposed Borrowing will be composed of [Prime Rate Advances] [LIBOR
Rate Advances].
(c) The aggregate amount of the Borrowing to be Converted or continued is $
_______ and consists of [Prime Rate Advances] [LIBOR Rate Advances].
<PAGE>
Bank One, Texas, N.A.
[Date]
Page 2
(d) The Proposed Borrowing consists of [a Conversion to [Prime Rate
Advances] [LIBOR Rate Advances]] [a continuation of [Prime Rate Advances]
[LIBOR Rate Advances]].
(e) The Interest Period for each LIBOR Rate Advance made as part of the
Proposed Borrowing is [____ month[s]].
Very truly yours,
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
EXHIBIT I
FORM OF PROPERTY ADJUSTMENT REPORT
This Property Adjustment Report is executed this ___ day of _____________,
1998 and is prepared pursuant to Section 2.14 of that certain Amended and
Restated Senior Unsecured Credit Agreement (the "Agreement") between AMERICAN
GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
(the "Borrower"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger, Syndication
Agent and Documentation Agent, BANK ONE, TEXAS, N.A., as Administrative Agent,
THE BANK OF NOVA SCOTIA, as Co-Agent, AND WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Co-Managers, and the Banks party to the Credit Agreement.
Capitalized terms used herein but not otherwise defined herein shall have the
meanings specified by the Agreement:
<TABLE>
<CAPTION>
Borrowing Base as
of last Borrowing Property Adjusted
Base Certificate Adjustment Borrowing Base
<S> <C> <C> <C>
1. Aggregate Hotel Value of all
Eligible Properties $_________ $_________ $_________
2. Line 1 above multiplied by 50% $_________ $_________ $_________
3. The Rolling Period Borrowing
Base Adjusted EBITDA
generated by the Eligible
Properties $_________ $_________ $_________
4. Line 3 above multiplied by five
(5) $_________ $_________ $_________
5. Borrowing Base (before
Subordinate Indebtedness)
(Lesser of Lines 2 and 4) $_________ $_________ $_________
6. Subordinate Indebtedness counted
for Borrowing Base calculation $_________ $_________ $_________
7. BORROWING BASE (Line 5 minus
Line 6) $_________ $_________ $_________
</TABLE>
<PAGE>
The Borrower has caused this Property Adjustment Report to be executed this
____ day of _________, 19__.
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:_______________________________
Name:_____________________________
Title:____________________________
-2-
<PAGE>
[LETTERHEAD APPEARS HERE]
February 13, 1998
Societe Generale
Southwest Agency
2001 Ross Avenue, Suite 4900
Dallas, Texas 75201
Bank One, Texas, N.A.
1717 Main Street, 4th Floor
Commercial Real Estate Department Lending
Dallas, Texas 75201
The Banks and the other financial
institutions party to the hereinafter
described Credit Agreement
Re: Amended and Restated Senior Unsecured Credit Agreement dated of
even date herewith (the "CREDIT AGREEMENT") by and between
American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "BORROWER") and Societe
Generale, a French banking corporation acting through its
Southwest Agency as arranger, syndication agent and documentation
agent; Bank One, Texas N.A., as administrative agent, The Bank of
Nova Scotia and Wells Fargo Bank, National Association, as co-
agents and other financial institutions party thereto dated as of
even date herewith (the "BANKS")
----------------------
<PAGE>
Battle Fowler LLP Page
2
Ladies and Gentlemen:
We have acted as counsel to the Borrower in connection with the Credit
Agreement. This opinion is being furnished pursuant to Section 3.01(a)(v) of
the Credit Agreement. Capitalized terms used herein and not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.
In connection with this opinion, we have examined the following
materials:
(a) the Credit Agreement and the other documents executed and
delivered in connection therewith identified on Schedule I hereto (collectively
----------
referred to herein as the "CREDIT DOCUMENTS");
(b) the certificate of limited partnership, as amended (the "BORROWER
PARTNERSHIP CERTIFICATE"), of the Borrower, as certified by the Secretary of
State of the State of Delaware, as being as a true and correct copy of such
document as filed in the office of the Secretary of State;
(c) the amended and restated agreement of limited partnership (the
"OPERATING PARTNERSHIP AGREEMENT") of the Borrower, dated as of July 31, 1996,
as certified by the Secretary of AGH GP, Inc., a Nevada corporation ("AGH GP"),
as general partner of the Borrower, on the date hereof as being complete,
correct and in effect;
(d) the amended and restated articles of incorporation (the
"CHARTER") of American General Hospitality Corporation (the "COMPANY"), as
certified by the State Department of Assessments and Taxation of the State of
Maryland as being a true and complete copy of such document as filed in the
office of the State Department of Assessments and Taxation (the "SDAT");
(e) the Bylaws of the Company as certified by the Secretary of the
Company and as the case may be, as of the date hereof as being complete, correct
and in effect;
(f) the certificate of limited partnership (the "DURHAM PARTNERSHIP
CERTIFICATE") of Durham I-8 Limited Partnership, a Delaware limited partnership
("DURHAM" and together with AGH GP, the Company and the Borrower, each a "LOAN
PARTY" and, collectively, the "LOAN PARTIES"), as certified by the Secretary of
State of the State of Delaware, as being as a true and correct copy of such
document as filed in the office of the Secretary of State;
(g) the amended and restated agreement of limited partnership (the
"DURHAM PARTNERSHIP AGREEMENT") of Durham, dated as of November 30, 1997, as
certified by the Secretary of AGH UPREIT LLC ("UPREIT") as general partner of
Durham on the date hereof as being complete, correct and in effect;
<PAGE>
Battle Fowler LLP Page
3
(h) certificates of good standing issued by the State of
incorporation or formation, as applicable, of each Loan Party;
(i) a certificate of the Secretary of the Company and a certificate
of the Secretary of AGH GP, each dated as of the date hereof, as to the
incumbency and signatures of certain officers of the Company and AGH GP,
respectively;
(j) an executed copy of each of the Credit Documents; and
(k) the other instruments and documents delivered at today's closing,
including certificates or telegrams of public officials as to matters set forth
therein and certificates of representatives of the Borrower as to matters set
forth therein.
In rendering this opinion, we have assumed the capacity to sign and
the genuineness of all signatures of all persons executing agreements,
instruments or documents examined or relied upon by us, the authenticity of all
agreements, instruments or documents submitted to us as originals and the
conformity with the original agreements, instruments or documents of all
agreements, instruments or documents submitted to us as copies.
We have also assumed that as to all parties other than the Loan
Parties the due authorization, execution, acknowledgment as indicated thereon
and delivery of documents referred to herein, and the validity, binding effect
and enforceability thereof against all parties thereto other than the Loan
Parties and that each of the Agents and each of the Banks has full power,
authority and legal right, under its charter and other governing documents and
all applicable laws to execute, deliver and perform their respective obligations
under the Credit Agreement, the other Credit Documents and the other documents
referred to therein and herein to which it is a party.
With respect to matters of fact, we have relied upon the written
statements and certificates of officers of AGH GP (on behalf of the Borrower),
or UPREIT (on behalf of Durham) and authorized representatives of the Company
(including, without limitation, in the certificate attached hereto as Exhibit A
---------
and referred to herein as the "OFFICERS CERTIFICATE"), representations made by
the Borrower in the Credit Documents, and certificates of public officials.
Where matters are stated to be "to the best of our knowledge" or "known to us,"
our knowledge is limited to the actual knowledge of those attorneys in our
office who have directly participated in this engagement, their review of
documents provided to us by the Loan Parties in connection with this engagement
and inquiries of officers of AGH GP, UPREIT and the Company, the results of
which are reflected in the Officers Certificate. We have not independently
verified the accuracy of the matters set forth in the written statements or
certificates upon which we have relied, including the organization, existence,
good standing, assets, business or affairs of the Loan Parties.
<PAGE>
Battle Fowler LLP Page
4
Insofar as our opinion relates to matters of (i) Maryland law, we have
relied upon the opinion of Ballard Spahr Andrews & Ingersoll, LLP addressed to
us, dated the date hereof, a copy of which is attached hereto as Exhibit B and
---------
(ii) Nevada law, we have relied exclusively upon the opinion McDonald Carano
Wilson McCune Bergin Frankovich & Hicks LLP, a copy of which is attached hereto
as Exhibit C.
---------
Except for the opinions set forth in paragraphs (1) through (3) below,
we express no opinions and no opinions should be implied.
We are not admitted to practice law in any jurisdiction other than the
State of New York and we do not express any opinion as to the laws of any states
or jurisdictions except as to New York law, the Delaware General Corporation
Law, the Delaware Revised Uniform Limited Partnership Act, the Delaware Limited
Liability Company Act and the Federal law of the United States of America.
Upon the basis of and subject to the foregoing and solely in reliance
thereon, we are of the opinion that:
1. Each of the Borrower and Durham is a limited partnership duly
formed validly existing and in good standing under the laws of its jurisdiction
of formation with full partnership power and authority to own, lease and operate
its properties and to conduct its business as currently conducted and to execute
and perform its obligations under the Credit Documents to which it is a party.
2. The execution and delivery of, and the performance by each of the
Borrower and Durham of its obligations under, the Credit Documents to which it
is a party have been duly and validly authorized.
3. Each of the Credit Documents has been duly executed and delivered
by each Loan Party which is a party thereto.
This opinion is being rendered to you and the other Banks and the
Bank's respective counsel for your and their sole use and may not be made
available to or relied upon by any other person, firm or entity without our
express prior written consent except for future Banks or participants in the
Credit Agreement.
Very truly yours,
/s/ Battle Fowler LLP
BATTLE FOWLER LLP
<PAGE>
SCHEDULE I
----------
CREDIT DOCUMENTS
----------------
1. Notes in the aggregate amount of $500,000,000 executed by the Borrower in
favor of Bank One, SG, Co-Agents and the banks;
2. Environmental Indemnification Agreement by the Company and certain of its
subsidiaries in favor of the Agents and the banks; and
3. Guaranty and Contribution Agreement by the Company and certain of its
subsidiaries in favor of the Agents and the banks.
<PAGE>
Exhibit A
---------
OFFICER'S CERTIFICATE
<PAGE>
Exhibit B
---------
[Opinion of Ballard Spahr Andrews & Ingersoll, LLP]
<PAGE>
Exhibit C
---------
[Opinion of McDonald Carano as to Nevada law]
<PAGE>
SCHEDULE I
----------
CREDIT DOCUMENTS
----------------
1. Notes in the aggregate amount of $500,000,000 executed by the Borrower in
favor of Bank One, SG Co-Agents and the banks;
2. Environmental Indemnification Agreement by the Company and certain of its
subsidiaries in favor of the Agents and the banks; and
3. Guaranty and Contribution Agreement by the Company and certain of its
subsidiaries in favor of the Agents and the banks.
<PAGE>
Schedule 4.01
SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF FORMATION PRINCIPAL OFFICE
---- ------------------ ----------------
<S> <C> <C>
2929 Williams Limited Liability Company Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
BCHI Acquisition, L.L.C. Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
3100 Glendale Joint Venture Ohio 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
MDV Limited Partnership Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Madison Motel Associates Wisconsin 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
183 Hotel Associates, Ltd. Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
455 Meadowlands Associates, Ltd.* Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
DFW South Limited Partnership* Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Richmond Williamsburg Associates, Ltd. Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH UPREIT LLC Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
<PAGE>
OFFICERS' CERTIFICATE
The undersigned, Kenneth E. Barr, on behalf of AMERICAN GENERAL
HOSPITALITY CORPORATION, a Maryland corporation ("AGHC"). AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"BORROWER"), AGH GP, INC., a Nevada corporation ("AGH GP"), and Durham I-95
Limited Partnership, a Delaware limited liability company ("DURHAM"), (AGHC,
the Borrower, AGH GP, and Durham are each an "ENTITY" and collectively the
"ENTITIES"), hereby certifies on behalf of each of the Entities as follows:
1. This certificate (the "CERTIFICATE") is being delivered in
connection with (i) that certain Amended and Restated Senior Unsecured Credit
Agreement by and between the Borrower and Societe Generale, a French banking
corporation acting through its Southwest Agency as manager, syndication agent
and documentation agent; Bank One, Texas N.A., as administrative agent. The Bank
of Nova Scotia and Wells Fargo Bank, National Association, as co-agents and
other financial institutions party thereto dated as of even date herewith (the
"CREDIT AGREEMENT"), (ii) the legal opinion of Battle Fowler LLP, dated the date
hereof, rendered pursuant to Section 3.01(a)(v) of the Credit Agreement, and
(iii) the legal opinions of local counsel identified on Schedule A hereto (the
----------
"LOCAL COUNSEL"). The undersigned understands that Battle Fowler LLP and each
Local Counsel will be relying upon this Certificate in rendering such opinions
and that this Certificate may be referred to in any such opinions and delivered
in connection therewith and each of the undersigned hereby consents to such
reliance, delivery, and use. Except as otherwise expressly set forth below, the
undersigned has personal knowledge of all facts certified or referred to herein,
and is authorized to execute and deliver this Certificate on behalf of each of
the Entities. All capitalized terms used herein but not defined herein shall
have the meanings ascribed to such terms, respectively, in the legal opinion of
Battle Fowler LLP referred to above.
2. Attached hereto as Exhibit 2 is a true and correct copy of the
---------
Second Articles of Amendment and Restatement of AGHC. Such Second Articles of
Amendment and Restatement of AGHC is in full force and effect on the date
hereof; no amendment thereto has been adopted since the date thereof or is
contemplated and no action has been taken or is contemplated which, with the
passage of time or the giving of notice, or both, would result in the winding up
or dissolution of AGHC.
3. Attached hereto as Exhibit 3 is a true and correct copy of the
---------
By-laws of each of the Entities which are corporations (the "Corporate
Entities"), as amended to date. Such By-laws are in full force and effect on the
date hereof; no amendment thereto has been adopted since the date thereof or is
contemplated; and no action has been taken or is contemplated which, with the
passage of time or the giving of notice, or both, would result in the winding up
or dissolution of any of the Corporate Entities.
4. Attached hereto are all of the resolutions, minutes, telephonic
resolutions and authorizations by the board of directors, partners or members,
and written consents of stockholders, as the case may be, for each of the
Entities, other than AGHI, since February 11, 1997 as follows:
<PAGE>
A. AGHC: Exhibit 4A;
----------
B. AGH GP on behalf of AGH OP: Exhibit 4B;
----------
C. AGH GP: Exhibit 4C;
----------
D. AGH LP: Exhibit 4D;
----------
E. UPREIT: Exhibit 4E;
----------
F. AGHL: Exhibit 4F;
----------
G. AGHL on behalf of Lessee: Exhibit 4G;
----------
H. 2929: Exhibit 4H;
----------
I. 3100: Exhibit 4I;
----------
J. MDV: Exhibit 4J;
----------
K. Madison: Exhibit 4K;
----------
L. 183: Exhibit 4L;
----------
M. Richmond: Exhibit 4M;
----------
N. Buena Vista: Exhibit 4N;
----------
O. TT Leaving: Exhibit 4O
----------
P. BCHI: Exhibit 4P
----------
Such resolutions, minutes, written consents of the stockholders and
telephonic resolutions of the Entities have not been amended or modified, are in
full force and effect in the form adopted and are the only resolutions adopted
by the board of directors, or stockholders, as the case may be, or by any
committee of or designated by the board of directors, partners or members of any
of the Entities, as the case may be since February 11, 1997.
5. Attached hereto as Exhibit 5 is a true and correct copy of the
---------
article or certificate of incorporation or certificate of limited partnership or
certificate of formation of each of the Entities, as the case may be, each of
which is in full force and effect on the date hereof.
6. Attached hereto as Exhibit 6 are true, correct and complete
---------
copies of the partnership agreements, as amended, of each of the Entities which
are general partnerships.
7. Attached hereto as Exhibit 7 are the partnership agreements, as
---------
amended, of each of the Entities which are limited partnerships.
-2-
<PAGE>
8. Attached hereto as Exhibit 8 are the operating agreements, as
---------
amended, of each of the Entities which are limited liability companies.
9. Each of the Entities has filed all reports and paid all franchise
taxes and other amounts due, through to the date hereof, to the following
States: Arizona, California, Delaware, Florida, Georgia, Louisiana, Maryland,
Michigan, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Pennsylvania,
Texas, Virginia, and Wisconsin (the "States").
10. The minute books and records of each of the Entities relating to
all proceedings of the stockholders, partners, members, and board of directors,
as the case may be, made available to Battle Fowler LLP and the Local Counsel
are the original minute books and records of each of the Entities, or are true,
correct and complete copies thereof in all material respects, with respect to
all proceedings of said stockholders, partners, members, and board of directors
since the date of incorporation or formation, as the case may be, of each of the
Entities. The minute books, records and other documents (including partnership
agreements) of each of the Entities made available to Battle Fowler LLP and the
Local Counsel were true, correct and complete in all respects and accurately
reflect all actions taken by the board of directors, partners, members and
stockholders of each of the Entities, respectively. There have been no changes,
additions or alterations in said minute books, records and other documents that
have not been disclosed to Battle Fowler LLP and the Local Counsel in writing.
11. All of the representations and warranties of each of the Entities
contained in the Loan Documents are true and correct.
12. To the best of the knowledge of the undersigned, the execution,
delivery or performance of the Loan Documents nor the consummation of the
transactions contemplated thereby by the Entities, as applicable, conflicts or
will conflict with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which any of the
Entities is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to any
of the Entities, any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of any of such entities (other than as contemplated by the Loan
Documents) pursuant to the terms of any agreement or instrument, to which any of
them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
13. There are no United States governmental or regulatory body
proceedings, no legal actions, suits or court proceedings, pending or threatened
relating to the revocation or modification of any authorization, approval,
certificate or permit (including, without limitation, those having jurisdiction
over environmental matters), which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially
adversely affect the business, operations or condition, financial or otherwise,
of any of the Entities, or any of their respective partners, directors or
officers in their capacity as such, or any of the Hotels, or materially
adversely affect the ability of any of the Entities, or any of their respective
partners, directors or officers in their capacity as such, or any of the Hotels,
to consummate or fulfill its respective obligations under and as contemplated by
the Loan Documents.
-3-
<PAGE>
14. The undersigned has reviewed the Form of Battle Fowler LLP's and
the Local Counsel's Legal Opinions (the "Opinions"), attached hereto as Exhibit
-------
9. The Opinions do not contain an untrue statement of material fact or omit to
- -
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Opinions, as of the date hereof, neither contain nor are anticipated to contain
an untrue statement of a material fact or omitted, or omits, or is anticipated
to omit a material fact necessary in order to make the statements therein not
misleading.
15. Exhibit 10 hereto is a list of certain of the officers of each of
----------
the Entities other than AGHI; the signatures set forth opposite each of their
names are their genuine signatures; and said officers are duly elected officers
of each of such Entities, respectively, holding the offices set forth opposite
their respective names, and were duly elected or appointed, qualified and acting
as such officer at the respective times of the signing and delivery of each
document delivered at the Closing, in connection with the Loan Increase.
16. There exist only two general partners of Madison, which are AGH
OP, a 99% general partner, and the UPREIT, a 1% general partner.
17. The undersigned is the Executive Vice President, of AGHC, AGHI,
AGH GP, AGH LP, UPREIT and AGHL.
_____________________________________
Kenneth E. Barr
Dated as of June __, 1998.
-4-
<PAGE>
EXHIBIT B
---------
[OPINION OF BALLARD SPAHR ANDREWS & INGERSOLL]
<PAGE>
EXHIBIT C
---------
[OPINION OF MCDONALD CARANO AS TO NEVADA LAW]
<PAGE>
SENIOR UNSECURED CREDIT AGREEMENT
Schedule 1.01(a)
<TABLE>
<CAPTION>
BANK COMMITMENT
---- ----------
<S> <C>
Societe Generale, Southwest Agency $76,500,000.00
Bank One, Texas, N.A. $76,500,000.00
Wells Fargo Bank, National Association $61,000,000.00
The Bank of Nova Scotia $61,000,000.00
NationsBank of Texas, N.A. $40,000,000.00
Bankers Trust Company $35,000,000.00
BANKBOSTON, N.A. $35,000,000.00
AmSouth Bank $35,000,000.00
Dresdner Bank, AG, New York Branch
And Grand Cayman Branch $35,000,000.00
First American Bank Texas, S.S.B. $25,000,000.00
First National Bank of Commerce $20,000,000.00
--------------
TOTAL $500,000,000.00
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Type of Service Total Rooms Hotel Eligible
Hotel Properties Owned by the Parent (Limited/Extended Number of Out of Acquisition Yes - Y EBITDA
at Parent Subsidiaries Stay/Full) Rooms Service Date No - N
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Eligible Properties
- ------------------------------------------------------------------------------------------------------------------------------------
1. Holiday Inn, DFW West, Full Service 243 31-Jul-95 Y $ 1,735,673
Bedford, TX
- ------------------------------------------------------------------------------------------------------------------------------------
2. Hampton Inn - Richmond, VA Limited Service 124 39 31-Jul-95 Y 1,216,570
- ------------------------------------------------------------------------------------------------------------------------------------
3. Hilton Hotel - Toledo, OH Full Service 213 31-Jul-95 Y 1,045,298
- ------------------------------------------------------------------------------------------------------------------------------------
4. Holiday Inn - N.O. Full Service 304 31-Jul-95 Y 3,525,305
Airport, Kenner, LA
- ------------------------------------------------------------------------------------------------------------------------------------
5. Crowne Plaza - Madison, WI Full Service 227 31-Jul-95 Y 2,651,247
- ------------------------------------------------------------------------------------------------------------------------------------
6. Holiday Inn - San Jose, CA Full Service 239 31-Jul-95 Y 2,952,221
- ------------------------------------------------------------------------------------------------------------------------------------
7. Wyndham Hotel - Full Service 276 31-Jul-96 Y 1,349,379
Albuquerque, NM
- ------------------------------------------------------------------------------------------------------------------------------------
8. Hotel Maison de Ville - Full Service 23 31-Jul-96 Y 448,717
New Orleans, LA
- ------------------------------------------------------------------------------------------------------------------------------------
9. Hampton Inn - Ocean City, Limited Service 168 31-Jul-96 Y 1,115,369
MD
- ------------------------------------------------------------------------------------------------------------------------------------
10. Holiday Inn - San Siego, Ca Full Service 317 48 31-Jul-96 Y 2,392,816
- ------------------------------------------------------------------------------------------------------------------------------------
11. Wyndham Hotel - San Jose, Full Service 356 31-Jul-96 Y 3,495,516
CA
- ------------------------------------------------------------------------------------------------------------------------------------
12. Durham Hilton - Durham, Full Service 184 08-Jan-97 Y 1,718,195
N.C.
- ------------------------------------------------------------------------------------------------------------------------------------
13. Holiday Inn Resort - Full Service 204 82 21-Nov-95 Y 1838,117
Monteray, CA
- ------------------------------------------------------------------------------------------------------------------------------------
14. Wyndham LBV - Orlando, FL Full Service 480 22-Oct-95 Y 3,484,016
- ------------------------------------------------------------------------------------------------------------------------------------
15. Westin Resort - Key Largo, Full Service 200 17-Mar-97 Y 2,889,885
FL
- ------------------------------------------------------------------------------------------------------------------------------------
16. Wyndham Gardens - Full Service 219 17-Mar-97 Y 1,280,857
Marletta, GA
- ------------------------------------------------------------------------------------------------------------------------------------
17. Holiday Inn - Phoenix, AZ Full Service 249 2 04-Apr-97 Y 1,445,743
- ------------------------------------------------------------------------------------------------------------------------------------
18. Hilton Hotel - Grand Full Service 226 18-Apr-97 Y 1,855,801
Rapids, MI
- ------------------------------------------------------------------------------------------------------------------------------------
19. Marriott West Loop - Full Service 302 25-Jun-97 Y 2,651,985
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------------
19a. Office Bldg West Loop - 25-Jun-97 935,583
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------------
20. Ralison Twin Towers - Full Service 742 25-Jun-97 Y 8,383,761
Orlando, FL
- ------------------------------------------------------------------------------------------------------------------------------------
21. Hilton Hotel - Coral Full Service 285 54 27-Jun-97 Y 2,802,481
Beach, FL
- ------------------------------------------------------------------------------------------------------------------------------------
22. Holiday Inn - Bucks Full Service 215 20-Jun-97 Y 2,399,851
County, PA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted EBITDA
Hotel Properties Owned by the Parent Adjusted EBITDA EBITDA Divided by 10% Cost Basis All Hotels Cost Basis New
at Parent Subsidiaries Seasoned Seasoned Hotels
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Eligible Properties
- ------------------------------------------------------------------------------------------------------------------------------------
1. Holiday Inn, DFW West, $ 1,487,024 $1,487,024 $14,870,240 $13,650,714 $ -
Bedford, TX
- ------------------------------------------------------------------------------------------------------------------------------------
2. Hampton Inn - Richmond, VA 1,111,794 - - 8,165,545 8,165,545
- ------------------------------------------------------------------------------------------------------------------------------------
3. Hilton Hotel - Toledo, OH 792,323 792,323 7,923,228 10,868,248 -
- ------------------------------------------------------------------------------------------------------------------------------------
4. Holiday Inn - N.O. 3,173,783 3,173,763 31,737,828 28,435,480 -
Airport, Kenner, LA
- ------------------------------------------------------------------------------------------------------------------------------------
5. Crowne Plaza - Madison, WI 2,327,254 2,327,254 23,272,540 23,280,637 -
- ------------------------------------------------------------------------------------------------------------------------------------
6. Holiday Inn - San Jose, CA 2,589,050 - - 21,163,741 21,153,741
- ------------------------------------------------------------------------------------------------------------------------------------
7. Wyndham Hotel - 1,097,097 - - 10,028,914 19,028,994
Albuquerque, NM
- ------------------------------------------------------------------------------------------------------------------------------------
8. Hotel Maison de Ville - 360,105 380,195 3,801,946 3,289,203 -
New Orleans, LA
- ------------------------------------------------------------------------------------------------------------------------------------
9. Hampton Inn - Ocean City, 1,013,522 - - 9,962,732 9,952,732
MD
- ------------------------------------------------------------------------------------------------------------------------------------
10. Holiday Inn - San Siego, Ca 2,091,858 - - 22,437,436 22,437,438
- ------------------------------------------------------------------------------------------------------------------------------------
11. Wyndham Hotel - San Jose, 3,017,111 - - 30,001,018 30,006,018
CA
- ------------------------------------------------------------------------------------------------------------------------------------
12. Durham Hilton - Durham, 1,492,107 - - 15,471,747 15,471,747
N.C.
- ------------------------------------------------------------------------------------------------------------------------------------
13. Holiday Inn Resort - 1,578,204 - - 17,676,654 17,376,651
Monteray, CA
- ------------------------------------------------------------------------------------------------------------------------------------
14. Wyndham LBV - Orlando, FL 3,009,225 - - 44,617,816 41,647,995
- ------------------------------------------------------------------------------------------------------------------------------------
15. Westin Resort - Key Largo, 2,493,768 - - 20,340,011 29,340,000
FL
- ------------------------------------------------------------------------------------------------------------------------------------
16. Wyndham Gardens - 1,104,095 - - 18,050,129 16,680,129
Marletta, GA
- ------------------------------------------------------------------------------------------------------------------------------------
17. Holiday Inn - Phoenix, AZ 1,205,534 - - 21,121,039 21,121,038
- ------------------------------------------------------------------------------------------------------------------------------------
18. Hilton Hotel - Grand 1,849,394 - - 17,070,985 17,070,918
Rapids, MI
- ------------------------------------------------------------------------------------------------------------------------------------
19. Marriott West Loop - 2,368,847 - - 28,910,433 26,810,443
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------------
19a. Office Bldg West Loop - 843,338 - - 12,893,005 12,893,808
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------------
20. Ralison Twin Towers - 7,382,733 - - 80,870,002 80,570,092
Orlando, FL
- ------------------------------------------------------------------------------------------------------------------------------------
21. Hilton Hotel - Coral 2,560,017 - - 23,794,328 23,794,328
Beach, FL
- ------------------------------------------------------------------------------------------------------------------------------------
22. Holiday Inn - Bucks 2,076,030 - 21,847,142 21,87,142
County, PA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Cost Basis Cost Basis Cost Basis Cost Basis
Hotel Properties Owned by the (Limited/Extended Non-Wholly Non-Franchised Ground Leases
at Parent Subsidiaries Stay) Owned
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Eligible Properties
- ------------------------------------------------------------------------------------------------------------------------------------
1. Holiday Inn, DFW West, $ - $ - $ -
Bedford, TX
- ------------------------------------------------------------------------------------------------------------------------------------
2. Hampton Inn - Richmond, VA 8,165,545 - 10,888,248
- ------------------------------------------------------------------------------------------------------------------------------------
3. Hilton Hotel - Toledo, OH - - -
- ------------------------------------------------------------------------------------------------------------------------------------
4. Holiday Inn - N.O. - - -
Airport, Kenner, LA
- ------------------------------------------------------------------------------------------------------------------------------------
5. Crowne Plaza - Madison, WI - -
- ------------------------------------------------------------------------------------------------------------------------------------
6. Holiday Inn - San Jose, CA - - -
- ------------------------------------------------------------------------------------------------------------------------------------
7. Wyndham Hotel - - - 19,028,991
Albuquerque, NM
- ------------------------------------------------------------------------------------------------------------------------------------
8. Hotel Maison de Ville - - 3,288,203 -
New Orleans, LA
- ------------------------------------------------------------------------------------------------------------------------------------
9. Hampton Inn - Ocean City, 9,952,732 - -
MD
- ------------------------------------------------------------------------------------------------------------------------------------
10. Holiday Inn - San Siego, Ca - - -
- ------------------------------------------------------------------------------------------------------------------------------------
11. Wyndham Hotel - San Jose, - - 30,006,016
CA
- ------------------------------------------------------------------------------------------------------------------------------------
12. Durham Hilton - Durham, - - -
N.C.
- ------------------------------------------------------------------------------------------------------------------------------------
13. Holiday Inn Resort - - - -
Monteray, CA
- ------------------------------------------------------------------------------------------------------------------------------------
14. Wyndham LBV - Orlando, FL - - -
- ------------------------------------------------------------------------------------------------------------------------------------
15. Westin Resort - Key Largo, - - -
FL
- ------------------------------------------------------------------------------------------------------------------------------------
16. Wyndham Gardens - - - -
Marletta, GA
- ------------------------------------------------------------------------------------------------------------------------------------
17. Holiday Inn - Phoenix, AZ - - -
- ------------------------------------------------------------------------------------------------------------------------------------
18. Hilton Hotel - Grand - - -
Rapids, MI
- ------------------------------------------------------------------------------------------------------------------------------------
19. Marriott West Loop - - - -
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------------
19a. Office Bldg West Loop - - - -
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------------
20. Ralison Twin Towers - - - -
Orlando, FL
- ------------------------------------------------------------------------------------------------------------------------------------
21. Hilton Hotel - Coral - - -
Beach, FL
- ------------------------------------------------------------------------------------------------------------------------------------
22. Holiday Inn - Bucks - - -
County, PA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
BORROWING BASE COMPLIANCE CERTIFICATE
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Hotel Properties Owned by Type of Service Total Rooms Hotel Eligible
the Parent at Parent's (Limited/Extended Number Out of Acquisition Yes - Y Adjusted
Subsidiaries Stay/Full) of Rooms Service Date No - N EBITDA EBITDA
Eligible Properties
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
31. St. Tropez - Las Vegas, NV Full Service 149 08-Jan-96 Y 2,492,283 2,314,683
- ------------------------------------------------------------------------------------------------------------------------------
32. Ramada Place - Meriden, CT Full Service 150 08-Jan-96 Y 1,256,418 1,045,649
- ------------------------------------------------------------------------------------------------------------------------------
33. Tampa Airport Hotel - Full Service 495 13-Feb-96 Y 2,381,327 1,951,714
Tampa, FL
- ------------------------------------------------------------------------------------------------------------------------------
34. Radisson Inn - Rochester, Full Service 171 13-Feb-96 Y 701,922 525,558
NY
- ------------------------------------------------------------------------------------------------------------------------------
35. Courtyard By Marriott - Full Service 276 13-Feb-96 Y 2,670,662 2,625,052
Marina del Ray, CA
- ------------------------------------------------------------------------------------------------------------------------------
36. Courtyard By Marriott - Full Service 134 13-Feb-96 Y 1,822,118 1,839,538
Century City, CA
- ------------------------------------------------------------------------------------------------------------------------------
37. Holiday Inn - Madeira Full Service 149 13-Feb-96 Y 709,406 641,687
Beach, FL
- ------------------------------------------------------------------------------------------------------------------------------
38. Howard Johnson Resort - Limited Service 100 13-Feb-96 Y 1,228,204 1,122,877
Key Largo, FL
- ------------------------------------------------------------------------------------------------------------------------------
39. Holiday Inn - Ft. Full Service 240 13-Feb-96 Y 2,037,728 1,776,859
Lauderdale, FL
- ------------------------------------------------------------------------------------------------------------------------------
40. Courtyard By Marriott LBV Full Service 323 13-Feb-96 Y 4,024,708 3,458,819
- Orlando, FL
- ------------------------------------------------------------------------------------------------------------------------------
41. Clearwater Beach Resort - Full Service 428 13-Feb-96 Y 6,216,622 4,514,218
Clearwater FL
- ------------------------------------------------------------------------------------------------------------------------------
Total Borrowing Base Pool 9,858 225 $ 94,803,697 $ 12,001,177
- ------------------------------------------------------------------------------------------------------------------------------
2.3%
- ------------------------------------------------------------------------------------------------------------------------------
42. Holiday Inn - St. Louis, MO Full Service 120 13-Feb-96 N 814,269 698,688
- ------------------------------------------------------------------------------------------------------------------------------
43. Holiday Inn - Richmond, VA Full Service 280 13-Feb-96 N 1,291,114 1,074,008
- ------------------------------------------------------------------------------------------------------------------------------
44. Ramada Inn Gulfview - Full Service 789 13-Feb-96 N 1,913,602 1,718,928
Clearwater, FL
- ------------------------------------------------------------------------------------------------------------------------------
45. Lodge At The Seaport - Limited Service 77 13-Feb-96 N 584,428 610,911
Mystic, CT
- ------------------------------------------------------------------------------------------------------------------------------
46. Four Points Hotel - Mt. Full Service 124 08-Jan-96 N 612,599 435,455
Arlington, NJ
- ------------------------------------------------------------------------------------------------------------------------------
47. Holiday Inn DFW South, Full Service 409 31-Jul-96 N 3,421,916 2,955,108
Irving TX
- ------------------------------------------------------------------------------------------------------------------------------
48. Courtyard By Marriott - Full Service 165 31-Jul-96 N 2,003,049 1,768,258
Secaucus, NJ
- ------------------------------------------------------------------------------------------------------------------------------
49. Radisson Hotel, Arlington Full Service 201 24-Feb-97 N 1,380,060 1,161,033
Heights, IL
- ------------------------------------------------------------------------------------------------------------------------------
50. Double Tree Galaria, Full Service 165 28 17-Mar-97 N 1,406,902 1,818,142
Atlanta, GA
- ------------------------------------------------------------------------------------------------------------------------------
51. Holiday Inn, Chicago, IL Full Service 507 03-Feb-96 N 5,117,452 4,146,141
- ------------------------------------------------------------------------------------------------------------------------------
52. Crowne Plaza, Portland, OR Full Service 161 08-Jan-96 N 2,176,725 1,947,995
- ------------------------------------------------------------------------------------------------------------------------------
53. Ramada Plaza Hotel, Full Service 155 08-Jan-96 N 2,451,228 2,212,342
Shallon, CT
- ------------------------------------------------------------------------------------------------------------------------------
Total Parent 12,699 254 $117,668,626 $101,849,075
- ------------------------------------------------------------------------------------------------------------------------------
1.0%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Hotel Properties Owned by Adjusted Adjusted EBITDA Cost Cost Cost Basis
the Parent at Parent's EBITDA Divided by 10% Basis Basis (Limited/
Subsidiaries Seasoned Seasoned All Hotels New Hotels Extended Stay)
Eligible Properties
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
31. St. Tropez - Las Vegas, NV - - 26,355,000 28,355,000 -
- --------------------------------------------------------------------------------------------------------------------
32. Ramada Place - Meriden, CT - - 9,785,000 1,785,000 -
- --------------------------------------------------------------------------------------------------------------------
33. Tampa Airport Hotel - - - 23,045,408 23,845,408 -
Tampa, FL
- --------------------------------------------------------------------------------------------------------------------
34. Radisson Inn - Rochester, - - 7,216,181 7,216,181 -
NY
- --------------------------------------------------------------------------------------------------------------------
35. Courtyard By Marriott - - - 27,213,151 27,241,161 -
Marina del Ray, CA
- --------------------------------------------------------------------------------------------------------------------
36. Courtyard By Marriott - - - 19,180,537 18,160,537 -
Century City, CA
- --------------------------------------------------------------------------------------------------------------------
37. Holiday Inn - Madeira - - 15,240,767 16,240,787 -
Beach, FL
- --------------------------------------------------------------------------------------------------------------------
38. Howard Johnson Resort - - - 15,245,449 15,245,449 15,245,449
Key Largo, FL
- --------------------------------------------------------------------------------------------------------------------
39. Holiday Inn - Ft. - - 19,738,782 19,798,782 -
Lauderdale, FL
- --------------------------------------------------------------------------------------------------------------------
40. Courtyard By Marriott LBV - - 46,979,146 46,979,145 -
- Orlando, FL
- --------------------------------------------------------------------------------------------------------------------
41. Clearwater Beach Resort - - - 52,075,112 12,076,112 -
Clearwater FL
- --------------------------------------------------------------------------------------------------------------------
Total Borrowing Base Pool $8,140,878 $81,408,782 $ 806,787,837 $ 620,261,606 $42,137,901
- --------------------------------------------------------------------------------------------------------------------
4.6%
- --------------------------------------------------------------------------------------------------------------------
42. Holiday Inn - St. Louis, MO - - 6,657,600 4,067,500 -
- --------------------------------------------------------------------------------------------------------------------
43. Holiday Inn - Richmond, VA - - 9,742,000 9,742,500 -
- --------------------------------------------------------------------------------------------------------------------
44. Ramada Inn Gulfview - - - 21,619,687 21,619,687 -
Clearwater, FL
- --------------------------------------------------------------------------------------------------------------------
45. Lodge At The Seaport - - - 5,582,800 5,582,600 5,682,500
Mystic, CT
- --------------------------------------------------------------------------------------------------------------------
46. Four Points Hotel - Mt. - - 4,700,000 4,700,000 -
Arlington, NJ
- --------------------------------------------------------------------------------------------------------------------
47. Holiday Inn DFW South, - - 27,914,872 27,914,612 -
Irving TX
- --------------------------------------------------------------------------------------------------------------------
48. Courtyard By Marriott - 1,768,258 17,681,158 8,167,886 - -
Secaucus, NJ
- --------------------------------------------------------------------------------------------------------------------
49. Radisson Hotel, Arlington - - 12,241,000 12,241,000 -
Heights, IL
- --------------------------------------------------------------------------------------------------------------------
50. Double Tree Galaria, - - 21,083,487 21,883,487 -
Atlanta, GA
- --------------------------------------------------------------------------------------------------------------------
51. Holiday Inn, Chicago, IL - - 65,600,000 65,600,000 -
- --------------------------------------------------------------------------------------------------------------------
52. Crowne Plaza, Portland, OR - - 24,875,000 24,875,000 -
- --------------------------------------------------------------------------------------------------------------------
53. Ramada Plaza Hotel, - - 14,525,000 14,525,000 -
Shallon, CT
- --------------------------------------------------------------------------------------------------------------------
Total Parent $8,905,834 $99,081,331 $1,128,787,070 $1,044,102,862 $47,730,401
- --------------------------------------------------------------------------------------------------------------------
4.2%
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
Hotel Properties Owned by Cost Basis Cost Basis Cost Basis
the Parent at Parent's Non-Wholly Non- Ground
Subsidiaries Owned Franchised Leases
Eligible Properties
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
31. St. Tropez - Las Vegas, NV 28,355,000 -
- --------------------------------------------------------------------------------------------
32. Ramada Place - Meriden, CT - -
- --------------------------------------------------------------------------------------------
33. Tampa Airport Hotel - 23,945,406 -
Tampa, FL
- --------------------------------------------------------------------------------------------
34. Radisson Inn - Rochester, - 7,216,191
NY
- --------------------------------------------------------------------------------------------
35. Courtyard By Marriott - - -
Marina del Ray, CA
- --------------------------------------------------------------------------------------------
36. Courtyard By Marriott - - -
Century City, CA
- --------------------------------------------------------------------------------------------
37. Holiday Inn - Madeira - -
Beach, FL
- --------------------------------------------------------------------------------------------
38. Howard Johnson Resort - - -
Key Largo, FL
- --------------------------------------------------------------------------------------------
39. Holiday Inn - Ft. - -
Lauderdale, FL
- --------------------------------------------------------------------------------------------
40. Courtyard By Marriott LBV - 46,978,146
- Orlando, FL
- --------------------------------------------------------------------------------------------
41. Clearwater Beach Resort - 62,076,112 52,075,112
Clearwater FL
- --------------------------------------------------------------------------------------------
Total Borrowing Base Pool $ - $105,553,721 $161,173,709
- --------------------------------------------------------------------------------------------
0.0% 11.7% 10.3%
- --------------------------------------------------------------------------------------------
42. Holiday Inn - St. Louis, MO 8,657,600 - -
- --------------------------------------------------------------------------------------------
43. Holiday Inn - Richmond, VA 9,742,600 - -
- --------------------------------------------------------------------------------------------
44. Ramada Inn Gulfview - 21,619,687 - -
Clearwater, FL
- --------------------------------------------------------------------------------------------
45. Lodge At The Seaport - 6,592,600 6,692,500
Mystic, CT
- --------------------------------------------------------------------------------------------
46. Four Points Hotel - Mt. - 4,790,000
Arlington, NJ
- --------------------------------------------------------------------------------------------
47. Holiday Inn DFW South, - -
Irving TX
- --------------------------------------------------------------------------------------------
48. Courtyard By Marriott - - 8,187,880
Secaucus, NJ
- --------------------------------------------------------------------------------------------
49. Radisson Hotel, Arlington - -
Heights, IL
- --------------------------------------------------------------------------------------------
50. Double Tree Galaria, - -
Atlanta, GA
- --------------------------------------------------------------------------------------------
51. Holiday Inn, Chicago, IL - -
- --------------------------------------------------------------------------------------------
52. Crowne Plaza, Portland, OR - -
- --------------------------------------------------------------------------------------------
53. Ramada Plaza Hotel, - -
Shallon, CT
- --------------------------------------------------------------------------------------------
Total Parent $ 43,312,111 $111,246,221 $178,131,888
- --------------------------------------------------------------------------------------------
3.8% 9.8% 10.9%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 1.01(c)
ENGINEER REPORT
SCOPE OF SERVICES
PROPERTY CONDITION REVIEW
(PCR)
ASSIGNMENT OBJECTIVES
- ---------------------
The purpose of the Property Condition Review (PCR) is: To determine the existing
conditions of the building(s) and its systems including structural, plumbing,
heating and ventilating, air conditioning, electrical, fire protection, finish
materials, exterior facades, roof, and site amenities. To identify any areas of
materials which may require repair or corrective action due to deferred
maintenance or present deficient conditions. To identify and list any
outstanding code violations against the property on file with the various
Municipal and Federal agencies, including the local building department, fire
department, etc. To evaluate the adequacy of the capacities of the HVAC and
electrical systems. To perform an Americans with Disabilities Act (ADA) survey
of the existing building(s) and property to determine compliance with the
legislation. To estimate the cost of the required remedial work indicated by any
of the preceding determinations. Note: The Property Condition Review (PCR)
assignment does not include any work with environmental issues, but Consultant
should be generally aware of and note any obvious existing or potential
conditions. Consultant shall utilize personnel having the appropriate
professional designations for those tasks outlined above (at a minimum, an ALA
and PE).
The Property Condition Review (PCR) assignment should include, at a minimum, a
review and description of the following aspects of the Project:
1. A description of the site and all improvements thereon, based upon field
observations as well as a review of all available documents.
2. Determine the general conformance of visible construction of the building
and site development to the construction documents, soils report, and
industry standards for such construction.
3. Consultant shall list all codes, regulations and public sector criteria
with which the Project must comply, including special permits, zoning,
development orders and other actions of local, state, and federal
authorities. Copies of the actual documents (building permits,
certificates of occupancy, etc.) should be included in the report.
4. Review of existing conditions of the building including exterior, roof,
interior spaces, MEP systems, structural members (including seismic
conditions, where applicable), site drainage, parking, landscaping and site
utilities; with conclusions and recommendations for conceivable repairs and
deficiencies along with cost estimates for the suggested repairs. Estimates
should be provided in the following format: IMMEDIATE, SHORT-TERM (1-5
years), and LONG-TERM REPAIRS (1-10 years).
<PAGE>
SCHEDULE 1.01(e)
ENVIRONMENTAL REPORT
SCOPE OF SERVICES
PHASE I ENVIRONMENTAL SITE ASSESSMENT
(ESA)
ASSIGNMENT OBJECTIVES
- ---------------------
The Phase I Environmental Site Assessment (ESA) survey is for the determination
of the condition of the Property (building(s) and site) as it relates to any
existing and potential hazardous waste materials or situations. The Scope of
the ESA should address and comply with the current ASTM Environmental Assessment
standards or the standards set forth below, whichever is more stringent.
The ESA assignment should include at a minimum a review and description of the
following aspects of the Property:
1. Identify project name, legal description, geographic coordinates, local
address, city, county and state for each site.
2. Provide a general description of the Property and site improvements,
including acres, square footages and age of improvements.
3. Identify the inspection date and consultant performing the inspection.
Describe the qualifications of the individual conducting the inspection.
4. Conduct and review a fifty-year recorded Chain of Title search. Identify
and review historical and current property uses/ownership's. Use Sanborn
maps and local directories when available and appropriate.
5. Review historical and current aerial photographs, and provide in the report
at least two original aerials (one from pre-1975, and one after 1985).
Provide a narrative discussion of the aerial photo review. Aerial
photographs should show the subject Property and surrounding areas.
6. Perform an on-site environmental inspection of the subject Property.
Interview on-site personnel and adjacent property owners where appropriate,
and provide records of all such communications. Review the available on-
site environmental records, including the compliance history of the subject
Property, if any.
7. Review and discuss ground water and surface water characteristics. Include
a general direction of the gradient as well as depth to potable and shallow
groundwater. Include a description of groundwater uses and surface water
bodies on-site. Discuss any available existing data on water quality.
Consultant should have someone with Hydrology or Hydro-Geology credentials
specifically comment on this matter.
8. Review and discus area geology and soil characteristics. Identify the
general soil permeability and corrosiveness tendencies. Discuss any
available data on soil conditions.
1
<PAGE>
SCHEDULE 1.01(d)
APPROVED ENGINEERS
SOCIETE GENERALE
U.S. REAL ESTATE GROUP
May 30, 1997
APPROVED LIST OF CONSULTANTS
PROPERTY CONDITION REVIEW (P? & DOCUMENT AND CONSTRUCTION REVIEW (DCR)
- -----------------------------------------------------------------------
ECKLAND CONSULTANTS, INC. CONSTRUCTION ASSET ADVISORS, INC.
100 Field Drive, Suite 140 5603 South Prince Street
Lake Forest, IL 60045 Littleton, CO 80120
Robert A. Eckland George M. Pales
(708) 234-1500 (303) 738-9880
THE BENTLEY GROUP WOZGROUP
The Lincoln Building 1586 South 21st Street, Suite A
60 East 42nd Street Colorado Springs, CO 80904-4234
New York, NY 10165 Gordon A. Rothoff
Laurence T. Goldberg (719) 473-4277
(212) 972-3635 (719) 635-3087 FAX
EMJ CONSTRUCTION CONSULTANTS INC. CARTER & BURGESS, INC.
60 East 42nd Street, Suite 1701 3880 Hulen Street
New York, NY 10165 Fort Worth, TX 76107
Elizabeth Koeckert Larry E. Garrett
(212) 972-2777 (212) 697-3052 FAX (817) 735-6000
MERRITT & HARRIS, INC. GEORGE A. KENNEDY & ASSOC., INC.
110 East 42nd Street 6 North Michigan Avenue
New York, NY 10017 Chicago, IL 60602
Ronald D. Gibney George A. Kennedy
(212) 697-3188 (312) 332-7060
HNTB CORPORATION MARX/OKUBO
1201 Walnut, Suite 700 723 Delaware Street
Kansas City, MO 64106 Denver, CO
Philip L. Hannon T. Larry Okubo
(816) 472-1201 (303) 321-4495
JAMES, HARWICK & PARTNERS, INC. LAW ENGINEERING
8340 Meadow Road, Suite 248 7616 LBJ Freeway
Dallas, TX 75231 Park Central I, Suite 600
Ronald E. Harwick Dallas, TX 75251
(214) 363-5687 Timothy Higgins
(214) 934-0800
LEVIEN-RICH BOYKEN INTERNATIONAL
150 N. Wacker Drive, Suite 2675 115 Perimeter Center Place, Suite 650
Chicago, IL 60606 Atlanta, GA 30346-1238
John Hyman Carol Orndorff/Joe Bond
(312) 578-1313 (770) 913-1300
(800) 842-5489
<PAGE>
SCHEDULE 1.01(e)
ENVIRONMENTAL REPORT
SCOPE OF SERVICES
PHASE I ENVIRONMENTAL SITE ASSESSMENT
(ESA)
ASSIGNMENT OBJECTIVES
- ---------------------
The Phase I Environmental Site Assessment (ESA) survey is for the determination
of the condition of the Property (building(s) and site) as it relates to any
existing and potential hazardous waste materials or situations. The Scope of
the ESA should address and comply with the current ASTM Environmental Assessment
standards or the standards set forth below, whichever is more stringent.
The ESA assignment should include at a minimum a review and description of the
following aspects of the Property:
1. Identify project name, legal description, geographic coordinates, local
address, city, county and state for each site.
2. Provide a general description of the Property and site improvements,
including acres, square footages and age of improvements.
3. Identify the inspection date and consultant performing the inspection.
Describe the qualifications of the individual conducting the inspection.
4. Conduct and review a fifty-year recorded Chain of Title search. Identify
and review historical and current property uses/ownership's. Use Sanborn
maps and local directories when available and appropriate.
5. Review historical and current aerial photographs, and provide in the report
at least two original aerials (one from pre-1975, and one after 1985).
Provide a narrative discussion of the aerial photo review. Aerial
photographs should show the subject Property and surrounding areas.
6. Perform an on-site environmental inspection of the subject Property.
Interview on-site personnel and adjacent property owners where appropriate,
and provide records of all such communications. Review the available on-
site environmental records, including the compliance history of the subject
Property, if any.
7. Review and discuss ground water and surface water characteristics. Include
a general direction of the gradient as well as depth to potable and shallow
groundwater. Include a description of groundwater uses and surface water
bodies on-site. Discuss any available existing data on water quality.
Consultant should have someone with Hydrology or Hydro-Geology credentials
specifically comment on this matter.
8. Review and discus area geology and soil characteristics. Identify the
general soil permeability and corrosiveness tendencies. Discuss any
available data on soil conditions.
1
<PAGE>
9. Identify and describe any hazardous materials used or stored on-site,
significant spills, dumping, emissions, evidence of contaminated soils or
water. Specifically,
a) Describe uses for hazardous materials; identify all wastestreams
generated at the site; and describe handling the disposal methods and
waste management handling, storage, and disposal areas. Also include a
discussion about areas previously used for thee purposes, if any.
b) List permits and authorization held, and describe permitted activities,
operating restrictions, and compliance reports, inspections, and
orders.
c) Discuss whether on-site electrical equipment contains PCBs, and
identify the party with compliance responsibility.
d) Describe in detail the observed on-site conditions of waters, soils,
vegetation, and production and waste management areas.
e) Review records of spills and release events, and describe materials and
area involved, remediation activities, and regulatory agency
involvement, if any.
f) Consultant should address all environmental concerns, including but not
limited to special statutory issues, lead paint, lead in drinking
water and wetlands.
10. Perform and discuss a one mile area reconnaissance, and describe all
adjacent site usages. Identify all potential sources of off-site
contamination and the impact of these findings, including landfills,
gasoline stations, industrial facilities, tank terminals, airports and
military bases or installations.
11. Review and provide all applicable local, state and federal regulatory
agency inquire (EPA, DERM, TWC, etc.) results for the site - as well as for
properties contained within a one mile radius of the site. Specifically
discuss: The NPL List, CERCLIS, SARA Title III, RCRA Notifiers List, TSD
List, UST List, LUST List, and Landfill List. For Properties found on
these lists, identify distance, direction and any potential impact to the
subject site.
12. For LUST's UST's and AST's on-site or within one mile radius - identify the
number of tanks, registration, size, age, tank contents and tank material
for each. For offsite tanks, identify distance, direction and subsurface
gradient direction from site for each. Describe former UST's on-site and
also the compliance status of current on-site UST's.
13. Review and provide local government and municipal inquiry results. Include
at least the following: the electric company, water/sewer authorities,
city/county health department and local fire Marshall's office. Provide a
record of these communications.
14. If applicable, a sufficient number of asbestos, lead (paint, water), and
radon samples should be taken, analyzed, and discussed to provide a
representative sampling. The number of samples may vary, but the rationale
for determining the number and location of the samples should be described.
Provide information on: methods of analysis and laboratory used, sample
collection method, and certification of the inspectors, as per the attached
Exhibit A (for asbestos only). Describe and locate on plan the locations
and materials sampled.
15. Provide a color topographical area site map, with scale, nothing the
subject site.
2
<PAGE>
16. If available, describe the circumstances of any known citizen complaints in
the area, the nature of the facility's relationship with its neighbors and
citizens, etc.
17. Provide a professionally prepared and detailed site map of the project,
noting all adjacent properties, location of any LUST's UST's AST's, drums,
transformers, areas of contamination, waste management areas, etc.
18. Provide a minimum of eight color labeled photographs depicting the site and
adjacent sites.
19. A copy of all records of communications (ROC's) should be provided in the
report for each including: date and time of a conversation, name and title
of person, name of company and a brief summary of the topic discussed.
Also provide a copy of all related permits, available soil and water data,
and any available enforcement records and documents.
20. Provide a list of any and all published references utilized.
21. Provide a statement of qualifications on the firm conducting the
assessment, and evidence of all required insurance coverage's (naming
Societe Generale, Southwest Agency, as additional insured).
22. Two original reports are required for this assignment, and should follow,
in general, the outline on the last page of this document.
3
<PAGE>
EXHIBIT "A"
ASBESTOS SURVEY
The asbestos survey shall be performed by appropriately trained personnel,
trained in accordance with the most recent federal, state and local
requirements, including but not limited to AHERA. The personnel shall determine
if suspect ACM is present. Suspect friable ACM shall be reported on and sampled
according to the following scope. Suspect non-friable ACM shall be reported on
according to the following scope, but without sampling.
The consultant's report shall include the following:
- ---------------------------------------------------
- The date(s) the inspections/sampling was performed.
- A general description of construction, mechanical, and electrical
systems at the property based on the site visit and a cursory review of
construction documents (drawings, specifications, change orders, etc.), if
available.
- A description of the history of the property, including the dates of
original construction and the dates and scopes of major remodeling work.
- A description of any prior asbestos abatement work that was performed
at the property and on evaluation of the work's compliance with governing codes,
statutes, regulations and ordinances.
- A review of the suspect materials throughout the property and a
description of the sampling strategy. A sufficient number of samples should be
obtained in order to conclude the specific results required.
- An evaluation of the condition of any and all positive material found
at the property in accordance with a hazard ranking system. Note material
locations with respect to building occupants, potential for disturbance and air
flow.
- A description of the process for inspection and representative
sampling for asbestos-containing materials.
- A summary of testing results and graphic representation of the
locations from which the samples were taken indicating which samples are
positive.
- An estimate of the total quantity of ACM (friable and non-friable)
within the entire facility, including each tenant space, mechanical area, office
area, maintenance area and common area. Provide an estimate of probable costs
to correct or remove ACM's identified from the positive sampling process and
survey.
- A list of tenants at the property, by name and space number, the
materials sampled and the results of the analysis and the quantity of asbestos
found.
- The signature of the responsible individual. The individual shall
certify that the sampling and report has been conducted and prepared according
to the licensing requirements of the state in which the property is located.
4
<PAGE>
SAMPLE OUTLINE REPORT FORMAT
PHASE I ENVIRONMENTAL SITE ASSESSMENT
1. Executive Summary
2. Objectives
3. Site Overview
4. Site Background/Operating History
a) Current Ownership
b) Prior Ownership
c) Review of Aerial Photographs
d) Historical City Directories/Fire Insurance Maps
5. Environmental Setting
a) Surface Water Characteristics
b) Ground Water Characteristics
c) Soils/Geology
6. Results of the On-Site Inspection
a) Observations
b) Hazardous Substance Identification/Inventory
c) Area Reconnaissance
d) Sampling Results (Asbestos) (Radon)
7. Regulatory/Governmental Agency Inquiries
a) Federal and State Regulatory Agency Inquires
b) City Government Inquiries
8. Conclusions
9. Recommendations
a) Additional Studies (File Review, Phase 2, etc.)
b) O & M Program
10. References
11. Appendices
a) Recorded Chain of Title
b) Aerial Photographs
c) Photographs
d) Permits/Records
12. Tables
a) Asbestos, Lead, and Radon Sampling Results
5
<PAGE>
SCHEDULE 1.01(f)
APPROVED LIST OF CONSULTANTS
ENVIRONMENTAL SITE ASSESSMENTS
- ------------------------------
DAMES & MOORE LAW ENGINEERING
12 Commerce Drive 7616 LBJ Freeway
Cranford, NJ 07016-1101 Dallas, TX 75251
(908) 272-8300 (972) 934-0800
5151 Beltline, Suite 700 222 W. Exchange, Suite 100
Dallas, TX 75240 Ft. Worth, TX 76106
Mike Pisarik Richard D. Varnell
(972) 980-4961 (817) 740-1177
3445 W. Shaw Avenue, Suite 101 FOREE & VANN, INC.
Fresno, CA 93711 9013 North 24th Avenue, Suite 7
Michael Padgett Phoenix, AZ 85021-2851
(209) 271-1093 Stanley O'Sick
(602) 943-6997
FUGRO/ENSR GROUNDWATER TECHNOLOGY
3140 North Argyle, Suite 104 23933 Research Drive
Fresno, CA 93710 Farmington Hills, MI 48335
David Sholes (810) 473-0720
(209) 292-5736
2201 Brookhollow Plaza, Suite 120
44 Montgomery St., Suite 1010 Arlington, TX 76006
San Francisco, CA (817) 633-1466
Steven Boudreau Roger Smith
(415) 296-1041
EMG
12201 Merit Drive, Suite 900 2701 West 15th St., Suite 644
Dallas, TX 75251 Plano, TX 75075
Timothy McMahon Steve Jones
(972) 484-8301 (972) 612-2276
RONE ENGINEERS, INC. G.M.T. ENVIRONMENTAL
11234 Goodnight Lane 22446 Davis Drive, Suite 127
Dallas, TX 75229-3319 Sterling, VA 20164
G. Robert Nell Ahmed Elrefai/George Walker
(214) 241-4517 (703) 406-8702
<PAGE>
ENVIRONMENTAL SITE ASSESSMENTS (ESA)(Continued)
- -----------------------------------------------
ATEC ASSOCIATES, INC. MAXIM ENGINEERS, INC.
11121 Canal Road 2342 Fabens
Cincinnati, OH 45241-1861 PO Box 59902
Robert L. Hearn Dallas, TX 75229
(513) 771-2112 (214) 247-7575
FLOUR DANIEL GTI
12502 Exchange Drive, Suite 440
Stafford, TX 77477
(713) 263-1200
Ed Fiffick
KERAMIDA ENVIRONMENTAL,INC.
330 North College Avenue
Indianapolis, IN 46202
(317) 685-6600
Vasiliki Keramida/Jodie Crandell
APPRAISAL ASSIGNMENT REPORT (AAR)
- ---------------------------------
(See Scope of Services)
STRUCTUAL ENGINEERS
- -------------------
MULLEN AND POWELL-TECHNI STRUCTURES
3500 Maple Avenue, Suite 1475 LB-3
Dallas, TX 75219
(214) 528-1725
K.S. Rajagopalan (Raja)
JOE NAGLER
(214) 828-9400
Charles Terry
TMBP
(214) 871-2302
Frank Merrit
<PAGE>
SCHEDULE 1.01(g)
Existing Letters of Credit
--------------------------
<TABLE>
<CAPTION>
Letter of Credit No. Expiration Date Beneficiary Amount
- ------------------- --------------- ----------- ------
<S> <C> <C> <C>
ST108121 6/1/98 Kathryn Flucke, wife of/and James D. $250,000.00
Danner
ST106704 9/30/98 Virtual Hospitality, Inc. $500,000.00
James E. Sowell
Lewis W. Shaw, II
Kenneth W. Shaw
Monica Jorns
Bruce G. Wiles
Craig A. Stark
Charles A. Thieme
Max J. Weber
Bank One, Wisconsin
ST108588 5/31/98 Zeta Bloomington Hotel, Inc. $750,000.00
c/o Battle Fowler, LLP
</TABLE>
<PAGE>
SCHEDULE 1.01(h)
Franchisors
Brand or Affiliation Considerations for AGIIC Future Acquisitions
DoubleTree Hotels Corporation DoubleTree Hotel or Resort
DoubleTree Club Hotel
DoubleTree Guest Suites Hotel
Hilton Hotels Corporation Hilton Hotel, Inn or Resort
Hilton Suites Hotel
Hilton Garden Inn
Holiday Inn Worldwide Crowne Plaza Hotel or Resort
Holiday Inn
Holiday Inn Express
Holiday Inn Hotel & Suites
Holiday Inn Select
Holiday Inn Sunspree Resort
Hyatt Hotels Corporation Hyatt Regency Hotel or Resort
Hyatt Hotel
ITT Sheraton Corporation Sheraton Hotel or Resort
Sheraton Suites Hotel
Four Points Hotel
Marriott Corporation Marriott Hotel or Resort
Marriott Suites Hotel
Residence Inn
Fairfield Inn, Inn & Suites
Courtyard by Marriott
Omni Hotels Omni Hotel or Resort
Promus Hotel Corporation Embassy Suites Hotel or Resort
Homewood Suites
Hampton Inn, Inn & Suites
Radisson Hotels Worldwide Radisson Hotel, Plaza Hotel or Resort
Radisson Inn
Radisson Suite Hotel
Westin Hotels & Resorts Westin Hotel or Resort
Wyndham Hotels and Resorts Wyndham Hotel or Resort
Wyndham Garden Hotel
Possible (If franchising becomes
available) Renaissance Hotels & Resorts
Red Lion Hotels & Inns
Ritz-Carlton
Inter-Continental
Four Seasons
?????
Nikko
Le Meridian/Fo?t
AmeriSuites
Vista/Hilton International
Fairmont
Adam's Mark
<PAGE>
SCHEDULE 1.01(i)
Ground Leases
-------------
ALBUQUERQUE, NEW MEXICO
That certain ground lease by and between the City of Albuquerque, New
Mexico and Fred Harvey, Inc. dated November 10, 1969 as amended by the
First Supplemental Lease Agreement dated May 17, 1971 and the Second
Supplemental Lease Agreement dated October 2, 1972.
NOTE: Ground Lessee may not assign or mortgage its interest without the
consent of Ground Lessor .
NEW ORLEANS, LOUISIANA
That certain Sublease Agreement between James L. Monaghan, as sub-lessor,
and Grantor, as sublessee, dated July 8, 1994 and recorded in COB 923,
Folio 521, records of Orleans Parish of that certain Lease of Commercial
Property granted by Mon-Tay Enterprises, Inc., as owner, and James
Monaghan, as lessee, dated December 11, 1985 recorded in COB 808A, Folio
15, records of Orleans Parish.
SAN JOSE, CALIFORNIA
That certain Sublease dated as of February 1, 1973 executed by and between
Claitor Properties Co. and Hotel Circle, Inc. and recorded on February 7,
1973 in Book 0225, Page 727 of the Official Records, as assigned to 1350
North First Street Company, as recorded on June 14, 1976 in Book C080, Page
157 in the Official Records, as further assigned to The Chase Manhattan
Bank (National Association), and recorded on September 17, 1976 in Book
C288, Page 36, as further assigned to North First-Gish Corporation, as
recorded on September 17, 1976 in Book C288, Page 45, as amended by that
certain Amendment to Sublease dated December 1, 1978 by and between Claitor
Properties Co. and North First-Gish Corporation and recorded on March 13,
1979 in Book E340, Page 285, as further assigned to Le Baron Hotels, Inc.
and recorded on March 13, 1979 in Book E341, Page 258, and as further
amended by that certain Consent to Amendment of Sublease and Release of
Reserved Right dated April 11, 1980 executed by and between William E.
Kiersted and
<PAGE>
William S. Boyd, as Trustees, Le Baron Hotels, Inc. and The Chase Manhattan
Bank, N.A. and recorded on April 29, 1980 in Book F298, Page 632 of the
Official Records.
TOLEDO, OHIO
That certain Lease by and among the State of Ohio, acting by and through
the Department of Administrative Services, the Medical College of Ohio at
Toledo, an Ohio College of Medicine authorized and created by Section
3350.01, Ohio Revised Code ("MCO"), and Toledo Hotel Investors Limited
Partnership, an Ohio limited partnership ("Original Lessee"), recorded at
Recorder's Number 86-0812A01 of the records of the Lucas County Recorder,
under which State and MCO leased to Original Lessee a certain unimproved
approximately 8.781 acre tract of land located on the campus of MCO in
Toledo, Lucas County, Ohio; as modified by an Affidavit dated November 15,
1986, recorded December 16, 1986, at Recorder's Number 86-1943A08 of the
records of the Lucas County Recorder; as further amended by First Amendment
to Lease by and among State, MCO, and Original Lessee, recorded March 24,
1988, at Recorder's Number 88-332C11 of the records of the Lucas County
Recorder; as further amended by Second Amendment to Lease by and among
State, MCO, and Original Lessee, recorded October 30, 1992, at Recorder's
Number 92-3155C04 of the records of the Lucas County Recorder; as further
affected by that certain Cooperating Agreement dated May 23, 1986, by and
between MCO and Original Lessee.
NOTE: Leasehold Mortgage requires consent of Ground Lessor. Ground Lessor
is not required to enter into a new lease with Leasehold Mortgagee upon
foreclosure.
LAKE BUENA VISTA, FLORIDA
That certain Lease Agreement dated September 28, 1971, between Buena Vista
Land Company, Inc. and Howard Johnson Company (Inc.) ("HJC"); as amended by
that certain Amendment to Lease dated August 15, 1978 between Lake Buena
Vista Communities, Inc. (f/k/a Buena Vista Land Company, Inc.) ("LBV") and
HJC; that certain Amendment to Lease dated December 18, 1986 between LBV
and Southeast Hotel Associates ("SHA"); that certain Amendment to Lease
dated November 6, 1989 between LBV and SHA; and that certain Fourth
Amendment to Lease effective as of September 5, 1996, between LBV and FSA
ZETA LBV Hotel, Inc.
Note: Ground Lessee's interest may be assigned only to a subsidiary.
Mortgage of the Leasehold Estate requires the consent of Ground Lessor
which shall not be unreasonably withheld so long as certain criteria are
met (including, Leasehold Mortgagee must be a
-2-
<PAGE>
financial institution with a good reputation, insurance requirements,
Ground Lease not in default).
CLEARWATER BEACH, FLORIDA
That certain Ground Lease dated as of February 14, 1980, by and among John
S. Taylor, III, Mary Ann Taylor, Marion Jean Taylor Carter, H. Richard
Carter, Mary Taylor Hancock and Harry Hancock, and W.B. Johnson Properties,
Inc., a Georgia corporation.
ROCHESTER, NEW YORK
That certain Lease dated as of January 1, 1971, between Rochester Institute
of Technology ("RIT") and Inn Camp, Inc. ("IC") as amended by that certain
Lease Amendment I dated November 8, 1971 between RIT and IC; that certain
Lease Amendment II dated as of April 30, 1981, between RIT and Rochilt
Associates; and that certain Lease Amendment III dated as of November 10,
1988, between RIT and Hotel Partners of Rochester.
-3-
<PAGE>
SCHEDULE 1.01(j)
Guarantors
----------
American General Hospitality Corporation, a Maryland corporation
AGH UPREIT, LLC, a Delaware limited liability company
3100 Glendale Joint Venture, an Ohio general partnership
MDV Limited Partnership, a Texas limited partnership
Madison Motel Associates, a Wisconsin general partnership
183 Hotel Associates, Ltd., a Texas limited partnership
Richmond Williamsburg Associates, Ltd., a Texas limited partnership
2929 Williams Limited Liability Company, a Delaware limited liability company
Lake Buena Vista Partners, Ltd., a Florida limited partnership
BCHI Acquisition, L.L.C., a Delaware limited liability company
Cocoa Beach Hotels, Ltd., a Florida limited partnership
Durham I-85 Limited Partnership, a Delaware limited partnership
<PAGE>
Schedule 1.01 (k)
Participating Leases
1. Lease Agreement between American General Hospitality Operating Partnership,
L.P. ("Borrower") and AGH Leasing, L.P. (the "Lessee") with respect to
Holiday Inn Select Mission Valley, CA, dated July 31, 1996.
2. Lease Agreement between Borrower and Lessee with respect to Hampton Inn
Ocean City, dated July 31, 1996.
3. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Secaucus, NJ, dated July 31, 1996.
4. Lease Agreement between Borrower and Lessee with respect to Wyndham Hotel-
San Jose, CA, dated July 31, 1996.
5. Lease Agreement between Borrower and Lessee with respect to Wyndham
Albuquerque Hotel, dated July 31, 1996.
6. Lease Agreement between 2929 Williams Limited Liability Company and Lessee
with respect to Holiday Inn Select New Orleans Airport Kenner, dated July
31, 1996.
7. Lease Agreement between 3100 Glendale Joint Venture and Lessee with respect
to Hilton Hotel Toledo, dated July 31, 1996
8. Lease Agreement between MDV Limited Partnership and Lessee with respect to
Hotel Maison de Ville, dated July 31, 1996.
9. Lease Agreement between Madison Motel Associates and Lessee with respect to
Crowne Plaza Madison, dated July 31, 1996.
10. Lease Agreement between 183 Hotel Associates, Ltd. And Lessee with respect
to Holiday Inn Dallas DFW Airport West, dated July 31, 1996.
11. Lease Agreement between Richmond Williamsburg Associates, Ltd. and Lessee
with respect to Hampton Inn - Richmond Airport, dated July 31, 1996.
12. Lease Agreement between Borrower and Lessee with respect to the Wyndham
Safari Hotel, Lake Buena Vista, FL, dated October 22, 1996.
13. Lease Agreement between 2780 Atlanta Limited Partnership, L.P. and Lessee
with respect to Doubletree Guest Suites Hotel-Atlanta, GA, dated March 17,
1997.
14. Lease Agreement between Borrower and Lessee with respect to Hilton Hotel -
Durham, dated January 6, 1997.
15. Lease Agreement between Borrower and Lessee with respect to Holiday Inn
Select DFW South, dated July 31, 1996.
16. Lease Agreement between Borrower and Lessee with respect to Grand Rapids
Hilton dated April 18, 1997.
17. Lease Agreement between Borrower and Lessee with respect to Crowne Plaza
Phoenix, dated April 1, 1997.
18. Lease Agreement between Lessee and Manager with respect to Holiday Inn
Resort - Monterey, dated November 20, 1996.
19. Lease Agreement between 75 Arlington Heights Limited Partnership, L.P. and
Lessee with respect to Radisson Hotel - Arlington Heights, dated February
28, 1997.
20. Lease Agreement between Borrower and Lessee with respect to Westin Key
Largo Resort, dated March 17, 1997.
21. Lease Agreement between Borrower and Lessee with respect to Wyndham Garden
Hotel-Marietta, GA, dated March, 17, 1997.
22. Lease Agreement between BCHI Acquisitions, L.L.C and Lessee with respect
to Holiday Inn Select-Bucks County, PA, dated June 20, 1997.
<PAGE>
23. Lease Agreement between Borrower and Lessee with respect to Radisson Twin
Tower-Orlando, FL, dated June 25, 1997.
24. Lease Agreement between Borrower and Lessee with respect to Marriott West
Loop-Houston, TX, dated June 25, 1997.
25. Lease Agreement between Cocoa Beach Hotels, Ltd. and Lessee with respect
to Hilton Hotel-Cocoa Beach, FL, dated June 27, 1997.
26. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Durham, NC, dated November 26, 1997.
27. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
Ramada Hotel-Mahwah, NJ, dated January 8, 1998.
28. Lease Agreement between Borrower and Mahwah Holding Corp. with respect to
Sheraton Crossroads-Mahwah, NJ, dated January 8, 1998.
29. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
Ramada Plaza-Meriden, CT, dated January 8, 1998.
30. Lease Agreement between Portland/Shelton LLC and Fairfield Holding Corp.
with respect to Ramada Plaza-Shelton, CT, dated January 8, 1998.
31. Lease Agreement between Portland/Shelton LLC and Fairfield Holding Corp.
with respect to Crowne Plaza-Portland, OR, dated January 8, 1998.
32. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
Crowne Plaza Suites-Las Vegas, NV, dated January 8, 1998.
33. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
St. Tropez Suites-Las Vegas, NV, dated January 8, 1998.
34. Lease Agreement between Mt. Arlington New Jersey, LLC and Clinton Holding
Corp. with respect to Four Points-Mt. Arlington, NJ, dated January 8, 1998.
35. Lease Agreement between Borrower and Lessee with respect to Holiday Inn
Express-Hanover, MD, dated January 22, 1998.
36. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Annapolis, MD, dated January 22, 1998.
37. Lease Agreement between Borrower and Lessee with respect to Ramada Hotel
Old Town-Alexandria, VA, dated January 22, 1998.
38. Lease Agreement between Borrower and Lessee with respect to Holiday Inn &
Suites-Alexandria, VA, dated January 22, 1998.
39. Lease Agreement between AGH O'Hare International LLC and Lessee with
respect to the Holiday Inn-O'Hare International, Rosemont, IL, dated
February 3, 1998.
40. Lease Agreement between Borrower and Lessee with respect to Doubletree
Resort-Clearwater Beach, FL, dated February 13, 1998.
41. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Lake Buena Vista, FL, dated February 13, 1998.
42. Lease Agreement between Borrower and Lessee with respect to Doubletree
Hotel, Tampa, FL, dated February 13, 1998.
43. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Marina del Rey, CA, dated February 13, 1998.
44. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Ft. Lauderdale, FL, dated February 13, 1998.
45. Lease Agreement between Borrower and Lessee with respect to Ramada Inn-
Clearwater Beach, FL, dated February 13, 1998.
46. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Century City, CA, dated February 13, 1998.
<PAGE>
47. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Madeira Beach, FL, dated February 13, 1998.
48. Lease Agreement between Borrower and Lessee with respect to Howard Johnson-
Key Largo, FL, dated February 13, 1998.
49. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Richmond, VA, dated February 13, 1998.
50. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
St. Louis, MO, dated February 13, 1998.
51. Lease Agreement between Borrower and Lessee with respect to Radisson
Hotel-Henrietta, NY, dated February 13, 1998.
52. Lease Agreement between Borrower and Lessee with respect to Mystic Hotel-
Mystic, CT, dated February 13, 1998.
53. Lease Agreement between Borrower and Lessee with respect to Select Inn-
Bloomington, MN, dated February 13, 1998.
<PAGE>
SCHEDULE 3.03
CONDITIONS PRECEDENT
1. Within two (2) days of Closing, the Borrower will return to the Issuing
Bank all outstanding letters of credit under the Existing Credit Agreement
except the Existing Letters of Credit.
<PAGE>
Schedule 4.01
SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF FORMATION PRINCIPAL OFFICE
---- ------------------ ----------------
<S> <C> <C>
2929 Williams Limited Liability Delaware 5605 MacArthur Blvd.
Company Suite 1200
Irving, Texas 75038
BCHI Acquisition, L.L.C. Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
3100 Glendale Joint Venture Ohio 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
MDV Limited Partnership Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Madison Motel Associates Wisconsin 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
183 Hotel Associates, Ltd. Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
455 Meadowlands Associates, Ltd.* Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
DFW South Limited Partnership* Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Richmond Williamsburg Associates, Ltd. Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH UPREIT LLC Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
AGH Secaucus LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH DFW South LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Lake Buena Vista Partners, Ltd. Florida 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Cocoa Beach Hotels, Ltd. Florida 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Durham I-85 Limited Partnership Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Portland/Shelton LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Mt. Arlington New Jersey, LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH O'Hare International, LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C> <C>
75 Arlington Heights Limited Partnership, L.P.* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
2780 Atlanta Limited Partnership, L.P.* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH PSS I, Inc. Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
___________________________
*Permitted other subsidiary
<PAGE>
SCHEDULE 4.08
AMERICAN GENERAL HOSPITALITY CORPORATION
----------------------------------------
(LISTING OF ALL PENDING OR THREATENED LEGAL PROCEEDINGS, WHETHER OR NOT COVERED
- -------------------------------------------------------------------------------
BY INSURANCE, TO WHICH THE AGHC, THE LESSEE, THE OPERATING PARTNERSHIP OR ANY
- -----------------------------------------------------------------------------
SUBSIDIARY IS A PARTY OR WHICH MAY AFFECT THEIR RESPECTIVE PROPERTIES OR
- ------------------------------------------------------------------------
BUSINESS.)
- ----------
CLINT FRUITMAN VS. AMERICAN GENERAL HOSPITALITY, INC.; HOLIDAY INNS, INC.;
HOLIDAY INNS B.V.; HOLIDAY INN PARK CENTER PLAZA; PARK CENTER HOTEL COMPANY
COURT: SUPERIOR COURT OF CALIFORNIA, COUNTY OF SANTA CLARA
CASE NUMBER CV768996
Date of Service:
10/20/97
Date of Incident:
9/26/96
Hotel Address:
Courtyard by Marriott
455 Harmon Meadow Blvd.
Secaucus, New Jersey 07094-3672
Mr. Fruitman reported that a headboard fell on his head. The Chief Maintenance
Engineer examined the headboard and noted that the brackets were secure
suggesting the event may not have occurred as described by the Plaintiff. Mr.
Fruitman retained legal counsel immediately after the event. The amount the
Plaintiff is seeking is not specified in the Complaint. There will be no cost
to the Company for this event. There is a zero deductible insurance program
through Fireman's Fund Insurance Company for the first 2 million and a $10,000
deductible for the next 50 million of insurance. This is presently being
monitored by the Fraud Unit at Fireman's Fund.
MILES RICCARDI VS. RED ROBIN, HARTZ, INC., DAYS HOTEL, AMERICAN GENERAL CORP,
ABC-XYZ CORPORATION & JOHN DOE-RICHARD ROE (A SERIES OF FICTITIOUS NAMES)
COURT: SUPERIOR COURT OF NEW JERSEY
LAW DIVISION: HUDSON COUNTY
DOCKET NUMBER : HUD-L-8048-97
Date of Service: 9/30/97
Date of Incident: 10/18/96
The Plaintiff alleges his slip and fall in the restaurant, Red Robin was a
result of not taking certain actions to alleviate the dangerous condition of the
property. The Date of Service was our first notice of this event. It is our
intention to seek a dismissal from this litigation since at the time of the
event Red Robin was operated as a separate business entity which assumed all
responsibility for occurrences within the restaurant area. The
<PAGE>
responsible parties for this law suit should be Magic Restaurant, Inc. and Red
Robin. The Plaintiff Attorney has been advised of such. The amount of damages
the Plaintiff is seeking is no specified in the Complaint. Until dismissed from
this matter Fireman's Fund insurance company will defend and indemnify American
General Hospitality Corporation with the limits noted above. We seek a Voluntary
Discontinuance.
VISTANA DEVELOPMENT, LTD, A FLORIDA LIMITED PARTNERSHIP VS. LAKE BUENA VISTA
PARTNERS, LTD., A FLORIDA LIMITED PARTNERSHIP
COURT: CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT IN AND FOR
ORANGE COUNTY, FL
CASE NO. = CI 97-7023
Date of Service: 8/20/97
Date of Incident: 8/20/97
Temporarily prohibited from evicting the Plaintiff from the leased premises. The
Plaintiff wants to remain at the information service desk or booth for the
purpose of providing guests of the Hotel with information on timeshare resort
sales and tours, and all related tourist information, etc. They will remain on
the premises until this matter is resolved. The Plaintiff continues to pay
rent. So, there is no fiscal loss to the Company.
February 3, 1998
Heather Bertini, ARM
Director, Risk and Insurance Services
972-550-6841
<PAGE>
SCHEDULE 4.17
Legal Requirements; Zoning; Utilities; Access
None
<PAGE>
SCHEDULE 4.18
<TABLE>
<CAPTION>
NAME OF PROPERTY NAME OF MORTGAGE HOLDER OUTSTANDING BALANCE
- ---------------- ----------------------- -------------------
<S> <C> <C>
Radisson-Arlington Heights Farmers Bank $ 8,218,755.05
Holiday Inn Select-DFW South Midland Loan Services $13,674,675.29
Courtyard by Marriott-Secaucus Fleet Bank $ 4,406,056.95
Doubletree-Atlanta First Union $ 9,346,513.06
Crowne Plaza-Portland Bank One Mortgage $ 5,296,995.61
Ramada Plaza-Shelton Bank One Mortgage $ 4,919,417.54
Holiday Inn-O'Hare International Travelers Insurance Co. $21,756,299.16
</TABLE>
<PAGE>
LIST OF FRANCHISORS
<TABLE>
<CAPTION>
NAME OF PROPERTY NAME OF FRANCHISOR TERM
<S> <C> <C>
Holiday Inn Park Center Plaza-San Jose, CA Holiday Inn 10 years
Holiday Inn Select Mission Valley-San Diego, CA Holiday Inn Select 10 years
Hampton Inn-Ocean City, MD Hampton Inn 12 years
Wyndham Hotel-San Jose, CA Wyndham Hotel 12 years
Courtyard by Marriott/Meadowlands Courtyard by Marriott 12 years
Wyndham Albuquerque Hotel-Albuquerque, NM Wyndham Hotel 12 years
Holiday Inn Select New Orleans Airport-Kenner, LA Holiday Inn Select 10 years
Hilton Hotel-Toledo, OH Hilton Hotel 10 years
Hotel Maison de Ville-New Orleans, LA Small Luxury Hotels 12 years
Crowne Plaza Hotel-Madison, WI Crowne Plaza 10 years
Holiday Inn DFW West-Bedford, TX Holiday Inn 10 years
Hampton Inn-Richmond Airport Hampton Inn 12 years
Wyndham Royal Safari LBV-Orlando, FL Wyndham Royal Safari 12 years
Doubletree Guest Suites-Atlanta, GA Doubletree Guest Suites 12 years
Hilton Hotel-Durham, NC Hilton Hotel 12 years
Holiday Inn Select DFW South Holiday Inn Select 10 years
Hilton Hotel-Grand Rapids, MI Hilton Hotel 12 years
Crowne Plaza-Phoenix, AZ Crowne Plaza 10 years
Holiday Inn Resort-Monterey, CA Holiday Inn Resort 10 years
Radisson Hotel-Arlington Heights, IL Radisson Hotel 12 years
Westin Resort-Key Largo, FL Westin Resort 12 years
Wyndham Garden Hotel-Marietta, GA Wyndham Garden Hotel 12 years
Holiday Inn Select-Bucks County, PA Holiday Inn Select 10 years
Radisson Twin Towers-Orlando, FL Radisson 12 years
Marriott West Loop-Houston, TX Marriott 20 years
Hilton Hotel-Cocoa Beach, FL Hilton 12 years
Courtyard by Marriott-Durham, NC Courtyard by Marriott 20 years
Holiday Inn Express-Hanover, MD Holiday Inn Express 10 years
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Ramada Old Town-Alexandria, VA Ramada Hotel Old Town 10 years
Holiday Inn-Alexandria, VA Holiday Inn 10 years
Holiday Inn-Annapolis, MD Holiday Inn 10 years
Holiday Inn-O'Hare International Holiday Inn 10 years
Doubletree Hotel-Tampa, Fl Doubletree 10 years
Holiday Inn-St. Louis, MO Holiday Inn 10 years
Radisson Hotel-Rochester, NY Radisson 10 years
Holiday Inn-Richmond, VA Holiday Inn 10 years
Ramada Inn-Clearwater Beach, FL Ramada Inn 15 years
Courtyard by Marriott-Marina del Rey, CA Courtyard by Marriott 20 years
Courtyard by Marriott-Century City, CA Courtyard by Marriott 20 years
Holiday Inn-Madeira Beach, FL Holiday Inn 10 years
Howard Johnson Resort-Key Largo, FL Howard Johnson 1 year
Holiday Inn-Ft. Lauderdale, FL Holiday Inn 10 years
Courtyard by Marriott-Lake Buena Vista, FL Courtyard by Marriott 20 years
Doubletree Resort-Clearwater Beach, FL Doubletree 10 years
</TABLE>
<PAGE>
Schedule 4.22
MANAGEMENT AGREEMENTS
1. Holiday Inn Park Center Plaza-San Jose, CA - Management Agreement between
AGH Leasing, L.P. ("Lessee") and American General Hospitality, Inc.
("Manager"), dated July 31, 1996.
2. Holiday Inn Select Mission Valley-San Diego, CA - Management Agreement
between Lessee and Manager, dated July 31, 1996.
3. Hampton Inn-Ocean City, MD - Management Agreement between Lessee and
Manager, dated July 31, 1996.
4. Wyndham Hotel-San Jose, CA - Management Agreement between Lessee and
Manager, dated July 31, 1996.
5. Courtyard by Marriott/Meadowlands-Secaucus, NJ - Management Agreement
between Lessee and Manager, dated July 31, 1996.
6. Wyndham Albuquerque Hotel-Albuquerque, NM - Management Agreement between
Lessee and Manager, dated July 31, 1996.
7. Holiday Inn Select New Orleans Airport-Kenner, LA - Management Agreement
between Lessee and Manager, dated July 31, 1996.
8. Hilton Hotel-Toledo, OH - Management Agreement between Lessee and Manager,
dated July 31, 1996
9. Hotel Maison de Ville-New Orleans, LA - Management Agreement between Lessee
and Manager, dated July 31, 1996.
10. Crowne Plaza Hotel-Madison, WI - Management Agreement between Lessee and
Manager, dated July 31, 1996.
11. Holiday Inn DFW West-Bedford, TX - Management Agreement between Lessee and
Manager, dated July 31, 1996.
12. Hampton Inn-Richmond Airport - Management Agreement between Lessee and
Manager, dated July 31, 1996.
13. Wyndham Royal Safari Lake Buena Vista, FL - Management Agreement between
Lessee and Manager, dated October 22, 1996.
14. Doubletree Guest Suites-Atlanta, GA - Management Agreement between Lessee
and Manager, dated March 17, 1997.
15. Hilton Hotel-Durham, NC - Management Agreement between Lessee and Manager,
dated January 8, 1997.
16. Holiday Inn Select DFW South - Management Agreement between Lessee and
Manager, dated July 31, 1996.
17. Grand Rapids Hilton Hotel - Management Agreement between Lessee and
Manager, dated April 18, 1997.
18. Crowne Plaza-Phoenix, AZ - Management Agreement between Lessee and
Manager, dated April 1, 1997.
19. Holiday Inn Resort-Monterey, CA - Management Agreement between Lessee and
Manager, dated November 20, 1996.
20. Radisson Hotel-Arlington Heights, IL - Management Agreement between Lessee
and Manager, dated February 28, 1997.
21. Westin Resort-Key Largo - Management Agreement between Lessee and Manager,
dated March 17, 1997.
22. Wyndham Garden Hotel-Marietta, GA - Management Agreement between Lessee
and Wyndham Management Corporation, dated March, 17, 1997.
<PAGE>
23. Holiday Inn Select-Bucks County, PA - Management Agreement between Lessee
and Manager, dated June 20, 197.
24. Marriott Hotel West Loop-Houston, TX - Management Agreement between Lessee
and Manager, dated June 25, 1997.
25. Radisson Twin Towers-Orlando, FL - Management Agreement between Lessee and
Manager, dated June 25, 1997.
26. Hilton Hotel-Cocoa Beach, FL - Management Agreement between Lessee and
Manager dated June 27, 1997.
27. Courtyard by Marriott-Durham, NC - Management Agreement between Lessee and
Manager dated November 26, 1997.
28. Holiday Inn Express-Hanover, MD - Management Agreement between Lessee and
Manager dated January 22, 1998.
29. Holiday Inn-Annapolis, MD - Management Agreement between Lessee and
Manager dated January 22, 1998.
30. Ramada Hotel Old Town-Alexandria, VA - Management Agreement between
Lessee and Manager dated January 22, 1998.
31. Holiday Inn Hotel & Suites-Alexandria, VA - Management Agreement between
Lessee and Manager dated January 22, 1998.
32. Holiday Inn-O'Hare International-Rosemont, IL - Management Agreement
between Lessee and Manager dated February 3, 1998.
33. Doubletree Resort-Clearwater Beach, FL - Management Agreement between
Lessee and Manager dated February 13, 1998.
34. Courtyard by Marriott-Lake Buena Vista, FL - Management Agreement between
Lessee and Manager dated February 13, 1998.
35. Doubletree Hotel-Tampa, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
36. Courtyard by Marriott-Marina del Rey, CA - Management Agreement between
Lessee and Manager dated February 13, 1998.
37. Holiday Inn-Ft. Lauderdale, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
38. Ramada Inn-Clearwater Beach, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
39. Courtyard by Marriott-Century City, CA - Management Agreement between
Lessee and Manager dated February 13, 1998.
40. Holiday Inn-Madeira Beach, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
41. Howard Johnson Lodge-Key Largo, FL - Management Agreement between Lessee
and Manager dated February 13, 1998.
42. Holiday Inn-Richmond, VA - Management Agreement between Lessee and Manager
dated February 13, 1998.
43. Holiday Inn-St. Louis, MO - Management Agreement between Lessee and
Manager dated February 13, 1998.
44. Radisson Hotel-Henrietta, NY - Management Agreement between Lessee and
Manager dated February 13, 1998.
45. Mystic Hotel-Mystic, CT - Management Agreement between Lessee and Manager
dated February 13, 1998.
46. Select Inn-Bloomington, MN - Management Agreement between Lessee and
Manager dated February 13, 1998.
<PAGE>
Section 5.05
ESA REQUIRED WORK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AMERICAN GENERAL HOSPITALITY TRUST
- ----------------------------------------------------------------------------------------------------
ENVIRONMENTAL SITE ASSESSMENT (ESA)
- ----------------------------------------------------------------------------------------------------
REQUIRED ITEMS
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FIRM REPORT DATE
- ----------------------------------------------------------------------------------------------------
PROPERTY NAME LOCATION NAME DATE DESCRIPTION REQ'D
- ------------- -------- ---- ---- ----------- -----
<S> <C> <C> <C> <C> <C>
Wyndham Lake Orlando, FL ATEC 10/21/96 Annual testing and quarterly 5/14/98
- ----------------------------------------------------------------------------------------------------
Buena Vista reporting on the status of the
- ----------------------------------------------------------------------------------------------------
nearby Texaco an 7-11 RAP.
Sheraton Crossroads Mahwah, NJ ENSR 1/6/98 Semi-annual reporting on 8/13/98
- ----------------------------------------------------------------------------------------------------
status of ongoing
- ----------------------------------------------------------------------------------------------------
remediation efforts/site
- ----------------------------------------------------------------------------------------------------
closure by Ford.
Ramada Inn Clearwater Dames 12/8/97 Provide documentation on 5/14/98
- ----------------------------------------------------------------------------------------------------
Gulfview Beach, FL & the former on-site UST's
- ----------------------------------------------------------------------------------------------------
Moore removal in November of
- ----------------------------------------------------------------------------------------------------
1997.
Holiday Inn Madeira Dames 12/15/97 Obtain NFA status for the 5/14/98
- ----------------------------------------------------------------------------------------------------
Beach, FL & site from the Pinellas
- ----------------------------------------------------------------------------------------------------
Moore County Health
- ----------------------------------------------------------------------------------------------------
Department.
Lodge at the Mystic, CT Dames 12/5/97 Confirm and provide 5/14/98
- ----------------------------------------------------------------------------------------------------
Seaport & documentation on the
- ----------------------------------------------------------------------------------------------------
Moore integrity of the two on-site
- ----------------------------------------------------------------------------------------------------
UST's.
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Section 5.06
PCR REQUIRED WORK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AMERICAN GENERAL HOSPITALITY TRUST
- ----------------------------------------------------------------------------------------------------
PROPERTY CONDITION REVIEW (PCR)
- ----------------------------------------------------------------------------------------------------
REQUIRED REPAIRS
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FIRM REPORT DATE
- ----------------------------------------------------------------------------------------------------
PROPERTY NAME LOCATION NAME DATE DESCRIPTION REQ'D
- ------------- -------- ---- ---- ----------- -----
<S> <C> <C> <C> <C> <C>
None required
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 5.07
INSURANCE
(a) INSURANCE POLICIES REQUIRED. While any obligation of the Borrower or
---------------------------
any Guarantor under any Credit Document remains outstanding, the Borrower shall
procure and maintain or shall cause to be procured and maintained continuously
in effect policies of insurance in form and amounts and issued by companies,
associations or organizations licensed to do business in the states the Hotel
Properties are located, with a Best's Rating of no less than A, XI and otherwise
satisfactory to the Agents covering such casualties, risks, perils, liabilities
and other hazards required by Agents. All original policies, or certificates
thereof, and endorsements and renewals thereof shall be delivered to and
retained by the Administrative Agent unless the Administrative Agent waives this
requirement in writing. Without limiting the generality of the foregoing, the
Borrower shall provide or cause to be provided the following types of insurance
coverage:
i. until repayment of the Notes and satisfaction of all obligations
under the Credit Documents: (i) property insurance on an "all risks" full
replacement cost basis without deduction for depreciation (or fire,
extended coverage and difference in conditions basis), including flood,
earthquake (for any Hotel Property located in the State of California, or
in any other location that, according to determination by the appropriate
agency of the United States Government, has an above average risk of
seismic activity) and sinkhole coverages in an amount equal to the
replacement cost of the Improvements (except for earthquake insurance which
for each required Hotel Property shall be in an amount which is equal to or
greater than the maximum probable loss determined pursuant to a written
report by a seismic engineer, which report and engineer are acceptable to
the Agents, provided, however, that the aggregate amount of such earthquake
-------- -------
insurance coverage and the deductibles thereunder may be modified at the
request of the Borrower based upon industry standards, subject to approval
of the Agents); (ii) Comprehensive General Liability Insurance (including
contractual liability, owners and contractors protective coverages,
products & completed operations, personal & advertising injury liability,
fire damage legal liability and alienated premises coverage) and
Comprehensive Auto Liability Insurance in a minimum amount of $50,000,000
each occurrence; (iii) Statutory Workers' Compensation and Employer's
Liability Insurance in the minimum amounts of $1,000,000 each accident,
$1,000,000 each employee - disease, $1,000,000 policy limit - disease; and
(iv) Rent loss insurance against loss of income by reason of any hazard
covered under the insurance required under this subparagraph (a) in an
amount sufficient to avoid any co-insurance penalty, but in any event for
not less than two (2) years gross receipts from all sources of income from
the Hotel Property. Each such policy of property insurance shall contain a
replacement cost
<PAGE>
endorsement and such other endorsements as are sufficient to prevent the
Borrower, the Agents and/or the Borrower's Subsidiaries from becoming a co-
insurer with respect to such buildings and improvements.
ii. During the renovation or expansion of any Hotel Property the
Borrower will additionally provide: (i) Builder's Risk Insurance on an "all
risks" basis including flood, earthquake (if required pursuant to the
provisions of and in the amount stated in clause (a)) and sinkhole
coverages, and also including Stored Materials and materials while in
transit, and (ii) Statutory Workers' Compensation and Employer's Liability
Insurance in the minimum amounts of $1,000,000 each accident, $1,000,000
each employee - disease, $1,000,000 policy limit - disease, covering each
contractor and all other contractors or subcontractors who may have
occasion to be at the job site.
iii Such additional insurance as may be reasonably required by the
Administrative Agent from time to time in the event that any Hotel Property
is exposed to hazards and risks with respect to which the Administrative
Agent deems the existing insurance inadequate to properly protect its
interests.
All policies of liability insurance shall name the Agents, the Banks and
their respective directors, officers, representatives, agents and employees (the
"Banks' Parties") as additional insureds. The Borrower shall furnish the
Administrative Agent with a certified copy of an original or a certificate of
insurance of all policies of insurance required. All policies or certificates,
as the case may be, of insurance shall set forth the coverage, the limits of
liability, the name of the carrier, the policy number, the Best's Rating of the
carrier and the period of coverage. In addition, all policies of insurance
required under the terms hereof shall contain an endorsement or agreement by the
insurer that any loss shall be payable in accordance with the terms of such
policy notwithstanding any act or negligence of the Borrower, the Participating
Lessee, the Manager or any party holding under any such Person which might
otherwise result in a forfeiture of said insurance and the further agreement of
the insurer waiving all rights of setoff, counterclaim or deductions against the
Borrower. At least 15 days prior to the expiration of each required policy, the
Borrower shall deliver to the Administrative Agent evidence of the renewal or
replacement of such policy, continuing such insurance in the form as required by
this Agreement. All such policies shall contain a provision that notwithstanding
any contrary agreement between the Borrower and the applicable insurance
company, such policies will not be canceled, allowed to lapse without renewal,
surrendered or amended (which provision shall include any reduction in the scope
or limits of coverage) without at least 15 days' prior written notice to the
Administrative Agent.
-2-
<PAGE>
SENIOR UNSECURED CREDIT AGREEMENT
SCHEDULE 10.02
Notices
-------
DOMESTIC LENDING OFFICE LIBOR LENDING OFFICE
- ----------------------- --------------------
SOCIETE GENERALE, SOUTHWEST AGENCY SOCIETE GENERALE, SOUTHWEST
AGENCY
4900 Trammell Crow Center 4900 Trammell Crow Center
2001 Ross Avenue 2001 Ross Avenue
Dallas, Texas 75201 Dallas, Texas 75201
Attn: Mr. Thomas K. Day Attn: Mr. Thomas K. Day
Vice President Vice President
Telephone: (214) 979-2774 Telephone: (214) 979-2774
Telecopy: (214) 979-2727 Telecopy: (214) 979-2727
BANK ONE, TEXAS, N.A. BANK ONE, TEXAS, N.A.
1717 Main Street, 4th Floor 1717 Main Street, 4th Floor
Dallas, Texas 75201 Dallas, Texas 75201
Attn: Commercial Real Estate Attn: Commercial Real Estate
Department Department
Mr. Jeff Etter Mr. Jeff Etter
Vice President Vice President
Telephone: (214) 290-2385 Telephone: (214) 290-2385
Telecopy: (214) 290-7205 Telecopy: (214) 290-7205
FIRST NATIONAL BANK OF COMMERCE FIRST NATIONAL BANK OF COMMERCE
201 St. Charles Avenue, 28th Floor 201 St. Charles Avenue, 28th
Floor
New Orleans, Louisiana 70170 New Orleans, Louisiana 70170
Attn: Mr. Jason Broussard Attn: Mr. Jason Broussard
Relationship Manager Relationship Manager
Telephone: (504) 623-1922 Telephone: (504) 623-1922
Telecopy: (504) 623-1738 Telecopy: (504) 623-1738
<PAGE>
THE BANK OF NOVA SCOTIA THE BANK OF NOVA SCOTIA
580 California Street 580 California Street
Suite 2100 Suite 2100
San Francisco, California 94119 San Francisco, California 94119
Attn: Mr. Paul Stiplosek Attn: Mr. Paul Stiplosek
Telephone: (415) 986-1100 Telephone: (415) 986-1100
Telecopy: (415) 397-0791 Telecopy: (415) 397-0791
WELLS FARGO BANK, NATIONAL WELLS FARGO BANK, NATIONAL
ASSOCIATION ASSOCIATION
12377 Merrit Drive 4120 E. Park Place
Suite 300 Suite 100
Dallas, Texas 75251 El Segundo, California 90245
Attn: Ms. Coleene Cox Attn: Anne Colvin/Nancy
Tam-Izumi
Telephone: (972) 661-8980 Telephone: Ann Colvin: (310)
335-9472
Telecopy: (972) 386-4723 Nancy Tam-Izumi:
(310)335-9492
Telecopy: (310) 615-1014
BANKERS TRUST COMPANY BANKERS TRUST COMPANY
130 Liberty Street 130 Liberty Street
25th Floor 25th Floor
New York, New York 10006 New York, New York 10006
Attn: Mr. Garrett Thelander Attn: Mr. Garrett Thelander
Telephone: (212) 250-2550 Telephone: (212) 250-2550
Telecopy: (212) 669-0743 Telecopy: (212) 669-0743
FIRST AMERICAN BANK, S.S.B. FIRST AMERICAN BANK TEXAS, S.S.B.
14651 Dallas Parkway 14651 Dallas Parkway
Suite 400 Suite 400
Dallas, Texas 75240 Dallas, Texas 75240
Attn: David Barr Attn: David Barr
Telephone: (972) 419-3307 Telephone: (972) 419-3307
Telecopy: (972) 419-3308 Telecopy: (972) 419-3308
-2-
<PAGE>
AMSOUTH BANK AMSOUTH BANK
1900 Fifth Avenue North 1900 Fifth Avenue North
AmSouth Sonat Tower AmSouth Sonat Tower
9th Floor 9th Floor
Birmingham, Alabama 35203 Birmingham, Alabama 35203
Attn: Mr. Arthur J. Sharbel, III Attn: Mr. Arthur J. Sharbel, III
Telephone: (205) 581-7647 Telephone: (205) 581-7647
Telecopy: (205) 326-4075 Telecopy: (205) 326-4075
BANKBOSTON, N.A. BANKBOSTON, N.A.
115 Perimeter Center Northeast, 115 Perimeter Center Northeast,
Suite 500 Suite 500
Atlanta, Georgia 30346 Atlanta, Georgia 30346
Attn: Mr. Steven Selbo Attn: Mr. Steven Selbo
Telephone: (770) 390-6500 Telephone: (770) 390-6500
Telecopy: (770) 390-8434 Telecopy: (770) 390-8434
NATIONSBANK OF TEXAS, N.A. NATIONSBANK OF TEXAS, N.A.
901 Main Street, 51st Floor 901 Main Street, 51st Floor
Dallas, Texas 75202 Dallas, Texas 75202
Attn: Mr. David Howard & John Attn: Mr. David Howard & John
E. Hall, III E. Hall, III
Real Estate Administration Officer Real Estate Administration
Officer
Telephone: (214) 508-2089 Telephone: (214) 508-2089
Telecopy: (214) 508-0085 Telecopy: (214) 508-0085
DRESDNER BANK, AG, NEW YORK DRESDNER BANK, AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH AND GRAND CAYMAN
BRANCH BRANCH
75 Wall Street, 25th Floor 75 Wall Street, 25th Floor
New York, NY 10005 New York, NY 10005
Attn: Mr. Michael Seton Attn: Mr. Michael Seton
Telephone: (212) 429-3277 Telephone: (212) 429-3277
Telecopy: (212) 429-2479 Telecopy: (212) 429-2479
-3-
<PAGE>
EXHIBIT 10.2
U.S. $100,000,000
SUBORDINATE UNSECURED CREDIT AGREEMENT
Dated as of February 13, 1998
Among
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.
as the Borrower,
---------------
SOCIETE GENERALE, SOUTHWEST AGENCY
as Arranger, Syndication Agent, and Documentation Agent,
-------------------------------------------------------
BANK ONE, TEXAS, N.A.
as Administrative Agent,
-----------------------
and
THE BANK OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL ASSOCIATION
as Managing-Agents
------------------
and
THE BANKS NAMED HEREIN
as the Banks
------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C>
Section 1.01 Certain Defined Terms.................................... 1
---------------------
Section 1.02 Computation of Time Periods.............................. 32
---------------------------
Section 1.03 Accounting Terms; Changes in GAAP........................ 32
---------------------------------
Section 1.04 Types of Advances........................................ 33
-----------------
Section 1.05 Miscellaneous............................................ 33
-------------
ARTICLE II
THE ADVANCES
Section 2.01 The Advances............................................. 33
------------
Section 2.02 Method of Borrowing...................................... 33
-------------------
Section 2.03 Fees..................................................... 37
----
Section 2.04 Reduction of the Commitments............................. 38
----------------------------
Section 2.05 Repayment of Advances.................................... 39
---------------------
Section 2.06 Interest, Late Payment Fee............................... 39
--------------------------
Section 2.07 Prepayments.............................................. 40
-----------
Section 2.08 Breakage Costs........................................... 42
--------------
Section 2.09 Increased Costs.......................................... 43
---------------
Section 2.10 Payments and Computations................................ 44
-------------------------
Section 2.11 Taxes.................................................... 46
-----
Section 2.12 Illegality............................................... 48
----------
Section 2.13 [Intentionally Left Blank]............................... 48
--------------------------
Section 2.14 Determination of Total Availability...................... 48
-----------------------------------
Section 2.15 Bank Replacement......................................... 49
----------------
Section 2.16 Sharing of Payments, Etc................................. 50
------------------------
</TABLE>
<PAGE>
<TABLE>
ARTICLE III
CONDITIONS OF LENDING
<S> <C>
Section 3.01 Conditions Precedent to initial Advance......................51
---------------------------------------
Section 3.02 Conditions Precedent for each Borrowing......................53
---------------------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Existence; Qualification; Partners; Subsidiaries.............54
------------------------------------------------
Section 4.02 Partnership and Corporate Power..............................56
-------------------------------
Section 4.03 Authorization and Approvals..................................56
---------------------------
Section 4.04 Enforceable Obligations......................................57
-----------------------
Section 4.05 Parent Common Stock..........................................57
-------------------
Section 4.06 Financial Statements.........................................57
--------------------
Section 4.07 True and Complete Disclosure.................................58
----------------------------
Section 4.08 Litigation...................................................58
----------
Section 4.09 Use of Proceeds..............................................58
---------------
Section 4.10 Investment Company Act.......................................59
----------------------
Section 4.11 Taxes........................................................59
-----
Section 4.12 Pension Plans................................................60
-------------
Section 4.13 Condition of Hotel Property; Casualties; Condemnation........60
-----------------------------------------------------
Section 4.14 Insurance....................................................60
---------
Section 4.15 No Burdensome Restrictions; No Defaults......................60
---------------------------------------
Section 4.16 Environmental Condition......................................61
-----------------------
Section 4.17 Legal Requirements, Zoning, Utilities, Access................62
---------------------------------------------
Section 4.18 Existing Indebtedness........................................62
---------------------
Section 4.19 Title; Encumbrances..........................................63
-------------------
Section 4.20 Leasing Arrangements.........................................63
--------------------
Section 4.21 Franchise Agreements.........................................63
--------------------
</TABLE>
-iii-
<PAGE>
<TABLE>
ARTICLE V
AFFIRMATIVE COVENANTS
<S> <C>
Section 5.01 Compliance with Laws, Etc.............................................. 64
-------------------------
Section 5.02 Preservation of Corporate Existence; Corporate Separateness, Etc....... 64
----------------------------------------------------------------
Section 5.03 Payment of Taxes, Etc.................................................. 66
----------------------
Section 5.04 Visitation Rights; Bank Meeting........................................ 67
-------------------------------
Section 5.05 Reporting Requirements................................................. 67
----------------------
Section 5.06 Maintenance of Property and Required Work.............................. 71
-----------------------------------------
Section 5.07 Insurance.............................................................. 72
---------
Section 5.08 Casualty; Condemnation................................................. 72
----------------------
Section 5.09 Supplemental Guaranties................................................ 73
-----------------------
Section 5.10 Participating Leases................................................... 73
--------------------
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01 Liens, Etc............................................................. 73
----------
Section 6.02 Indebtedness........................................................... 74
------------
Section 6.03 Agreements Restricting Distributions From Subsidiaries................. 76
------------------------------------------------------
Section 6.04 Restricted Payments.................................................... 76
-------------------
Section 6.05 Fundamental Changes; Asset Dispositions................................ 76
---------------------------------------
Section 6.06 Personal Property Leases............................................... 77
------------------------
Section 6.07 Investments, Loans, Future Properties.................................. 77
-------------------------------------
Section 6.08 Affiliate Transactions................................................. 79
----------------------
Section 6.09 Sale and Leaseback..................................................... 80
------------------
Section 6.10 Sale or Discount of Receivables........................................ 80
-------------------------------
Section 6.11 No Further Negative Pledges............................................ 80
---------------------------
Section 6.12 Franchise Agreements................................................... 80
--------------------
Section 6.13 Material Documents..................................................... 80
------------------
Section 6.14 Limitations on Development, Construction, Renovation and Purchase
-----------------------------------------------------------------
of Hotel Properties.................................................... 81
-------------------
</TABLE>
-iv-
<PAGE>
<TABLE>
ARTICLE VII
FINANCIAL COVENANTS
<S> <C>
7.01 Interest Coverage Ratio............................................. 82
-----------------------
7.02 Debt Service Coverage Ratio......................................... 82
---------------------------
7.03 Maintenance of Net Worth............................................ 82
------------------------
7.04 Limitations on Total Indebtedness................................... 82
---------------------------------
7.05 Limitations on Secured Recourse Indebtedness........................ 82
--------------------------------------------
7.06 Limitations on Secured Non-Recourse Indebtedness.................... 83
------------------------------------------------
7.07 Limitations on Secured Indebtedness................................. 83
-----------------------------------
7.08 Permitted Non-Voting Stock Company Adjustment....................... 83
---------------------------------------------
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default......................................... 84
-----------------
Section 8.02 Optional Acceleration of Maturity......................... 90
---------------------------------
Section 8.03 Automatic Acceleration of Maturity........................ 90
----------------------------------
Section 8.04 Cash Collateral Account................................... 90
-----------------------
Section 8.05 Non-exclusivity of Remedies............................... 91
---------------------------
Section 8.06 Right of Set-off.......................................... 91
----------------
ARTICLE IX
AGENCY PROVISIONS
Section 9.01 Authorization and Action................................. 92
------------------------
Section 9.02 Agents' Reliance, Etc.................................... 92
---------------------
Section 9.03 Each Agent and Its Affiliates............................ 93
-----------------------------
Section 9.04 Bank Credit Decision..................................... 93
--------------------
Section 9.05 Indemnification.......................................... 93
---------------
Section 9.06 Successor Agent.......................................... 94
---------------
Section 9.07 Arranger, Syndication Agent and Managing Agents.......... 94
-----------------------------------------------
</TABLE>
-v-
<PAGE>
<TABLE>
ARTICLE X
SUBORDINATION
<S> <C>
Section 10.01 Subordination........................................... 95
-------------
Section 10.02 Payment Blockage........................................ 95
----------------
Section 10.03 Remedy Blockage......................................... 96
---------------
Section 10.04 Certain Distributions................................... 96
---------------------
Section 10.05 Payment in Trust........................................ 97
----------------
Section 10.06 Liens................................................... 97
-----
Section 10.07 Miscellaneous........................................... 97
-------------
ARTICLE XI
MISCELLANEOUS
Section 11.01 Amendments, Etc........................................ 98
---------------
Section 11.02 Notices, Etc........................................... 101
------------
Section 11.03 No Waiver; Remedies.................................... 101
-------------------
Section 11.04 Costs and Expenses..................................... 101
------------------
Section 11.05 Binding Effect......................................... 102
--------------
Section 11.06 Bank Assignments and Participations.................... 102
-----------------------------------
Section 11.07 Indemnification........................................ 105
---------------
Section 11.08 Execution in Counterparts.............................. 106
-------------------------
Section 11.09 Survival of Representations, Indemnifications, etc..... 106
--------------------------------------------------
Section 11.10 Severability........................................... 106
------------
Section 11.11 Business Loans......................................... 106
--------------
Section 11.12 Usury Not Intended..................................... 107
------------------
Section 11.13 Certain Office and Retail Space........................ 107
-------------------------------
Section 11.14 Governing Law.......................................... 108
-------------
Section 11.15 Consent to Jurisdiction................................ 108
-----------------------
Section 11.16 Knowledge of Borrower.................................. 108
---------------------
Section 11.17 Banks Not in Control................................... 108
--------------------
Section 11.18 Headings Descriptive................................... 109
--------------------
Section 11.19 Time is of the Essence................................. 109
----------------------
</TABLE>
-vi-
<PAGE>
<TABLE>
<S> <C>
Section 11.20 WAIVERS OF JURY TRIAL............................. 109
---------------------
Section 11.21 ENTIRE AGREEMENT.................................. 109
----------------
</TABLE>
-vii-
<PAGE>
EXHIBITS:
Exhibit A - Form of Note
Exhibit B - Form of Assignment and Acceptance
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Environmental Indemnity
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Conversion or Continuation
Exhibit G - Form of Property Adjustment Report
Exhibit H - Form of Subordinate Guaranty
Exhibit I - Form of Battle Fowler L.L.P. Opinion
-viii-
<PAGE>
SCHEDULES:
Schedule 1.01(a) - Commitments
Schedule 1.01(b) - Initial Properties, Cost Basis and Hotel Value
Schedule 1.01(c) - Engineer Report Scope of Services
Schedule 1.01(d) - Approved Engineers
Schedule 1.01(e) - Environmental Report Scope of Services
Schedule 1.01(f) - Approved Environmental Consultants
Schedule 1.01(g) - Franchisors
Schedule 1.01(h) - Ground Leases
Schedule 1.01(i) - Guarantors
Schedule 1.01(j) - Participating Leases
Schedule 4.01 - Subsidiaries
Schedule 4.08 - Litigation
Schedule 4.17 - Legal Requirements; Zoning; Utilities; Access
Schedule 4.18 - Existing Indebtedness
Schedule 4.21 - Franchise Agreements
Schedule 4.22 - Management Agreements
Schedule 5.06 - Required Work
Schedule 5.07 - Insurance
Schedule 11.02 - Notice Information
-ix-
<PAGE>
SUBORDINATE UNSECURED CREDIT AGREEMENT
SUBORDINATE UNSECURED CREDIT AGREEMENT, dated as of February 13, 1998, is
among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership, as the Borrower, SOCIETE GENERALE, SOUTHWEST AGENCY, as
Arranger, Syndication Agent, and Documentation Agent, BANK ONE, TEXAS, N.A., as
Administrative Agent, THE BANK OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Managing Agents and the Banks.
In consideration of the provisions contained in this Agreement, the parties
hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Accession Agreement" means an Accession Agreement in the form attached
-------------------
respectively to the Subordinate Guaranty and Environmental Indemnity as Annex 1
thereto, which agreement causes the Person executing and delivering the same to
the Administrative Agent to become a party to the Subordinate Guaranty and
Environmental Indemnity.
"Acquisition Agreements" means for any Hotel Property the agreements
----------------------
entered into in connection with the acquisition of such Hotel Property.
"Adjusted EBITDA" means, for any Person or Hotel Property, as applicable,
---------------
for any period, the EBITDA of such Person or Hotel Property, as applicable, for
such period less the aggregate FF&E Reserves for such period in respect of, as
------
applicable, each Hotel Property owned by such Person or its Subsidiaries
(whether located on land owned by or land leased to such owner of the Hotel
Property) or such Hotel Property. For any New Property or any Person who owns or
leases a New Property, Adjusted EBITDA shall include the Adjusted EBITDA for
such New Property incurred before the date of acquisition of such New Property
adjusted upward or downward to provide for a deemed management equal to a three
percent (3%) of gross revenues from such New Property incurred before the date
of acquisition of such New Property regardless of the actual management
<PAGE>
fees paid in connection with such New Property incurred before the date of
acquisition of such New Property.
"Adjusted Net Worth" means, for the Parent as of any date, the sum of (a)
------------------
the Parent's Net Worth on such date plus (b) the minority interest of the Parent
----
on such date determined in accordance with GAAP.
"Adjusted Prime Rate" means, for any day, the fluctuating rate per annum of
-------------------
interest equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus 1/2%.
"Adjustment Event" has the meaning set forth in Section 2.14(b).
----------------
"Administrative Agent" means Bank One, Texas, N.A. in its capacity as
--------------------
Administrative Agent for the Banks pursuant to Article IX and any successor
Administrative Agent appointed pursuant to Section 9.06.
"Advance" means an Advance by a Bank to the Borrower, any such Advance
-------
being either a Prime Rate Advance or a LIBOR Rate Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of a Control Percentage, by contract or otherwise.
"Agents" means the Administrative Agent and the Documentation Agent, and
------
"Agent" means either such agent.
-----
"AGHI" means American General Hospitality, Inc., a Texas corporation.
----
"AGH Leasing" means AGH Leasing, L.P., a Delaware limited partnership.
-----------
"AGH LP" means AGH LP, Inc., a Nevada corporation.
------
-2-
<PAGE>
"Agreement" has the meaning given such term in the initial paragraph of
---------
this agreement.
"Allocation Percentage" means, for any Person, with respect to a Person's
---------------------
Non Wholly-Owned Subsidiary, the percentage ownership interest of such Person in
such Non Wholly-Owned Subsidiary.
"Applicable Lending Office" means, with respect to each Bank, such Bank's
-------------------------
Domestic Lending Office in the case of a Prime Rate Advance and such Bank's
LIBOR Lending Office in the case of a LIBOR Rate Advance.
"Applicable Margin" means, with respect to each Type of Advance at any
-----------------
date, the applicable percentage per annum set forth below based upon the Status
then in effect under the column for such Type of Advance.
<TABLE>
<CAPTION>
Prime Rate LIBOR
Advances Rate Advances
-------- -------------
<S> <C> <C>
Level I .375% 1.875%
Status
Level II .50% 2.00%
Status
</TABLE>
"Asset Disposition" means (a) any sale, lease of substantially all of a
-----------------
Hotel Property (in which the Borrower or a Guarantor is lessor but exclusive of
the Participating Leases), conveyance, exchange, transfer, or assignment of any
Property by the Borrower or a Guarantor to a Person other than the Borrower or a
Guarantor; and (b) any insured loss or casualty of Hotel Property owned by the
Borrower or any Guarantor if the insurance proceeds in connection therewith are
required by the provisions of this Agreement to be used to repay Obligations.
"Assignment and Acceptance" means an assignment and acceptance entered into
-------------------------
by a Bank and an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of the attached Exhibit B.
"Associates" means, for any individual, the Associates (as such term is
----------
defined in Rule 12b-2 promulgated under the Exchange Act) of such individual.
-3-
<PAGE>
"Banks" means the lenders listed on the signature pages of this Agreement
-----
and each Eligible Assignee that shall become a party to this Agreement pursuant
to Section 11.06.
"Blockage Period" has the meaning set forth in Section 10.02.
---------------
"Borrower" means American General Hospitality Operating Partnership, L.P.,
--------
a Delaware limited partnership.
"Borrower Controlled Group" means all members of a controlled group of
-------------------------
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Borrowing" means a borrowing consisting of simultaneous Advances of the
---------
same Type made by each Bank pursuant to Section 2.01 or Converted by each Bank
to Advances of a different Type pursuant to Section 2.02(b).
"Business Day" means a day of the year on which banks are not required or
------------
authorized to close in New York City or Dallas, Texas and, if the applicable
Business Day relates to any LIBOR Rate Advances, any day other than a Saturday
or Sunday or a day on which banking institutions are generally authorized or
obligated by law or executive order to close in the City of London, England
"Capital Expenditure" means any payment made directly or indirectly for the
-------------------
purpose of acquiring or constructing fixed assets, Real Property or equipment
which in accordance with GAAP would be capitalized in the fixed asset accounts
of such Person making such expenditure, including, without limitation, amounts
paid or payable for such purpose under any conditional sale or other title
retention agreement or under any Capital Lease, but excluding repairs of
Property in the normal and ordinary course of business in keeping with the past
practices of the Borrower.
"Capitalization Event" means either (a) any sale or issuance by the Parent
--------------------
or any of its Subsidiaries of equity securities except for the issuance of the
Borrower's operating partnership units in exchange for a direct or indirect
ownership interest in a Person that owns a Hotel Property, or (b) any issuance
or incurrence by the Parent or any of its Subsidiaries of any Indebtedness
except for Indebtedness permitted pursuant to the provisions of Section 6.02.
-4-
<PAGE>
"Capital Lease" means, for any Person, any lease of any Property (whether
-------------
real, personal or mixed) by that Person as lessee which, in accordance with
GAAP, is or should be accounted for as a capital lease on the balance sheet of
that Person.
"Capitalized Lease Obligations" means, as to any Person, the capitalized
-----------------------------
amount of all obligations of such Person or any of its Subsidiaries under
Capitalized Leases, as determined on a consolidated basis in conformity with
GAAP.
"Cash Collateral Account" means a special cash collateral account
-----------------------
containing cash deposited pursuant to the terms of this Agreement to be
maintained at the Administrative Agent's office in accordance with Section 8.04.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
------
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.
"Closing Date" means February 13, 1998.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
successor statute.
"Commitment" means, with respect to any Bank, the amount set opposite such
----------
Bank's name on Schedule 1.01(a) as its Commitment, or if such Bank has entered
into any Assignment and Acceptance, the amount set forth for such Bank as its
Commitment in the Register maintained by the Administrative Agent pursuant to
Section 11.06(c), as such amount may be reduced pursuant to Section 2.04.
"Compliance Certificate" means a certificate of the Borrower in
----------------------
substantially the form of the attached Exhibit D.
"Conditions to Asset Disposition" shall for any Asset Disposition include
-------------------------------
all of the following requirements: (a) no Default has occurred and is continuing
or would occur upon the consummation of such Asset Disposition, as certified by
the Borrower; (b) the Borrower shall have delivered to the Administrative Agent
a Property Adjustment Report in connection with such Asset Disposition; and (c)
if required pursuant to the provisions of Section 2.07(c)(ii), the Borrower
makes a prepayment
-5-
<PAGE>
of the Advances in an amount of not less than the amount of Advances that would
need to be repaid, if any, to cure a Total Availability deficiency under Section
2.07(c)(ii).
"Consolidated" refers to the consolidation of the accounts of the Borrower
------------
with the Borrower's Subsidiaries and the Parent with the Parent's Subsidiaries,
as applicable, in accordance with GAAP, including, when used in reference to the
Borrower, principles of consolidation consistent with those applied in the
preparation of the Financial Statements.
"Control Percentage" means, with respect to any Person, the percentage of
------------------
the outstanding capital stock of such Person having ordinary voting power which
gives the direct or indirect holder of such stock the power to elect a majority
of the Board of Directors of such Person.
"Controlled Group" means each of the Borrower Controlled Group, the
----------------
Participating Lessee Controlled Group and the Manager Controlled Group, and
"Controlled Groups" means, collectively, all of such groups.
-----------------
"Convert", "Conversion", and "Converted" each refers to a conversion of
------- ---------- ---------
Advances of one Type into Advances of another Type pursuant to Section 2.02(b).
"Cost Basis" means for any Hotel Property the sum of (a) for any Initial
----------
Property, the amount set forth for such Initial Property on Schedule 1.01(b)
attached hereto, and for any other Hotel Property, the aggregate purchase price
paid by the Borrower or its Subsidiary for such other Hotel Property (giving
effect to any securities used to purchase a Hotel Property at the fair market
value of the securities at the time of purchase based upon the price at which
such securities could be exchanged into the Parent's common stock assuming such
exchange occurred on the date of acquiring the Hotel Property), and (b) the
actual cost of any Capital Expenditures or expenditures for FF&E for such Hotel
Property made by the Borrower or its Subsidiaries pursuant to a Preliminary
Property Plan; provided that with respect to the Cost Basis for a Hotel Property
--------
owned or leased by a Non Wholly-Owned Subsidiary, the Cost Basis for such Hotel
Property shall be deemed to be the Allocation Percentage of the Cost Basis for
such Hotel.
"Credit Documents" means this Agreement, the Notes, the Subordinate
----------------
Guaranties, the Environmental Indemnities, the Fee Letter, and each other
agreement, instrument or document executed by the Borrower or any of its
Subsidiaries at any time in connection with this Agreement.
-6-
<PAGE>
"Debt Service" means, for any Person for the period for which such amount
------------
is being determined, the amount (without duplication) of all mandatory principal
payments scheduled to be made (excluding optional prepayments and scheduled
principal payments in respect of any such Indebtedness which is payable in a
single installment at final maturity), Interest Expense and all payments
scheduled to be made in respect of Capital Leases of such Person.
"Debt Service Coverage Ratio" means, as of the end of any Rolling Period, a
---------------------------
ratio of (a) Adjusted EBITDA to (b) Debt Service, for such Rolling Period.
"Default" means (a) an Event of Default or (b) any event or condition which
-------
with notice or lapse of time or both would, unless cured or waived, become an
Event of Default.
"Documentation Agent" means Societe Generale, Southwest Agency in its
-------------------
capacity as Documentation Agent for the Banks pursuant to Article IX and any
successor Documentation Agent pursuant to Section 9.06.
"Dollar Equivalent" means the equivalent in another currency of an amount
-----------------
in U.S. Dollars to be determined by reference to the rate of exchange quoted by
the Administrative Agent, at 11:00 a.m. (Dallas, Texas time) on the date of
determination, for the spot purchase in the foreign exchange market of such
amount of Dollars with such other currency.
"Dollars" and "$" means lawful money of the United States of America.
------- -
"Domestic Lending Office" means, with respect to any Bank, the office of
-----------------------
such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule 11.02 or such other office of such Bank as such Bank may from time to
time specify to the Borrower and the Administrative Agent.
"EBITDA" means for any Person or Hotel Property, as applicable, for any
------
period for which such amount is being determined, an amount equal to (a) the Net
Income for such Person or Hotel Property, as applicable, for such period plus
----
(b) to the extent deducted in determining Net Income, Interest Expense, income
taxes, depreciation, amortization, and other non-cash items for such period, as
determined in accordance with GAAP; provided that if any Property of a Person
--------
has been sold or conveyed by such Person in such period, the amounts referred to
in clauses (a)-(b) above arising from such Property shall be excluded from the
calculation of EBITDA for such Person for such
-7-
<PAGE>
period; and provided further that if such Person has acquired any Property in
----------------
such period, the amounts referred to in clauses (a)-(b) above arising from such
Property during such entire period shall be included in the calculation of
EBITDA for such Person for such period.
"Effective Date" means the date all of the conditions precedent set forth
--------------
in Section 3.01 have been satisfied.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
-----------------
the United States, or any State thereof, and having primary capital of not less
than $250,000,000 and approved by the Agents, which approvals will not be
unreasonably withheld, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development and having primary capital (or its equivalent) of not less than
$250,000,000 (or its Dollar Equivalent) and approved by the Agents, which
approvals will not be unreasonably withheld, (c) a Bank, and (d) an Affiliate of
the respective assigning Bank, without approval of any Person but otherwise
meeting the eligibility requirements of (a) or (b) above.
"Eligible Property" means a Hotel Property deemed an "Eligible Property"
-----------------
under the Senior Credit Agreement.
"Engineering Report" means with respect to any Hotel Property, an
------------------
engineering report in accordance with the scope of services attached hereto as
Schedule 1.01 (c) reasonably satisfactory to the Agents prepared for the Banks
by a Person set forth on Schedule 1.01(d) or otherwise satisfactory to the
Agents covering the physical condition of the Hotel Property, including without
limitation the structural, electrical, plumbing, mechanical and other essential
components of the Hotel Property.
"Environment" or "Environmental" shall have the meanings set forth in 42
----------- -------------
U.S.C. (S) 9601(8), as amended.
"Environmental Claim" means any third party (including governmental
-------------------
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
-8-
<PAGE>
"Environmental Indemnity" means one or more environmental indemnity
-----------------------
agreements dated of even date herewith in substantially the form of the attached
Exhibit D executed or to be executed by the Borrower, the Parent and all
Subsidiaries of the Borrower (excluding the Permitted Other Subsidiaries), and
any future environmental indemnities executed in connection with any Hotel
Property, as any of such environmental indemnities may be amended hereafter in
accordance with the terms of such agreements.
"Environmental Law" means all Legal Requirements arising from, relating to,
-----------------
or in connection with the Environment, health, or safety, including without
limitation CERCLA, relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment, processing,
recycling, reclamation, cleanup, storage, disposal or transportation; (c)
exposure to pollutants, contaminants, hazardous, medical, infectious, or toxic
substances, materials or wastes; (d) the safety or health of employees; or (e)
the manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical, infectious, or toxic substances,
materials or wastes.
"Environmental Permit" means any permit, license, order, approval or other
--------------------
authorization under Environmental Law.
"Environmental Report" means with respect to any Hotel Property, an
--------------------
environmental report in accordance with the scope of services attached hereto as
Schedule 1.01 (e) prepared for the Banks by a Person set forth on Schedule
1.01(f) or otherwise satisfactory to the Agents certifying to the Agents and the
Banks that the Hotel Property and the soil and the groundwater thereunder do not
contain Hazardous Substances except for Permitted Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"Event of Default" has the meaning set forth in Section 8.01.
----------------
"Exchange Act" has the meaning set forth in Section 2.04.
------------
-9-
<PAGE>
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
------------------
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for any such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
---------------------
System or any of its successors.
"Fee Letter" means the letter agreement dated as of January 15, 1998 among
----------
the Borrower, the Documentation Agent, the Administrative Agent and the Managing
Agents, as amended.
"FF&E" means furniture, fixtures and equipment.
----
"FF&E Reserve" means, for any Person or any Hotel Property for any period,
------------
a reserve equal to four percent (4%) of gross revenues from any Hotel Property
owned by such Person or from such Hotel Property, as applicable, for such
period, excluding, however, from such calculation for the applicable Persons and
Hotel Properties the gross revenues generated by the office portion of the
Houston, Texas Marriott and the gross revenues generated by the retail portion
of the St. Tropez hotel, Las Vegas, Nevada.
"Financial Covenant Default" has the meaning set forth in Section 10.02.
--------------------------
"Financial Statements" means the financial statements of the Parent, the
--------------------
Borrower and their respective Subsidiaries dated as of September 30, 1997.
"Fiscal Quarter" means each of the three-month periods ending on March 31,
--------------
June 30, September 30 and December 31.
"Fiscal Year" means the twelve-month period ending on December 31.
-----------
-10-
<PAGE>
"Florida Liens" means the Liens securing the Senior Credit Documents on the
-------------
Initial Properties located in the State of Florida.
"Franchise Agreements" means those certain Agreements listed on Schedule
--------------------
4.21 attached hereto and any future franchise or license agreement for a Hotel
Property with a Franchisor.
"Franchisor" means those certain franchisors listed on Schedule 1.01(g)
----------
attached hereto, or any other reputable, nationally known, third party
franchisor or licensor of a Hotel Property approved by the Agents in writing.
"Free Cash Flow" means, for any Person for any period, the Funds From
--------------
Operations for such period plus any amortization of deferred financing costs for
----
such period less (a) the aggregate FF&E Reserves for such Person and its
----
Subsidiaries for such period, and (b) the aggregate amount of scheduled
principal payments on the Total Indebtedness of such Person (excluding optional
prepayments and scheduled principal payments in respect of any such Indebtedness
which is payable in a single installment at final maturity) required to be made
during such period.
"Fund," "Trust Fund," or "Superfund" means the Hazardous Substance Response
---- ---------- ---------
Trust Fund, established pursuant to 42 U.S.C. (S) 9631 (1988) and the Post-
closure Liability Trust Fund, established pursuant to 42 U.S.C. (S) 9641 (1988),
which statutory provisions have been amended or repealed by the Superfund
Amendments and Reauthorization Act of 1986, and the "Fund," "Trust Fund," or
"Superfund" that are now maintained pursuant to 42 U.S.C. (S) 9507.
"Funds From Operations" means, for any Person for any period for which such
---------------------
amount is being determined, an amount equal to such Person's Net Income for such
period excluding gains (losses) from debt restructuring and sales of property
(including furniture and equipment) plus depreciation and amortization
(excluding amortization of deferred financing costs) and after adjustments for
unconsolidated partnerships and joint ventures.
"Future Property" means any Hotel Property except for the Initial
---------------
Properties which the Borrower or any Subsidiary of the Borrower acquires.
"GAAP" means United States generally accepted accounting principles as in
----
effect from time to time, applied on a basis consistent with the requirements of
Section 1.03.
-11-
<PAGE>
"General Partner" means AGH GP, Inc., a Nevada corporation.
---------------
"Governmental Authority" means any foreign governmental authority, the
----------------------
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Parent, the Borrower, any Subsidiaries of the Borrower or the
Parent, the Participating Lessee, the Manager or any of their respective
Properties.
"Governmental Proceedings" means any action or proceedings by or before any
------------------------
Governmental Authority, including, without limitation, the promulgation,
enactment or entry of any Legal Requirement.
"Ground Lease" means each of the ground leases or subground leases set
------------
forth on Schedule 1.01(h) hereto and for a Future Property means any ground
lease (a) which is a direct ground lease granted by the fee owner of real
property, (b) which may be transferred and/or assigned without the consent of
the lessor (or as to which the lease expressly provides that (i) such lease may
be transferred and/or assigned with the consent of the lessor and (ii) such
consent shall not be unreasonably withheld or delayed), (c) which has a
remaining term (including any renewal terms exercisable at the sole option of
the lessee) of at least twenty five (25) years, (d) under which no material
default has occurred and is continuing, (e) with respect to which a Lien may be
granted without the consent of the lessor, and (f) which contains lender
protection provisions acceptable to the Documentation Agent, including, without
limitation, provisions to the effect that (i) the lessor shall notify any holder
of a Lien in such lease of the occurrence of any default by the lessee under
such lease and shall afford such holder the option to cure such default, and
(ii) in the event that such lease is terminated, such holder shall have the
option to enter into a new lease having terms substantially identical to those
contained in the terminated lease.
"Guarantor" means Parent and each Subsidiary of the Borrower (except the
---------
Permitted Other Subsidiaries). The Guarantors on the Effective Date are
identified on Schedule 1.01(i).
"Hazardous Substance" means the substances identified as such pursuant to
-------------------
CERCLA and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products, radio
nuclides, radioactive materials, and medical and infectious waste.
-12-
<PAGE>
"Hazardous Waste" means the substances regulated as such pursuant to any
---------------
Environmental Law.
"Hotel Capital Lease Limit" means for any Hotel Property $1,000 per room in
-------------------------
such Hotel Property or such other amount of Capital Leases as is approved by the
Agents in writing (which approval will not be unreasonably withheld).
"Hotel Operating Lease Limit" means for any Hotel Property $750 per room in
---------------------------
such Hotel Property or such other amount of operating leases as is approved by
the Agents in writing (which approval will not be unreasonably withheld).
"Hotel Property" for any hotel means the Real Property and the Personal
--------------
Property for such hotel, and the property referred to in Section 11.13.
"Hotel Value" means, with respect to any Hotel Property, at any date, the
-----------
value thereof to be calculated as follows:
(a) For a Seasoned Property, (i) the Adjusted EBITDA for such Seasoned
Property for the preceding Rolling Period divided by (ii) ten percent (10.0%);
----------
and
(b) For a New Property, the Cost Basis in such New Property.
The initial Hotel Value for the Initial Properties is set forth on Schedule
1.01(b) attached hereto.
"Improvements" for any hotel means all buildings, structures, fixtures,
------------
tenant improvements and other improvements of every kind and description now or
hereafter located in or on or attached to the Land for such hotel; and all
additions and betterments thereto and all renewals, substitutions and
replacements thereof.
"Indebtedness" means (without duplication), at any time and with respect to
------------
any Person, (a) indebtedness of such Person for borrowed money (whether by loan
or the issuance and sale of debt securities) or for the deferred purchase price
of property or services purchased (other than amounts constituting trade
payables or bank drafts arising in the ordinary course); (b) indebtedness of
others in the amount which such Person has directly or indirectly assumed or
guaranteed or otherwise provided credit support therefor or for which such
Person is liable as a partner of such Person; (c)
-13-
<PAGE>
indebtedness of others in the amount secured by a Lien on assets of such Person,
whether or not such Person shall have assumed such indebtedness; (d) obligations
of such Person in respect of letters of credit, acceptance facilities, or drafts
or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person (other than trade payables or bank
drafts arising in the ordinary course); (e) obligations of such Person under
Capital Leases; and (f) obligations under interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements or other similar
agreements or arrangements designed to protect against fluctuations in interest
rates.
"Initial Properties" means collectively the Hotel Properties listed on
------------------
Schedule 1.01(b), and "Initial Property" means any of such Hotel Properties.
----------------
"Interest Coverage Ratio" means, as of the end of any Rolling Period, a
-----------------------
ratio of (a) Adjusted EBITDA to (b) Interest Expense, for such Rolling Period.
"Interest Expense" means, for any Person for any period for which such
----------------
amount is being determined, the total interest expense (including that properly
attributable to Capital Leases in accordance with GAAP) and all charges incurred
with respect to letters of credit determined on a consolidated basis in
conformity with GAAP, plus capitalized interest of such Person and its
----
Subsidiaries.
"Interest Period" means, for each LIBOR Rate Advance comprising part of the
---------------
same Borrowing, the period commencing on the date of such Advance or the date of
the Conversion of any Prime Rate Advance into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and Section 2.02 and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and Section
2.02. The duration of each such Interest Period shall be one, two, or three
months, in each case as the Borrower may select, upon notice received by the
Administrative Agent not later than 11:00 a.m. (Dallas, Texas time) on the third
Business Day prior to the first day of such Interest Period, provided, however,
-------- -------
that:
(a) Interest Periods for Advances of the same Borrowing shall be of the
same duration;
(b) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next
-14-
<PAGE>
succeeding Business Day, provided that if such extension would cause the last
--------
day of such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding Business Day;
(c) any Interest Period which begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and
(d) each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires; and
(e) no Interest Period with respect to any portion of any Advance shall
extend beyond the Maturity Date.
"Interest Rate Agreements" means any interest rate swap agreement, interest
------------------------
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect the Borrower, the Parent or any of their
respective Subsidiaries against fluctuations in interest rates.
"Investment" means, with respect to any Person, (a) any loan or advance to
----------
any other Person, (b) the ownership, purchase or other acquisition of, any
Stock, Stock Equivalents, other equity interest, obligations or other securities
of, (i) any other Person, (ii) or all or substantially all of the assets of any
other Person, or (iii) all or substantially all of the assets constituting the
business of a division, branch or other unit operation of any other Person, or
(c) any joint venture or partnership with, or any capital contribution to, or
other investment in, any other Person or any real property.
"Land" for any hotel means the real property upon which the hotel is
----
located, together with all rights, title and interests appurtenant to such real
property, including without limitation all rights, title and interests to (a)
all strips and gores within or adjoining such property, (b) the streets, roads,
sidewalks, alleys, and ways adjacent thereto, (c) all of the tenements,
hereditaments, easements, reciprocal easement agreements, rights-of-way and
other rights, privileges and appurtenances thereunto belonging or in any way
pertaining thereto, (d) all reversions and remainders, (e) all air space rights,
and all water, sewer and wastewater rights, (e) all mineral, oil, gas,
hydrocarbon substances and other rights to produce or share in the production of
anything related to such
-15-
<PAGE>
property, and (f) all other appurtenances appurtenant to such property,
including without limitation, any now or hereafter belonging or in anywise
appertaining thereto.
"Legal Requirement" means any law, statute, ordinance, decree, requirement,
-----------------
order, judgment, rule, regulation (or official interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
"Leverage Ratio" means the ratio of (a) the Parent's Total Indebtedness to
--------------
(b) the Hotel Value of the Parent's and the Parent's Subsidiaries' Hotel
Properties which meet the Parent Property Requirements.
"LIBOR Lending Office" means, with respect to any Bank, the office of such
--------------------
Bank specified as its "LIBOR Lending Office" opposite its name on Schedule 11.02
(or, if no such office is specified, its Domestic Lending Office) or such other
office of such Bank as such Bank may from time to time specify to the Borrower
and the Administrative Agent.
"LIBOR Rate" means, for the Interest Period for each LIBOR Rate Advance
----------
comprising part of the same Borrowing, an interest rate per annum (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum) equal to (A) the
rate per annum at which deposits in Dollars are offered to prime banks in the
London interbank market at 11:00 a.m. (London time) three Business Days before
the first day of such Interest Period as shown on the display designated
"British Banker's Association Interest Settlement Rates" on the Telerate System
("Telerate") at Page 3750 or Page 3740, or such other page or pages as may
replace such pages on Telerate for purposes of displaying such rate, in an
amount substantially equal to the Administrative Agent's LIBOR Rate Advance
comprising part of such Borrowing and for a period equal to such Interest Period
divided by (B) one minus the LIBOR Reserve Requirement; provided, however, that
if such rate is not available on Telerate then such offered rate shall be
otherwise independently determined by Administrative Agent from an alternate,
substantially similar source available to Administrative Agent or shall be
calculated by Administrative Agent by a substantially similar methodology as
that theretofore used to determine such offered rate in Telerate. It is agreed
that for purposes of this definition, LIBOR Rate Advances made hereunder shall
be deemed to constitute Eurocurrency Liabilities as defined in Regulation D and
to be subject to the reserve requirements of Regulation D.
"LIBOR Rate Advance" means any Advance which bears interest as provided in
------------------
Section 2.06(b).
-16-
<PAGE>
"LIBOR Reserve Requirement" shall mean, on any day, that percentage
-------------------------
(expressed as a decimal fraction) which is in effect on such date, as provided
by the Federal Reserve System for determining the maximum reserve requirements
generally applicable to financial institutions regulated by the Federal Reserve
Board comparable in size and type to the Administrative Agent (including,
without limitation, basic, supplemental, marginal and emergency reserves) under
Regulation D with respect to "Eurocurrency liabilities" as currently defined as
Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding (or other category of
liabilities which includes deposits by reference to which the interest rate on a
LIBOR Rate Advance is determined or any category or extensions of credit which
includes loans by a non-United States office of the Administrative Agent to
United States residents). Each determination by the Administrative Agent of the
LIBOR Reserve Requirement, shall, in the absence of manifest error, be
conclusive and binding upon the Borrower.
"Lien" means any mortgage, lien, pledge, charge, deed of trust, security
----
interest, encumbrance or other type of preferential arrangement to secure or
provide for the payment of any obligation of any Person, whether arising by
contract, operation of law or otherwise (including, without limitation, the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement).
"Liquid Investments" means:
------------------
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States;
(b) (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 180 days from
the date of acquisition thereof ("bank debt securities"), issued by (A) any Bank
or (B) any other bank or trust company which has a combined capital surplus and
undivided profit of not less than $250,000,000 or the Dollar Equivalent thereof,
if at the time of deposit or purchase, such bank debt securities are rated not
less than "A" (or the then equivalent) by the rating service of S&P or of
Moody's, and (ii) commercial paper issued by (A) any Bank or (B) any other
Person if at the time of purchase such commercial paper is rated not less than
"A-2" (or the then equivalent) by the rating service of S&P or not less than "P-
2" (or the then equivalent) by the rating service of Moody's, or upon the
discontinuance of both of such services, such other nationally recognized rating
service or services, as the case may be, as shall be selected by the Borrower
with the consent of the Administrative Agent;
-17-
<PAGE>
(c) repurchase agreements relating to investments described in clauses (a)
and (b) above with a market value at least equal to the consideration paid in
connection therewith, with any Person who regularly engages in the business of
entering into repurchase agreements and has a combined capital surplus and
undivided profit of not less than $250,000,000 or the Dollar Equivalent thereof,
if at the time of entering into such agreement the debt securities of such
Person are rated not less than "A" (or the then equivalent) by the rating
service of S&P or of Moody's; and
(d) such other instruments (within the meaning of Article 9 of the Texas
Business and Commerce Code) as the Borrower may request and the Administrative
Agent may approve in writing, which approval will not be unreasonably withheld.
"Majority Banks" means, at any time, Banks holding at least 51% of the then
--------------
aggregate unpaid principal amount of the Notes at such time, or, if no such
principal amount of the Notes is then outstanding, Banks having at least 51% of
the aggregate amount of the Commitments at such time.
"Management Agreements" means those certain Management Agreements listed on
---------------------
Schedule 4.22 attached hereto and any future management agreement for a Hotel
Property in substantially the same form or as otherwise approved by the Agents
in writing.
"Manager" means AGHI, or any other manager of a Hotel Property approved by
-------
the Agents in writing.
"Manager Controlled Group" means all members of a controlled group of
------------------------
corporations and all trades (whether or not incorporated) under common control
which, together with the Manager, are treated as a single employer under Section
414 of the Code.
"Managing Agents" means The Bank of Nova Scotia and Wells Fargo Bank,
---------------
National Association as Managing Agents, and any successor Managing Agents.
"Material Adverse Change" shall mean a material adverse change in the
-----------------------
business, financial condition, or results of operations of the Borrower, the
Parent or any Guarantor, in each case since the date of the most recent
financial statements of the Borrower or the Parent delivered to the Banks.
"Maturity Date" means May 20, 2001.
-------------
-18-
<PAGE>
"Maximum Rate" means the maximum nonusurious interest rate under applicable
------------
law.
"Minimum Tangible Net Worth" means, with respect to the Parent, at any
--------------------------
time, the sum of $450,000,000 plus (a) 75% of the aggregate net proceeds
----
received by the Parent or any of its Subsidiaries after the date of this
Agreement in connection with any offering of Stock or Stock Equivalents of the
Parent or its Subsidiaries taken as a whole and (b) 75% of the value of any
partnership interests in Borrower issued after the date of this Agreement for
the acquisition of a Hotel Property or any interest in a Hotel Property
permitted hereunder.
"Minority Interest Adjustment" means an amount equal to the fair market
----------------------------
value on the date of issuance of all partnership interests in the Borrower which
(a) are not directly or indirectly owned by the Parent and (b) have been
conveyed to Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr, James E. Sowell,
Louis W. Shaw, II, Kenneth W. Shaw or Persons owned or controlled by such
individuals in exchange for a Hotel Property or an ownership interest in a
Person which own a Hotel Property.
"Moody's" means Moody's Investor Service Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA to which the Borrower or any member of a Controlled Group is
making or accruing an obligation to make contributions.
"Net Cash Proceeds" means (a) the aggregate cash proceeds (including,
-----------------
without limitation, insurance proceeds) received by the Parent, the Borrower or
any of their respective Subsidiaries (as applicable) in connection with any
Asset Disposition or Capitalization Event, minus (b) the reasonable expenses of
-----
such Person in connection with such Asset Disposition or such Capitalization
Event.
"Net Income" means, for any Person or Hotel Property for any period for
----------
which such amount is being determined, the net income of such Person (on a
consolidated basis) or Hotel Property, as applicable, after taxes, as determined
in accordance with GAAP, excluding, however, extraordinary items, including but
not limited to (i) any net gain or loss during such period arising from the
sale, exchange, or other disposition of capital assets (such term to include all
fixed assets and all securities) other than in the ordinary course of business
and (ii) any write-up or write-down of assets; provided that with respect to Net
--------
Income received from a Non Wholly-Owned Subsidiary or for a
-19-
<PAGE>
Hotel Property owned by a Non Wholly-Owned Subsidiary, such Person or Hotel
Property shall only be deemed to have received the Allocation Percentage of such
Net Income, and provided further that to the extent that the Net Income for any
----------------
Hotel Property does not include a reasonable allocation of administrative,
accounting or other overhead of the Person or Persons who directly or indirectly
own or lease such Hotel Property which directly pertains to the operation of
Hotel Properties, then such allocation amount shall be deemed subtracted from
such Net Income for purposes of the financial tests and other definitions
contained in this Agreement which utilize Hotel Property Net Income.
"Net Worth" means, for any Person, stockholders equity of such Person
---------
determined in accordance with GAAP.
"New Property" means, as at any date, any Hotel Property (including any
------------
Renovating Property) that is not a Seasoned Property.
"Non Wholly-Owned Subsidiary" of a Person means any Subsidiary of such
---------------------------
Person which is controlled and managed by such Person, except for a Wholly-Owned
Subsidiary.
"Note" means a subordinated promissory note of the Borrower payable to the
----
order of any Bank, in substantially the form of the attached Exhibit A,
evidencing indebtedness of the Borrower to such Bank resulting from Advances
owing to such Bank, and "Notes means all of such promissory notes.
-----
"Notice of Borrowing" means a notice of borrowing in the form of the
-------------------
attached Exhibit E signed by a Responsible Officer of the Borrower.
"Notice of Conversion or Continuation" means a notice of conversion or
------------------------------------
continuation in the form of the attached Exhibit F signed by a Responsible
Officer of the Borrower.
"Obligations" means all Advances, and other amounts payable by the Borrower
-----------
to the Documentation Agent, the Administrative Agent, or the Banks under the
Credit Documents.
"Parent" means American General Hospitality Corporation, a Maryland
------
corporation.
"Parent Common Stock" means the common stock of Parent, par value $.01 per
-------------------
share.
-20-
<PAGE>
"Parent Properties" means all Hotel Properties owned or leased by the
-----------------
Parent or one of the Parent's Subsidiaries.
"Parent Property Requirements" means collectively that (a) all Parent
----------------------------
Properties must be located within the United States and must be either an
Eligible Property or a Permitted Non-Eligible Property under the Senior Credit
Agreement; (b) the Cost Basis for the Parent Properties which are located in any
one state shall not exceed 20% (except for Florida which shall not exceed 35%)
of the Cost Basis for all Parent Properties; (c) the Cost Basis for the Parent
Properties which are limited service hotels or extended stay shall not
collectively in the aggregate exceed 20% of the Cost Basis for all Parent
Properties (for purposes of this definition Courtyards by Marriott shall not be
deemed limited service hotels); (d) the Cost Basis for the Parent Properties
which are not operated under any franchise or license agreement shall not exceed
15% of the Cost Basis for all Parent Properties; (e) no Hotel Property or other
Property shall cause the Parent to forfeit the Parent's tax status as a REIT;
and (f) the Cost Basis for Parent Properties which are subject to a ground lease
shall not exceed 22.5% of the Cost Basis or 22.5% of the total guest rooms for
all Parent Properties.
"Parent Total Cost Basis" means the sum of (a) the Minority Interest
-----------------------
Adjustment plus (b) the cost of all Hotel Properties owned or leased by the
----
Parent and its Subsidiaries on a Consolidated basis determined in accordance
with GAAP.
"Participating Leases" means those certain Participating Leases listed on
--------------------
Schedule 1.01(j) attached hereto and any future participating lease for a Hotel
Property approved by the Agents in writing (which approval shall not be
unreasonably withheld).
"Participating Lessee" means AGH Leasing, TT Leasing, Prime Hospitality and
--------------------
any future participating lessee for a Hotel Property approved by the Agents in
writing (which approval shall not be unreasonably withheld as long as such
Person is at least 65% owned by the same individuals required of a Participating
Lessee pursuant to the provisions of Section 8.01(r)).
"Participating Lessee Controlled Group" means all members of a controlled
-------------------------------------
group of corporations and all trades (whether or not incorporated) under common
control which, together with the Participating Lessee, are treated as a single
employer under Section 414 of the Code.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
-21-
<PAGE>
"Permitted Encumbrances" means the Liens permitted to exist pursuant to
----------------------
Section 6.01.
"Permitted Hazardous Substances" means (a) Hazardous Substances, petroleum
------------------------------
and petroleum products which are (i) used in the ordinary course of business and
in typical quantities for a hotel and (ii) generated, used and disposed of in
accordance with all Legal Requirements and good hotel industry practice and (b)
non-friable asbestos to the extent (i) that no applicable Legal Requirements
require removal of such asbestos from the Hotel Property and (ii) such asbestos
is encapsulated in accordance with all applicable Legal Requirements and such
reasonable operations and maintenance program as may be required by the Agents.
"Permitted Hotel Sale" means the Asset Disposition of all, but not a
--------------------
portion, of (a) a Hotel Property or (b) the ownership interest in a Subsidiary
of the Borrower which owns a Hotel Property, in either case for which the
Conditions to Asset Disposition are satisfied or will be satisfied within the
time periods required under this Agreement; provided, however, that the Borrower
shall be entitled to sell the office building portion of the Houston, Texas
Marriott as long as the other Conditions to Asset Disposition are satisfied in
connection with such sale.
"Permitted Non-Eligible Property" means a Hotel Property deemed a
-------------------------------
"Permitted Non-Eligible Property" under the Senior Credit Agreement.
"Permitted Non-Voting Stock Company" means a corporation (a) which has one
----------------------------------
class of voting common stock which is 91% owned by Steven D. Jorns and 9% owned
by the Borrower or a Subsidiary of the Borrower and one class of non-voting
common stock (the "Non-Voting Stock") owned entirely by the Borrower or a
Subsidiary of the Borrower, (b) which has Steven D. Jorns as its president or
chief executive officer, (c) which has articles of incorporation, by-laws or
other organizational documents which provide that the Non-Voting Stock
stockholder is entitled to at least 95% of all dividends declared by the Board
of Directors of the Permitted Non-Voting Stock Company, (d) which has no Liens
on any of the Hotel Properties owned by such Person except Permitted
Encumbrances and Liens which are held by the Borrower, and (e) the ownership of
which by the Borrower or any Subsidiary of the Borrower would not cause a
Material Adverse Change.
"Permitted Non-Voting Stock Investment" means (a) the Non-Voting Stock of a
-------------------------------------
Permitted Non-Voting Stock Company and (b) a loan to a Permitted Non-Voting
Stock Company which may or may not be secured by a Permitted Non-Voting Stock
Mortgage.
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<PAGE>
"Permitted Non-Voting Stock Mortgage" means a Lien on a Hotel Property
-----------------------------------
owned by a Permitted Non-Voting Stock Company which is held by the Borrower.
"Permitted Officer Assignment" means such sales, assignments or pledges of
----------------------------
such legal and beneficial interests in the Parent or the Borrower by Steven D.
Jorns, Bruce Wiles, Russ Valentine or Kenneth E. Barr or any of their respective
Associates which for any such individual and such individual's Associates either
(a) does not result in a decrease in such individual's or individual's
Associates' ownership interests below 50% of the ownership interests in the
Borrower and the Parent's common stock represented by the sum of (i) the
interests that are owned on the date of this Agreement by such individual or
such individual's Associates and which is not subject to forfeiture on the date
of this Agreement and (ii) for which such individual or such individual's
Associates have vested options to acquire as of the date of this Agreement, (b)
occurs following such individual's termination of employment with the Parent or
(c) involves the exchange of ownership interests in the Borrower for the
Parent's common stock.
"Permitted Other Subsidiaries" means Persons deemed "Permitted Other
----------------------------
Subsidiaries" under the Senior Credit Agreement.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof or any trustee, receiver, custodian or
similar official.
"Personal Property" for any Hotel Property means all FF&E, inventory and
-----------------
other personal property of every kind, whether now existing or hereafter
acquired, tangible and intangible, now or hereafter located on or about the
Land, and used or to be used in the future in connection with the operation of
such Hotel Property.
"Plan" means an employee benefit plan (other than a Multiemployer Plan)
----
maintained for employees of the Borrower or any member of a Controlled Group and
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code.
"Preliminary Property Plan" means for any Hotel Property, the preliminary
-------------------------
financial projections of the Capital Expenditures and the expenditures for FF&E
for such Hotel Property in
-23-
<PAGE>
connection with a renovation or expansion (but not maintenance) of such Hotel
Property, as such projections may be amended by the Borrower from time to time.
"Prime Hospitality" means Prime Hospitality Corp. or an Affiliate of Prime
-----------------
Hospitality Corp.
"Prime Rate" means a fluctuating interest rate per annum as shall be in
----------
effect from time to time equal to the rate of interest publicly announced by the
Administrative Agent as its prime commercial lending rate (which may not be the
lowest rate offered to its customers), whether or not the Borrower has notice
thereof.
"Prime Rate Advance" means an Advance which bears interest as provided in
------------------
Section 2.06(a).
"Property" of any Person means any property or assets (whether real,
--------
personal, or mixed, tangible or intangible) of such Person.
"Property Adjustment Report" means a certificate of the Borrower in
--------------------------
substantially the form of the attached Exhibit G.
"Property Information" for any Hotel Property means:
--------------------
(a) an Engineering Report and Environmental Report for such Hotel
Property,
(b) a commitment for a Title Policy for such Hotel Property, together with
a legible copy of all documents referred to in such commitment,
(c) a copy of each of the following for such Hotel Property certified as
true and correct by the Borrower:
i. If the Hotel Property is subject to a franchise agreement, the
franchise agreement and any requirements or conditions imposed by the
Franchisor at such time in connection with the franchise agreement,
including without limitation any requirements with respect to Capital
Expenditures or expenditures for FF&E for the Hotel Property;
ii. Management Agreement;
-24-
<PAGE>
iii. Participating Lease;
iv. If the Hotel Property is subject to a ground lease, the ground
lease; and
v. The Property Owner's articles of incorporation, by-laws,
partnership agreements, as applicable, and certificates of existence, good
standing and authority to do business from each appropriate state
authority, and partnership or corporate, as applicable, authorizations
authorizing the execution, delivery and performance of the Accession
Agreement all certified to be true and complete by a duly authorized
officer of such Property Owner;
(d) if the Borrower has received a survey of the Real Property, a copy of
such survey;
(e) (i) a description of such Hotel Property, such description to include
the age, location and number of rooms or suites of such Hotel Property, and (ii)
to the extent available, statistics with respect to the occupancy of the Hotel
Property, operating statements, and an analysis of the revenue per available
room, in each case for the prior Fiscal Year and the completed Fiscal Quarters
of the current Fiscal Year;
(f) certificates and policies of insurance evidencing that the Hotel
Property is covered by the insurance required pursuant to Section 5.07 hereof,
provided that for the required earthquake insurance for the Initial Properties
the policy or policies for such earthquake insurance need only be delivered
within 30 days of the date of this Agreement;
(g) If the Hotel Property serves as collateral for any Indebtedness, a
description of the chief financial terms of such Indebtedness; and
(h) all other documents reasonably required by either Agent.
"Property Owner" for any Initial Property or Future Property, means the
--------------
Person who owns fee or leasehold title interest (as applicable) in, and to such
Property.
"Pro Rata Share" means, at any time with respect to any Bank, either (a)
--------------
the ratio (expressed as a percentage) of such Bank's Commitment at such time to
the aggregate Commitments at such time or (b) if the Commitments have been
terminated, the ratio (expressed as a percentage) of such
-25-
<PAGE>
Bank's aggregate outstanding Advances at such time to the aggregate outstanding
Advances of all the Banks at such time.
"Real Property" for any hotel means the Land and the Improvements for such
-------------
hotel, including without limitation, parking and other ancillary functions
necessary for the operation of such hotel, and, (a) with respect to the Houston,
Texas Marriott shall include the Land and the Improvements for the office
building owned by the Borrower or a Guarantor other than the Parent in
connection with such hotel and (b) with respect to the St. Tropez hotel, Las
Vegas, Nevada shall include the Land and the Improvements for the retail
property owned by the Borrower or a Guarantor other than the Parent in
connection with such hotel.
"Register" has the meaning set forth in paragraph (c) of Section 11.06.
--------
"REIT" means a real estate investment trust under Sections 856-860 of the
----
Code.
"Release" shall have the meaning set forth in CERCLA or under any other
-------
Environmental Law.
"Remedial Action" has the meaning set forth in Section 10.03.
---------------
"Renovating Property" means a Hotel Property (i) that has been owned for
-------------------
four or more, but less than six, consecutive full Fiscal Quarters by the
Borrower or by a Person that has been a Subsidiary of the Borrower during such
entire period and (ii) with respect to which renovation, consisting of
alterations, remodeling and other similar work having an aggregate cost
exceeding ten percent (10%) of the Cost Basis in such Hotel Property, was
commenced within 180 days of such acquisition and was completed, or is
reasonably expected to be completed, within eighteen (18) months of such
acquisition.
"Reportable Event" means any of the events set forth in Section 4043(b) of
----------------
ERISA.
"Response" shall have the meaning set forth in CERCLA or under any other
--------
Environmental Law.
"Responsible Officer" means the Chief Executive Officer, President,
-------------------
Executive Vice President or Chief Financial Officer of any Person.
-26-
<PAGE>
"Restricted Payment" means (a) any direct or indirect payment, prepayment,
------------------
redemption, purchase, or deposit of funds or Property for the payment (including
any sinking fund or defeasance), prepayment, redemption or purchase of
Indebtedness not permitted by this Agreement, and (b) the making by any Person
of any dividends or other distributions (in cash, property, or otherwise) on, or
payment for the purchase, redemption or other acquisition of, any shares of any
capital stock, any limited liability company interests or any partnership
interests of such Person, other than dividends or distributions payable in such
Person's stock, limited liability company interests or any partnership
interests.
"Required Work" means for any Initial Property, the work described on
-------------
Schedule 5.06 attached hereto as may be modified by agreement between the
Borrower and the Agents, and for any Future Property, the work agreed upon by
the Borrower and the Agents, if any, as the Required Work for such Future
Property, if any.
"Rolling Period" means, as of any date, the four Fiscal Quarters ending
--------------
immediately preceding such date.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
---
Inc., or any successor thereof.
"Seasoned Property" means, as at any date, a Hotel Property (excluding any
-----------------
Renovating Property) that has been owned for four (4) or more Fiscal Quarters,
by the Borrower or by a Person that has been a Subsidiary of the Borrower during
such entire period.
"Secured Non-Recourse Indebtedness" of any Person means all Indebtedness of
---------------------------------
such Person with respect to which recourse for payment is limited to specific
assets encumbered by a Lien securing such Indebtedness; provided, however, that
-------- -------
personal recourse of a holder of Indebtedness against any obligor with respect
thereto for fraud, misrepresentation, misapplication of cash, non-payment of
real estate taxes or ground lease rent, waste and other circumstances
customarily excluded from non-recourse provisions in non-recourse financing of
real estate shall not, by itself, prevent any Indebtedness from being
characterized as Secured Non-Recourse Indebtedness, provided further that if a
-------- ------- ----
personal recourse claim is made in connection therewith, such claim shall not
constitute Secured Non-Recourse Indebtedness for the purposes of this Agreement.
-27-
<PAGE>
"Secured Recourse Indebtedness" of any Person means any Total Indebtedness
-----------------------------
(excluding any Secured Non-Resource Indebtedness) of such Person for which the
obligations thereunder are secured by a Lien on any assets of such Person or its
Subsidiaries.
"Senior Administrative Agent" means the administrative agent under the
---------------------------
Senior Credit Agreement.
"Senior Credit Agreement" means that Amended and Restated Senior Unsecured
-----------------------
Credit Agreement dated as of even date herewith, between the Borrower and
certain lenders, as may be amended, modified or extended in accordance with the
provisions of this Agreement.
"Senior Credit Documents" means that Senior Credit Agreement and the
-----------------------
promissory notes, guaranties and other documents executed in connection with the
Senior Credit Agreement.
"Senior Creditors" means the holders of the Senior Obligations.
----------------
"Senior Obligations" means the Indebtedness of the Borrower, the Parent and
------------------
their respective Subsidiaries under the Senior Credit Documents, including
interest (including interest accruing after the filing of a petition initiating
any proceeding pursuant to any bankruptcy law with respect to the Borrower as
debtor) and reimbursement obligations thereunder.
"Senior Payment Default" has the meaning set forth in Section 10.02.
----------------------
"Status" means the existence of Level I Status or Level II Status, as the
------
case may be. As used in this definition:
"Level I Status" exists at any date if, at such date, the Leverage
--------------
Ratio is less than 55%; and
"Level II Status" exists at any date if, at such date, the Leverage
---------------
Ratio is equal to or greater than 55%.
Status shall be determined and changed as of the 50th day following any Fiscal
Quarter. Notwithstanding the foregoing, until the 50th day following the Fiscal
Quarter ending March 31, 1998, the Status in effect under this Agreement shall
be Level I Status.
-28-
<PAGE>
"Stock" means shares of capital stock, beneficial or partnership interests,
-----
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or non-voting, and includes,
without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities (other than Stock) convertible
-----------------
into or exchangeable for Stock and all warrants, options or other rights to
purchase or subscribe for any stock, whether or not presently convertible,
exchangeable or exercisable.
"Subordinate Guaranty" means one or more Subordinate Guaranty and
--------------------
Contribution Agreements in substantially the form of the attached Exhibit H
executed by the Borrower and all of the Subsidiaries of the Borrower (excluding
the Permitted Other Subsidiaries), evidencing the joint and several guaranty by
the signatories thereto of the obligations of Borrower in respect of the Credit
Documents and the obligations of landlords under Participating Leases, and any
future guaranty and contribution agreement executed to secure Advances except
for Supplemental Guaranties, as any of such agreements may be amended hereafter
in accordance with the terms of such agreements.
"Subsidiary" of a Person means any corporation, association, partnership or
----------
other business entity of which more than 50% of the outstanding shares of
capital stock (or other equivalent interests) having by the terms thereof
ordinary voting power under ordinary circumstances to elect a majority of the
board of directors or Persons performing similar functions (or, if there are no
such directors or Persons, having general voting power) of such entity
(irrespective of whether at the time capital stock (or other equivalent
interests) of any other class or classes of such entity shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
Subsidiaries of such Person or by one or more Subsidiaries of such Person. A
Permitted Non-Voting Stock Company shall not be deemed a Subsidiary of either
the Borrower or the Parent for all purposes under this Agreement.
"Super Majority Banks" means, at any time, Banks holding at least 66 2/3%
--------------------
of the then aggregate unpaid principal amount of the Notes at such time, or, if
no such principal amount of the Notes is then outstanding, Banks having at least
66 2/3% of the aggregate amount of the Commitments at such time.
"Supplemental Guarantor" means any partner of the Borrower except for the
----------------------
Parent, the Guarantors, the General Partner or AGH LP that executes a
Supplemental Guaranty.
-29-
<PAGE>
"Supplemental Guaranty" means any future assumption of liability in a form
---------------------
reasonably acceptable to the Agents executed by a Supplemental Guarantor to
secure Advances, as such future supplemental guaranties may be amended hereafter
in accordance with their terms.
"Termination Event" means (a) the occurrence of a Reportable Event with
-----------------
respect to a Plan, as described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under such regulations), (b) the withdrawal of the
Borrower or any of a Controlled Group from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
giving of a notice of intent to terminate a Plan under Section 4041(c) of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any
other event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"Total Assets" of any Person means, at any date, the total assets of such
------------
Person and its Subsidiaries at such date determined on a consolidated basis in
conformity with GAAP.
"Total Availability" means, at any date of its determination, an amount
------------------
equal to (a) the Parent's and the Parent's Subsidiaries' Consolidated Adjusted
EBITDA for the Rolling Period immediately preceding such date multiplied by (i)
on or prior to December 31, 1998, six (6) and (ii) after December 31, 1998, five
(5), minus (b) the sum of (i) all Indebtedness of the Parent and its
-----
Subsidiaries outstanding on such date, including without limitation the Senior
Obligations, Secured Recourse Indebtedness and Secured Non-Recourse Indebtedness
and (ii) to the extent not included in the preceding clause (i), the aggregate
face amount of any letters of credit issued under the Senior Credit Agreement.
"Total Availability Determination Date" means any date the Total
-------------------------------------
Availability is determined in accordance with Section 2.14.
"Total Indebtedness" of any Person means the sum of the following (without
------------------
duplication): (a) all Indebtedness of such Person and its Subsidiaries
determined on a Consolidated basis in conformity with GAAP, plus (b) such
----
Person's Unconsolidated Entity Percentage of Indebtedness (including Secured
Non-Recourse Indebtedness) of such Person's Unconsolidated Entities, minus (c)
-----
to the extent included in the calculation of either of the preceding clauses (a)
or (b), trade
-30-
<PAGE>
payables and accruals permitted under the provisions of Section 6.02(e) hereof
and the amount of any minority interests.
"TT Leasing" means Twin Towers Leasing, L.P., a Delaware limited
----------
partnership.
"Type" has the meaning set forth in Section 1.04.
----
"Unconsolidated Entity" means, with respect to any Person, at any date, any
---------------------
other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person, if such statements were prepared as of such date.
"Unconsolidated Entity Percentage" means, for any Person, with respect to a
--------------------------------
Person's Unconsolidated Entity, the percentage ownership interest of such Person
in such Unconsolidated Entity, provided that, in the event that such Person is
--------------
the general partner of such Unconsolidated Entity, such Person's Unconsolidated
Entity Percentage with respect to such Unconsolidated Entity shall be the
percentage of the general partner interests owned by such Person in such
Unconsolidated Entity with respect to any Indebtedness for which recourse may be
made against any general partner of such Unconsolidated Entity.
"Unencumbered" means, with respect to any Hotel Property, at any date of
------------
determination, the circumstance that such Hotel Property on such date:
(a) is not subject to any Liens (including restrictions on
transferability or assignability) of any kind (including any such Lien or
restriction imposed by (i) any agreement governing Indebtedness, and (ii) the
organizational documents of the Borrower or any of its Subsidiaries, but
excluding Permitted Encumbrances and, in the case of any Ground Lease (to the
extent permitted by the definition thereof), restrictions on transferability or
assignability in respect of such Ground Lease);
(b) is not subject to any agreement (including (i) any agreement
governing Indebtedness, and (ii) if applicable, the organizational documents of
the Borrower or any of its Subsidiaries) which prohibits or limits the ability
of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon such Hotel Property, other than Permitted
-31-
<PAGE>
Encumbrances (excluding any agreement or organizational document which limits
generally the amount of Indebtedness which may be incurred by the Borrower or
its Subsidiaries); and
(c) is not subject to any agreement (including any agreement governing
Indebtedness) which entitles any Person to the benefit of any Lien (other than
Permitted Encumbrances) on such Hotel Property, or would entitle any Person to
the benefit of any such Lien upon the occurrence of any contingency (including,
without limitation, pursuant to an "equal and ratable" clause).
For the purposes of this Agreement, any Hotel Property owned by a Subsidiary of
the Borrower shall not be deemed to be Unencumbered unless both (i) such Hotel
Property and (ii) all Stock owned directly or indirectly by Borrower in such
Subsidiary is Unencumbered.
"Wholly-Owned Subsidiary" of a Person means any Subsidiary for which such
-----------------------
Person's ownership interest is 99% or more.
Section 1.02 Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.03 Accounting Terms; Changes in GAAP.
---------------------------------
(a) All accounting terms not specifically defined in this Agreement shall
be construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the Financial Statements.
(b) Unless otherwise indicated, all financial statements of the Borrower
and the Parent, all calculations for compliance with covenants in this
Agreement, and all calculations of any amounts to be calculated under the
definitions in Section 1.01 shall be based upon the Consolidated accounts of the
Borrower, the Parent and their respective Subsidiaries (as applicable) in
accordance with GAAP.
(c) If any changes in accounting principles after December 31, 1997
required by GAAP or the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants or similar agencies results in a
change in the method of calculation of, or affects the
-32-
<PAGE>
results of such calculation of, any of the financial covenants, standards or
terms found in this Agreement, then the parties shall enter into and diligently
pursue negotiations in order to amend such financial covenants, standards or
terms so as to equitably reflect such change, with the desired result that the
criteria for evaluating the financial condition of Borrower and its Subsidiaries
(determined on a Consolidated basis) shall be the same after such change as if
such change had not been made.
Section 1.04 Types of Advances. Advances are distinguished by "Type". The
-----------------
"Type" of an Advance refers to the determination whether such Advance is a LIBOR
Rate Advance or Prime Rate Advance, each of which constitutes a Type.
Section 1.05 Miscellaneous. Article, Section, Schedule and Exhibit
-------------
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.
ARTICLE II
THE ADVANCES
Section 2.01 The Advances. Each Bank severally agrees, on the terms and
------------
conditions set forth in this Agreement, to make Advances to the Borrower from
time to time on any Business Day on or prior to September 30, 1998 in an
aggregate amount not to exceed at any time outstanding an amount equal to such
Bank's Commitment. The aggregate amount of all outstanding Advances at any time
may not exceed either the lesser of (i) the aggregate Commitments at such time
or (ii) the Total Availability at such time. After September 30, 1998 the
Borrower cannot request any additional Advances; provided that the Borrower can
request that Advances outstanding on September 30, 1998 be continued or
Converted as provided in this Agreement. The Borrower may from time to time
prepay Advances pursuant to Section 2.07. Any Advances that are repaid cannot be
------
reborrowed.
Section 2.02 Method of Borrowing.
-------------------
(a) Notice. Each Borrowing shall be made pursuant to a Notice of
------
Borrowing, given not later than 11:00 a.m. (Dallas, Texas time) (i) on the third
Business Day before the date of the proposed Borrowing, in the case of a
Borrowing consisting of LIBOR Rate Advances, or (ii) on the Business Day before
the date of the proposed Borrowing, in the case of a Borrowing consisting of
Prime Rate Advances, by the Borrower to the Administrative Agent, which shall
give each Bank
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<PAGE>
prompt notice on the day of receipt of such timely Notice of Borrowing of such
proposed Borrowing by telecopier. Each Notice of Borrowing shall be in writing
or by telecopier specifying the requested (i) date of such Borrowing, (ii) Type
of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing,
and (iv) if such Borrowing is to be comprised of LIBOR Rate Advances, the
Interest Period for each such Advance. In the case of a proposed Borrowing
comprised of LIBOR Rate Advances, the Administrative Agent shall promptly notify
each Bank of the applicable interest rate under Section 2.06(b). Each Bank
shall, before 11:00 a.m. (Dallas, Texas time) on the date of such Borrowing,
make available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 11.02, or such other
location as the Administrative Agent may specify by notice to the Banks, in same
day funds, such Bank's Pro Rata Share of such Borrowing. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower at its account with the Administrative
Agent.
(b) Conversions and Continuations. In order to elect to Convert or
-----------------------------
continue Advances comprising part of the same Borrowing under this Section, the
Borrower shall deliver an irrevocable Notice of Conversion or Continuation to
the Administrative Agent at the Administrative Agent's office no later than
11:00 a.m. (Dallas, Texas time) (i) on the date which is at least three Business
Days in advance of the proposed Conversion or continuation date in the case of a
Conversion to or a continuation of a Borrowing comprised of LIBOR Rate Advances
and (ii) on the Business Day prior to the proposed conversion date in the case
of a Conversion to a Borrowing comprised of Prime Rate Advances. Each such
Notice of Conversion or Continuation shall be in writing or by telecopier,
specifying (i) the requested Conversion or continuation date (which shall be a
Business Day), (ii) the Borrowing amount and Type of the Advances to be
Converted or continued, (iii) whether a Conversion or continuation is requested,
and if a Conversion, into what Type of Advances, and (iv) in the case of a
Conversion to, or a continuation of, LIBOR Rate Advances, the requested Interest
Period. Promptly after receipt of a Notice of Conversion or Continuation under
this paragraph, the Administrative Agent shall provide each Bank with a copy
thereof and, in the case of a Conversion to or a continuation of LIBOR Rate
Advances, notify each Bank of the applicable interest rate under Section
2.06(b). For purposes other than the conditions set forth in Section 3.02, the
portion of Advances comprising part of the same Borrowing that are Converted to
Advances of another Type shall constitute a new Borrowing. If the Borrower shall
fail to specify an Interest Period for a LIBOR Rate Advance including the
continuation of a LIBOR Rate Advance, the Borrower shall be deemed to have
selected a Prime Rate Advance.
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<PAGE>
(c) Certain Limitations. Notwithstanding anything in paragraphs (a) and
-------------------
(b) above:
(i) in the case of LIBOR Rate Advances each Borrowing shall be in an
aggregate amount of not less than $2,000,000 or greater multiples of
$100,000;
(ii) except for Borrowings for the acquisition of Future Properties
by the Borrower or its Subsidiary, the Borrower may not request Borrowings
on more than three days in any calendar month.
(iii) at no time shall there be more than five Interest Periods
applicable to outstanding LIBOR Rate Advances;
(iv) the Borrower may not select LIBOR Rate Advances for any
Borrowing to be made, Converted or continued if a Default has occurred and
is continuing;
(v) if any Bank shall, at any time prior to the making of any
requested Borrowing comprised of LIBOR Rate Advances, notify the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any
central bank or other governmental authority asserts that it is unlawful,
for such Bank or its LIBOR Lending Office to perform its obligations under
this Agreement to make LIBOR Rate Advances or to fund or maintain LIBOR
Rate Advances, then such Bank's Pro Rata Share of such Borrowing shall be
made as a Prime Rate Advance, provided that such Prime Rate Advance shall
be considered part of the same Borrowing and interest on such Prime Rate
Advance shall be due and payable at the same time that interest on the
LIBOR Rate Advances comprising the remainder of such Borrowing shall be due
and payable; and such Bank agrees to use commercially reasonable efforts
(consistent with its internal policies and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the
making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of such Bank, be otherwise materially
disadvantageous to such Bank;
(vi) if the Administrative Agent is unable to determine the LIBOR
Rate for LIBOR Rate Advances comprising any requested Borrowing, the right
of the Borrower to select LIBOR Rate Advances for such Borrowing or for any
subsequent Borrowing shall be suspended until the Administrative Agent
shall notify the Borrower and the Banks that the
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<PAGE>
circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Prime Rate Advance;
(vii) if the Majority Banks shall, at least one Business Day before
the date of any requested Borrowing, notify the Administrative Agent that
the LIBOR Rate for LIBOR Rate Advances comprising such Borrowing will not
adequately reflect the cost to such Banks of making or funding their
respective LIBOR Rate Advances, as the case may be, for such Borrowing, the
right of the Borrower to select LIBOR Rate Advances for such Borrowing or
for any subsequent Borrowing shall be suspended until the Administrative
Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist, and each Advance comprising such
Borrowing shall be a Prime Rate Advance; and
(viii) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any LIBOR Rate Advances in
accordance with the provisions contained in the definition of "Interest
Period" in Section 1.01 and paragraph (a) or (b) above, the Administrative
Agent will forthwith so notify the Borrower and the Banks and such Advances
will be made available to the Borrower on the date of such Borrowing as
Prime Rate Advances or, if an existing Advance, Converted into Prime Rate
Advances.
(d) Notices Irrevocable. Each Notice of Borrowing and Notice of Conversion
-------------------
or Continuation shall be irrevocable and binding on the Borrower. In the case
of any Borrowing which the related Notice of Borrowing specifies is to be
comprised of LIBOR Rate Advances, the Borrower shall indemnify each Bank against
any loss, out-of-pocket cost or expense incurred by such Bank as a result of any
condition precedent for Borrowing set forth in Article III not being satisfied
for any reason, including, without limitation, any loss, cost or expense
actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund the Advance to be made by such Bank as
part of such Borrowing when such Advance, as a result of such failure, is not
made on such date.
(e) Administrative Agent Reliance. Unless the Administrative Agent shall
-----------------------------
have received notice from a Bank before the date of any Borrowing that such Bank
will not make available to the Administrative Agent such Bank's Pro Rata Share
of the Borrowing, the Administrative Agent may assume that such Bank has made
its Pro Rata Share of such Borrowing available to the Administrative Agent on
the date of such Borrowing in accordance with paragraph (a) of this Section 2.02
and the Administrative Agent may, in reliance upon such assumption, make
available to the
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Borrower on such date a corresponding amount. If and to the extent that such
Bank shall not have so made its Pro Rata Share of such Borrowing available to
the Administrative Agent, such Bank and the Borrower severally agree to
immediately repay to the Administrative Agent on demand such corresponding
amount, together with interest on such amount, for each day from the date such
amount is made available to the Borrower until the date such amount is repaid to
the Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable on each such day to Advances comprising such Borrowing and (ii) in
the case of such Bank, the Federal Funds Rate for each such day. If such Bank
shall repay to the Administrative Agent such corresponding amount and interest
as provided above, such corresponding amount so repaid shall constitute such
Bank's Advance as part of such Borrowing for purposes of this Agreement even
though not made on the same day as the other Advances comprising such Borrowing.
(f) Bank Obligations Several. The failure of any Bank to make the Advance
------------------------
to be made by it as part of any Borrowing shall not relieve any other Bank of
its obligation, if any, to make its Advance on the date of such Borrowing. No
Bank shall be responsible for the failure of any other Bank to make the Advance
to be made by such other Bank on the date of any Borrowing.
(g) Notes. The indebtedness of the Borrower to each Bank resulting from
-----
Advances owing to such Bank shall be evidenced by the Note of the Borrower
payable to the order of such Bank in substantially the form of Exhibit A.
Section 2.03 Fees.
----
(a) Fee Letter. The Borrower agrees to pay to the Agents and the Managing
----------
Agents for their benefit the fees set forth in the Fee Letter as and when the
same are due and payable pursuant to the terms of the Fee Letter.
(b) Real Estate Acquisition Finance Fees. The Borrower agrees to pay to
------------------------------------
the Administrative Agent for the benefit of each Bank on the date of this
Agreement, a real estate acquisition finance fee equal to .50% of such Bank's
Commitment.
(c) New Advance Fees. The Borrower agrees to pay to the Administrative
----------------
Agent for the benefit of each Bank on the date of each Borrowing under this
Agreement except for the Conversion or continuation of existing Advances, an
advance fee equal to .50% of the amount of such Bank's Advance made under such
Borrowing.
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<PAGE>
(d) Outstanding Advance Fees. The Borrower agrees to pay to the
------------------------
Administrative Agent for the benefit of each Bank on the applicable date of
calculation, .1875% on such Bank's outstanding Advances on September 30, 1998;
.375% on such Bank's outstanding Advances on December 31, 1998; .50% on such
Bank's outstanding Advances on March 31, 1999, June 30, 1999, September 30, 1999
and December 31, 1999; and .75% on such Bank's outstanding Advances on the last
day of each quarter thereafter.
Section 2.04 Reduction of the Commitments.
----------------------------
(a) Upon the occurrence of any of the following:
(i) a change in control is reported by the Borrower, the Parent, AGH
Leasing or any other Participating Lessee which is an Affiliate of the
Borrower, or AGHI in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), or
(ii) any "person" (as such term is used in Section 13(d) and Section
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Borrower, the Parent, AGH Leasing or any other
Participating Lessee which is an Affiliate of the Borrower, or AGHI
representing the Control Percentage or more of the combined voting power of
the Borrower's, the Parent's, such Participating Lessee's or AGHI's, as
applicable, then outstanding securities;
then, in such event the Majority Banks may, at their sole option upon written
notice to the Borrower (a "Termination Notice"), declare the obligation of each
Bank to make Advances to be terminated, whereupon the same shall forthwith
terminate and the Commitments shall reduce to zero.
Notwithstanding the foregoing, a "change of control" shall not be deemed to
occur as a result of the acquisition of securities of the Borrower, the Parent,
AGH Leasing or any other Participating Lessee which is an Affiliate of the
Borrower or AGHI by any of Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr,
James E. Sowell, Louis W. Shaw, II, Kenneth W. Shaw or their respective
Associates (as such term is defined in Rule 12b-2 promulgated under the Exchange
Act) or controlled Affiliates.
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<PAGE>
Section 2.05 Repayment of Advances. The Borrower shall repay the
---------------------
outstanding principal amount of each Advance on the Maturity Date.
Section 2.06 Interest, Late Payment Fee. The Borrower shall pay interest
--------------------------
on the unpaid principal amount of each Advance made by each Bank from the date
of such Advance until such principal amount shall be paid in full, at the
following rates per annum:
(a) Prime Rate Advances. If such Advance is a Prime Rate Advance, a rate
-------------------
per annum (computed on the actual number of days elapsed, including the first
day and excluding the last, based on a 365 day year) equal at all times to the
lesser of (i) the Adjusted Prime Rate in effect from time to time plus the
----
Applicable Margin and (ii) the Maximum Rate, payable in arrears on the last
Business Day of each calendar month and on the date such Prime Rate Advance
shall be paid in full, provided that during the continuance of an Event of
--------
Default, Prime Rate Advances shall bear interest at a rate per annum equal at
all times to the lesser of (i) the rate required to be paid on such Advance
immediately prior to the date on which such amount becomes due plus three
----
percent (3%) and (ii) the Maximum Rate.
(b) LIBOR Rate Advances. If such Advance is a LIBOR Rate Advance, a rate
-------------------
per annum (computed on the actual number of days elapsed, including the first
day and excluding the last, based on a 360 day year) equal at all times during
the Interest Period for such Advance to the lesser of (i) the LIBOR Rate for
such Interest Period plus the Applicable Margin and (ii) the Maximum Rate,
----
payable in arrears on the last day of such Interest Period, and on the date such
LIBOR Rate Advance shall be paid in full, and, with respect to LIBOR Rate
Advances having an Interest Period in excess of 30 days, the last day of each
calendar month during such Interest Period excluding the month in which such
LIBOR Rate Advance shall be paid in full; provided that during the continuance
--------
of an Event of Default, LIBOR Rate Advances shall bear interest at a rate per
annum equal at all times to the lesser of (i) the rate required to be paid on
such Advance immediately prior to the date on which such amount became due plus
----
three percent (3%) and (ii) the Maximum Rate.
(c) Usury Recapture. In the event the rate of interest chargeable under
---------------
this Agreement or the Notes at any time is greater than the Maximum Rate, the
unpaid principal amount of the Notes shall bear interest at the Maximum Rate
until the total amount of interest paid or accrued on the Notes equals the
amount of interest which would have been paid or accrued on the Notes if the
stated rates of interest set forth in this Agreement had at all times been in
effect. In the event, upon payment in full of the Notes, the total amount of
interest paid or accrued under the terms of this
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<PAGE>
Agreement and the Notes is less than the total amount of interest which would
have been paid or accrued if the rates of interest set forth in this Agreement
had, at all times, been in effect, then the Borrower shall, to the extent
permitted by applicable law, pay the Administrative Agent for the account of the
Banks an amount equal to the difference between (i) the lesser of (A) the amount
of interest which would have been charged on the Notes if the Maximum Rate had,
at all times, been in effect and (B) the amount of interest which would have
accrued on the Notes if the rates of interest set forth in this Agreement had at
all times been in effect and (ii) the amount of interest actually paid or
accrued under this Agreement on the Notes. In the event the Banks ever receive,
collect or apply as interest any sum in excess of the Maximum Rate, such excess
amount shall, to the extent permitted by law, be applied to the reduction of the
principal balance of the Notes, and if no such principal is then outstanding,
such excess or part thereof remaining shall be paid to the Borrower.
(d) Other Amounts Overdue. If any amount payable under this Agreement
---------------------
other than the Advances is not paid when due and payable, including without
limitation, accrued interest and fees, then such overdue amount shall accrue
interest hereon due and payable on demand at a rate per annum equal to the
Adjusted Prime Rate plus three percent (3%), from the date such amount became
----
due until the date such amount is paid in full.
(e) Late Payment Fee. Subject to the provisions of Section 11.12, if any
----------------
interest payable under this Agreement is not paid when due and payable (after
taking into account any applicable grace period), then the Borrower will pay to
the Banks contemporaneously with the payment of such past due interest a late
payment fee equal to an amount equal to the product of (i) such overdue interest
times (ii) four percent (4%).
- -----
Section 2.07 Prepayments.
-----------
(a) Right to Prepay. The Borrower shall have no right to prepay any
---------------
principal amount of any Advance except as provided in this Section 2.07.
(b) Optional Prepayments. The Borrower may elect to prepay any of the
--------------------
Advances, after giving by 11:00 a.m. (Dallas, Texas time) (i) in the case of
LIBOR Rate Advances, at least three Business Days' or (ii) in case of Prime Rate
Advances, at least one Business Day's prior written notice to the Administrative
Agent stating the proposed date and aggregate principal amount of such
prepayment, and if applicable, the relevant Interest Period for the Advances to
be prepaid. If any such notice is given, the Borrower shall prepay Advances
comprising part of the same Borrowing
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<PAGE>
in whole or ratably in part in an aggregate principal amount equal to the amount
specified in such notice, and shall also pay accrued interest to the date of
such prepayment on the principal amount prepaid and amounts, if any, required to
be paid pursuant to Section 2.08 as a result of such prepayment being made on
such date; provided, however, that each partial prepayment shall be in an
-------- -------
aggregate principal amount not less than $1,000,000 and in integral multiples of
$100,000.
(c) Mandatory Prepayments.
---------------------
(i) Change of Control. On the fifth Business Day following the
-----------------
Borrower's receipt of a Termination Notice pursuant to Section 2.04(a)
hereof, the Borrower shall be required to prepay all outstanding Advances
in full.
(ii) Total Availability Deficiency. (A) On or prior to the fifth
-----------------------------
(5th) Business Day following a Total Availability Determination Date
occurring under the provisions of Sections 2.14(b) or (c) and (B) on or
prior to the thirtieth (30th) Business Day following a Total Availability
Determination Date occurring under the provisions of Sections 2.14(a), the
Borrower shall be required to prepay Advances or prepay Senior Obligations
in an aggregate amount equal to the excess of (Y) the aggregate amount of
outstanding Advances on such date over (Z) the lesser of (1) the Total
Availability, as determined on such Total Availability Determination Date
or (2) the aggregate Commitments at such time.
(iii) Capitalization Event. If any Capitalization Event shall occur
--------------------
and any Net Cash Proceeds of such Capitalization Event are not used to make
an Investment permitted pursuant to the provisions of Section 6.07, then at
the Borrower's election the Borrower shall prepay either (A) Advances (if
no Blockage Period is in effect) or (B) the Senior Obligations on the
Business Day such Net Cash Proceeds are received by the Borrower or the
Parent, as applicable, in an amount equal to the lesser of (A) the amount
of the outstanding Advances and Senior Obligations on such Business Day and
(B) 100% of the Net Cash Proceeds of such Capitalization Event not used to
make an Investment permitted pursuant to the provisions of Section 6.07.
(iv) Accrued Interest. Each prepayment pursuant to this Section
----------------
2.07(c) shall be accompanied by accrued interest on the amount prepaid to
the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.08 as a result of such prepayment being made on such
date.
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<PAGE>
(v) Avoidance of Breakage Costs. In the event that the amount of
---------------------------
any mandatory prepayment of Advances under this Section 2.07(c) exceeds the
aggregate principal amount of Advances which consist of Prime Rate Advances
(the amount of such excess being the "Excess Amount"), the Borrower shall
-------------
have the right, in lieu of making such prepayment in full, to prepay such
outstanding Advances which are Prime Rate Advances and to deposit an amount
equal to the Excess Amount with the Administrative Agent in the Cash
Collateral Account maintained by and in the sole dominion and control of
the Administrative Agent for the ratable benefit of the Banks. Any amount
so deposited shall be held by the Administrative Agent as collateral for
the Obligations, earn interest on behalf of the Borrower and be applied to
the prepayment of Advances which are LIBOR Rate Advances at the end of the
current Interest Period(s) applicable thereto. On any day on which amounts
collected in the Cash Collateral Account remain on deposit in or to the
credit of the Cash Collateral Account after giving effect to the payment
made on such day pursuant to this Section 2.07(c), and the Borrower shall
have delivered to the Administrative Agent a written request or a
telephonic request (which shall be promptly confirmed in writing) prior to
11:00 am (Dallas, Texas time) that such remaining collected amounts be
invested in cash equivalents specified in such request, the Administrative
Agent shall invest such funds, to the extent the Administrative Agent is
reasonably able to do so, in such cash equivalents as are acceptable to,
and with no risk to, the Administrative Agent on an overnight basis or with
maturities such that amounts will be available to pay the Obligations
secured thereby as they become due, whether at maturity, by acceleration or
otherwise; provided, however, that any loss resulting from such investments
-------- -------
shall be charged to and be immediately payable by the Borrower on demand by
the Administrative Agent.
(d) Ratable Payments. Each payment of any Advance pursuant to this
----------------
Section 2.07 or any other provision of this Agreement shall be made in a manner
such that all Advances comprising part of the same Borrowing are paid in whole
or ratably in part.
(e) Effect of Notice. All notices given pursuant to this Section 2.07
----------------
shall be irrevocable and binding upon the Borrower.
Section 2.08 Breakage Costs. If (a) any payment of principal of any
--------------
LIBOR Rate Advance is made other than on the last day of the Interest Period for
such Advance as a result of any payment pursuant to Section 2.07 or the
acceleration of the maturity of the Notes pursuant to Article VIII or otherwise;
(b) any Conversion of a LIBOR Rate Advance is made other than on the last day of
the
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<PAGE>
Interest Period for such Advance pursuant to Section 2.12 or otherwise; or (c)
the Borrower fails to make a principal or interest payment with respect to any
LIBOR Rate Advance on the date such payment is due and payable, the Borrower
shall, within 10 days of any written demand sent by any Bank to the Borrower
through the Administrative Agent, pay to the Administrative Agent for the
account of such Bank any amounts (without duplication of any other amounts
payable in respect of breakage costs) required to compensate such Bank for any
additional losses, out-of-pocket costs or expenses which it may reasonably incur
as a result of such payment or nonpayment, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Bank to fund or maintain such Advance.
Section 2.09 Increased Costs.
---------------
(a) LIBOR Rate Advances. If, due to either (i) the introduction of or any
-------------------
change (other than any change by way of imposition or increase of reserve
requirements included in the calculation of the LIBOR Rate) in or in the
interpretation of any law or regulation following the date of this Agreement or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) not complied
with prior to the date of this Agreement, there shall be any increase in the
cost to any Bank of agreeing to make or making, funding or maintaining LIBOR
Rate Advances, then the Borrower shall from time to time, upon demand by such
Bank (with a copy of such demand to the Administrative Agent), immediately pay
to the Administrative Agent for the account of such Bank additional amounts
(without duplication of any other amounts payable in respect of increased costs)
sufficient to compensate such Bank for such increased cost; provided, however,
-------- -------
that, before making any such demand, each Bank agrees to use commercially
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost and would not, in the reasonable judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate as to the amount of such
increased cost and detailing the calculation of such cost submitted to the
Borrower and the Administrative Agent by such Bank at the time such Bank demands
payment under this Section shall be conclusive and binding for all purposes,
absent manifest error.
(b) Capital Adequacy. If any Bank determines in good faith that
----------------
compliance with any law or regulation or any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) implemented or effective after the date of this Agreement affects or would
affect the amount of capital required or expected to be maintained by such Bank
and
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<PAGE>
that the amount of such capital is increased by or based upon the existence of
such Bank's commitment to lend and other commitments of this type, then, upon 30
days prior written notice by such Bank(with a copy of any such demand to the
Administrative Agent), the Borrower shall immediately pay to the Administrative
Agent for the account of such Bank from time to time as specified by such Bank,
additional amounts (without duplication of any other amounts payable in respect
of increased costs) sufficient to compensate such Bank, in light of such
circumstances, to the extent that such Bank reasonably determines such increase
in capital to be allocable to the existence of such Bank's commitment to lend
under this Agreement. A certificate as to such amounts and detailing the
calculation of such amounts submitted to the Borrower and the Administrative
Agent by such Bank shall be conclusive and binding for all purposes, absent
manifest error.
Section 2.10 Payments and Computations.
-------------------------
(a) Payment Procedures. Except if otherwise set forth herein, the
------------------
Borrower shall make each payment under this Agreement and under the Notes not
later than 11:00 a.m. (Dallas, Texas time) on the day when due in Dollars to the
Administrative Agent at the location referred to in the Notes (or such other
location as the Administrative Agent shall designate in writing to the Borrower)
in same day funds. The Administrative Agent will on the same day cause to be
distributed like funds relating to the payment of principal, interest or fees
ratably (other than amounts payable solely to the Administrative Agent, or a
specific Bank pursuant to Section 2.03(b), 2.03(c), 2.06(c), 2.08, 2.09, 2.11,
2.12, or 2.13(c) but after taking into account payments effected pursuant to
Section 11.04) to the Banks in accordance with each Bank's Pro Rata Share for
the account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Bank for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement.
(b) Computations. All computations of interest based on the Adjusted
------------
Prime Rate shall be made by the Administrative Agent on the basis of a year of
365 days and all computations of fees and interest based on the LIBOR Rate and
the Federal Funds Rate shall be made by the Administrative Agent on the basis of
a year of 360 days, in each case for the actual number of days (including the
first day, but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent of
an interest rate shall be conclusive and binding for all purposes, absent
manifest error.
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<PAGE>
(c) Non-Business Day Payments. Whenever any payment shall be stated to be
-------------------------
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
- --------
principal of LIBOR Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) Administrative Agent Reliance. Unless the Administrative Agent shall
-----------------------------
have received written notice from the Borrower prior to the date on which any
payment is due to the Banks that the Borrower will not make such payment in
full, the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such date an amount equal to the amount then due such Bank. If and to
the extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Bank, together with
interest, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Administrative Agent, at the
Federal Funds Rate for each such day.
(e) Application of Payments. Unless otherwise specified in Section 2.07
-----------------------
hereof, whenever any payment received by the Administrative Agent under this
Agreement is insufficient to pay in full all amounts then due and payable under
this Agreement and the Notes, such payment shall be distributed and applied by
the Administrative Agent and the Banks in the following order: first, to the
-----
payment of fees and expenses due and payable to the Administrative Agent under
and in connection with this Agreement or any other Credit Document; second, to
------
the payment of all expenses due and payable under Section 2.11(c), ratably among
the Banks in accordance with the aggregate amount of such payments owed to each
such Bank; third, to the payment of all other fees due and payable under Section
-----
2.03; and fourth, to the payment of the interest accrued on and the principal
------
amount of all of the Notes, regardless of whether any such amount is then due
and payable, ratably among the Banks in accordance with the aggregate accrued
interest plus the aggregate principal amount owed to such Bank.
(f) Register. The Administrative Agent shall record in the Register the
--------
Commitment and the Advances from time to time of each Bank and each repayment or
prepayment in respect to the principal amount of such Advances of each Bank.
Any such recordation shall be conclusive and binding on the Borrower and each
Bank, absent manifest error; provided however, that failure to
-------- -------
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<PAGE>
make any such recordation, or any error in such recordation, shall not affect
the Borrower's obligations hereunder in respect of such Advances.
Section 2.11 Taxes.
-----
(a) No Deduction for Certain Taxes. Any and all payments by the Borrower
------------------------------
shall be made, in accordance with Section 2.10, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Bank and the Administrative Agent, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the laws of which
such Bank or the Administrative Agent (as the case may be) is organized or any
political subdivision of the jurisdiction (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes") and, in the case of each Bank, Taxes by the jurisdiction
of such Bank's Applicable Lending Office or any political subdivision of such
jurisdiction. If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable to any Bank or the Administrative Agent, (i)
the sum payable shall be increased as may be necessary so that, after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.11), such Bank or the Administrative Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made; provided, however, that if the Borrower's obligation to
--------
deduct or withhold Taxes is caused solely by such Bank's or the Administrative
Agent's failure to provide the forms described in paragraph (e) of this Section
2.11 and such Bank or the Administrative Agent could have provided such forms,
no such increase shall be required; (ii) the Borrower shall make such
deductions; and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
Legal Requirements.
(b) Other Taxes. In addition, the Borrower agrees to pay any present or
-----------
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification. The Borrower indemnifies each Bank and the
---------------
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.11) paid by such Bank or the
Administrative Agent (as the case may be) and any liability (including interest
and
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<PAGE>
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Each payment required to be
made by the Borrower in respect of this indemnification shall be made to the
Administrative Agent for the benefit of any party claiming such indemnification
within 30 days from the date the Borrower receives written demand detailing the
calculation of such amounts therefor from the Administrative Agent on behalf of
itself as Administrative Agent, or any such Bank. If any Bank or the
Administrative Agent receives a refund in respect of any Taxes or Other Taxes
paid by the Borrower under this paragraph (c), such Bank or the Administrative
Agent, as the case may be, shall promptly pay to the Borrower the Borrower's
share of such refund.
(d) Evidence of Tax Payments. The Borrower will pay prior to delinquency
------------------------
all Taxes and Other Taxes payable in respect of any payment. Within 30 days
after the date of any payment of Taxes, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 11.02, the original
or a certified copy of a receipt evidencing payment of such Taxes or Other
Taxes.
(e) Foreign Bank Withholding Exemption. Each Bank that is not
----------------------------------
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Administrative Agent on the
date of this Agreement or upon the effectiveness of any Assignment and
Acceptance (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Bank is entitled to receive payments under
this Agreement and the Notes payable to it, without deduction or withholding of
any United States federal income taxes, (ii) if applicable, an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax, and (iii) any
other governmental forms which are necessary or required under an applicable tax
treaty or otherwise by law to reduce or eliminate any withholding tax, which
have been reasonably requested by the Borrower. Each Bank which delivers to the
Borrower and the Administrative Agent a Form 1001 or 4224 and Form W-8 or W-9
pursuant to the next preceding sentence further undertakes to deliver to the
Borrower and the Administrative Agent two further copies of Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower and
the Administrative Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower and the Administrative Agent certifying
in the case of a Form 1001 or 4224 that such Bank is entitled to
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receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. If an event (including without limitation
any change in treaty, law or regulation) has occurred prior to the date on which
any delivery required by the preceding sentence would otherwise be required
which renders all such forms inapplicable or which would prevent any Bank from
duly completing and delivering any such letter or form with respect to it and
such Bank advises the Borrower and the Administrative Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax, such Bank shall not be
required to deliver such forms. The Borrower shall withhold tax at the rate and
in the manner required by the laws of the United States with respect to payments
made to a Bank failing to timely provide the requisite Internal Revenue Service
forms.
Section 2.12 Illegality. If any Bank shall notify the Administrative
----------
Agent and the Borrower that the introduction of or any change in or in the
interpretation of any Legal Requirement makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful for such Bank
or its LIBOR Lending Office to perform its obligations under this Agreement to
maintain any LIBOR Rate Advances of such Bank then outstanding hereunder, then,
notwithstanding anything herein to the contrary, the Borrower shall, if demanded
by such Bank by notice to the Borrower and the Administrative Agent no later
than 11:00 a.m. (Dallas, Texas time), (a) if not prohibited by Legal Requirement
to maintain such LIBOR Rate Advances for the duration of the Interest Period, on
the last day of the Interest Period for each outstanding LIBOR Rate Advance of
such Bank or (b) if prohibited by Legal Requirement to maintain such LIBOR Rate
Advances for the duration of the Interest Period, on the second Business Day
following its receipt of such notice from such Bank, Convert all LIBOR Rate
Advances of such Bank then outstanding to Prime Rate Advances, and pay accrued
interest on the principal amount Converted to the date of such Conversion and
amounts, if any, required to be paid pursuant to Section 2.08 as a result of
such Conversion being made on such date. Each Bank agrees to use commercially
reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of such Bank, be otherwise disadvantageous
to such Bank.
Section 2.13 [Intentionally Left Blank]
--------------------------
Section 2.14 Determination of Total Availability. The Total Availability
-----------------------------------
shall be determined by the Administrative Agent, as follows:
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(a) Quarterly. On the 50th day following each calendar quarter the
---------
Administrative Agent shall determine the Total Availability upon receipt of a
Compliance Certificate setting forth the Parent's and the Parent's Subsidiaries'
Consolidated Adjusted EBITDA for the Rolling Period just ended.
(b) Property Adjustments. Following each acquisition of a Hotel Property
--------------------
or Asset Disposition (an "Adjustment Event"), and the Administrative Agent's
----------------
receipt of a Property Adjustment Report with respect thereto, the Administrative
Agent shall adjust the Total Availability accordingly.
(c) Reduction of Commitments. Following each reduction of the Commitments
------------------------
pursuant to the provisions of Section 2.04.
(d) Notice of Total Availability Change. Promptly following any date the
-----------------------------------
Total Availability is redetermined in accordance with the preceding paragraphs,
the Administrative Agent shall give notice to the Banks and the Borrower of the
new Total Availability.
Section 2.15 Bank Replacement.
----------------
(a) Right to Replace. The Borrower shall have the right to replace each
----------------
Bank affected by a condition under Section 2.02(c)(v), 2.09, 2.11, or 2.12 for
more than 90 days (each such affected Bank, an "Affected Bank") in accordance
with the procedures in this Section 2.15 and provided that no reduction of the
total Commitments occurs as a result thereof.
(b) First Right of Refusal; Replacement.
-----------------------------------
(i) Upon the occurrence of any condition permitting the replacement
of a Bank, each Bank which is not an Affected Bank shall have the right,
but not the obligation, to elect to increase its respective Commitment by
an amount not to exceed the amount of the Commitments of the Affected
Banks, which election shall be made by written notice from each such Bank
to the Administrative Agent and the Borrower given within 30 days after the
date such condition occurs specifying the amount of such proposed increase
in such Bank's Commitment.
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(ii) If the aggregate amount of the proposed increases in
Commitments of all such Banks making such an election is in excess of the
Commitments of the Affected Banks, (A) the Commitments of the Affected
Banks shall be allocated pro rata among such Banks based on the respective
amounts of the proposed increases to Commitments elected by each of such
Banks, and (B) the respective Commitments of such Banks shall be increased
by the respective amounts as so allocated so that after giving effect to
such termination and increases the aggregate amount of the Commitments of
the Banks will be the same as prior to such termination.
(iii) If the aggregate amount of the proposed increases to
Commitments of all Banks making such an election equals the Commitments of
the Affected Banks, the respective Commitments of such Banks shall be
increased by the respective amounts of their proposed increases, so that
after giving effect to such termination and increase the aggregate amount
of the Commitments of all of the Banks will be the same as prior to such
termination.
(iv) If the aggregate amount of the proposed increases to
Commitments of all Banks making such an election is less than the
Commitments of the Affected Banks, (A) the respective Commitments of such
Banks shall be increased by the respective amounts of their proposed
increases, and (B) the Borrower shall have the right to add additional
Banks which are Eligible Assignees to this Agreement to replace such
Affected Banks, which additional Banks would have aggregate Commitments no
greater than those of the Affected Banks minus the amounts thereof assumed
-----
by the other Banks pursuant to such increases.
(c) Procedure. Any assumptions of Commitments pursuant to this Section
---------
2.15 shall be (i) made by the purchasing Bank or Eligible Assignee and the
selling Bank entering into an Assignment and Assumption and by following the
procedures in Section 11.06 for adding a Bank. In connection with the increase
of the Commitments of any Bank pursuant to the foregoing paragraph (b), each
Bank with an increased Commitment shall purchase from the Affected Banks at par
such Bank's ratable share of the outstanding Advances of the Affected Banks.
Section 2.16 Sharing of Payments, Etc. If any Bank shall obtain any
------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of its Advances in excess of its Pro Rata Share
of payments on account of the Advances obtained by all the Banks, such Bank
shall notify the Administrative Agent and forthwith purchase from the other
Banks such participations in the Advances made by them as shall be necessary to
cause such
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purchasing Bank to share the excess payment ratably in accordance with the
requirements of this Agreement with each of them; provided, however, that if all
--------
or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and such Bank
shall repay to the purchasing Bank the purchase price to the extent of such
Bank's ratable share (according to the proportion of (a) the amount of the
participation sold by such Bank to the purchasing Bank as a result of such
excess payment to (b) the total amount of such excess payment) of such recovery,
together with an amount equal to such Bank's ratable share (according to the
proportion of (a) the amount of such Bank's required repayment to the purchasing
Bank to (b) the total amount of all such required repayments to the purchasing
Bank) of any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. The Borrower agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section 2.16 may,
to the fullest extent permitted by Legal Requirement, unless and until rescinded
as provided above, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrower in the amount of such participation.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to initial Advance. The obligation of
---------------------------------------
each Bank to make its initial Advance as part of the initial Borrowing are
subject to the following conditions precedent being satisfied on or prior to
February 28, 1998:
(a) Documentation. The Documentation Agent or the Administrative Agent
-------------
shall have received counterparts of this Agreement executed by the Borrower and
the Banks, and the following duly executed by all the parties thereto, in form
and substance satisfactory to the Agents, and, with respect to this Agreement,
all Subordinate Guaranties and the Environmental Indemnity, in sufficient
copies for each Bank:
(i) the Notes, all Subordinate Guaranties, and the Environmental
Indemnity;
(ii) a certificate from the Chief Executive Officer, President or
Chief Financial Officer of the General Partner on behalf of the Borrower
dated as of the Effective Date stating that as of the Effective Date (A)
all representations and warranties of the Borrower
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set forth in this Agreement and the Credit Documents are true and correct
in all material respects; (B) no Default has occurred and is continuing;
(C) the conditions in this Section 3.01 have been met or waived in writing;
and (D) to the best of the Borrower's knowledge there are no claims,
defenses, counterclaims or offsets against the Banks under the Credit
Documents;
(iii) a certificate of the Secretary or an Assistant Secretary of the
General Partner on behalf of the Borrower and each Guarantor dated as of
the date of this Agreement certifying as of the date of this Agreement (A)
the names and true signatures of officers or authorized representatives of
the general partner of the Borrower and such Guarantor authorized to sign
the Credit Documents to which such Person is a party as general partner of
such Person, (B) resolutions of the Board of Directors or the members of
the general partner of such Person with respect to the transactions herein
contemplated, (C) either (x) the copies of the organizational documents of
the general partner of such Person delivered to the Banks are still true
and correct and have not been amended or modified since such date or (y)
copies of any modification or amendment to the organizational documents of
the general partner of such Person made since such date, (D) a true and
correct copy of the partnership agreement for such Person, (E) a true and
correct copy of all partnership authorizations necessary or desirable in
connection with the transactions herein contemplated and (F) a true and
correct copy of all Senior Credit Documents;
(iv) a certificate of the Secretary or an Assistant Secretary of the
Parent dated as of the date of this Agreement certifying as of the date of
this Agreement (A) resolutions of the Board of Directors of such Person
with respect to the transactions herein contemplated, (B) the copies of the
charter and bylaws of the Parent and any modification or amendment to the
articles or certificate of incorporation or bylaws of the Parent made since
such date and (C) the calculation of the Parent's and the Parent's
Subsidiaries Consolidated Adjusted EBITDA for the Rolling Period preceding
such date and Total Availability as of such date in such detail as the
Agents shall reasonably request;
(v) (A) one or more favorable written opinions of Battle Fowler
L.L.P., special counsel for the Borrower, the Parent, and their
Subsidiaries, substantially in the form of the attached Exhibit I, in each
case dated as of the Closing Date and with such changes as the Agents may
approve, (B) one or more favorable written opinions of Kane, Russell,
Coleman & Logan, special Texas counsel for the Borrower, the Parent, and
the Manager and their
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<PAGE>
Subsidiaries, in a form reasonably acceptable to the Agents, in each case
dated as of the Closing Date and with such changes as the Agents may
approve, and (C) such other legal opinions as either of the Agents shall
reasonably request, in each case dated as of the Closing Date and with such
changes as the Agents may approve; and
(vi) such other documents, governmental certificates, agreements,
lien searches as either Agent may reasonably request.
(b) Representations and Warranties. The representations and warranties
------------------------------
contained in Article IV hereof, the Subordinate Guaranties, and the
Environmental Indemnities shall be true and correct in all material respects.
(c) Certain Payments. The Borrower shall have paid the fees required to be
----------------
paid as of the execution of this Credit Agreement pursuant to the Fee Letter.
(d) Senior Credit Agreement. The Senior Credit Documents shall have been
-----------------------
fully-executed.
Section 3.02 Conditions Precedent for each Borrowing. The obligation of
---------------------------------------
each Bank to fund an Advance on the occasion of each Borrowing (other than the
Conversion or continuation of any existing Borrowing) shall be subject to the
further conditions precedent that on the date of such Borrowing:
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing):
(i) the representations and warranties contained in Article IV
hereof, the Subordinate Guaranties, and the Environmental Indemnities and
are correct in all material respects on and as of the date of such
Borrowing, before and after giving effect to such Borrowing and to the
application of the proceeds from such Borrowing, as though made on and as
of such date; and
(ii) no Default has occurred and is continuing or would result from
such Borrowing or from the application of the proceeds therefrom;
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<PAGE>
(b) the Borrower shall have executed and delivered to the Administrative
Agent a certificate dated not earlier than the date 10 days prior to the
anticipated date of such Borrowing setting forth the calculation of the Parent's
and the Parent's Subsidiaries Consolidated Adjusted EBITDA for the Rolling
Period preceding such date and Total Availability as of such date in such detail
as the Agents shall reasonably request; and
(c) the Administrative Agent shall have received such other approvals,
opinions or documents deemed necessary or desirable by any Bank, the
Documentation Agent or the Administrative Agent as such party may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.01 Existence; Qualification; Partners; Subsidiaries.
------------------------------------------------
(a) The Borrower is a limited partnership duly organized, validly
existing, and in good standing under the laws of Delaware and in good standing
and qualified to do business in each jurisdiction where its ownership or lease
of property or conduct of its business requires such qualification, except where
the failure to so qualify would not have a material adverse effect on the
Borrower.
(b) The Parent is a corporation duly organized, validly existing, and in
good standing under the laws of Maryland and in good standing and qualified to
do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Parent. The Parent
owns 100% of the issued and outstanding shares of the General Partner and AGH
LP. The Parent has no first tier Subsidiaries (other than the General Partner
and AGH LP).
(c) The General Partner is the Borrower's sole general partner with full
power and authority to bind the Borrower. The General Partner is a corporation
duly organized, validly existing, and in good standing under the laws of Nevada
and in good standing and qualified to do business in each jurisdiction where its
ownership or lease of property or conduct of its business
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<PAGE>
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the General Partner.
(d) AGH LP is a limited partnership duly organized, validly existing, and
in good standing under the laws of Nevada and in good standing and qualified to
do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on AGH LP.
(e) As of the date of this Agreement, the General Partner owns a 1%
general partner interest in and AGH LP owns an approximately 83.83% limited
partnership interest in the Borrower.
(f) Each Subsidiary of the Borrower is a limited partnership, general
partnership or limited liability company duly organized, validly existing, and
in good standing under the laws of its jurisdiction of formation and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on such Subsidiary. The Borrower has no Subsidiaries on the date of this
Agreement other than the Subsidiaries listed on the attached Schedule 4.01, and
Schedule 4.01 lists the jurisdiction of formation and the address of the
principal office of each such Subsidiary existing on the date of this Agreement.
As of the date of this Agreement, the Borrower owns, directly or indirectly, at
least 99% of the interests in each such Subsidiary.
(g) To the knowledge of the Borrower, each Participating Lessee is a
limited partnership duly organized, validly existing, and in good standing under
the laws of the state of its creation and in good standing and qualified to do
business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Participating Lessee.
To the knowledge of the Borrower, the sole general partner of AGH Leasing is
AGHL GP, Inc. As of the date of this Agreement, to the knowledge of Borrower,
James Sowell, Louis Shaw and Kenneth Shaw legally and beneficially own, directly
or indirectly, approximately 77% of the partnership interests in AGH Leasing.
As of the date of this Agreement, to the knowledge of Borrower, Steven D. Jorns,
Bruce G. Wiles, and Kenneth E. Barr legally and beneficially own approximately
23% of the partnership interests in AGH Leasing. To the knowledge of the
Borrower, the sole general partner of TT Leasing is AGH Leasing. As of the date
of this Agreement, to the knowledge of Borrower, AGH
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<PAGE>
Leasing legally and beneficially owns, directly or indirectly, approximately 51%
of the partnership interests in TT Leasing.
(h) To the knowledge of Borrower, AGHI is a corporation duly organized,
validly existing, and in good standing under the laws of Texas and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on AGHI. To the knowledge of the Borrower, as of the date of this Agreement,
James Sowell, Louis Shaw and Kenneth Shaw legally and beneficially own, directly
or indirectly, approximately 79% of the outstanding shares of AGHI common stock.
To the knowledge of the Borrower, as of the date of this Agreement, Steven D.
Jorns and Bruce G. Wiles legally and beneficially own approximately 21% of the
outstanding shares of AGHI common stock.
Section 4.02 Partnership and Corporate Power. The execution, delivery,
-------------------------------
and performance by the Borrower, the Parent, and each Guarantor of the Credit
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby (a) are within such Persons' partnership,
limited liability company and corporate powers, as applicable, (b) have been
duly authorized by all necessary corporate, limited liability company and
partnership action, as applicable, (c) do not contravene (i) such Person's
certificate or articles, as the case may be, of incorporation or by-laws,
operating agreement or partnership agreement, as applicable, or (ii) any law or
any contractual restriction binding on or affecting any such Person, the
contravention of which could reasonably be expected to cause a Material Adverse
Change, and (d) will not result in or require the creation or imposition of any
Lien prohibited by this Agreement. At the time of each Borrowing, such
Borrowing and the use of the proceeds of such Borrowing will be within the
Borrower's partnership powers, will have been duly authorized by all necessary
partnership action, (a) will not contravene (i) the Borrower's partnership
agreement or (ii) any law or any contractual restriction binding on or affecting
the Borrower, the contravention of which could reasonably be expected to cause a
Material Adverse Change, and (b) will not result in or require the creation or
imposition of any Lien prohibited by this Agreement.
Section 4.03 Authorization and Approvals. No authorization or approval
---------------------------
or other action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery and performance by the Borrower, the
Parent, or any Guarantor of the Credit Documents to which it is a party or the
consummation of the transactions contemplated thereby. At the time of each
Borrowing, no authorization or approval or other action by, and no notice to or
filing with, any
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Governmental Authority will be required for such Borrowing or the use of the
proceeds of such Borrowing the absence of which could reasonably be expected to
cause a Material Adverse Change.
Section 4.04 Enforceable Obligations. This Agreement, the Notes, and the
-----------------------
other Credit Documents to which the Borrower is a party have been duly executed
and delivered by the Borrower; each Subordinate Guaranty and the other Credit
Documents to which each Guarantor and the Parent is a party have been duly
executed and delivered by such Guarantor and the Environmental Indemnity has
been duly executed and delivered by the parties thereto. Each Credit Document
is the legal, valid, and binding obligation of the Borrower, the Parent, and
each Guarantor which is a party to it enforceable against the Borrower, the
Parent, and each such Guarantor in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights generally
and by general principles of equity (whether considered in proceeding at law or
in equity).
Section 4.05 Parent Common Stock. The entire authorized capital stock of
-------------------
the Parent consists of 100,000,000 shares of Parent Common Stock of which
21,804,480 shares of Parent Common Stock are duly and validly issued and
outstanding, fully paid and nonassessable as of February 1, 1998. The issuance
and sale of such Parent Common Stock either (i) has been registered under
applicable federal and state securities laws or (ii) was issued pursuant to an
exemption therefrom. The Parent Common Stock shall at all times be duly listed
on the New York Stock Exchange, Inc. and the Parent shall use commercially
reasonable efforts to timely file all reports required to be filed by it with
the New York Stock Exchange, Inc. and the Securities and Exchange Commission.
The Parent qualifies as a REIT.
Section 4.06 Financial Statements.
--------------------
The Consolidated balance sheet of the Parent and its Subsidiaries, and
the related Consolidated statements of operations, shareholders' equity and cash
flows, of the Parent and its Subsidiaries contained in the Financial Statements,
fairly present the financial condition in all material respects and reflects the
Indebtedness of the Parent and its Subsidiaries as of the dates indicated in the
Financial Statements and the results of the operations of the Parent and its
Subsidiaries for the periods indicated, and such balance sheet and statements
were prepared in accordance with GAAP, subject to year-end adjustments. Since
the date of such statements, no Material Adverse Change has occurred. The
Minority Interest Adjustment amount as of December 31, 1997 is approximately
$10,300,000.
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Section 4.07 True and Complete Disclosure. No representation, warranty,
----------------------------
or other statement made by the Borrower (or on behalf of the Borrower) in this
Agreement or any other Credit Document contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made as of the date of this Agreement. There is no fact known
to any Responsible Officer of the Borrower or the Parent on the date of this
Agreement that has not been disclosed to the Agents which could reasonably be
expected to cause a Material Adverse Change. All projections, estimates, and
pro forma financial information furnished by the Borrower and the Parent or on
behalf of the Borrower or the Parent were prepared on the basis of assumptions,
data, information, tests, or conditions believed to be reasonable at the time
such projections, estimates, and pro forma financial information were furnished.
No representation, warranty or other statement made in the Parent's latest 10K,
the 10Q or the annual report contains any untrue statement of material fact or
omits to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made as
of the date same were made. Borrower and/or Parent have made all filings
required by the Exchange Act.
Section 4.08 Litigation. Except as set forth in the attached Schedule
----------
4.08, there is no pending or, to the best knowledge of the Borrower, threatened
action or proceeding affecting the Borrower, the Parent, the Manager, any
Participating Lessee or any of their respective Subsidiaries before any court,
Governmental Authority or arbitrator (provided that with respect to the giving
of this representation after the date of this Agreement, the representation
shall only be deemed to apply to those matters for which Administrative Agent
would have been entitled to notice under Section 5.05(n)).
Section 4.09 Use of Proceeds.
---------------
(a) Advances. The proceeds of the Advances have been, and will be used by
--------
the Borrower (i) to refinance other existing Indebtedness secured by Hotel
Properties, (ii) to make investments permitted pursuant to the provisions of
Section 6.07, (iii) to finance the renovation, repair, restoration and expansion
of Hotel Properties, Capital Expenditures for and expenditures for FF&E for any
Hotel Properties in accordance with the provisions of Section 5.06 and as
permitted pursuant to the provisions of Sections 6.07 and 6.14, (iv) for general
corporate purposes of the Borrower and its Subsidiaries, (v) for costs incurred
in connection with any Capitalization Event done in compliance with this
Agreement.
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(b) Regulations. No proceeds of Advances will be used to purchase or carry
-----------
any margin stock in violation of Regulations G, T, U or X of the Federal Reserve
Board, as the same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Federal Reserve Board).
Section 4.10 Investment Company Act. Neither the Borrower, the Parent
----------------------
nor any of their respective Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 4.11 Taxes. All federal, state, local and foreign tax returns,
-----
reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by the Borrower, its Subsidiaries, or
any member of a Controlled Group have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns, reports and
statements are required to be filed, and where the failure to file could
reasonably be expected to cause a Material Adverse Change, except where
contested in good faith and by appropriate proceedings; and all taxes and other
impositions due and payable (which are material in amount) have been timely paid
prior to the date on which any fine, penalty, interest, late charge or loss
(which are material in amount) may be added thereto for non-payment thereof
except where contested in good faith and by appropriate proceedings. As of the
date of this Agreement, neither the Borrower nor any member of a Controlled
Group has given, or been requested to give, a waiver of the statute of
limitations relating to the payment of any federal, state, local or foreign
taxes or other impositions. None of the Property owned by the Borrower or any
other member of a Controlled Group is Property which the Borrower or any member
of a Controlled Group is required to be treated as being owned by any other
Person pursuant to the provisions of Section 168(f)(8) of the Code. Proper and
accurate amounts have been withheld by the Borrower and all members of each
Controlled Group from their employees for all periods to comply in all material
respects with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law. Timely payment of all
material sales and use taxes required by applicable law have been made by the
Borrower and all other members of each Controlled Group, the failure to timely
pay of which could reasonably be expected to cause a Material Adverse Change.
The amounts shown on all tax returns to be due and payable have been paid in
full or adequate provision therefor is included on the books of the appropriate
member of the applicable Controlled Group.
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Section 4.12 Pension Plans. All Plans are in compliance in all material
-------------
respects with all applicable provisions of ERISA. No Termination Event has
occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) has occurred and there has been no excise tax imposed
under Section 4971 of the Code. To the knowledge of any Responsible Officer of
the Borrower, no Reportable Event has occurred with respect to any Multiemployer
Plan, and each Multiemployer Plan has complied with and been administered in all
material respects with applicable provisions of ERISA and the Code. To the
knowledge of any Responsible Officer of the Borrower, neither the Borrower nor
any member of a Controlled Group has had a complete or partial withdrawal from
any Multiemployer Plan for which there is any material withdrawal liability. As
of the most recent valuation date applicable thereto, neither the Borrower nor
any member of a Controlled Group has received notice that any Multiemployer Plan
is insolvent or in reorganization.
Section 4.13 Condition of Hotel Property; Casualties; Condemnation.
-----------------------------------------------------
Except as disclosed in an Engineering Report, each Initial Property and any
Future Property except a Permitted Non-Eligible Property (a) is and will
continue to be in good repair, working order and condition, normal wear and tear
excepted, (b) is free of structural defects, (c) is not subject to material
deferred maintenance and (d) has and will have all building systems contained
therein and all other FF&E in good repair, working order and condition, normal
wear and tear excepted. None of the Properties of the Borrower or of any of its
Subsidiaries has been materially and adversely affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by a Governmental Authority, riot, activities
of armed forces or acts of God or of any public enemy. No condemnation or other
like proceedings that has had, or could reasonably be expected to result in, a
Material Adverse Effect, are pending and served nor, to the knowledge of the
Borrower, threatened against any Property in any manner whatsoever. No casualty
has occurred to any Property that could reasonably be expected to have a
Material Adverse Effect.
Section 4.14 Insurance. The Borrower and each of its Subsidiaries carry
---------
the insurance required pursuant to the provisions of Section 5.07.
Section 4.15 No Burdensome Restrictions; No Defaults.
---------------------------------------
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(a) Except in connection with Indebtedness which is (i) either permitted
pursuant to the provisions of Section 6.02, or (ii) being repaid with the
proceeds of the initial Borrowing, neither the Borrower nor any of its
Subsidiaries is a party to any indenture, loan or credit agreement. Neither the
Borrower, the Parent nor any of their respective Subsidiaries is a party to any
agreement or instrument or subject to any charter or corporate restriction or
provision of applicable law or governmental regulation which could reasonably be
expected to cause a Material Adverse Change. Neither the Borrower, the Parent
nor any of their Subsidiaries is in default under or with respect to (i) any
contract, agreement, lease or other instrument which could reasonably be
expected to cause a Material Adverse Change or (ii) any ground lease,
Participating Lease, franchise agreement or management agreement except as
disclosed to the Administrative Agent in writing prior to the date such
representation is deemed given. Neither the Borrower, the Parent nor any of
their Subsidiaries has received any notice of default under any material
contract, agreement, lease or other instrument which is continuing and which, if
not cured, could reasonably be expected to cause a Material Adverse Change.
(b) No Default has occurred and is continuing (or with respect to the
giving of this representation after the date of this Agreement, as otherwise
disclosed to the Administrative Agent in writing after the date of this
Agreement and prior to the date such representation is deemed given).
Section 4.16 Environmental Condition.
-----------------------
(a) Except as disclosed in the Environmental Reports (or with respect to
the giving of this representation after the date of this Agreement, as otherwise
disclosed to the Administrative Agent in writing after the date of this
Agreement and prior to the date such representation is deemed given), to the
knowledge of the Borrower, the Borrower and its Subsidiaries (i) have obtained
all Environmental Permits material for the ownership and operation of their
respective Properties and the conduct of their respective businesses; (ii) have
been and are in material compliance with all terms and conditions of such
Environmental Permits and with all other requirements of applicable
Environmental Laws; (iii) have not received notice of any violation or alleged
violation of any Environmental Law or Environmental Permit; and (iv) are not
subject to any actual or contingent Environmental Claim.
(b) Except as set forth in the Environmental Reports or the surveys for
the Hotel Properties, to the knowledge of Borrower, none of the present or
previously owned or operated Property of the Borrower or of any of its present
or former Subsidiaries, wherever located, (i) has
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been placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise investigated,
designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under any
Environmental Laws which could reasonably be expected to cause a Material
Adverse Change; (ii) is subject to a Lien, arising under or in connection with
any Environmental Laws, that attaches to any revenues or to any Property owned
or operated by the Borrower or any of its Subsidiaries, wherever located; (iii)
has been the site of any Release, use or storage of Hazardous Substances or
Hazardous Wastes from present or past operations except for Permitted Hazardous
Substances, which Permitted Hazardous Substances have not caused at the site or
at any third-party site any condition that has resulted in or could reasonably
be expected to result in the need for Response or (iv) none of the Improvements
are constructed on land designated by any Governmental Authority having land use
jurisdiction as wetlands.
Section 4.17 Legal Requirements, Zoning, Utilities, Access. Except as
---------------------------------------------
set forth on Schedule 4.17 attached hereto, the use and operation of each Hotel
Property as a commercial hotel with related uses constitutes a legal use under
applicable zoning regulations (as the same may be modified by special use
permits or the granting of variances) and complies in all material respects with
all Legal Requirements, and does not violate in any material respect any
material approvals, material restrictions of record or any material agreement
affecting any Hotel Property (or any portion thereof). The Borrower and its
Subsidiaries possess all certificates of public convenience, authorizations,
permits, licenses, patents, patent rights or licenses, trademarks, trademark
rights, trade names rights and copyrights (collectively "Permits") required by
Governmental Authority to own and operate the Hotel Properties, except for those
Permits if not obtained would not cause a Material Adverse Change. The Borrower
and its Subsidiaries own and operate their business in material compliance with
all applicable Legal Requirements. To the extent necessary for the full
utilization of each Hotel Property in accordance with its current use, telephone
services, gas, steam, electric power, storm sewers, sanitary sewers and water
facilities and all other utility services are available to each Hotel Property,
are adequate to serve each such Hotel Property, exist at the boundaries of the
Land and are not subject to any conditions, other than normal charges to the
utility supplier, which would limit the use of such utilities. All streets and
easements necessary for the occupancy and operation of each Hotel Property are
available to the boundaries of the Land.
Section 4.18 Existing Indebtedness. Except for the Obligations and the
---------------------
Senior Obligations, the only Indebtedness of the Borrower, the Parent or any of
their respective Subsidiaries existing as
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of the Effective Date is the Secured Non-Recourse Indebtedness and Secured
Recourse Indebtedness set forth on Schedule 4.18 attached hereto. No "default"
or "event of default", however defined, has occurred and is continuing under any
such Indebtedness (or with respect to the giving of this representation after
the date of this Agreement, as otherwise disclosed to the Administrative Agent
in writing after the date of this Agreement and prior to the date such
representation is deemed given).
Section 4.19 Title; Encumbrances. With respect to the Initial
-------------------
Properties, the Borrower or any Guarantor, as the case may be, has (i) good and
marketable fee simple title to the Real Property (other than for Real Property
subject to a ground lease, as to which it has a valid leasehold or subleasehold
interest) and (ii) good and marketable title to the Personal Property (other
than Personal Property for any Hotel Property (A) which has been leased which
does not in the aggregate exceed the Hotel Operating Lease Limit or the Hotel
Capital Lease Limit, as applicable, for such Hotel Property and (B) for which
the Property Owner has a valid leasehold interest) free and clear of all Liens,
and there exists no Liens or other charges against such Property or leasehold
interest or any of the real or personal, tangible or intangible, Property of the
Borrower or any Guarantor (including without limitation statutory and other
Liens of mechanics, workers, contractors, subcontractors, suppliers, taxing
authorities and others; provided that certain Capital Expenditures have been
made to the Hotel Properties prior to the Effective Date for which the payment
is not past due), except (A) Permitted Encumbrances and (B) the Personal
Property (plus any replacements thereof) owned by the Participating Lessee.
Section 4.20 Leasing Arrangements. The only material leases of Real
--------------------
Property for which either the Borrower or a Guarantor is a lessee are the Ground
Leases. The Property Owner for a Real Property subject to a ground lease is the
lessee under such ground lease and no consent is necessary to such Person being
the lessee under such ground lease which has not already been obtained. The
Ground Leases are in full force and effect and no defaults exist thereunder.
The only material leases burdening the Hotel Properties for which the lessee is
entitled to participate in the increased revenues of the Hotel Properties are
the Participating Leases. The Participating Leases are in full force and
effect and no defaults by the Borrower or any Subsidiary exist thereunder.
Section 4.21 Franchise Agreements. The only hotel franchise agreements
--------------------
burdening the Initial Properties (excluding the Permitted Non-Eligible
Properties) are the Franchise Agreements. The Participating Lessee for a Hotel
Property subject to a Franchise Agreement is the licensee under such Franchise
Agreement and no consent is necessary to such Person being the licensee under
such Franchise Agreement which has not already been obtained. The Franchise
Agreements are in full
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force and effect and no material defaults by the Borrower or any Subsidiary
exist thereunder (or with respect to the giving of this representation after the
date of this Agreement, as otherwise disclosed to the Administrative Agent in
writing after the date of this Agreement and prior to the date such
representation is deemed given). Schedule 4.21 sets forth, as of the date of
this Agreement, (a) which Franchise Agreements the Borrower expects to
terminate, (b) the expected date of such termination, (c) the expected fees, if
any, which will be owed to the Franchisor being terminated in connection with
such termination and (d) the expected replacement Franchisor and the material
terms of the expected replacement Franchise Agreement.
Section 4.22 Management Agreements. The only management agreements
---------------------
burdening the Initial Properties (excluding the Permitted Non-Eligible
Properties) are the Management Agreements. To the knowledge of the Borrower, the
Participating Lessee for a Hotel Property subject to a Management Agreement is
the owner under such Management Agreement and no consent is necessary to such
Person being the owner under such Management Agreement which has not already
been obtained. To the knowledge of the Borrower, the Management Agreements are
in full force and effect and no material defaults by the Participating Lessee
exist thereunder (or with respect to the giving of this representation after the
date of this Agreement, as otherwise disclosed to the Administrative Agent in
writing after the date of this Agreement and prior to the date such
representation is deemed given).
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid,, or any Bank shall have any Commitment hereunder, unless the
Administrative Agent shall otherwise consent in writing, the Borrower agrees to
comply with the following covenants.
Section 5.01 Compliance with Laws, Etc. The Borrower will comply, and
-------------------------
cause each of its Subsidiaries to comply, in all material respects with all
Legal Requirements.
Section 5.02 Preservation of Corporate Existence; Corporate Separateness,
------------------------------------------------------------
Etc.
- ---
(a) The Borrower will preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its partnership, limited liability
company or corporate (as applicable)
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existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified, and cause each such Subsidiary to
qualify and remain qualified, as a foreign partnership or corporation as
applicable in each jurisdiction in which qualification is necessary or desirable
in view of its business and operations or the ownership of its properties, and,
in each case, where failure to qualify or preserve and maintain its rights and
franchises could reasonably be expected to cause a Material Adverse Change.
(b) The Borrower shall cause the Permitted Other Subsidiaries which have
Indebtedness and own a Hotel Property to, (i) maintain financial statements,
payroll records, accounting records and other corporate records and other
documents separate from each other and any other Person, (ii) maintain its own
bank accounts in its own name, separate from each other and any other Person,
(iii) pay its own expenses and other liabilities from its own assets and incur
(or endeavor to incur) obligations to other Persons based solely upon its own
assets and creditworthiness and not upon the creditworthiness of each other or
any other Person, and (iv) file its own tax returns or, if part of a
consolidated group, join in the consolidated tax return of such group as a
separate member thereof. The Borrower shall use reasonable efforts to correct
any known misunderstanding or misrepresentation regarding the independence of
the Permitted Other Subsidiaries from the Borrower and the Borrower's other
Subsidiaries.
(c) The Borrower shall, and shall cause the Permitted Other Subsidiaries
which have Indebtedness and own a Hotel Property to, take all actions necessary
to keep such Permitted Other Subsidiaries, separate from the Borrower and the
Borrower's other Subsidiaries, including, without limitation, (i) the taking of
action under the direction of the Board of Directors, members or partners, as
applicable, of such Permitted Other Subsidiaries and, if so required by the
Certificate of Incorporation or the Bylaws, operating agreement or partnership
agreement, as applicable, of such Permitted Other Subsidiaries or by any Legal
Requirement, the approval or consent of the stockholders, members or partners,
as applicable, of such Permitted Other Subsidiaries, (ii) the preparation of
corporate, partnership or limited liability company minutes for or other
appropriate evidence of each significant transaction engaged in by such
Permitted Other Subsidiaries, (iii) the observance of separate approval
procedures for the adoption of resolutions by the Board of Directors or consents
by the partners, as applicable, of such Permitted Other Subsidiaries, on the one
hand, and of the Borrower and the Borrower's other Subsidiaries, on the other
hand, (iv) the holding of the annual stockholders meeting, if applicable, of
such Permitted Other Subsidiaries, which are corporations on a date other than
the date of the annual stockholders' meeting of the General Partner or AGH LP,
and (v) preventing the cash, cash equivalents, credit card receipts or other
revenues of
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the Hotel Properties owned by such Permitted Other Subsidiaries or any other
assets of such Permitted Other Subsidiaries from being commingled with the cash,
cash equivalents, credit card receipts or other revenues collected by the
Borrower or the Borrower's other Subsidiaries.
(d) The Borrower shall, and shall cause the Permitted Other Subsidiaries
to, manage the business of and conduct the administrative activities of the
Permitted Other Subsidiaries independently from the business of the Borrower,
any of the Borrower's other Subsidiaries and any other Person. Any moneys earned
by the Permitted Other Subsidiaries on their assets or proceeds of the sale of
any of their assets shall be deposited in bank accounts separate from any of the
assets of the Borrower, any of the Borrower's other Subsidiaries and any other
Person, and no assets of the Permitted Other Subsidiaries shall become
commingled with assets of such Persons.
(e) The Borrower shall hold itself out, and shall continue to hold itself
out, to the public and to its creditors as a legal entity, separate and distinct
from all other entities, and shall continue to take all steps reasonably
necessary to avoid (i) misleading any other Person as to the identity of the
entity with which such Person is transacting business or (ii) implying that the
Borrower is, directly or indirectly, absolutely or contingently, responsible for
the Indebtedness or other obligations of the Permitted Other Subsidiaries or any
other Person.
Section 5.03 Payment of Taxes, Etc. The Borrower will pay and discharge,
---------------------
and cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or Property that are material in
amount, prior to the date on which penalties attach thereto and (b) all lawful
claims that are material in amount which, if unpaid, might by Legal Requirement
become a Lien upon its Property; provided, however, that neither the Borrower
-------- -------
nor any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim (a) which is being contested in good faith
and by appropriate proceedings, (b) with respect to which reserves in conformity
with GAAP have been provided, (c) such charge or claim does not constitute and
is not secured by any choate Lien on any portion of any Hotel Property and no
portion of any Hotel Property is in jeopardy of being sold, forfeited or lost
during or as a result of such contest, (d) neither the Agents nor any Bank could
become subject to any civil fine or penalty or criminal fine or penalty, in each
case as a result of non-payment of such charge or claim and (e) such contest
does not, and could not reasonably be expected to, result in a Material Adverse
Change.
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Section 5.04 Visitation Rights; Bank Meeting. At any reasonable time and
-------------------------------
from time to time and so long as any visit or inspection will not unreasonably
interfere with the Borrower's or any of its Subsidiaries' operations, upon
reasonable notice, the Borrower will, and will cause its Subsidiaries to, permit
the Agents and any Bank or any of its agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit and inspect at its reasonable discretion the properties of, the
Borrower and any such Subsidiary, to discuss the affairs, finances and accounts
of the Borrower and any such Subsidiary with any of their respective officers or
directors. Without in any way limiting the foregoing, the Borrower will, upon
the request of either Agent, participate in a meeting with the Agents and the
Banks once during each calendar year to be held at the Borrower's office in
Dallas, Texas (or such other location as may be agreed to by the Borrower and
the Agents) at such time as may be agreed to by the Borrower and the Agents.
Section 5.05 Reporting Requirements. The Borrower will furnish to the
----------------------
Administrative Agent and each Bank:
(a) Quarterly Financials. As soon as available and in any event not later
--------------------
than 50 days after the end of each Fiscal Quarter of the Parent, the unaudited
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such quarter and the related unaudited statements of income, shareholders'
equity and cash flows of the Parent and its Subsidiaries for the period
commencing at the end of the previous year and ending with the end of such
Fiscal Quarter, and the corresponding figures as at the end of, and for, the
corresponding period in the preceding Fiscal Year, all duly certified with
respect to such statements (subject to year-end audit adjustments) by a
Responsible Officer of the Parent as having been prepared in accordance with
GAAP, together with (i) a Compliance Certificate duly executed by a Responsible
Officer of the Parent, (ii) written notice of any anticipated material variation
to an operating budget prepared pursuant to Section 5.05(e) and (iii) a report
certified by a Responsible Officer of the Parent setting forth for each of the
Hotel Properties owned or leased by the Parent or any of its Subsidiaries for
the Fiscal Quarter just ended the average daily rate, the average occupancy, the
RevPAR, the total gross revenues, the total expenses and the Adjusted EBITDA for
such Hotel Properties..
(b) Annual Financials. As soon as available and in any event not later
-----------------
than 95 days after the end of each Fiscal Year of the Parent, a copy of the
Consolidated balance sheets of the Parent and its Subsidiaries as of the end of
such Fiscal Year and the related Consolidated statements of income,
shareholders' equity and cash flows of the Parent and its Subsidiaries for such
Fiscal Year,
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and the corresponding figures as at the end of, and for, the preceding Fiscal
Year, and certified by Coopers & Lybrand L.L.P. or other independent certified
public accountants of nationally recognized standing reasonably acceptable to
the Agents in an opinion, without qualification as to the scope, and including,
if requested by either Agent, any management letters delivered by such
accountants to the Parent in connection with such audit, together with (i) a
Compliance Certificate duly executed by a Responsible Officer of the Parent,
(ii) written notice of any anticipated material variation to an operating budget
prepared pursuant to Section 5.05(e) and (iii) the document required in clause
(iii) of the preceding Section 5.05(a).
(c) Manager Financials. As soon as available and in any event not later
------------------
than 120 days after the end of each Fiscal Year of AGHI, as applicable, a copy
of the annual audit report for such year for AGHI and its Subsidiaries, if any,
including therein an audited Consolidated balance sheet of AGHI and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
Consolidated statements of income, shareholders' equity and cash flows of AGHI
and its Subsidiaries for such Fiscal Year, and the corresponding figures as at
the end of, and for, the preceding Fiscal Year, in each case certified by an
independent certified public accountant reasonably acceptable to the Agents and
including, if requested by either Agent, any management letters delivered by
such accountants to AGHI in connection with such audit.
(d) AGH Leasing Financials. As soon as available and in any event not
----------------------
later than 50 days after the end of each Fiscal Quarter of AGH Leasing, the
unaudited Consolidated balance sheets of AGH Leasing and its Subsidiaries as of
the end of such quarter and the related unaudited statements of income,
shareholders' equity and cash flows of AGH Leasing and its Subsidiaries for the
period commencing at the end of the previous year and ending with the end of
such Fiscal Quarter, and the corresponding figures as at the end of, and for,
the corresponding period in the preceding Fiscal Year, all duly certified with
respect to such statements (subject to year-end audit adjustments) by a
Responsible Officer of AGH Leasing as having been prepared in accordance with
GAAP. As soon as available and in any event not later than 120 days after the
end of each fiscal year of AGH Leasing, as applicable, (i) a copy of the annual
audit report for such year for AGH Leasing and its Subsidiaries, if any,
including therein audited Consolidated balance sheets of AGH Leasing and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
Consolidated statements of income, shareholders' equity and cash flows of AGH
Leasing and its Subsidiaries for such fiscal year, and the corresponding figures
as at the end of, and for, the preceding fiscal year, in each case certified by
an independent certified public accountant reasonably
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acceptable to the Agents and including, if requested by either Agent, any
management letters delivered by such accountants to AGH Leasing in connection
with such audit.
(e) Annual Budgets. Prior to the start of each Fiscal Year, the
--------------
Consolidated annual operating budget of the Parent and its Subsidiaries for such
upcoming Fiscal Year in reasonable detail and duly certified by a Responsible
Officer of the Parent as the budgets presented or to be presented to the
Parent's Board of Directors for their review.
(f) Securities Law Filings. Promptly and in any event within 15 days after
----------------------
the sending or filing thereof, copies of all proxy material, reports and other
information which the Borrower, the Parent or any of their respective
Subsidiaries sends to or files with the United States Securities and Exchange
Commission or sends to all shareholders of the Parent or partners of the
Borrower.
(g) Defaults. As soon as possible and in any event within five days after
--------
the occurrence of each Default known to a Responsible Officer of the Borrower,
the Parent or any of their respective Subsidiaries, a statement of an authorized
financial officer or Responsible Officer of the Borrower setting forth the
details of such Default and the actions which the Borrower has taken and
proposes to take with respect thereto.
(h) ERISA Notices. As soon as possible and in any event (i) within 30 days
-------------
after the Borrower or any of a Controlled Group knows to know that any
Termination Event described in clause (a) of the definition of Termination Event
with respect to any Plan has occurred, (ii) within 10 days after the Borrower or
any of a Controlled Group knows that any other Termination Event with respect to
any Plan has occurred, a statement of the Chief Financial Officer of the
Borrower describing such Termination Event and the action, if any, which the
Borrower or such member of such Controlled Group proposes to take with respect
thereto; (iii) within 10 days after receipt thereof by the Borrower or any of a
Controlled Group from the PBGC, copies of each notice received by the Borrower
or any such member of such Controlled Group of the PBGC's intention to terminate
any Plan or to have a trustee appointed to administer any Plan; and (iv) within
10 days after receipt thereof by the Borrower or any member of a Controlled
Group from a Multiemployer Plan sponsor, a copy of each notice received by the
Borrower or any member of such Controlled Group concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA.
(i) Environmental Notices. Promptly upon the knowledge of any Responsible
---------------------
Officer of the Borrower of receipt thereof by the Borrower or any of its
Subsidiaries, a copy of any form of
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notice, summons or citation received from the United States Environmental
Protection Agency, or any other Governmental Authority concerning (i) violations
or alleged violations of Environmental Laws, which seeks to impose liability
therefor, (ii) any action or omission on the part of the Parent or Borrower or
any of their present or former Subsidiaries in connection with Hazardous Waste
or Hazardous Substances which, based upon information reasonably available to
the Borrower, could reasonably be expected to cause a Material Adverse Change or
an Environmental Claim in excess of $1,000,000, (iii) any notice of potential
responsibility under CERCLA, or (iv) concerning the filing of a Lien upon,
against or in connection with the Parent, Borrower, their present or former
Subsidiaries, or any of their leased or owned Property, wherever located.
(j) Other Governmental Notices or Actions. Promptly and in any event
-------------------------------------
within five Business Days after receipt thereof by the Borrower, the Parent or
any of their respective Subsidiaries, (i) a copy of any notice, summons,
citation, or proceeding seeking to adversely modify in any material respect,
revoke, or suspend any license, permit, or other authorization from any
Governmental Authority, which action could reasonably be expected to cause a
Material Adverse Change, and (ii) any revocation or involuntary termination of
any license, permit or other authorization from any Governmental Authority,
which revocation or termination could reasonably be expected to cause a Material
Adverse Change.
(k) Reports Affecting the Total Availability. On or prior to the 5th day
----------------------------------------
following any Adjustment Event, a Property Adjustment Report with respect to
such Adjustment Event.
(l) Press Releases. Promptly and in any event within 5 days after the
--------------
sending or releasing thereof, copies of all press releases or other releases of
information to the public by the Borrower, the Parent or any of their respective
Subsidiaries or releases of information to the Parent's shareholders.
(m) Other Notices.
-------------
(i) Upon the request of either Agent, a certified rent roll listing
all of the Real Property of the Borrower and the Guarantors that are
subject to leases and containing such other information regarding such
leases that such Agent may reasonably request,
(ii) As soon as received, a copy of any notice of default or any
other material notice (including without limitation property condition
reviews) received by the Borrower
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or any Guarantor from any holder of any of the Senior Obligations or any
Franchisor, Manager, or any ground lessor under a ground lease, and
(iii) Promptly following any merger or dissolution of any Subsidiary
of the Borrower which is permitted hereunder or event which would make any
of the representations in Section 4.01-4.04 untrue, notice thereof.
(n) Material Litigation. As soon as possible and in any event within five
-------------------
days of any Responsible Officer of the Borrower, the Parent or any of their
respective Subsidiaries having knowledge thereof, notice of any litigation,
claim or any other event which could reasonably be expected to cause a Material
Adverse Change.
(o) Preliminary Property Plan. Prior to making Capital Expenditures or
-------------------------
FF&E expenditures for the renovation or expansion of a Hotel Property, the
Preliminary Property Plan for such renovation or expansion in sufficient detail
as the Documentation Agent shall reasonably request.
(p) Future Property. (i) at least 10 days prior to the acquisition of a
---------------
Hotel Property by the Parent or one of the Parent's Subsidiaries, an
Environmental Report for such Hotel Property, (ii) not later that the date 10
days following the date of the acquisition of a Hotel Property by the Parent or
one of the Parent's Subsidiaries or a Permitted Non-Voting Stock Company, (A)
the remaining Property Information and (B) if the Property Owner for such Hotel
Property is not the Borrower or a Guarantor and such Hotel Property does not
serve as collateral for either Secured Recourse Indebtedness or Secured Non-
Recourse Indebtedness, then the Borrower will cause such Property Owner to
execute and deliver to the Administrative Agent either (1) an original
Subordinate Guaranty and Environmental Indemnity executed by such Person or (2)
an Accession Agreement executed by such Person.
(q) Other Information. Such other information respecting the business or
-----------------
Properties, or the condition or operations, financial or otherwise, of the
Borrower, the Parent or any of their respective Subsidiaries, as any Bank
through the Administrative Agent may from time to time reasonably request.
Section 5.06 Maintenance of Property and Required Work. The Borrower
-----------------------------------------
will, and will cause each of its Subsidiaries to, (a) maintain their owned,
leased, or operated Property in a manner
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consistent for hotel properties and related property of the same quality and
character and shall keep or cause to be kept every part thereof and its other
properties in good condition and repair, reasonable wear and tear excepted, and
make all reasonably necessary repairs, renewals or replacements thereto as may
be reasonably necessary to conduct the business of the Borrower and its
Subsidiaries, (b) not remove, demolish or structurally alter, or permit or
suffer the removal, demolition or structural alteration of, any of the
Improvements except for the renovation or expansion of a Hotel Property (i) for
which the Borrower has delivered a Preliminary Property Plan to the
Administrative Agent and (ii) complies with the limitations set forth in this
Agreement on the aggregate amount of renovations and expansions the Borrower,
the Parent and their Subsidiaries are permitted at any one time, (c) not
knowingly or willfully permit the commission of waste or other injury, or the
occurrence of pollution, contamination or any other condition in, on or about
any Hotel Property, (d) maintain and repair each Hotel Property as required by
any franchise agreement, management agreement or ground lease for such Hotel
Property, and (e) commence the Required Work for any Hotel Property by a date
which would allow a reasonable period of time to complete such work on or prior
to the deadline set for such Required Work in Schedule 5.06 or otherwise agreed
to by the Borrower and the Agents, (f) after any commencement of any of work for
any Hotel Property diligently perform such work (i) for the Required Work, by
the required deadline and as described in the Engineering Reports and/or the
Environmental Reports referred to in Schedule 5.06 or as otherwise described for
any Future Property, (ii) in a good and workmanlike manner and (iii) in
compliance in all material respects with all Legal Requirements. Except as may
be required to maintain the Parent's status as a REIT under the Code, any
Capital Expenditures or expenditures or leases for FF&E made for any Hotel
Property shall be in the name of the Property Owner for such Hotel Property.
Section 5.07 Insurance. The Borrower will maintain, and cause each of its
---------
Subsidiaries to maintain, the insurance required pursuant to Schedule 5.07.
Section 5.08 Casualty; Condemnation. Any proceeds collected (the
----------------------
"Proceeds") under any fire or other physical damage insurance policy described
in this Agreement pertaining to any Hotel Property (excluding the Permitted Non-
Eligible Properties) shall be disbursed as provided in this Section 5.08. If
such casualty would result in a decrease to the Total Availability which would
require a prepayment of the Obligations pursuant to the provisions of this
Agreement and the Borrower is not obligated pursuant to the terms of the Senior
Credit Agreement to use such proceeds to repay Senior Obligations, then the
Borrower shall deliver such Proceeds, up to the amount of the required
prepayment, to the Administrative Agent as a prepayment of the Obligations. If
the
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Proceeds do not need to be applied against the Obligations pursuant to the
foregoing sentence, then the Borrower is entitled to retain such Proceeds.
Section 5.09 Supplemental Guaranties. The Borrower has requested and the
-----------------------
Agents have agreed that any partner of the Borrower except the General Partner,
AGH LP or any Guarantor may execute a Supplemental Guaranty. However, the
execution of or release of any Supplemental Guaranty shall not be construed as a
release or modification of any obligation of a Guarantor under a Subordinate
Guaranty or Environmental Indemnity.
Section 5.10 Participating Leases. Upon knowledge of a material default
--------------------
by a Participating Lessee under a Participating Lease, the Borrower will send,
or will cause the Guarantor who is a party to such Participating Lease to send,
a notice of such default to such Participating Lessee as provided in the
document under which such default has occurred.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, or any Bank shall have any Commitment, the Borrower agrees, unless the
Administrative Agent shall otherwise consent in writing, to comply with the
following covenants.
Section 6.01 Liens, Etc. The Borrower will not create, assume, incur or
----------
suffer to exist, or permit any of its Subsidiaries (except for Permitted Other
Subsidiaries) to create, assume, incur, or suffer to exist, any Lien on or in
respect of any of its Property whether now owned or hereafter acquired, or
assign any right to receive income, except that the Borrower and its
Subsidiaries may create, incur, assume or suffer to exist Liens:
(a) securing the Obligations;
(b) for taxes, assessments or governmental charges or levies on Property
of the Borrower or any Guarantor to the extent not required to be paid pursuant
to Sections 5.03;
(c) Liens imposed by law (such as landlords', carriers', warehousemen's
and mechanics' liens or otherwise arising from litigation) (a) which are being
contested in good faith and by
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appropriate proceedings, (b) with respect to which reserves in conformity with
GAAP have been provided, (c) which have not resulted in any Hotel Property being
in jeopardy of being sold, forfeited or lost during or as a result of such
contest, (d) neither the Agents nor any Bank could become subject to any civil
fine or penalty or criminal fine or penalty, in each case as a result of non-
payment of such charge or claim and (e) such contest does not, and could not
reasonably be expected to, result in a Material Adverse Change;
(d) on leased personal property to secure solely the lease obligations
associated with such property;
(e) Liens securing Secured Recourse Indebtedness and Secured Non-Recourse
Indebtedness permitted pursuant to the provisions of Section 6.02;
(f) Liens under the Permitted Non-Voting Stock Mortgages; and
(g) The Florida Liens securing the Senior Obligations.
Section 6.02 Indebtedness. The Borrower, the Parent and their respective
------------
Subsidiaries will not incur or permit to exist any Indebtedness other than the
Obligations and the following:
(a) Senior Obligations for which the sum of the principal outstanding and
face amount of outstanding letters of credit is less than or equal to
$500,000,000;
(b) Secured Recourse Indebtedness and Secured Non-Recourse Indebtedness
incurred by Permitted Other Subsidiaries (and possibly guaranteed by the Parent)
to the extent (i) that the covenants contained in Article VII are complied with,
(ii) the Secured Recourse Indebtedness secured by a Hotel Property does not
exceed 65% of the market value of such Hotel Property and all Secured Recourse
Indebtedness in the aggregate secured by Hotel Properties does not exceed 65% of
the aggregate market value of such Hotel Properties, (iii) the Secured Non-
Recourse Indebtedness secured by a Hotel Property does not exceed 70% of the
market value of such Hotel Property and all Secured Non-Recourse Indebtedness in
the aggregate secured by Hotel Properties does not exceed 70% of the aggregate
market value of such Hotel Properties and (iv) such Indebtedness does not in the
aggregate exceed $70,000,000;
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(c) Indebtedness in the form of Capital Leases for any particular Hotel
Property which have over the term of such Capital Leases payments in the
aggregate for all such Capital Leases for such Hotel Property for an amount
which does not exceed the Hotel Capital Lease Limit for such Hotel Property;
(d) Indebtedness in the form of Interest Rate Agreements; provided that
(i) such agreements shall be unsecured, (ii) the dollar amount of indebtedness
subject to such agreements and the indebtedness subject to Interest Rate
Agreements in the aggregate shall not exceed the sum of the amount of the
Commitments and the amount of Senior Obligations, and (iii) the agreements shall
be at such interest rates and otherwise in form and substance reasonably
acceptable to the Agents.
(e) Any of the following Indebtedness incurred by the Parent:
(i) guaranties in connection with the Indebtedness secured by a
Hotel Property of (A) if the Hotel Property is subject to a ground lease,
the payment of rent under such ground lease, (B) real estate taxes relating
to such Hotel Property, (C) capital reserves required under such
Indebtedness, and (D) after a default under such Indebtedness, the rent
under the applicable Participating Lease will be applied to such
Indebtedness;
(ii) indemnities for certain acts of malfeasance, misappropriation
and misconduct and an environmental indemnity for the lender under
Indebtedness permitted under to this Agreement;
(iii) indemnities for certain acts of malfeasance, misappropriation
and misconduct by the Permitted Other Subsidiaries and environmental
indemnities, all for the benefit of the lenders of other Permitted Other
Subsidiary Indebtedness in connection with such Indebtedness; and
(iv) guaranties of the franchise agreements.
(f) extensions, renewals and refinancing of any of the Indebtedness
specified in paragraphs (a) - (e) above so long as the principal amount of such
Indebtedness is not thereby increased.
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<PAGE>
Section 6.03 Agreements Restricting Distributions From Subsidiaries. The
------------------------------------------------------
Borrower will not, nor will it permit any of its Subsidiaries (other than
Permitted Other Subsidiaries) to, enter into any agreement (other than a Credit
Document or the Senior Credit Documents) which limits distributions to or any
advance by any of the Borrower's Subsidiaries to the Borrower.
Section 6.04 Restricted Payments. Neither the Parent, the Borrower, nor
-------------------
any of their respective Subsidiaries, will make any Restricted Payment, except
that:
(a) provided no Default has occurred and is continuing or would result
therefrom, the Parent may in any Fiscal Quarter, based on the immediately
preceding Rolling Period, make cash payments to its shareholders (including in
connection with the repurchase of Stock or Stock Equivalents) which with the
previous such cash payments in the three immediately preceding Fiscal Quarters
are not in excess of the greater of (i) the lesser of (A) ninety percent (90%)
of the Funds From Operations of the Parent during such Rolling Period or (B) one
hundred percent (100%) of Free Cash Flow of the Parent during such Rolling
Period and (ii) the amount required for the Parent to maintain its status as a
REIT;
(b) provided no Default has occurred and is continuing or would result
therefrom, the Borrower shall be entitled to make cash distributions to its
partners and such partners shall be entitled to make cash distributions to the
Parent;
(c) a Subsidiary of the Borrower may make a Restricted Payment to the
Borrower,
(d) the limited partners of the Borrower shall be entitled to exchange
limited partnership interests in the Borrower for the Parent's stock; and
(e) the Borrower shall be entitled to issue limited partnership interests
in the Borrower in exchange of ownership interests in Subsidiaries and
Unconsolidated Entities which own a Future Property to the extent such
Investment is permitted pursuant to the provisions of Section 6.07.
Section 6.05 Fundamental Changes; Asset Dispositions. Neither the
---------------------------------------
Parent, the Borrower, nor any of their respective Subsidiaries (other than the
Permitted Other Subsidiaries) will, (a) merge or consolidate with or into any
other Person, unless (i) a Guarantor is merged into the Borrower and the
Borrower is the surviving Person or a Subsidiary (other than a Permitted
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<PAGE>
Other Subsidiary which has Indebtedness other than the Obligations) is merged
into any Subsidiary (other than a Permitted Other Subsidiary which has
Indebtedness other than the Obligations), and (ii) immediately after giving
effect to any such proposed transaction no Default would exist; (b) sell,
transfer, or otherwise dispose of all or any of the such Person's material
property except for a Permitted Hotel Sale, dispositions or replacements of
personal property in the ordinary course of business, or Hotel Properties which
are not Eligible Properties; (c) enter into a lease (other than a Participating
Lease) of all or substantially all of any Eligible Property with any Person
without the consent of the Agents; (d) sell or otherwise dispose of any material
shares of capital stock, membership interests or partnership interests of any
Subsidiary (except for a Permitted Other Subsidiary); (e) except for sales of
ownership interests permitted under this Agreement and the issuance of limited
partnership interests in the Borrower in exchange for ownership interests in
Subsidiaries and Unconsolidated Entities to the extent permitted pursuant to the
provisions of Section 6.04, materially alter the corporate, capital or legal
structure of any such Person (except for a Permitted Other Subsidiary); (f)
liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution)
provided that nothing herein shall prohibit the Borrower from dissolving any
Subsidiary which has no assets on the date of dissolution or (g) materially
alter the character of their respective businesses from that conducted as of the
date of this Agreement.
Section 6.06 Personal Property Leases. For any Eligible Property, the
------------------------
Borrower will not, and will not permit any of its Subsidiaries to (a) enter into
leases of Personal Property which constitute Capital Leases in excess of the
Hotel Capital Lease Limit or (b) enter into leases of Personal Property which do
not constitute Capital Leases in excess of the Hotel Operating Lease Limit.
Section 6.07 Investments, Loans, Future Properties. Neither the Parent
-------------------------------------
nor the Borrower shall, or shall permit any of their respective Subsidiaries to,
acquire by purchase or otherwise all or substantially all the business, property
or fixed assets of any Person or any Hotel Property, make or permit to exist any
loans, advances or capital contributions to, or make any Investments in
(including without limitation, loans and advances to, and other Investments in,
Subsidiaries), or purchase or commit to purchase any evidences of indebtedness
of, stock or other securities, partnership interests, member interests or other
interests in any Person, except the following (provided that after giving effect
thereto there shall exist no Default):
(a) the purchase of Liquid Investments with any Person which qualifies as
an Eligible Assignee;
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(b) trade and customer accounts receivable (including in connection with
the sale of used FF&E) which are for goods furnished or services rendered in the
ordinary course of business and are payable in accordance with customary trade
terms;
(c) a Future Property which qualifies as an Eligible Property or a
Permitted Non-Eligible Property;
(d) Investments in unimproved land that either (i) is under development
for operation of a Hotel Property or with respect to which such Hotel Property
development is planned to commence within twelve months of the acquisition of
such land or (ii) does not qualify under the preceding clause (i) and does not
in the aggregate have a Cost Basis which exceeds $20,000,000;
(e) Stock or Stock Equivalents (i) received in settlement of liabilities
created in the ordinary course of business, and (ii) if the Leverage Ratio on
the date of such Investment is less than or equal to 50%, then additional Stock
or Stock Equivalents of publicly-traded Unconsolidated Entities which in the
aggregate do not exceed $25,000,000;
(f) Stock, Stock Equivalents, and other Investments in Unconsolidated
Entities which are not publicly-traded Persons, and Permitted Non-Voting Stock
Investments, provided that the aggregate of all such Stock, Stock Equivalents,
Investments and Permitted Non-Voting Stock Investments shall not exceed
$50,000,000 in the aggregate without the approval of the Majority Banks;
(g) Indebtedness of a Person to the Borrower or to a Subsidiary of the
Borrower that is secured by a Lien on one or more Hotel Properties owned by such
Person, which Hotel Properties (A) were previously owned by the Borrower or a
Subsidiary of the Borrower or (B) the Borrower reasonably expects to acquire
(through trustee's sale, foreclosure, deed in lieu of foreclosure or otherwise),
provided, however, that the aggregate amount of all Investments permitted under
- -------- -------
this clause (g) shall not at any time exceed an amount equal to five percent
(5%) of the Cost Basis in all the Parent's or the Parent's Subsidiaries Hotel
Properties;
(h) Investments in real estate other than Hotel Properties, provided that
--------
(i) excluding the Borrower's Investment in the office portion of the Marriott
Hotel in Houston, Texas, such Investments do not, in the aggregate, exceed five
percent (5%) of the Total Assets of the Parent or (ii) the Borrower intends to
convert such real estate into Hotel Properties, provided that the Borrower
--------
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<PAGE>
(A) so notifies the Administrative Agent within ninety (90) days after the date
of such acquisition and (B) commences construction of such conversion within
twelve (12) months after the date of such acquisition;
(i) a loan to a Participating Lessee in amount sufficient to allow such
Participating Lessee to purchase Personal Property from the Property Owners of
the Hotel Properties which qualify as either an Eligible Property or a Permitted
Non-Eligible Property so that the ownership of Personal Property by such
Property Owners does not cause the Parent to forfeit the Parent's status as a
REIT under the Code;
(j) receivables purchased in connection with the acquisition of a Hotel
Property; and
(k) other assets owned in the ordinary course of owning the Parent's and
the Parent's Subsidiaries' Hotel Properties.
Notwithstanding the foregoing, (a) neither the Borrower, nor the Parent, nor
their respective Subsidiaries shall make an Investment which would (i) cause the
Parent Properties in the aggregate to violate in any material way the Parent
Property Requirements without the Agents' written consent, (ii) cause a Default,
or (iii) cause or result in the Borrower or the Parent failing to comply with
any of the financial covenants contained herein, and (b) neither the Borrower,
nor the Parent, nor their respective Subsidiaries shall make an Investment with
the Net Cash Proceeds from any Asset Disposition except for those Investments
for which the Parent has publicly announced as of December, 31, 1997 and the
acquisition of the Olivier House, New Orleans, Louisiana.
Section 6.08 Affiliate Transactions. Except for the Management
----------------------
Agreements, the Participating Lease Agreements, certain liquor license
agreements, the transactions described in Section 6.07(i) and the purchase by
the Borrower or one of its Subsidiaries of the Madison, Wisconsin Ramada at a
purchase price equal to or less than (a) the fair market value for such property
at the time of entering into such purchase agreement, as confirmed by an
appraisal plus (b) the costs of Capital Expenditures and FF&E for such property
incurred in connection with the major renovation of such property contemplated
by such agreement, the costs of financing such expenditures, and carrying costs
and pre-opening costs for such property during the period of construction, and
as expressly permitted elsewhere in this Agreement, the Borrower will not, and
will not permit any of its Subsidiaries to, make, directly or indirectly: (a)
any transfer, sale, lease, assignment or other disposal of any assets to any
Affiliate of the Borrower which is not a Guarantor
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<PAGE>
or any purchase or acquisition of assets from any such Affiliate except for
sales of new Personal Property (i) which in any calendar year do not exceed
$1,000,000 in the aggregate and (ii) for which the sales price is the actual
cost to the party selling; or (b) any arrangement or other transaction directly
or indirectly with or for the benefit of any such Affiliate (including without
limitation, guaranties and assumptions of obligations of an Affiliate), other
than in the ordinary course of business and at market rates.
Section 6.09 Sale and Leaseback. The Borrower will not, and will not
------------------
permit any of its Subsidiaries to, enter into any arrangement with any Person,
whereby in contemporaneous transactions the Borrower or such Subsidiary sells
essentially all of its right, title and interest in a material asset and the
Borrower or such Subsidiary acquires or leases back the right to use such
property.
Section 6.10 Sale or Discount of Receivables. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value thereof,
any of its notes or accounts receivable.
Section 6.11 No Further Negative Pledges. Except for those restrictions
---------------------------
stated in the Senior Credit Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, enter into or suffer to exist any agreement
(other than this Agreement and the Credit Documents) (a) prohibiting the
creation or assumption of any Lien upon the Properties of the Borrower or any of
its Subsidiaries (except for the Permitted Other Subsidiaries), whether now
owned or hereafter acquired, or (b) requiring an obligation to be secured if
some other obligation is or becomes secured.
Section 6.12 Franchise Agreements. The Borrower will not, nor will it
--------------------
permit any of its Subsidiaries (other than Permitted Other Subsidiaries) or any
Participating Lessee (other than as a lessee of a Permitted Non-Eligible
Property) to enter into any termination, material modification or amendment of
any Franchise Agreement except in connection with the conversion of a Hotel
Property from a Franchise Agreement with one Franchisor to a Franchise Agreement
with another Franchisor.
Section 6.13 Material Documents. The Borrower will not, nor will it
------------------
permit any of its Subsidiaries (other than Permitted Other Subsidiaries) or any
Participating Lessee (other than as a lessee of a Permitted Non-Eligible
Property) to, enter into any termination, material modification or amendment of
any:
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(a) Management Agreement;
(b) Participating Lease;
(c) Ground Lease; and
(d) Any other material agreement.
Any termination, modification or amendment prohibited under this Section 6.13
without the Administrative Agent's written consent shall, to the extent
permitted by applicable law, be void and of no force and effect.
Section 6.14 Limitations on Development, Construction, Renovation and
--------------------------------------------------------
Purchase of Hotel Properties. Neither the Parent nor the Borrower shall or
- ----------------------------
shall permit any of their respective Subsidiaries to engage in the development,
construction or expansion of any Hotel Properties with respect to which the cost
to complete the same shall at any time exceed $75,000,000 for all such
development, construction and expansion in the aggregate or enter into any
agreements to purchase Hotel Properties or other assets, unless the Parent, the
Borrower or such Subsidiary (as applicable) at all times has available sources
of capital equal to the total cost to complete such development or construction
and to pay in full the cost of the purchase of such Hotel Properties or other
assets (to the extent that the payment of such cost of purchase constitutes a
recourse obligation of the Parent, the Borrower or its Subsidiary), which
available sources of capital may include Advances to the extent that the
Borrower may borrow the same for the purposes required or other Indebtedness
permitted by the terms of this Agreement.
ARTICLE VII
FINANCIAL COVENANTS
So long as any Note or any amount under any Credit Document shall remain
unpaid, or any Bank shall have any Commitment hereunder, unless the Super
Majority Banks shall otherwise consent in writing, the Borrower agrees to comply
and cause the Parent and the Parent's Subsidiaries to comply with the following
covenants.
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<PAGE>
7.01 Interest Coverage Ratio. The Parent shall maintain at the end of each
-----------------------
Rolling Period (a) for the Rolling Periods ending on March 31, 1998 through
December 31, 1998, an Interest Coverage Ratio of not less than 2.15 to 1.0 and
(b) for any Rolling Period thereafter, an Interest Coverage Ratio of not less
than 2.50 to 1.0.
7.02 Debt Service Coverage Ratio. The Parent shall maintain at the end of
---------------------------
each Rolling Period commencing with the Rolling Period ending on March 31, 1998,
a Debt Service Coverage Ratio of not less than 2.0 to 1.0.
7.03 Maintenance of Net Worth. The Parent shall at all times maintain an
------------------------
Adjusted Net Worth of not less than the Minimum Tangible Net Worth.
7.04 Limitations on Total Indebtedness. The Parent shall not on any date
---------------------------------
permit the Total Indebtedness (including, without limitation, the Obligations
and all Capitalized Lease Obligations) of the Parent to exceed the lesser of:
------
(a) the sum of (i) for Seasoned Properties, (A) Adjusted EBITDA (on a
Consolidated basis) of such Seasoned Properties for the preceding Rolling
Period multiplied by (B) for the Rolling Periods ending on or before
-------------
September 30, 1998, six (6), and for any Rolling Periods ending thereafter,
five (5); and (ii) for New Properties (including Hotel Properties to be
immediately acquired using the proceeds from any Indebtedness), (A) the
Cost Basis in such New Properties multiplied by (B) on or before September
-------------
30, 1998, sixty percent (60%), and for any date thereafter, fifty percent
(50%); and
(b) (i) the Parent Total Cost Basis (including Hotel Properties to be
immediately acquired using the proceeds from any Indebtedness) multiplied
----------
by (ii) on or before September 30, 1998, sixty percent (60%), and for any
--
date thereafter, fifty percent (50%);
provided that, in no event shall the Borrower or the Parent permit the Total
- -------- ----
Indebtedness of the Parent to exceed the amount permitted under the Articles of
Incorporation of the Parent.
7.05 Limitations on Secured Recourse Indebtedness. The Parent shall not
--------------------------------------------
on any date on a Consolidated basis permit the Secured Recourse Indebtedness of
the Parent, to exceed the lesser of:
------
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(a) the sum of (i) for Seasoned Properties, Adjusted EBITDA (on a
consolidated basis) of such Seasoned Properties for the preceding Rolling
Period multiplied by two (2), and (ii) for New Properties (including Hotel
Properties to be immediately acquired using the proceeds from any
Indebtedness), twenty percent (20%) of the Cost Basis in such New
Properties; and
(b) fifteen percent (15%) of the Parent Total Cost Basis (including
Hotel Properties to be immediately acquired using the proceeds from any
Indebtedness).
7.06 Limitations on Secured Non-Recourse Indebtedness. The Parent shall
------------------------------------------------
not on any date on a Consolidated basis permit the Secured Non-Recourse
Indebtedness of the Parent, to exceed the lesser of:
------
(a) the sum of (i) for Seasoned Properties, Adjusted EBITDA (on a
consolidated basis) of such Seasoned Properties for the preceding Rolling
Period multiplied by three (3), and (B) for New Properties (including Hotel
Properties to be immediately acquired using the proceeds from any
Indebtedness), thirty percent (30%) of the Cost Basis in such New
Properties; and
(b) thirty percent (30%) of the Parent Total Cost Basis (including
Hotel Properties to be immediately acquired using the proceeds from any
Indebtedness).
7.07 Limitations on Secured Indebtedness. The Parent shall not at any time
-----------------------------------
on a Consolidated basis permit the sum of the Parent's Secured Non-Recourse
Indebtedness and Secured Recourse Indebtedness to exceed thirty percent (30%) of
the Parent Total Cost Basis (including Hotel Properties to be immediately
acquired using the proceeds from any Indebtedness).
7.08 Permitted Non-Voting Stock Company Adjustment. If the Parent or any
---------------------------------------------
of its Subsidiaries have a Permitted Non-Voting Stock Investment, then (a) to
the extent not already included in the Adjusted EBITDA of the Parent and its
Subsidiaries the lesser of (i) the dividends and interest received by the Parent
or any of its Subsidiaries from a Permitted Non-Voting Stock Company and (ii)
the Adjusted EBITDA of the Hotel Properties owned or leased by such Permitted
Non-Voting Stock Company shall be included in Adjusted EBITDA for purposes of
the financial covenants in this
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<PAGE>
Article VII, and (b) the Cost Basis of a Hotel Property owned by such Permitted
Non-Voting Stock Company shall be included, as applicable, in those financial
covenants in this Article VII which use Cost Basis and Parent Total Cost Basis.
Applicability for a particular test shall be based upon whether a Hotel Property
owned by such Permitted Non-Voting Stock Company constitutes either a Seasoned
Property or a New Property.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default. The occurrence of any of the following
-----------------
events shall constitute an "Event of Default" under any Credit Document:
(a) Principal Payment. The Borrower shall fail to pay any principal of
-----------------
any Note when the same becomes due and payable as set forth in this Agreement;
(b) Interest or Other Obligation Payment. The Borrower shall fail to pay
------------------------------------
any interest on any Note or any fee or other amount payable hereunder or under
any other Credit Document when the same becomes due and payable as set forth in
this Agreement, provided however that the Borrower will have a grace period of
five days after the payments covered by this Section 8.01(b) becomes due and
payable for the first two defaults under this Section 8.01(b) in every calendar
year;
(c) Representation and Warranties. Any representation or warranty made or
-----------------------------
deemed to be made (i) by the Borrower in this Agreement or in any other Credit
Document, (ii) by the Borrower (or any of its officers) in connection with this
Agreement or any other Credit Document, or (iii) by any Subsidiary in any Credit
Document shall prove to have been incorrect in any material respect when made or
deemed to be made;
(d) Covenant Breaches. (i) The Borrower shall fail to perform or observe
-----------------
any covenant contained in Sections 5.02, 5.03, or 5.08, Section 5.05 (f), (g),
(h), (i), (l) or (n), Article VI or Article VII of this Agreement or the
Borrower shall fail to perform or observe, or shall fail to cause any Guarantor
to perform or observe any covenant in any Credit Document beyond any notice
and/or cure period for such default expressly provided in such Credit Document
or (ii) the Borrower or any Guarantor shall fail to perform or observe any term
or covenant set forth in any Credit Document which is not covered by clause (i)
above or any other provision of this Section 8.01, in each case if such failure
shall remain unremedied for 30 days after the earlier of the date written notice
of such
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<PAGE>
default shall have been given to the Borrower or such Guarantor by the
Administrative Agent or any Bank or the date a Responsible Officer of the
Borrower or any Guarantor has actual knowledge of such default, unless such
default in this clause (ii) cannot be cured in such 30 day period and the
Borrower is diligently proceeding to cure such default, in which event the cure
period shall be extended to 90 days;
(e) Cross-Defaults.
--------------
(i) any "Event of Default" as defined in the Senior Credit Agreement
shall occur; or
(ii) with respect to (A) any Secured Non-Recourse Indebtedness which
is outstanding in a principal amount of at least $20,000,000 individually
or when aggregated with all such Secured Non-Recourse Indebtedness of the
Borrower, the Parent or any of their respective Subsidiaries or (B) any
other Indebtedness (but excluding Indebtedness evidenced by the Notes)
which is outstanding in a principal amount of at least $5,000,000
individually or when aggregated with all such Indebtedness of the Borrower,
the Parent or any of their respective Subsidiaries any of the following:
(1) any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof,
(2) the Borrower, the Parent or any of their respective
Subsidiaries shall fail to pay any principal of or premium or interest
of any of such Indebtedness (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness, or
(3) any other event shall occur or condition shall exist under
any agreement or instrument relating to such Indebtedness, and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is
to permit the holders of such Indebtedness to accelerate the maturity
of such Indebtedness;
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(f) Insolvency. The Borrower, the Parent, any of their respective
----------
Subsidiaries, or the Participating Lessee (except for Prime Hospitality) for
four (4) or more Eligible Properties shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower, the Parent, any
of their respective Subsidiaries, or the Participating Lessee (except for Prime
Hospitality) for four (4) or more Eligible Properties seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against the
Borrower, the Parent, any of their respective Subsidiaries, or the Participating
Lessee (except for Prime Hospitality) for four (4) or more Eligible Properties,
either such proceeding shall remain undismissed for a period of 60 days or any
of the actions sought in such proceeding shall occur; or the Borrower, the
Parent, any of their respective Subsidiaries, or the Participating Lessee
(except for Prime Hospitality) for four (4) or more Eligible Properties shall
take any corporate action to authorize any of the actions set forth above in
this paragraph (f);
(g) Judgments. Any judgment or order for the payment of money in excess
---------
of $5,000,000 (reduced for purposes of this paragraph for the amount in respect
of such judgment or order that a reputable insurer has acknowledged being
payable under any valid and enforceable insurance policy) shall be rendered
against the Borrower, the Parent or any of their respective Subsidiaries which,
within 30 days from the date such judgment is entered, shall not have been
discharged or execution thereof stayed pending appeal;
(h) ERISA. (i) Any Person shall engage in any "prohibited transaction"
-----
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is likely to result in the termination of such Plan for
purposes of Title IV of ERISA, unless such Reportable Event, proceedings or
appointment are being contested by the Borrower in good faith and by appropriate
proceedings, (iv) any Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any member of a Controlled Group shall incur any liability
in connection with a
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withdrawal from a Multiemployer Plan or the insolvency (within the meaning of
Section 4245 of ERISA) or reorganization (within the meaning of Section 4241 of
ERISA) of a Multiemployer Plan, unless such liability is being contested by the
Borrower in good faith and by appropriate proceedings, or (vi) any other event
or condition shall occur or exist, with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all other
such events or conditions, if any, could subject the Borrower or any Guarantor
to any tax, penalty or other liabilities in the aggregate exceeding $10,000,000;
(i) Subordinate Guaranty. Any provision of any Subordinate Guaranty
--------------------
except a Supplemental Guaranty shall for any reason cease to be valid and
binding on any Guarantor or any Guarantor shall so state in writing;
(j) Environmental Indemnity. Any Environmental Indemnity shall for any
-----------------------
reason cease to be valid and binding on any Person party thereto or any such
Person shall so state in writing;
(k) Invalidity of Subordination Provisions. The provisions or documents
--------------------------------------
which provide for the subordination of any claims by a Participating Lessee
under the Participating Leases against the applicable Property Owner to the
Obligations or the Subordinate Indebtedness shall be invalidated or otherwise
cease to be in full force and effect;
(l) Franchise Agreement. With respect to any Hotel Properties owned or
-------------------
leased by the Parent or any of its Subsidiaries (i) any of the Ramada-branded
Hotel Properties contained within the Prime Hospitality portfolio (excluding
Ramada Inn - Danbury, CT and Ramada Inn - Elmsford, NY) fail to be subject to a
Franchise Agreement within 18 months from the date of acquisition, (ii) if at
the time of acquisition of any other Hotel Property such Hotel Property is
operated pursuant to a franchise or license agreement with a Person who is not a
Franchisor, then on or prior to the first anniversary (18 months for Hotel
Properties which in the aggregate at any one time have a Cost Basis of less than
or equal to $100,000,000) of the acquisition thereof such Hotel Property fails
to be converted to a Franchise Agreement with a Franchisor, and (iii) any four
(4) Franchise Agreements shall be in default at the same time;
(m) Default Under Ground Lease. The occurrence of a default under any
--------------------------
ground lease (other than a Ground Lease affecting a Permitted Non-Eligible
Property) which has not been cured or waived (i) 10 days prior to the date the
ground lessor under such ground lease would have the
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right to terminate such ground lease and (ii) in any event within 30 days of the
occurrence of such default;
(n) Manager. The Participating Lessee of a Hotel Property other than a
-------
Permitted Non-Eligible Property shall not have replaced the Manager with a
reputable, nationally known, third party manager acceptable to the Agents within
120 days of the occurrence of any of the following: Any Management Agreement
shall have been terminated except in connection with an Asset Disposition, or
any Manager shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Manager or any of its Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against the Manager or any of its Subsidiaries, either such
proceeding shall remain undismissed for a period of 60 days or any of the
actions sought in such proceeding shall occur; or the Manager or any of its
Subsidiaries shall take any corporate action to authorize any of the actions set
forth above in this paragraph (n);
(o) Parent's REIT Status. There shall be a determination from the
--------------------
applicable Governmental Authority from which no appeal can be taken that the
Parent's tax status as a REIT has been lost;
(p) Parent Common Stock; Capitalization Event The Parent at any time
-----------------------------------------
hereafter fails to (a) cause the Parent Common Stock to be duly listed on the
New York Stock Exchange, Inc. and (b) file timely all reports required to be
filed by the Parent with the New York Stock Exchange, Inc. and the Securities
and Exchange Commission and, with respect to a failure under clause (b), such
failure remains uncured on the date which is the earlier of (i) the date 30 days
following the initial occurrence of such failure and (ii) the date specified by
the New York Stock Exchange, Inc. or the Securities and Exchange Commission as
the date such failure needs to be cured by. Upon the receipt by the Parent of
any Net Cash Proceeds from a Capitalization Event, (a) the Parent fails to
immediately make a capital contribution to the Borrower in the aggregate amount
of such Net Cash Proceeds or (b) the Borrower fails to apply such Net Cash
Proceeds in accordance with this Agreement and the Senior Credit Documents
either (i) to repay any outstanding principal of the Notes, and accrued and
unpaid interest thereon and other amounts payable by the Borrower in
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respect thereof, (ii) to repay any Senior Obligations or (iii) to make
Investments permitted by this Agreement;
(q) Changes in Ownership and Control. Any of the following occur without
--------------------------------
the written consent of the Agents: (a) the Parent owns less than 100% of the
stock and beneficial ownership interest in the General Partner and AGH LP; (b)
the General Partner and AGH LP (i) amend the Borrower's partnership agreement in
any material respect, (ii) admit a new general partner to the Borrower, or (iii)
own less than 51% of the partnership interests in and beneficial ownership of
the Borrower; (c) the General Partner resigns as general partner of the
Borrower; (d) Steven D. Jorns, Bruce G. Wiles and their respective Associates
legally and beneficially own less than 20% of the outstanding shares of the
Manager common stock; (e) Steven D. Jorns, Bruce G. Wiles or any of their
respective Associates sells or assigns either the legal or beneficial interest
in any outstanding shares of the Manager common stock except to Steven D. Jorns,
Bruce G. Wiles or any of their respective Associates; (f) Steven D. Jorns, Bruce
G. Wiles, and Kenneth E. Barr and their respective Associates legally and
beneficially owns less than 20% of the partnership interests in AGH Leasing; (g)
Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr or any of their respective
Associates sells or assigns either the legal or beneficial interest in any
partnership interests in AGH Leasing except to Steven D. Jorns, Bruce G. Wiles,
Kenneth E. Barr or any of their respective Associates; (h) Steven D. Jorns or
Kenneth E. Barr or any of their respective Associates sells or assigns either
the legal or beneficial interest in the Parent or the Borrower except (1) to
their respective Associates and (2) in connection with a Permitted Officer
Assignment; (i) the Parent shall cease to employ Steven D. Jorns as the
president and chief executive officer of the Parent and, within 180 days
following the termination of such employment of Mr. Jorns for any reason,
another person acceptable to the Majority Banks in their sole discretion is not
employed as the president and chief executive officer of the Parent; (j) the
Parent shall cease to employ Kenneth E. Barr as the chief financial officer of
the Parent and, within 180 days following the termination of such employment of
Mr. Barr for any reason, another person acceptable to the Majority Banks in
their sole discretion is not employed as the chief financial officer of the
Parent; (k) unless TT Leasing is no longer a Participating Lessee or has been
merged into AGH Leasing, AGH Leasing sells or assigns either the legal or
beneficial interest in any partnership interests in TT Leasing except to Steven
D. Jorns, Bruce G. Wiles, Kenneth E. Barr or any of their respective Associates
or (l) AGH Leasing, Steven D. Jorns, Bruce G. Wiles, Kenneth E. Barr or any of
their respective Associates is no longer the sole general partner of TT Leasing,
provided, however, TT Leasing can be merged into AGH Leasing; or
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(r) Participating Lessee. Either (i) a material default by the
--------------------
Participating Lessee shall occur under any Participating Lease related to four
(4) or more Eligible Properties which shall remain uncured following any notice
and cure period under such document, (ii) with respect to four (4) or more
Eligible Properties, the Participating Lease for any Hotel Property is
terminated, or (iii) the Participating Lessee enters into a Participating Lease
or other material agreement except those directly related to a Hotel Property
owned by the Borrower or any of the Borrower's Subsidiaries.
Section 8.02 Optional Acceleration of Maturity. If any Event of Default
---------------------------------
(other than an Event of Default pursuant to paragraph (f) of Section 8.01) shall
have occurred and be continuing, then, and in any such event,
(a) the Administrative Agent (i) shall at the request, or may with the
consent, of the Super Majority Banks, by notice to the Borrower, declare the
obligation of each Bank to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Super Majority Banks, by notice to the Borrower, declare the
Notes, all interest thereon, and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, all such interest, and all
such amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest or further notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrower, and
(b) the Administrative Agent shall at the request of, or may with the
consent of, the Super Majority Banks proceed to enforce its rights and remedies
under the Credit Documents for the ratable benefit of the Banks by appropriate
proceedings.
Section 8.03 Automatic Acceleration of Maturity. If any Event of Default
----------------------------------
pursuant to paragraph (f) of Section 8.01 shall occur, then the obligation of
each Bank to make Advances shall immediately and automatically be terminated and
the Notes, all interest on the Notes, and all other amounts payable under this
Agreement shall immediately and automatically become and be due and payable in
full, without presentment, demand, protest or any notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Borrower.
Section 8.04 Cash Collateral Account.
-----------------------
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(a) Pledge. The Borrower hereby pledges, and grants to the Administrative
------
Agent for the benefit of the Banks, a security interest in all funds held in the
Cash Collateral Account from time to time and all proceeds thereof, as security
for the payment of the Obligations.
(b) Duty of Care. The Administrative Agent shall exercise reasonable care
------------
in the custody and preservation of any funds held in the Cash Collateral Account
and shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Administrative Agent
accords its own property, it being understood that the Administrative Agent
shall not have any responsibility for taking any necessary steps to preserve
rights against any parties with respect to any such funds.
Section 8.05 Non-exclusivity of Remedies. No remedy conferred upon the
---------------------------
Administrative Agent or the Banks is intended to be exclusive of any other
remedy, and each remedy shall be cumulative of all other remedies existing by
contract, at law, in equity, by statute or otherwise.
Section 8.06 Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent, if any, specified by Section 8.02 to authorize the
Administrative Agent to declare the Notes and any other amount payable hereunder
due and payable pursuant to the provisions of Section 8.02 or the automatic
acceleration of the Notes and all amounts payable under this Agreement pursuant
to Section 8.03, each Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement, the Note held by such
Bank, and the other Credit Documents, irrespective of whether or not such Bank
shall have made any demand under this Agreement, such Note, or such other Credit
Documents, and although such obligations may be unmatured. Each Bank agrees to
promptly notify the Borrower after any such set-off and application made by such
Bank, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
Section are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which such Bank may have.
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ARTICLE IX
AGENCY PROVISIONS
Section 9.01 Authorization and Action. Each Bank hereby appoints and
------------------------
authorizes each Agent to take such action as Agent on its behalf and to exercise
such powers under this Agreement and the other Credit Documents as are delegated
to such Agent by the terms hereof and of the other Credit Documents, together
with such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement or any other Credit Document
(including, without limitation, enforcement or collection of the Notes), the
Agents shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Majority
Banks, and such instructions shall be binding upon all Banks and all holders of
Notes; provided, however, that neither Agent shall be required to take any
--------
action which exposes such Agent to personal liability or which is contrary to
this Agreement, any other Credit Document, or applicable law. The functions of
the Agents are administerial in nature and in no event shall the Agents have a
fiduciary or trustee relation in respect of any Bank by reason of this Agreement
or any other Credit Document. Within 5 Business Days of the Administrative
Agent receiving actual notice (without any duty to investigate) of a Default,
the Administrative Agent will provide written notice of such Default to the
Banks.
Section 9.02 Agents' Reliance, Etc. Neither the Agents nor any of their
---------------------
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken (including such Person's own negligence) by
it or them under or in connection with this Agreement or the other Credit
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, each Agent: (a) may
treat the payee of any Note as the holder thereof until such Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to the Administrative Agent; (b) may consult with legal
counsel (including counsel for the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Bank and shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with this Agreement or the other Credit
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any other Credit Document on the part of
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the Borrower or its Subsidiaries or to inspect the property (including the books
and records) of the Borrower or its Subsidiaries; (e) shall not be responsible
to any Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Credit
Document; and (f) shall incur no liability under or in respect of this Agreement
or any other Credit Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party or
parties.
Section 9.03 Each Agent and Its Affiliates. With respect to its
-----------------------------
Commitment, the Advances made by it and the Notes issued to it, each Agent shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not an Agent. The term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include each Agent in its
individual capacity. Each Agent and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower or any of its Subsidiaries, and any Person
who may do business with or own securities of the Borrower or any such
Subsidiary, all as if such Agent were not an Agent hereunder and without any
duty to account therefor to the Banks.
Section 9.04 Bank Credit Decision. Each Bank acknowledges that it has,
--------------------
independently and without reliance upon either Agent or any other Bank and based
on the financial statements referred to in Section 4.06 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon either Agent or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
Section 9.05 Indemnification. The Banks severally agree to indemnify
---------------
each Agent (to the extent not reimbursed by the Borrower), according to their
respective Pro Rata Shares from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against such Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by such Agent under
this Agreement or any other Credit Document (including such Agent's own
negligence), provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Without limitation of the
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foregoing, each Bank agrees to reimburse each Agent promptly upon demand for its
Pro Rata Share of any out-of-pocket expenses (including counsel fees) incurred
by such Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any other Credit Document,
to the extent that such Agent is not reimbursed for such expenses by the
Borrower.
Section 9.06 Successor Agent. Either Agent may resign at any time by
---------------
giving written notice thereof to the Banks and the Borrower and may be removed
at any time with cause by the Super Majority Banks upon receipt of written
notice from the Super Majority Banks to such effect. Upon receipt of notice of
any such resignation or removal, the Super Majority Banks shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Super Majority Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks and the Borrower, appoint a successor Agent, which shall be a commercial
bank meeting the financial requirements of an Eligible Assignee. Upon the
acceptance of any appointment as Agent by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the other
Credit Documents. After any retiring Agent's resignation or removal hereunder as
Documentation Agent or Administrative Agent, the provisions of this Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was such Agent under this Agreement and the other Credit Documents.
Section 9.07 Arranger, Syndication Agent and Managing Agents. The Bank
-----------------------------------------------
of Nova Scotia and Wells Fargo Bank, National Association shall each be named a
Managing Agent under the Credit Documents, but the Managing Agents shall have no
right or duty to act as agent on behalf of the Banks. Societe Generale,
Southwest Agency shall be named Arranger and Syndication Agent under the Credit
Documents, but the Arranger and the Syndication Agent shall have no right or
duty to act as agent on behalf of the Banks in such capacities; provided that
the provisions of this sentence shall in no way effect Societe Generale,
Southwest Agency's rights or duties as Documentation Agent on behalf of the
Banks.
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ARTICLE X
SUBORDINATION
Section 10.01 Subordination. The payment of any Obligations (including
-------------
interest accruing after the filing of a petition initiating any proceeding
pursuant to any bankruptcy law with respect to the Borrower as debtor) is
subordinated to the payment of any Senior Obligations, as the Senior Obligations
may be amended, renewed, extended, increased, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to time;
provided that the aggregate principal amount and face amount of outstanding
- --------
letters of credit under the Senior Credit Agreement which shall be senior to the
Obligations shall not exceed $500,000,000.00 on the terms and conditions
contained in this Article X.
Section 10.02 Payment Blockage. No payment by the Borrower on the
----------------
Obligations (whether pursuant to the terms of the Obligations or upon
acceleration or otherwise) shall be made if, at the time of any such payment,
there exists a default in the payment of any Senior Obligations (a "Senior
Payment Default"), and such Senior Payment Default shall not have been cured or
waived by or on behalf of the holders of such Senior Obligations. In addition,
during the continuance of the breach of any provision in Article VII of the
Senior Credit Agreement ("Financial Covenant Default"), upon the giving by the
Senior Administrative Agent of written notice to the Administrative Agent of
such breach, no such payment may be made by the Borrower upon the Obligations
for a period (the "Blockage Period") commencing on the date of the giving of
such notice and ending 180 days after the date of the giving of such notice.
Not more than one Blockage Period may be commenced with respect to the
Obligations during any period of 360 consecutive days. No Financial Covenant
Default which existed or was continuing on the date of commencement of any
Blockage Period shall be, or be made, the basis for commencement of a second
Blockage Period whether within or without a period of 360 consecutive days
unless such Financial Covenant Default shall have been cured for a period of not
less than 30 consecutive days or waived. During any period in which payments on
the Obligations are not restricted pursuant to this Section 10.02, the holders
of the Obligations shall be entitled to receive payments in accordance with the
terms of the Obligations, including any payments that were previously restricted
in accordance with this Section 10.02.
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Section 10.03 Remedy Blockage.
---------------
(a) At any time when any Senior Obligations remain outstanding, the
holders of the Obligations will not have any of the following rights: (i) to
demand, sue for or take from the Borrower, by set-off or in any other manner,
any moneys which may then or thereafter be owing by the Borrower on the
Obligations, (ii) to commence, or to join with any Person in commencing, any
suit, action or proceeding against the Borrower (A) to enforce payment of or to
collect all or any portion of the Obligations or (B) to commence judicial
enforcement of any of the rights and remedies under the documents or instruments
governing the Obligations or applicable law, (iii) to accelerate the principal
of or interest on or any other amount under the Obligations, or (iv) as a holder
of the Obligations, to commence, or to join with any Person in commencing,
against Borrower or any of its property a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding (each of the foregoing a
"Remedial Action") until the earlier of:
1. the commencement by the Senior Administrative Agent or any holder
of the Senior Obligations of any Remedial Action;
2. the commencement of a liquidation or dissolution proceeding with
respect to the Borrower or a bankruptcy, reorganization, insolvency,
receivership, or other similar proceeding with respect to the Borrower or
any of its property; or
3. the occurrence of an Event of Default and the continuance thereof
unwaived for 360 days.
(b) Notwithstanding the foregoing, the holders of the Obligations and the
Administrative Agent may (i) charge interest at a default rate, (ii) sue for
specific performance, but not for damages or other sums of money, or obtain
injunctive relief, in either case, in respect of the covenants of the
Obligations which do not require, directly or indirectly, the payment by the
Borrower of money, (iii) give notices and file law suits to prevent the running
of the relevant statute of limitations, pursue rights in bankruptcy,
reorganization, insolvency, receivership, or other similar proceedings, and
otherwise protect legal rights and (iv) send notices of default under the Credit
Agreement.
Section 10.04 Certain Distributions. Upon any distribution to creditors
---------------------
of the Borrower in a liquidation or dissolution of the Borrower or in a
bankruptcy, reorganization, insolvency, receivership, or other similar
proceeding with respect to the Borrower or any of its property, (a) the
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holders of the Senior Obligations will be entitled to receive payment in full in
cash, or to have such payment duly provided for in cash, of all amounts payable
under or in respect of the Senior Obligations (including interest accrued after
the commencement of such proceeding) before the holders of the Obligations will
be entitled to receive from the Borrower or its assets any payment under or in
respect of the Obligations and (b) until the holders of the Senior Obligations
have received such payment in full in cash, or such payment is duly provided for
in cash, any distribution from the Borrower or its assets to which the holders
of the Obligations would otherwise be entitled will be made to the holders of
the Senior Obligations (or one or more trustees or representatives acting on
their behalf). Subject to the prior payment in full in cash of all Senior
Obligations (or provision made for payment in full in cash of all Senior
Obligations), the holders of the Obligations shall be subrogated to the rights
of the holders of the Senior Obligations to receive payments or distribution of
assets of the Borrower applicable to the Senior Obligations until all amounts
owing on the Obligations shall be paid in full.
Section 10.05 Payment in Trust. The Administrative Agent and each of the
----------------
Banks (or a trustee, representative, or agent acting on their behalf) will be
obligated to hold in trust for, and to pay over promptly to, the holders of the
Senior Obligations (or one or more trustees, representatives, or agents acting
on their behalf) all payments and distributions received by the Administrative
Agent or such Bank in contravention of the restrictions contained in this
Article X; provided, however, that notwithstanding such restrictions, the
Administrative Agent and the Banks shall be entitled to receive and to retain
any and all payments (a) made in securities of the Borrower provided the same
are subordinated to the Senior Obligations at least to the same extent as the
Obligations or (ii) made in accordance with any relevant court order respecting
the subordination provided for herein.
Section 10.06 Liens. The Administrative Agent and the Banks will not
-----
create, assume, or suffer to exist any Lien securing the repayment of the
Obligations. Any such Lien existing in violation of the foregoing shall be
fully subordinate to any Lien in favor of the Senior Administrative Agent or
the Senior Creditors which secures any of the Senior Obligations. At the
request of the Senior Administrative Agent, the Administrative Agent, the Banks,
and the Borrower will take any and all steps necessary to fully effect the
release of any such Lien.
Section 10.07 Miscellaneous.
-------------
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(a) The Administrative Agent, the Banks, and the Borrower agree to execute
any and all other instruments requested by the Senior Administrative Agent to
further evidence the subordination of the Obligations to the Senior Obligations
as herein provided.
(b) The provisions of this Article X are irrevocable and the Senior
Administrative Agent and the Senior Creditors may, without notice to any of the
parties hereto and without impairing or releasing the obligations of the
Borrower, the Administrative Agent, and the Banks hereunder, (i) create Senior
Obligations by extending credit under the Senior Credit Agreement; (ii) subject
to the limitation on total principal contained in Section 10.01, change the
terms of or increase the amount of the Senior Obligations by increasing,
extending, rearranging, amending, supplementing, or otherwise modifying any
instrument or agreement creating Senior Obligations; (iii) sell, exchange,
release, or otherwise deal with any collateral securing any Senior Obligations;
(iv) release anyone, including the Borrower or any guarantor, liable in any
manner for the payment or collection of any Senior Obligations; (v) exercise or
refrain from exercising any rights against the Borrower or any other Person; and
(vi) apply any sums received by any Senior Creditor, from whatever source, to
the payment of the Senior Obligations.
(c) The foregoing provisions will be enforceable against the
Administrative Agent and the Banks, by or on behalf of the holders of the Senior
Obligations and such holders are intended third party beneficiaries of this
Article X.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Documentation
Agent, the Administrative Agent or the Agents, as specified in the particular
provisions of the Credit Documents, and the Borrower, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment shall increase the
--------
Commitment of any Bank without the written consent of such Bank, and no
amendment, waiver or consent shall, unless in writing and signed by all the
Banks, do any of the following: (a) increase the aggregate Commitments of the
Banks,
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(b) reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder or under any other Credit Document or otherwise
release the Borrower from any Obligations, (c) postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, (d) change the number of Banks which shall be required for
the Banks or any of them to take any action hereunder or under any other Credit
Document, (e) amend this Section 11.01, (f) amend the definition of "Majority
Banks" or "Super Majority Banks", (g) amend the definition of "Total
Availability", but not the definitions that are used in the definition of "Total
Availability", (h) release the Parent from its obligations under the Subordinate
Guaranty or (i) amend the provisions of Article X; and provided, further, that
--------
no amendment, waiver or consent shall, unless in writing and signed by the
Documentation Agent or the Administrative Agent, in addition to the Banks
required above to take such action, affect the rights or duties of the
Documentation Agent or the Administrative Agent, as the case may be, under this
Agreement or any other Credit Document. In addition, none of the following
decisions shall be made without the written consent of the Super Majority Banks:
(a) release any Guarantor except the Parent from its obligations
under any of the Subordinate Guaranties (provided that the Administrative
Agent can (i) release any Supplemental Guarantor from its obligations under
any of the Supplemental Guaranties and (ii) if no Default then exists,
release any Subsidiary of the Borrower which no longer is a Property Owner
of an Eligible Property);
(b) release any Person from its obligations under any of the
Environmental Indemnities;
(c) any determination to make a Borrowing after the occurrence and
during the continuance of an Event of Default;
(d) increases the maximum duration of Interest Periods permitted
under this Agreement;
(e) any waiver for a period of more than 60 days of, or any material
amendment to, the financial covenants contained in Article VII of this
Agreement;
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(f) any material waiver of the covenants contained in Sections 6.01,
6.02 or 6.04;
(g) amends any of the definitions that are used in the definition of
"Total Availability";
(h) any amendment, supplement or modification to, or waiver of, the
provisions of Section 8.01 of this Agreement;
(i) any determination to send notice to the Borrower of, or otherwise
declare, an Event of Default pursuant to Section 8.01 of this Agreement;
(j) any determination to accelerate the Obligations pursuant to
Section 8.02 of this Agreement; and
(k) any exercise remedies under any Credit Document, provided,
however, that if an Event of Default has occurred and is continuing and the
Super Majority Banks cannot agree on a course of action within 60 days
following the occurrence of such Event of Default, the Administrative Agent
shall commence exercising remedies against the Borrower, the Parent and the
other Guarantors.
In addition, none of the following decisions shall be made without the written
consent of the Majority Banks:
(a) any waiver for more than 30 days of, or any material amendment
to, of the reporting requirements set forth in clauses (a)-(f) or (h) of
Section 5.05 of this Agreement;
(b) any material waiver of, or any material amendment to any section
of Article VI not previously referenced in this Section 11.01; and
(c) any material decision regarding the operation, maintenance, sale
or other disposition of any Property after the foreclosure upon such
Property, provided that Administrative Agent shall be able to take any
action it determines necessary to preserve or
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maintain any such Property and provided further that if the Majority Banks
cannot agree on the sale or disposition of such Property, the
Administrative Agent shall not sell or dispose of such Property, but shall
continue to hold such Property for the benefit of the Banks.
Any amendment to a covenant of the Parent or any of its Subsidiaries or
amendment to a definition shall require the Borrower's written consent.
Section 11.02 Notices, Etc. All notices and other communications shall be
------------
in writing (including telecopy or telex) and mailed, telecopied, telexed, hand
delivered or delivered by a nationally recognized overnight courier, if to the
Borrower, at its address at 5605 MacArthur Blvd., Suite 1200, Irving, Texas
75038, Attention: Steven D. Jorns; if to any Bank at its Domestic Lending Office
specified opposite its name on Schedule 11.02; if to the Documentation Agent, at
its address at 4900 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201,
Attention: Thomas K. Day, Vice President (telecopy: (214) 979-2727; telephone:
(214) 979-2774); if to Bank One, Texas, N.A., in its capacity as Administrative
Agent, at its office at 1717 Main Street, 4th Floor, Dallas, Texas 75201,
Attention: Commercial Real Estate Department - Jeff Etter, Vice President
(telecopy: (214) 290-7205; telephone: (214) 290-2385); or, as to each party, at
such other address or teletransmission number as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall, when mailed, telecopied, telexed or hand delivered or
delivered by overnight courier, be effective three days after deposited in the
mails, when telecopy transmission is completed, when confirmed by telex answer-
back or when delivered, respectively, except that notices and communications to
the Administrative Agent pursuant to Article II or Article IX shall not be
effective until received by the Administrative Agent.
Section 11.03 No Waiver; Remedies. No failure on the part of any Bank or
-------------------
any Agent to exercise, and no delay in exercising, any right hereunder or under
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies provided in this Agreement and the
other Credit Documents are cumulative and not exclusive of any remedies provided
by law.
Section 11.04 Costs and Expenses. The Borrower agrees to pay on demand
------------------
all out-of-pocket costs and expenses of the Agents in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other Credit Documents and syndication
(syndication costs shall not exceed $5,000 per Eligible Assignee) of the
Obligations including, without limitation, (a) the reasonable fees and out-of-
pocket expenses of
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Bracewell & Patterson, L.L.P., counsel for the Documentation Agent, and, with
respect to advising either Agent as to its rights and responsibilities under
this Agreement, the Agents, (b) the reasonable fees and out-of-pocket expenses
of Donohoe, Jameson & Carroll, P.C., counsel for the Administrative Agent, and
(c) all reasonable out-of-pocket costs and expenses, if any, of each Agent and
each Bank (including, without limitation, reasonable counsel fees and expenses
of each Agent and each Bank) in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other
Credit Documents, and (d) to the extent not included in the foregoing, the costs
of any local counsel, travel expenses, Engineering Reports, Environmental
Reports, and any title or Uniform Commercial Code search costs, any flood plain
search costs, insurance consultant costs and other costs usual and customary in
connection with a credit facility of this type.
Section 11.05 Binding Effect. This Agreement shall become effective when
--------------
it shall have been executed by the Borrower and the Agents, and when the
Documentation Agent shall have, as to each Bank, either received a counterpart
hereof executed by such Bank or been notified by such Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, each Agent, and each Bank and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights or
delegate its duties under this Agreement or any interest in this Agreement
without the prior written consent of each Bank.
Section 11.06 Bank Assignments and Participations.
-----------------------------------
(a) Assignments. Any Bank may assign to one or more banks or other
-----------
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances
owing to it, the Notes held by it); provided, however, that (i) each such
-------- -------
assignment shall be of a constant, and not a varying, percentage of all of such
Bank's rights and obligations under this Agreement and shall involve a ratable
assignment of such Bank's Commitment and such Bank's Advances, (ii) the amount
of the resulting Commitment and Advances of the assigning Bank (unless it is
assigning all its Commitment) and the assignee Bank pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000 and shall
be an integral multiple of $1,000,000, (iii) each such assignment shall be to an
Eligible Assignee, (iv) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with the Notes subject to such
assignment, (v) the Agents shall consent to such assignment, which consent shall
not be unreasonably withheld
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or delayed, and (vi) each Eligible Assignee (other than the Eligible Assignee of
either Agent or an Eligible Assignee which is an Affiliate of the assigning
Bank) shall pay to the Administrative Agent a $2,500 administrative fee. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least three Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto for all purposes and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) such Bank thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of such Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto). Notwithstanding anything herein to the
contrary, any Bank may assign, as collateral or otherwise, any of its rights
under the Credit Documents to any Federal Reserve Bank.
(b) Term of Assignments. By executing and delivering an Assignment and
-------------------
Acceptance, the Bank thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency of
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
Guarantors or the performance or observance by the Borrower or the Guarantors of
any of their obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Sections 4.06 and 5.05, if applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon either Agent, such Bank
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes each Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to such Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and (vi)
such assignee agrees that it will perform in accordance with their terms
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all of the obligations which by the terms of this Agreement are required to be
performed by it as a Bank.
(c) The Register. The Administrative Agent shall maintain at its address
------------
referred to in Section 11.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the
Advances owing to, each Bank from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, each Agent, and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(d) Procedures. Upon its receipt of an Assignment and Acceptance executed
----------
by a Bank and an Eligible Assignee, together with the Note subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of the attached Exhibit B,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Administrative Agent in exchange
for the surrendered Note, a new Note payable to the order of such Eligible
Assignee in amount equal to, respectively, the Commitment and the outstanding
Advances assumed by it pursuant to such Assignment and Acceptance, and if the
assigning Bank has retained any Commitment hereunder, a new Note payable to the
order of such Bank in an amount equal to, respectively, the Commitment and the
outstanding Advances retained by it hereunder. Such new Note shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the attached Exhibit A.
(e) Participations. Each Bank may sell participations to one or more banks
--------------
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it, and the Notes held by it); provided,
--------
however, that (i) such Bank's obligations under this Agreement (including,
- -------
without limitation, its Commitment to the Borrower hereunder) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Bank shall remain the
holder of any such Note for all purposes of this Agreement, (iv) the Borrower,
each Agent, and the other Banks shall continue to deal solely and directly with
such Bank
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in connection with such Bank's rights and obligations under this Agreement, (v)
such Bank shall not require the participant's consent to any matter under this
Agreement, except for change in the principal amount of any Note in which the
participant has an interest, reductions in fees or interest, or extending the
Maturity Date except as permitted in this Agreement, and (vi) such Bank shall
give prompt notice to the Borrower of each such participation sold by such Bank.
The Borrower hereby agrees that participants shall have the same rights under
Sections 2.08, 2.09, 2.11(c), and 11.07 hereof as the Bank to the extent of
their respective participations.
(f) Confidentiality. Each Bank may furnish any information concerning the
---------------
Borrower and its Subsidiaries in the possession of such Bank from time to time
to assignees and participants (including prospective assignees and
participants); provided that, prior to any such disclosure, the assignee or
--------
participant or proposed assignee or participant shall agree in writing to
preserve the confidentiality of any confidential information relating to the
Borrower and its Subsidiaries received by it from or on behalf of such Bank.
Such Bank shall promptly deliver a signed copy of any such confidentiality
agreement to the Borrower.
Section 11.07 Indemnification. The Borrower shall indemnify each Agent,
---------------
the Banks (including any lender which was a Bank hereunder prior to any full
assignment of its Commitment), and each affiliate thereof and their respective
directors, officers, employees and agents from, and discharge, release, and hold
each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from (i) any actual or
proposed use by the Borrower or any Affiliate of the Borrower of the proceeds of
any Advance, (ii) any breach by the Borrower or any Guarantor of any provision
of this Agreement or any other Credit Document, (iii) any investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to the foregoing, or (iv) any Environmental Claim or
requirement of Environmental Laws concerning or relating to the present or
previously-owned or operated properties, or the operations or business, of the
Borrower or any of its Subsidiaries, and the Borrower shall reimburse each Agent
and each Bank, and each affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any reasonable out-of-pocket
expenses (including legal fees) incurred in connection with any such
investigation, litigation or other proceeding; and expressly including any such
losses, liabilities, claims, damages, or expense incurred by reason of the
Person being indemnified's own negligence, but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
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THE BORROWER ACKNOWLEDGES AND AGREES THAT CERTAIN OF ITS OBLIGATIONS AND
INDEMNITIES UNDER THIS AGREEMENT INCLUDE ANY CLAIMS RESULTING FROM THE
NEGLIGENCE OR ALLEGED NEGLIGENCE OF THE DOCUMENTATION AGENT, THE ADMINISTRATIVE
AGENT, THE BANKS, OR ANY OTHER PERSON BEING INDEMNIFIED.
Section 11.08 Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 11.09 Survival of Representations, Indemnifications, etc. All
--------------------------------------------------
representations, warranties contained in this Agreement or made in writing by or
on behalf of the Borrower in connection herewith shall survive the execution and
delivery of this Agreement and the Credit Documents, the making of the Advances
and any investigation made by or on behalf of the Banks, none of which
investigations shall diminish any Bank's right to rely on such representations
and warranties. All obligations of the Borrower provided for in Sections 2.08,
2.09, 2.11(c), 9.05 and 11.07 shall survive any termination of this Agreement
and repayment in full of the Obligations.
Section 11.10 Severability. In case one or more provisions of this
------------
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
not be affected or impaired thereby.
Section 11.11 Business Loans. The Borrower warrants and represents that
--------------
the Advances evidenced by the Notes are and shall be for business, commercial,
investment or other similar purposes and not primarily for personal, family,
household or agricultural use, as such terms are used in Chapter One of the
Texas Credit Code. For purposes of determining the Maximum Rate under the
applicable laws of the State of Texas, the applicable rate ceiling shall be the
indicated rate ceiling computed in accordance with Article 5069-1H of the Texas
Revised Civil Statutes, if applicable, and, if Article 5069-1H is not
applicable, then Article 5069-1D of the Texas Revised Civil Statutes; provided
that, to the extent permitted by applicable laws and subject to any notice or
other requirements under applicable laws, the Administrative Agent may from time
to time change the rate ceiling; and provided, further, that the "Maximum Rate"
for purposes of this Agreement shall not be limited to the applicable rate
ceiling under Article 5069-1D or Article 5069-1H if the United
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States federal law or Texas law now or hereafter in effect and applicable to
this Agreement (and the interest contracted for, charged and collected
hereunder) shall permit a higher rate of interest.
Section 11.12 Usury Not Intended. It is the intent of the Borrower and
------------------
each Bank in the execution and performance of this Agreement and the other
Credit Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the Advances of each Bank
including such applicable laws of the State of Texas and the United States of
America from time to time in effect. In furtherance thereof, the Banks and the
Borrower stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes
hereof "interest" shall include the aggregate of all charges which constitute
interest under such laws that are contracted for, charged or received under this
Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Advances, include amounts which by applicable law are deemed interest
which would exceed the Maximum Rate, then such excess shall be deemed to be a
mistake and each Bank receiving same shall credit the same on the principal of
its Notes (or if such Notes shall have been paid in full, refund said excess to
the Borrower). In the event that the maturity of the Notes is accelerated by
reason of any election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Notes (or, if the applicable Notes shall have been paid in full,
refunded to the Borrower). The provisions of this Section shall control over all
other provisions of this Agreement or the other Credit Documents which may be in
apparent conflict herewith.
Section 11.13 Certain Office and Retail Space. The Banks acknowledge and
-------------------------------
agree that the office portion of the Houston, Texas Marriott and the retail
portion of the St. Tropez hotel in Las Vegas, Nevada (a) will or may not be
subject to a Participating Lease, Franchise Agreement or Management Agreement,
(b) will be included in the calculation of the Total Availability, and (c) may
be sold or transferred separately from the hotel portion of such Hotel Property
in accordance with the requirements of a Permitted Hotel Sale. If in connection
with any such sale or transfer, the office or retail, as applicable, portions
and hotel portions of such Hotel Property need to enter into
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any agreements pertaining to the joint use of facilities, such agreements will
be subject to the reasonable approval of the Documentation Agent.
Section 11.14 Governing Law. This Agreement, the Notes and the other
-------------
Credit Documents shall be governed by, and construed and enforced in accordance
with, the laws of the State of Texas.
Section 11.15 Consent to Jurisdiction. The Borrower hereby irrevocably
-----------------------
submits to the jurisdiction of any Texas state or federal court sitting in
Dallas, Texas in any action or proceeding arising out of or relating to this
Agreement, the Notes and the other Credit Documents, and the Borrower hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such court. The Borrower hereby irrevocably waives,
to the fullest extent it may effectively do so, any right it may have to the
defense of an inconvenient forum to the maintenance of such action or
proceeding. The Borrower hereby agrees that service of copies of the summons
and complaint and any other process which may be served in any such action or
proceeding may be made by mailing or delivering a copy of such process to the
Borrower at its address specified in Section 11.02. The Borrower agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the rights of any Bank,
the Documentation Agent, or the Administrative Agent to serve legal process in
any other manner permitted by the law or affect the right of any Bank, the
Documentation Agent or the Administrative Agent to bring any action or
proceeding against the Borrower or its Property in the courts of any other
jurisdiction.
Section 11.16 Knowledge of Borrower. For purposes of this Agreement,
---------------------
"knowledge of the Borrower" means the actual knowledge of any of the executive
officers and all other Responsible Officers of the Parent or the general manager
of each Hotel Property except the general manager for those Hotel Properties for
which Prime Hospitality is the Participating Lessee.
Section 11.17 Banks Not in Control. None of the covenants or other
--------------------
provisions contained in the Credit Documents shall or shall be deemed to, give
the Banks the rights or power to exercise control over the affairs and/or
management of the Borrower, any of its Subsidiaries or any Guarantor, the power
of the Banks being limited to the right to exercise the remedies provided in the
Credit Documents; provided, however, that if any Bank becomes the owner of any
stock, or other equity interest in, any Person whether through foreclosure or
otherwise, such Bank shall be entitled
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(subject to requirements of law) to exercise such legal rights as it may have by
being owner of such stock, or other equity interest in, such Person.
Section 11.18 Headings Descriptive. The headings of the several Sections
--------------------
and paragraphs of the Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
Section 11.19 Time is of the Essence. Time is of the essence under the
----------------------
Credit Documents.
SECTION 11.20 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE
---------------------
BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT
OR TO ANY COUNTERCLAIM THEREIN.
SECTION 11.21 ENTIRE AGREEMENT. PURSUANT TO SECTION 26.02 OF THE TEXAS
----------------
BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE
LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S
AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THE BORROWER ACKNOWLEDGES AND AGREES THAT CERTAIN OF ITS OBLIGATIONS AND
INDEMNITIES UNDER THIS AGREEMENT INCLUDE ANY CLAIMS RESULTING FROM THE
NEGLIGENCE OR ALLEGED NEGLIGENCE OF
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THE DOCUMENTATION AGENT, THE ADMINISTRATIVE AGENT, THE BANKS, OR ANY OTHER
PERSON BEING INDEMNIFIED.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURE PAGE OF SUBORDINATE UNSECURED CREDIT AGREEMENT]
EXECUTED as of the date first referenced above.
BORROWER:
--------
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By: /s/ Kenneth E. Barr
----------------------------------
Name: KENNETH E. BARR
--------------------------------
Title: EXECUTIVE VICE PRESIDENT
-------------------------------
<PAGE>
[SIGNATURE PAGE OF SUBORDINATE UNSECURED CREDIT AGREEMENT]
BANK ONE, TEXAS, N.A., individually and
as Administrative Agent
/s/ Jeffrey A. Etter
--------------------------------------
By: Jeffrey A. Etter
--------------------------------------
Title: VICE PRESIDENT
-----------------------------------
SOCIETE GENERALE, SOUTHWEST AGENCY,
individually and as Arranger, Syndication Agent,
and Documentation Agent
_________________________________________
By:______________________________________
Title:___________________________________
<PAGE>
[SIGNATURE PAGE OF SUBORDINATE UNSECURED CREDIT AGREEMENT]
BANK ONE, TEXAS, N.A., individually and
as Administrative Agent
_________________________________________
By:______________________________________
Title:___________________________________
SOCIETE GENERALE, SOUTHWEST AGENCY,
individually and as Arranger, Syndication Agent,
and Documentation Agent
/s/ Thomas K. Day
-----------------------------------------
By: THOMAS K. DAY
--------------------------------------
Title: VICE PRESIDENT
-----------------------------------
<PAGE>
[SIGNATURE PAGE OF SUBORDINATE UNSECURED CREDIT AGREEMENT]
WELLS FARGO BANK, NATIONAL
ASSOCIATION, individually and as Managing Agent
/s/ DAVID MCNEILL
-------------------------------------
By: DAVID MCNEILL
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
<PAGE>
$100,000,000.00
SUBORDINATE UNSECURED CREDIT AGREEMENT
AMONG AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P.,
as the Borrower
SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger, Syndication Agent and
Documentation Agent,
BANK ONE, TEXAS, N.A., as Administrative Agent,
THE BANK OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL
ASSOCIATION as Managing Agents
and THE BANKS
<TABLE>
<CAPTION>
EXHIBITS TO CREDIT AGREEMENT Tab No.
-------
<S> <C>
A. Form of Note................................................... 1
B. Form of Assignment and Acceptance.............................. 2
C. Form of Compliance Certificate................................. 3
D. Form of Environmental Indemnification Agreement................ 4
E. Form of Notice of Borrowing.................................... 5
F. Form of Notice of Conversion or Continuation................... 6
G. Form of Property Adjustment Report............................. 7
H. Form of Subordinate Guaranty................................... 8
I. Form of Battle Fowler, L.L.P. Legal Opinion.................... 9
SCHEDULES TO CREDIT AGREEMENT
1. Credit Documents...............................................10
1.01(a) Commitments....................................................11
1.01(b) Initial Properties, Cost Basis and Hotel Value.................12
1.01(c) Engineer Report Scope of Services..............................13
1.01(d) Approved Engineers.............................................14
1.01(e) Environmental Report Scope of Services.........................15
1.01(f) Approved Environmental Consultants.............................16
1.01(g) Franchisors....................................................17
1.01(h) Ground Leases..................................................18
1.01(i) Guarantors.....................................................19
1.01(j) Participating Leases...........................................20
4.01 Subsidiaries...................................................21
4.08 Litigation.....................................................22
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4.17 Legal Requirements; Zoning; Utilities; Access..................23
4.18 Existing Indebtedness..........................................24
4.21 Franchise Agreements...........................................25
4.22 Management Agreements..........................................26
5.06 Required Work..................................................27
5.07 Insurance......................................................28
11.02 Notice Information.............................................29
</TABLE>
-2-
<PAGE>
EXHIBIT A
FORM OF SUBORDINATE NOTE
This instrument is subordinated to the extent and in the manner provided in the
Subordinate Unsecured Credit Agreement referred to below. By acceptance of this
instrument, the holder of this instrument agrees to be bound by all of the terms
of the Subordinate Unsecured Credit Agreement as if the holder had been an
original party to the Subordinate Unsecured Credit Agreement.
$ _______________ ____________, 1998
For value received, the undersigned American General Hospitality Operating
Partnership L.P., a Delaware limited partnership ("Borrower"), hereby promises
to pay to the order of ________________________ ("Bank") the principal amount of
_______________ and _______/100 Dollars ($_____) or, if less, the aggregate
outstanding principal amount of each Advance (as defined in the Subordinate
Unsecured Credit Agreement referred to below) made by the Bank to the Borrower,
together with interest on the unpaid principal amount of each Advance from the
date of such Advance until such principal amount is paid in full, at such
interest rates, and at such times, as are specified in the Subordinate Unsecured
Credit Agreement referred to below.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Subordinate Unsecured Credit
Agreement dated as of February 13, 1998 (as the same may be amended or modified
from time to time, the "Credit Agreement"), among the Borrower, the Banks, Bank
One, Texas, N.A., as Administrative Agent, Societe Generale. Southwest Agency,
as Arranger, Syndication Agent, and Documentation Agent, the Bank of Nova Scotia
as Managing Agent, and Wells Fargo Bank, National Association, as Managing
Agent. Capitalized terms used in this Note that are defined in the Credit
Agreement and not otherwise defined in this Note have the meanings, assigned to
such terms in the Credit Agreement. The Credit Agreement, among other things,
(a) provides for the making of Advances by the Bank to the Borrower from time to
time in an aggregate amount not to exceed at any time outstanding the Dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
each such Advance being evidenced by this Note and (b) contains provisions for
acceleration of the maturity of this Note upon the happening of certain events
stated in the Credit Agreement and for prepayments of principal prior to the
maturity of this Note upon the terms and conditions specified in the Credit
Agreement.
<PAGE>
Both principal and interest are payable in lawful money of the United
States of America to the Administrative Agent at 1717 Main Street, P.O. Box
655415. 4th Floor, Commercial Real Estate Department, Dallas, Texas 75201 (or at
such other location or address as may be specified by the Administrative Agent
to the Borrower) in same day funds. The Bank shall record all Advances and
payments of principal made under this Note, but no failure of the Bank to make
such recordings shall affect the Borrower's repayment obligations under this
Note.
Except as specifically provided in the Credit Agreement, the Borrower
hereby waives presentment, demand, protest, notice of intent to accelerate,
notice of acceleration, and any other notice of any kind. No failure to
exercise, and no delay in exercising, any rights hereunder on the part of the
holder of this Note shall operate as a waiver of such rights.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the state of Texas (except that Chapter 346 of the Texas
Finance Code, which regulates certain revolving credit loan accounts shall not
apply to this Note).
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
By: AGH GP. Inc., its general partner
By:__________________________________________
Name:________________________________________
Title:_______________________________________
-2-
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ______, 1998
Reference is made to the Amended and Restated Senior Unsecured Credit
Agreement dated as of February 13, 1998 (as the same may be amended or modified
from time to time, the "Credit Agreement") among American General Hospitality
Operating Partnership, L.P., a Delaware limited partnership (the "Borrower"),
the Banks, Bank One, Texas, N.A., as Administrative Agent, Societe Generale,
Southwest Agency, as Arranger, Syndication Agent, and Documentation Agent (the
"Documentation Agent"), the Bank of Nova Scotia, as Managing Agent, and Wells
Fargo Bank, National Association, as Managing Agent. Capitalized terms not
otherwise defined in this Assignment and Acceptance shall have the meanings
assigned to them in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, __________ wishes to assign
and delegate ___%/1/ of its rights and obligations under the Credit Agreement.
Therefore, _________________ ("Assignor"), ___________________ ("Assignee"), and
the Administrative Agent agree as follows:
1. As of the Effective Date (as defined below), the Assignor hereby sells
and assigns and delegates to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, without recourse to the Assignor and without
representation or warranty except for the representations and warranties
specifically set forth in clauses (i), (ii), and (iii) of Section 2, a ____%
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement in connection with its Commitment, including, without limitation, such
percentage interest in the Assignor's Commitment and the Advances owing to the
Assignor, the participation interest in the Letter of Credit Obligations held by
the Assignor, and the Note held by the Assignor.
2. The Assignor (i) represents and warrants that, prior to executing this
Assignment and Acceptance, its Commitment is $____________________, the
aggregate outstanding principal amount of Advances owed to it by the Borrower is
$___________________, and its Pro Rata Share of the Letter of Credit Exposure is
/1/ Specify percentage in no more than 5 decimal points.
<PAGE>
$________________; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (iii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with the Credit
Agreement or any other Credit Document or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit Agreement or
any other Credit Document or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or any Guarantor or the
performance or observance by the Borrower or any Guarantor of any of its
obligations under the Credit Agreement or any other Credit Document or any other
instrument or document furnished pursuant thereto; and (v) attaches the Note
referred to in paragraph 1 above and requests that the Administrative Agent
exchange such Note for a new Note dated ____________, 19__ in the principal
amount of $_____________, payable to the order of the Assignee, [and a new Note
dated ___________, 19__ in the principal amount of $_________________, payable
to the order of Assignor].
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.06 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Documentation Agent, the Administrative Agent, either of the
Managing Agents, the Assignor, or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other Credit Document; (iii) appoints and authorizes the Administrative
Agent to take such action as administrative agent on its behalf and to exercise
such powers under the Credit Agreement and any other Credit Document as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (iv) appoints and authorizes the
Documentation Agent to take such action as documentation agent on its behalf and
to exercise such powers under the Credit Agreement and any other Credit Document
as are delegated to the Documentation Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement or any other Credit Document are required to be
performed by it as a Bank; (vi) specifies as its Domestic
-2-
<PAGE>
Lending Office (and address for notices) and LIBOR Lending Office the offices
set forth beneath its name on the signature pages hereof; (vii) attaches the
forms prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement and its Note or such other documents as are necessary
to indicate that all such payments are subject to such rates at a rate reduced
by an applicable tax treaty/1/, and (viii) represents that it is an Eligible
Assignee.
4. The effective date for this Assignment and Acceptance shall be
________________ (the "Effective Date")/2/ and following the execution of this
Assignment and Acceptance, the Administrative Agent will record it.
5. Upon such recording, and as of the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement for all purposes, and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Bank thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights (other than rights against the
Borrower pursuant to Sections 2.09, 2.11(c) and 9.07 of the Credit Agreement,
which shall survive this assignment) and be released from its obligations under
the Credit Agreement.
6. Upon such recording, from and after the Effective Date, the
Administrative Agent shall make all payments under the Credit Agreement and the
Notes in respect of the interest assigned hereby (including, without limitation,
all payments of principal, interest, and commitment fees) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
__________________
/2/ If the Assignee is organized under the laws of a jurisdiction outside
the United States.
/3/ See Section 9.06. Such date shall be at least three Business Days
after the execution of this Assignment and Acceptance.
-3-
<PAGE>
The parties hereto have caused this Assignment and Acceptance to be duly
executed as of the date first above written.
[ASSIGNOR]
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address:__________________________________
__________________________________
Attention:________________________________
Telecopy:_________________________________
Telephone:________________________________
[ASSIGNEE]
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Domestic Lending Office:
Address:__________________________________
__________________________________
Attention:________________________________
Telecopy:_________________________________
Telephone:________________________________
-4-
<PAGE>
LIBOR Lending Office:
Address:__________________________________
__________________________________
Attention:________________________________
Telecopy:_________________________________
Telephone:________________________________
Bank One, Texas, N.A.,
as Administrative Agent
By:_______________________________________
Jeff Etter
Vice President
Address: 1717 Main Street, 4th Floor
P.O. Box 655415
Commercial Real Estate Department
Dallas, Texas 75201
Attention: Jeff Etter
Telecopy: 214-290-7205
Telephone: 214-290-2385
-5-
<PAGE>
Exhibit "C"
COMPLIANCE CERTIFICATE
----------------------
This Compliance Certificate is executed this ____ day of _________, ______,
and is prepared pursuant to that certain Senior Unsecured Credit Agreement (the
"Agreement") between AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a
---------
Delaware limited partnership (the "Borrower"), SOCIETE GENERALE, SOUTHWEST
--------
AGENCY, as Arranger, Syndication Agent and Documentation Agent, BANK ONE, TEXAS,
N.A., as Administrative Agent, THE BANK OF NOVA SCOTIA and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a Managing Agents, and the Banks parties to the Agreement.
Capitalized terms used herein but not otherwise defined herein shall have the
meanings specified by the Agreement. This Compliance Certificate is also being
provided to the Senior Administrative Agent in compliance with the requirements
of the Subordinate Credit Agreement.
1. Representations, Covenants, Defaults: Borrower hereby certifies to the
------------------------------------
Agents and the Banks, effective as of the date of execution of this
Compliance Certificate, as follows:
1.1 Covenants. All covenants of Borrower set forth in Articles V and VI
---------
of the Agreement required to be performed as of the date hereof have
been performed and maintained in all material respects, and such
Covenants continue to be performed and maintained as of the execution
date of this certificate, except as follows:
_________________________________ [specify]
_________________________________
1.2 Representations and Warranties. All representations and warranties of
------------------------------
Borrower set forth in Article IV of the Agreement are true and correct
in all material respects as of the execution date of this certificate,
except as follows:
_________________________________ [specify]
_________________________________
1.3 Event of Default. There exists no Event of Default except as follows:
----------------
_________________________________ [specify]
_________________________________
COMPLIANCE CERTIFICATE - Page 1 of 17
- ----------------------
<PAGE>
2. Operating Covenants. Borrower hereby certifies to the Agents and the
-------------------
Banks, effective as of the calendar quarter ending ____________, ___, that
the amounts and calculations made hereunder pursuant to Article VII of the
Agreement are true and correct. Borrower acknowledges that if the Parent
or any of its Subsidiaries have a Permitted Preferred Stock Investment,
then (a) the Permitted Preferred Stock Percentage of the Adjusted EBITDA of
the Hotel Properties owned by such Permitted Preferred Stock Company shall
be included, as applicable, in those calculations herein which use Adjusted
EBITDA, and (b) the Cost Basis of a Hotel Property owned by such Permitted
Preferred Stock Company shall be included, as applicable, in those
calculations herein which use Cost Basis or Parent Total Cost Basis.
2.1 Parent Interest Coverage Ratio (Section 7.01 of the Agreement).
------------------------------
The Interest Coverage Ratio for the Parent, as of
the Rolling Period ending on _____________, ____,
is set forth in (c) below, based on the ratio of:
(a) Adjusted EBITDA: $__________
(b) Interest Expense: $__________
(c) Interest Coverage Ratio of (a) to
(b) above, maintained by the
Parent for the stated Rolling
equals: ___________
Required by the Agreement:
For any Rolling Period ending on March 31, 1998 through
December 31, 1998, a ratio of not less than 2.15 to
1.0. 2.15 to 1.0
For any Rolling Period thereafter, a ratio of not less
than 2.50 to 1.0. 2.50 to 1.0
2.2 Parent Debt Service Coverage Ratio (Section 7.02 of the Agreement).
----------------------------------
The Debt Service Coverage Ratio for the Parent, as
of the Rolling Period ending on _________, ______,
is as set forth in (c) below, based on the ratio of:
(a) Adjusted EBITDA, to $__________
COMPLIANCE CERTIFICATE - Page 2 of 17
- ----------------------
<PAGE>
(b) Debt Service $__________
(c) DEBT SERVICE COVERAGE RATIO
MAINTAINED BY THE PRENT FOR THE
STATED ROLLING PERIOD EQUALS $__________
Required by the Agreement:
For any Rolling Period commencing with the Rolling Period
ending on March 31, 1998, a ratio of not less than 2.0 to 1.0.
2.3 Maintenance of Net Worth (Section 7.03 of the Agreement).
------------------------
The Adjusted Net Worth for the Parent, as of the
Rolling Period ending on , , is as set forth in (c)
below, based on the sum of:
(a) Net Worth (determined in accordance
with GAAP) $__________
(b) Minority Interest Adjustment $__________
(c) ADJUSTED NET WORTH OF PARENT
EQUAL (A) + (B) $__________
The Minimum Tangible Net Worth for the Parent, as of
the Rolling Period ending on , , is as set forth in (d)
below, based on the sum of:
(a) $450,000 $450,000.00
(b) 75% of aggregate net proceeds received by Parent
or any of its Subsidiaries after the date of the
Agreement in connection with any offering of Stock
or Stock Equivalents of the Parent or its
Subsidiaries taken as a whole, plus $__________
COMPLIANCE CERTIFICATE - Page 3 of 17
- ----------------------
<PAGE>
(c) 75% of the consideration for any partnership
interests in Borrower issued after the date of the
Agreement for the acquisition of a Hotel Property
or any interest in a Hotel Property permitted
under the Agreement. $__________
(d) THE MINIMUM TANGIBLE NET WORTH OF PARENT
EQUALS (A) + (B) + (C) $__________
Required by the Agreement:
The Parent shall at all times maintain an Adjusted Net
Worth of not less than the Minimum Tangible Net Worth.
2.4 Limitations onTotal Indebtedness of Parent (Section 7.04 of the
-------------------------------------------
Required by the Agreement:
Total Indebtedness (including, without limitation, the
Obligations and all Capitalized Lease Obligations) of
the Parent shall not exceed at any time the lesser of
------
(a) and (b) below:
(a) The sum of:
(i) for Seasoned Properties, (A) Adjusted
EBITDA (on a Consolidated basis) of
such Seasoned Properties for the
preceding Rolling Period multiplied by
(B) for any Rolling Period ending on or
before September, to 1998, six (6), and
for any Rolling period ending
thereafter, five (5); and
COMPLIANCE CERTIFICATE - Page 4 OF 17
- ----------------------
<PAGE>
.................................. $_________
(ii) for New Properties (including Hotel
Properties to be immediately acquired
using the proceeds from any
Indebtedness), (A) the Cost Basis in such
New Properties multiplied by (B) for any
Rolling Period ending on or before
September 30, 1998,sixty percent (60%),
or (B) for any Rolling Period ending
thereafter, fifty percent (50%)
.................................. $_________
(iii) Total of (ii) an (ii) above:...... $__________
OR
(b) The Parent Total Cost Basis (including
Hotel Properties to be immediately
acquired using the proceeds from any
Indebtedness) multiplied by, for any
Rolling Period ending on or before
September 30, 199 8, sixty percent (60%),
and for any Rolling Period ending
thereafter, fifty (50%), based upon the
following calculation
(A) $___________, the Minority
Interest Adjustment
(B) Cost Basis of all Hotel Property
which meet the Parent Propeerty
Requirement
(C) Parent Total Cost Basis equal sum of
(A) + (B) above = $_____________
multiplied by ___%, which is $__________
(c) Lesser of (a) and (b) above:...... $__________
COMPLIANCE CERTIFICATE - Page 5 OF 17
<PAGE>
Required by the Agreement:
In no event shall the_ Borrower or the Parent permit
the Total Indebtedness of the Parent to exceed the
amount permitted under the Artic es of Incorporation of
the Parent.
Total Indebtedness of Parent, based upon the
foregoing calculation, as of the date of
execution of this Compliance Certificate
equals: $__________
2.5 Limitations on Secured Recourse Indebtedness of Parent (Section
------------------------------------------------------
7.05of the Agreement).
Required by the Agreement:
The Secured Recourse Indebtedness (excluding the
Obligations) of the Parent shall not at any time on a
Consolidated basis, exceed the lesser of (a) or (b)
below:
(a) The sum of:
(i) for Secured Properties, Adjusted EBITDA (on a
Consolidated basis) of such Seasoned
Properties for the preceeding Rolling Period
multiplied by two (2); and
................................... $__________
(ii) for New Properties (including Hotel
Properties to be immediately acquired using
the proceeds from any Indebtedness), twenty
percent (20%) of the Cost Basis in such New
Properties:
................................... $__________
(iii) Total of (i) and (ii) above........ $__________
OR
COMPLIANCE CERTIFICATE - Page 6 OF 17
<PAGE>
(b) Fifteen percent (15%) of the Parent Total Cost
Basis (including Hotel Properties to be
immediately acquired using the proceeds from any
Indebtedness):
............................................... $__________
THE SECURED RECOURSE INDEBTEDNESS OF PARENT AS OF
THE DATE OF EXECUTION OF THIS COMPLIANCE CERTIFICATE
EQUALS: $__________
2.6 Limitations on Secured Non-Recourse Indebtedness of Parent (Section
----------------------------------------------------------
7.06 of the Agreement).
Required by the Agreement:
The Secured Non-Recourse Indebtedness of the Parent
shall not at any time on a Consolidated basis, exceed
the lesser of (a) or (b) below:
(a) The sum of:
(i) for Seasoned Properties, Adjusted EBITDA (on
a Consolidated basis) of such Seasoned
Properties for the preceding Rolling Period
multiplied by three (3): and
.......................................... $__________
(ii) for New Properties (including Hotel
Properties to be immediately acquired using
the proceeds from any Indebtedness), thirty
percent (30%) of the Cost Basis in such New
Properties:
.......................................... $__________
(iii) Total of (i) and (ii) above............... $__________
OR
COMPLIANCE CERTIFICATE - Page 7 OF 17
<PAGE>
(b) Thirty percent (30%) of the Parent Total Cost
Basis (including Hotel Properties to be
immediately acquired using the proceeds from any
Indebtedness)
................................................ $__________
THE SECURED NON-RECOURSE INDEBTEDNESS OF PARENT
AS OF THE DATE OF EXECUTION OF THIS COMPLIANCE
CERTIFICATE EQUALS: $__________
2.7 Limitations on Secured Indebtedness of Parent
---------------------------------------------
(Section 7.07 of the Agreement).
Required by the Agreement:
The Parent shall not at any time on a Consolidated
basis permit the sum of the Parent's Secured Non-
Recourse Indebtedness and Secured Recourse to exceed
thirty percent (30%) of the Parent Total Cost Basis
(including Hotel Properties to be immediately acquired
using the proceeds from any Indebtedness).
Calculation of Parent Total Cost Basis:
(a) 10,420,273.00 $10,420,273.00
(b) The sum of the Cost Basis of all Hotel Properties
which meet the Parent Property Requirements: $__________
(c) Parent Total Cost Basis equals the sum of
(a) and (b) above: $__________
(d) 30% of Parent Total Cost Basis: $__________
(e) Secured Non-Recourse Indebtedness: $__________
(f) Secured Recourse Indebtedness: $__________
(g) Sum of (e) and (f) above: $__________
COMPLIANCE CERTIFICATE - Page 8 OF 17
<PAGE>
2.8 Borrowing Limitation (Section 2.01 of the Agreement)
--------------------
Required by the Agreement:
The maximum aggregate amount outstanding under the
facility (for Advances and Letters of Credit) shall
not exceed the Borrowing Base
(a) The Borrowing Base for the Rolling Period ending
on ___________, _____ equals: $__________
(b) Actual amount outstanding under the facility
(for Advances and Letters of Credit): $__________
2.9 Total Availability. (Section 2.01 of the
------------------
Subordinate Credit Agreement)
Required by the Subordinate Credit Agreement:
The aggregate amount of all outstanding advances under
the Subordinate Credit Agreement at any one time may
not exceed the lesser of the aggregate Commitments
under the Subordinate Credit Agreement at such time or
the Total Availability at such time.
The Adjusted Net Worth as of the date of this
Compliance Certificate is as set forth in (f) below,
based on the following calculation:
(a) The Parent's and the Parent's Subsidiaries
Consolidated Adjusted EBITDA for the Rolling
Period ending , equals: $__________
(b) Line (a) above multiplied by (i) on or before
December 31, 1998, six (6), and (ii) after
December 31, 1998, five (5), equals: $__________
COMPLIANCE CERTIFICATE - Page 9 OF 17
<PAGE>
(c) All Indebtedness of the Parent and its
outstanding as of such date, including without
Subsidiaries limitation, the Senior Obligations,
Secured Recourse Indebtedness and Secured
Non-Recourse Indebtedness equals: $__________
(d) Line (b) above minus Line (c) above equals: $__________
(e) issued under the Agreement equals: The
aggregate face amount of all Letters of
Credit $__________
(f) Total Availability equals Line (d) above
minus (e) above: Line $__________
3. Other Covenants. Borrower hereby certifies to the Agents and the Banks,
---------------
effective as of the Rolling Period ending _________, ___, that the
following amounts and calculations made pursuant to the Agreement are true
and correct:
3.1 Leverage Ratio (Article 1 of the Agreement)
--------------
The Leverage Ratio for the Parent, as of the Rolling
Period ending on ___________, ______, is as set forth
in (c) below, based on the ratio of:
(a) Parent's Total Indebtedness: $__________
(b) Hotel Value of Hotel Properties owned by the
Parent and Parent's Subsidiaries which meet the
Parent Property Requirements: $__________
(c) THE LEVERAGE RATIO BASED ON THE RATIO OF (A) TO
(B) ABOVE MAINTAINED BY THE PARENT FOR THE STATED
ROLLING PERIOD EQUALS $__________
COMPLIANCE CERTIFICATE - Page 10 OF 17]
<PAGE>
3.2 Status; Applicable Margin (Article 1 of the Agreement)
-------------------------
Pursuant to Article 1 of the Agreement, the Status
applicable to the loan facility is ______________,
based upon a Leverage Ratio of ____________ (as
calculated above). Based on the foregoing, the
Applicable Margin for each subsequent Advance is as
follows:
Prime Rate Advances: $__________
LIBOR Rate Advances: $__________
Unused Commitment Fee: $__________
3.3 Parent Property Requirements (Article 1 of the Agreement)
----------------------------
Attach schedule with detail for each Parent Property
----------------------------------------------------
(a) The Cost Basis for any of the Parent Properties located in one
state shall not exceed 20% (except Florida which shall not exceed
35%) of the Cost Basis for all of the Parent Properties:
(i) Highest Cost Basis for all Parent Properties
in any one state: $_________
(ii) Total Cost Basis for all Parent Properties $_________
(iii) Ratio of (i) to (ii) above
(iv) Cost Basis of Parent Properties in Florida $_________
(b) The Cost Basis for all of the Parent Properties
which are limited service hotels or extended stay
hotels (Marriott Courtyards shall not be deemed
limited service hotels) shall not exceed, in the
aggregate, 20% of the Cost Basis for all of the
Parent Properties, as follows:
COMPLIANCE CERTIFICATE - Page 11 OF 17
<PAGE>
(i) Cost Basis for Parent Properties which are
limited service or extended stay hotels: $_________
(ii) Cost Basis of all of the Paren Properties: $_________
(iii) Ratio of (i) to (ii) above
(c) The Cost Basis for Hotel Properties which do not
have franchise or license agreements shall not
exceed 15% of the Cost Basis for all Parent
Properties:
(i) Cost Basis for Parent Properties which do
not have franchise or license agreements: $_________
(ii) Cost Basis of all Parent Properties: $_________
(iii) Ratio of (i) to (ii) above
(d) The Cost Basis for Hotel Properties which are
subject to a ground lease shall not exceed 22.5%
of the Cost Basis for all of the Parent Properties
or 22.5% of the total guest rooms for all Parent
Properties, as follows:
(i) Cost Basis of all Parent Properties which
are subject to a ground lease: $_________
(ii) Total guest rooms for all Parent Properties:
(iii) Cost Basis for all of the Parent
Properties: $_________
COMPLIANCE CERTIFICATE - Page 12 OF 17
<PAGE>
(iv) Ratio of (iii) to (i) above
(v) Ratio of (iii) to (ii) above:
3.4 Parent Total Cost Basis (Article 1 of the Agreement)
-----------------------
Parent Total Cost Basis, as of the Rolling Period
ending on , , is as set forth in (c) below, based on
the sum of
(a) Cost Basis of all Parent Properties which meet the
Parent Property Requirements $_________
(b) Minority Interest Adjustment $_________
(c) Sum of (a) and (b) above $_________
3.5 Restricted Liens (Section 6.01 of the Agreement)
----------------
Required by the Agreement:
Borrower, Parent and their respective Subsidiaries will
not incur or permit to exist any Indebtedness other
than the Obligations and the following:
COMPLIANCE CERTIFICATE - Page 13 OF 17
<PAGE>
(a) Subordinate Indebtedness for which the cumulative
principal outstanding prior to the Maturity Date
is less than or equal to $125,000,000
Actual principal balance of Subordinate Indebtedness as
of the date of this Compliance Certificate: $_________
(b) If all of the Subordinate Indebtedness is repaid
in full and no more Subordinate Indebtedness may
be incurred pursuant to (a) above, then
Indebtedness which is less than or equal to
$30,000,000
Actual other Indebtedness incurred in accordance with
(b) above $_________
(c) Secured Recourse Indebtedness and Secured Non-
Recourse Indebtedness incurred by Permitted Other
Subsidiaries to the extent (i) the covenants in
Article VII of the Agreement are complied with,
(ii) the Secured Recourse Indebtedness secured by
a Hotel Property does not exceed 65% of the market
value of such Hotel Property, (iii) all Secured
Recourse Indebtedness in the aggregate secured by
Hotel Properties does not exceed 65% of the
aggregate market value of such Hotel Properties,
and (iv) the Secured Non-Recourse Indebtedness
secured by a Hotel Property does not exceed 70% of
the market value of such Hotel Property, (iii) all
Secured Recourse Indebtedness in the aggregate
secured by Hotel Properties does not exceed 70% of
the aggregate market value of such Hotel
Properties.
COMPLIANCE CERTIFICATE - Page 14 OF 17
<PAGE>
Indicate whether Borrower is in compliance with Section
6.01 of the Agreement. If not, explain why and provide
detail.
(d) Certain other restrictions detailed in
Section 6.02(d) through (g) of the
Agreement
Indicate whether Borrower is in compliance with the
foregoing restrictions. If not, explain why and
provide detail.
3.6 Agreements Regarding Distributions From Subsidiaries
----------------------------------------------------
(Section 6.03 of the Agreement)
Required by the Agreement:
Borrower will not create, assume, incur or suffer to
exist, or permit any of its Subsidiaries (except for
Permitted Other Subsidiaries) to create, assume, incur,
or suffer to exist, any Lien, except as permitted under
Section 6.01 of the Agreement.
Indicate whether Borrower, Parent and their
Subsidiaries are in compliance with the foregoing and
attach schedule of values and Indebtedness. If not,
explain why and provide detail.
Indicate whether Borrower, Parent and their
Subsidiaries are in compliance with the foregoing
restrictions. If not, explain why and provide detail.
3.7 Restricted Payments (Section 6.04 of the Agreement)
-------------------
Required by the Agreement:
Neither The Parent, Borrower, nor any their respective
Subsidiaries, may not make any Restricted Payment,
except as provided in Section 6.04 of the Agreement.
COMPLIANCE CERTIFICATE - Page 15 OF 17
<PAGE>
Parent may, if no Default has occurred and is
continuing or would result therefrom, make payments to
its shareholders (including in connection with the
repurchase of Stock or Stock Equivalents) which with
the previous such cash payments in the three
immediately preceding Fiscal Quarters are not in excess
of the greater of (i) the lesser of (A) ninety percent
(90%) of the Funds From Operations of the Parent during
such Rolling Period or (B) one hundred percent (100%)
of Free Cash Flow of the Parent during such Rolling
Period and (ii) the amount required for the Parent to
maintain its status as a REIT:
(a) Payments to Shareholders during the Rolling Period
ending on : $_________
(b) Funds From Operations of the Parent during the
Rolling Period ending on $_________
(c) Ratio of Payments to Funds From Operations
(d) Free Cash Flow of the Parent during the Rolling
Period ending on $_________
Certain other restrictions detailed in Section 6.04(b)
through (e) of the Agreement
Indicate whether Borrower, the Parent and their
Subsidiaries, as applicable, are in compliance with the
foregoing restrictions. If not, explain why and provide
detail.
3.8 Other Restrictions and Covenants (Article 6 of the
--------------------------------
Agreement)
Indicate whether Borrower, the Parent and their
Subsidiaries, as applicable, are in compliance with the
covenants and restrictions set forth in Sections 6.05
through 6.14 of the Agreement. If not, explain why and
provide detail.
COMPLIANCE CERTIFICATE - Page 16 OF 17
<PAGE>
3.19 Parent's REIT Status
--------------------
Indicate whether the Parent has maintained its REIT tax
status. If not, explain why and provide detail.
EXECUTED as of the date first referenced above.
BORROWER:
--------
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:_____________________________________
Kenneth B. Barr
Executive Vice President
COMPLIANCE CERTIFICATE - Page 17 OF 17
<PAGE>
3.9 Parent's REIT Status
Indicate whether the Parent has maintained its REIT tax status.
If not, explain why and provide detail.
EXECUTED as of the date first referenced above.
BORROWER:
--------
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:________________________________
Kenneth E. Barr
Executive Vice President
COMPLIANCE CERTIFICATE - Page 17 of 17
<PAGE>
EXHIBIT "D"
FORM OF ENVIRONMENTAL INDEMNIFICATION AGREEMENT
This Environmental Indemnification Agreement (this "Agreement") is made
and entered into effective for all purposes as of the 13th day of February,
1998, by the parties signatory hereto or to an Accession Agreement (as
hereinafter defined) (collectively, the "Indemnitor" whether one or more), to
and for the benefit of BANK ONE, TEXAS, N.A., as Administrative Agent (the
"Administrative Agent"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger,
Syndication Agent, and Documentation Agent (the "Documentation Agent"), THE BANK
OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Managing Agents
(the "Managing Agents"), and the banks and other lenders named in the Credit
Agreement herein described.
INTRODUCTION
WHEREAS, this Agreement is given in connection with that certain
Subordinate Unsecured Credit Agreement dated as of February 13, 1998 ("Credit
Agreement"), among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the "Borrower"), Administrative Agent,
Documentation Agent, Managing Agents and the banks and other lenders party
thereto (collectively the "Banks") pursuant to which the Banks are considering
making a loan in an amount up to $100,000,000.00 (the "Loan") to Borrower as
more specifically described therein;
WHEREAS, the Borrower and Subsidiaries of the Borrower now or hereafter
will own certain Hotel Properties which include without limitation the Initial
Properties, the Future Properties, the Permitted Non-Eligible Properties and the
properties owned by the Permitted Other Subsidiaries (said properties together
with all property owned by the Participating Lessees in connection with such
Hotel Properties, all rights and appurtenances to such Hotel Properties and all
improvements presently located or hereafter constructed on such Hotel Properties
are hereinafter collectively called the "Properties");
WHEREAS, the Borrower is the principal financing entity for capital
requirements of its Subsidiaries, and from time to time the Borrower has made
and will continue to make capital contributions and advances to its
Subsidiaries, including the Subsidiaries which are parties hereto. Other than
the Parent, each Indemnitor is a direct or indirect subsidiary of the Borrower.
Each Indemnitor will derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement; and
<PAGE>
WHEREAS, the Banks have required the execution and delivery of this
Agreement as a condition precedent to the execution of the Credit Agreement.
The Banks would not be willing to execute the Credit Agreement in the absence of
the execution and delivery by Indemnitor of this Agreement.
AGREEMENT
---------
NOW, THEREFORE, Indemnitor, as an inducement to the Banks to make the Loan,
hereby covenants and agrees to and for the benefit of the Banks as follows:
1. Defined Terms. All terms used in this Agreement, but not defined
-------------
herein, shall have the meaning given such terms in the Credit Agreement.
2. Hazardous Material. As used in this Agreement, the term "Hazardous
------------------
Materials" shall mean any flammable explosives, radioactive materials, hazardous
wastes, hazardous materials, hazardous or toxic substances, or related materials
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. (S) 9601 et. seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. (S) 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. (S) 6901 et seq.),
and in the regulations adopted and publications promulgated pursuant thereto,
and all friable asbestos, petroleum derivatives, polychlorinated biphenyls, and
materials defined as hazardous materials under any federal, state or local laws,
ordinances, codes, rules, orders, regulations or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal thereof (collectively, "Environmental Laws").
3. Representation. Except as set forth in the Environmental Reports,
--------------
Indemnitor warrants and represents to the Banks that it has no knowledge of (a)
the presence of any Hazardous Materials on any of the Properties except for
Permitted Hazardous Substances; or (b) any material spills, releases, discharges
or disposal of Hazardous Materials that have occurred or are presently occurring
off any of the Properties as a result of any construction on or operation and
use of any of the Properties. In connection with the operation and use of any
of the Properties, Indemnitor warrants and represents that, as of the date of
this Agreement, it has no knowledge of any failure to comply in all material
respects with all applicable law, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders relating to the
generation, recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials other than as set forth in the Environmental Reports.
-2-
<PAGE>
4. Covenant. Indemnitor covenants and agrees not to cause or permit the
--------
presence, use, generation, release, discharge, storage, disposal or
transportation of any Hazardous Materials on, under, in, about, to or from any
of the Properties except for Permitted Hazardous Substances.
5. Indemnification. Indemnitor shall exonerate, indemnify, pay and
---------------
protect, defend (with counsel approved pursuant to the Credit Agreement) and
save the Administrative Agent, the Documentation Agent, the Managing Agents, the
Banks, and their respective directors, trustees, beneficiaries, officers,
shareholders, employees and agents of the Banks (collectively, the "Indemnified
Parties"), harmless from and against any claims (including, without limitation,
third party claims for personal injury or real or personal Properties damage),
actions, administrative proceedings (including informal proceedings), judgments,
damages, punitive damages, penalties, fines, costs, taxes, assessments,
liabilities (including, without limitation, sums paid in settlements of claims),
interest or losses, including reasonable attorneys' fees and expenses
(including, without limitation, any such reasonable fees and expenses incurred
in enforcing this Agreement or collecting any sums due hereunder), consultant
fees, and expert fees, together with all other reasonable costs and expenses of
any kind or nature (collectively, the "Costs") that arise directly or indirectly
in connection with the presence, suspected presence, release or suspected
release of any Hazardous Materials in or into the air, soil, ground water,
surface water or improvements at, on, about, under or within any of the
Properties, or any portion thereof, or elsewhere in connection with the
transportation of Hazardous Materials to or from any of the Properties (any such
release being referred to herein as a "Release"; provided however that
Indemnitor shall not be so liable for any Costs arising because of the gross
negligence or wilful misconduct of an Indemnified Party or Costs arising because
of a Release for a Property after the Administrative Agent or the Administrative
Agent's nominee acquires title to such Property. INDEMNITOR'S OBLIGATION TO SO
INDEMNIFY THE INDEMNIFIED PARTIES SHALL INCLUDE INDEMNIFICATION FOR ANY OF SUCH
MATTERS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED
PARTIES. The indemnification provided in this Section shall specifically apply
to and include claims or actions brought by or on behalf of tenants or employees
of Indemnitor; Indemnitor hereby expressly waives (with respect to any claims of
the Indemnified Parties arising under this Agreement) any immunity to which
Indemnitor may otherwise be entitled under any industrial or worker's
compensation laws. In the event any of the Indemnified Parties shall suffer or
incur any such Costs, Indemnitor shall pay to the Administrative Agent for the
benefit of the Indemnified Party the total of all such Costs suffered or
incurred by such Indemnified Party within ten (10) days after demand therefor,
such payment to be disbursed by the Administrative Agent in accordance with the
Credit Agreement. Without limiting the generality of the foregoing, the
indemnification provided by this Section 5 shall specifically cover Costs,
including, without limitation, capital, operating and maintenance costs,
incurred in connection with any
-3-
<PAGE>
investigation or monitoring of site conditions, any clean-up, containment,
remedial, removal or restoration work required or performed by any federal,
state or local governmental agency or political subdivision ("Governmental
Agency") or performed by any non-governmental entity or person as required or
requested, by any Governmental Agency because of the presence, suspected
presence, release or suspected release of any Hazardous Materials in or into the
air, soil, groundwater, surface water or improvements at, on, under or within
any of the Properties (or any portion thereof), or elsewhere in connection with
the transportation of Hazardous Materials to or from any of the Properties, and
any claims of third parties for loss or damage due to such Hazardous Materials.
6. Remedial Work. In the event any investigation or monitoring of site
-------------
conditions or any clean-up, containment, restoration, removal or other remedial
work ("Remedial Work") is required (a) under any Environmental Law, (b) by any
judicial, arbitral or administrative order, (c) in order to comply with any
agreements affecting any of the Properties, or (d) to maintain any of the
Properties in a standard of environmental condition which prevents the release
or generation of any Hazardous Materials except for Permitted Hazardous
Substances, Indemnitor shall perform or cause to be performed such Remedial
Work; provided, that Indemnitor may withhold commencement of such Remedial Work
pending resolution of any good faith contest regarding the application,
interpretation or validity of any law, regulation, order or agreement, subject
to the requirements of Section 7 below. All Remedial Work shall be conducted
(i) in a diligent and timely fashion by a licensed environmental engineer, (ii)
pursuant to a detailed written plan for the Remedial Work approved by any
Governmental Agency with a legal or contractual right to such approval, (iii)
with such insurance coverage pertaining to liabilities arising out of the
Remedial Work as is then customarily maintained with respect to such activities
and (iv) only following receipt of all required permits, licenses or approvals.
In addition, Indemnitor shall submit to the Banks promptly upon receipt or
preparation, copies of any and all reports, studies, analyses, correspondence,
governmental comments or approvals, proposed removal or other Remedial Work
contracts and similar information prepared or received by Indemnitor in
connection with any Remedial Work or Hazardous Materials relating to any of the
Properties. All costs and expenses of such Remedial Work shall be paid by
Indemnitor, including, without limitation, the charges of the Remedial Work
contractors and the consulting environmental engineer, any taxes or penalties
assessed in connection with the Remedial Work and the Banks' reasonable fees and
costs incurred in connection with monitoring or review of such Remedial Work.
In the event Indemnitor should fail to commence or cause to be commenced such
Remedial Work, in a timely fashion, or fail diligently to prosecute to
completion, such Remedial Work, the Administrative Agent following consent of
the Majority Banks (following thirty (30) days written notice to Indemnitor)
may, but shall not be required to, cause such Remedial Work to be performed, and
all costs and expenses thereof, or incurred in connection therewith shall be
-4-
<PAGE>
Costs within the meaning of Section 5 above. All such Costs shall be due and
payable to the Administrative Agent by Indemnitor upon thirty (30) days after
demand therefor, such payments to be disbursed by the Administrative Agent in
accordance with the Credit Agreement.
7. Permitted Contests. Notwithstanding any provision of this Agreement
------------------
to the contrary, Indemnitor may contest by appropriate action any Remedial Work
requirement imposed by any Governmental Agency provided that (a) if the Loan
then remains outstanding, no "Event of Default" has occurred and is continuing
under the Credit Agreement or any Credit Documents, (b) Indemnitor has given the
Banks written notice that Indemnitor is contesting or shall contest and
Indemnitor does in fact contest the application, interpretation or validity of
the law, regulation, order or agreement pertaining to the Remedial Work by
appropriate legal or administrative proceedings conducted in good faith and with
due diligence and dispatch, (c) such contest shall not subject any of the
Indemnified Parties nor any assignee of all or any portion of the Banks'
interest in the Loan nor any of the Properties to civil or criminal liability
and does not jeopardize any such party's lien upon or interest in any of the
Properties and (d) if the estimated cost of the Remedial Work is greater than
$2,500,000, Indemnitor shall give such security or assurances as may be
reasonably required by the Banks as determined pursuant to the Credit Agreement
to ensure ultimate compliance with all legal or contractual requirements
pertaining to the Remedial Work (and payment of all costs, expenses, interest
and penalties in connection therewith) and to prevent any sale, forfeiture or
loss by reason of nonpayment or noncompliance.
8. Reports and Claims. Indemnitor shall deliver to the Banks copies of
------------------
any reports, analyses, correspondence, notices, licenses, approvals, orders or
other written materials relating to the environmental condition of any of the
Properties promptly upon receipt, completion or delivery thereof. Indemnitor
shall give notice to the Banks of any claim, action, administrative proceeding
(including, without limitation, informal proceedings) or other demand by any
governmental agency or other third party involving Costs or Remedial Action at
the time such claim or other demand first becomes known to Indemnitor. Receipt
of any such notice shall not be deemed to create any obligation on the Banks to
defend or otherwise respond to any claim or demand. All notices, approvals,
consents, requests and demands upon the respective parties hereto shall be in
writing, including telegraphic communication and delivered or teletransmitted to
the Administrative Agent, as set forth in the Credit Agreement and to each
Indemnitor, at the address set forth beneath such Indemnitor's signature or in
the Accession Agreement executed by such Indemnitor, or to such other address as
shall be designated by any Indemnitor or the Administrative Agent in written
notice to the other parties. All such notices and other communications shall be
effective when delivered or teletransmitted to the above addresses.
-5-
<PAGE>
9. Banks as Owner. If for any reason, the Administrative Agent or any
--------------
of the Banks (or any successor or assign of such parties) becomes the fee owner
of any of the Properties and any claim, action, notice, administrative
proceeding (including, without limitation, informal proceedings) or other demand
is made by any governmental agency or other third party which implicate Costs or
Remedial Work, Indemnitor shall cooperate with such party in any defense or
other appropriate response to any such claim or other demand; provided however
that Indemnitor shall not be so liable for any Costs arising because of the
gross negligence or wilful misconduct of an Indemnified Party. Indemnitor's
duty to cooperate and right to participate in the defense or response to any
such claim or demand shall not be deemed to limit or otherwise modify
Indemnitor's obligations under this Agreement. Any party subject to a claim or
other proceeding referenced in the first sentence of this Section 9 shall give
notice to Indemnitor of any claim or demand governed by this Section 9 at the
time such claim or other demand first becomes known to such party.
10. Subrogation of Indemnity Rights. If Indemnitor fails to fully perform
-------------------------------
its obligations under Sections 5 and 6 above, the Indemnified Parties shall be
subrogated to any rights or claims Indemnitor may have against any present,
future or former owners, tenants or other occupants or users of any of the
Properties, any portion thereof or any adjacent or proximate properties,
relating to the recovery of Costs or the performance of Remedial Work.
11. Assignment by Agents and Banks. No consent by Indemnitor shall be
------------------------------
required for any assignment or reassignment of the rights of the Administrative
Agent, the Documentation Agent, the Managing Agents or the Banks under this
Agreement to any successor of such party or a purchaser of the Loan or any
interest in or portion of the Loan including participation interests.
12. Merger, Consolidation or Sale of Assets. In the event Indemnitor is
---------------------------------------
dissolved, liquidated or terminated or all or substantially all the assets of
Indemnitor are sold or otherwise transferred to one or more persons or other
entities, the surviving entity or transferee or assets, as the case may be, (i)
shall be formed and existing under the laws of a state, (ii) shall deliver to
the Banks an acknowledged instrument in recordable form assuming all
obligations, covenants and responsibilities of Indemnitor under this Agreement.
13. Independent Obligations; Survival. The obligations of Indemnitor
---------------------------------
under this Agreement shall survive the consummation of the Loan transaction
described above and the repayment of the Loan. The obligations of Indemnitor
under this Agreement are separate and distinct from the obligations of
Indemnitor under the Credit Documents. This Agreement may be enforced by the
Banks without regard to or affecting any rights and remedies the Administrative
-6-
<PAGE>
Agent and/or the Banks may have against Indemnitor under the Credit Documents
and without regard to any limitations on the Administrative Agent's or Banks'
recourse for recovery of the Loan as may be provided in the Credit Documents.
Enforcement of this Agreement is not and shall not be deemed to constitute an
action for recovery of the indebtedness of the Loan.
14. Default Interest. In addition to all other rights and remedies of the
----------------
Banks against Indemnitor as provided herein, or under applicable law, Indemnitor
shall pay to the Administrative Agent, immediately upon demand therefor,
Default Interest (as defined below) on any Costs and other payments required to
be paid by Indemnitor to the Banks under this Agreement which are not paid
within ten (10) days after demand therefor, such payments to be disbursed by the
Administrative Agent in accordance with the Credit Agreement. Default Interest
shall be paid by Indemnitor from the date such payment becomes delinquent
through and including the date of payment of such delinquent sums. "Default
Interest" shall mean a per annum interest rate equal to three points above the
Adjusted Prime Rate or reference rate for the then current calendar month, as of
the first day of such calendar month, which is publicly announced from time to
time by the Administrative Agent.
15. Contribution. As a result of the transactions contemplated by the
------------
Credit Agreement, each of the Indemnitors will benefit, directly and indirectly,
from the Obligations and in consideration thereof desire to enter into a
contribution agreement among themselves as set forth in this Section 15 to
allocate such benefits among themselves and to provide a fair and equitable
arrangement to make contributions in the event any payment is made by any
Indemnitor hereunder to the Administrative Agent, the Documentation Agent, the
Managing Agents or the Banks (such payment being referred to herein as a
"Contribution," and for purposes of this Agreement, includes any exercise of
recourse by the Administrative Agent against any Property of a Contributor
designated as collateral under any Credit Document and application of proceeds
of such collateral in satisfaction of such Indemnitor's obligations under this
Agreement). The Indemnitors hereby agree as follows:
15.01 Calculation of Contribution. In order to provide for just and
---------------------------
equitable contribution among the Indemnitors in the event any Contribution
is made by a Indemnitor (a "Funding Indemnitor"), such Funding Indemnitor
shall be entitled to a contribution from certain other Indemnitors for all
payments, damages and expenses incurred by that Funding Indemnitor in
discharging any of the obligations under this Agreement (the
"Obligations"), in the manner and to the extent set forth in this Section.
The amount of any Contribution under this Agreement shall be equal to the
payment made by the Funding Indemnitor to the Administrative Agent or any
other beneficiary
-7-
<PAGE>
pursuant to this Agreement and shall be determined as of the date on which
such payment is made.
15.02 Benefit Amount Defined. For purposes of this Agreement, the
----------------------
"Benefit Amount" of any Indemnitor as of any date of determination shall be
the net value of the benefits to such Indemnitor and all of its
Subsidiaries (including any Subsidiaries which may be Indemnitors) from
extensions of credit made by the Banks to the Borrower under the Credit
Agreement; provided, that in determining the contribution liability of any
Indemnitor which is a Subsidiary to its direct or indirect parent
corporation or of any Indemnitor to its direct or indirect Subsidiary, the
Benefit Amount of such Subsidiary and its Subsidiaries, if any, shall be
subtracted in determining the Benefit Amount of the parent corporation.
Such benefits shall include benefits of funds constituting proceeds of
Advances made to the Borrower by the Banks which are in turn advanced or
contributed by the Borrower to such Indemnitor or its Subsidiaries and
benefits of Letters of Credit issued pursuant to the Credit Agreement on
behalf of, or the proceeds of which are advanced or contributed or
otherwise benefit, directly or indirectly, such Indemnitor and its
Subsidiaries (collectively, the "Benefits"). In the case of any proceeds of
Advances or Benefits advanced or contributed to a Person (an "Owned
Entity") any of the equity interests of which are owned directly or
indirectly by a Indemnitor, the Benefit Amount of a Indemnitor with respect
thereto shall be that portion of the net value of the benefits attributable
to Advances or Benefits equal to the direct or indirect percentage
ownership of such Indemnitor in its Owned Entity.
15.03 Contribution Obligation. Each Indemnitor shall be liable to a
-----------------------
Funding Indemnitor in an amount equal to the greater of (A) the (i) ratio
of the Benefit Amount of such Indemnitor to the total amount of
Obligations, multiplied by (ii) the amount of Obligations paid by such
Funding Indemnitor and (B) 95% of the excess of the fair saleable value of
the property of such Indemnitor over the total liabilities of such
Indemnitor (including the maximum amount reasonably expected to become due
in respect of contingent liabilities) determined as of the date on which
the payment made by a Funding Indemnitor is deemed made for purposes of
this Agreement (giving effect to all payments made by other Funding
Indemnitors as of such date in a manner to maximize the amount of such
contributions).
15.04 Allocation. In the event that at any time there exists more
than one Funding Indemnitor with respect to any Contribution (in any such
case, the "Applicable Contribution"), then payment from other Indemnitors
pursuant to this Agreement shall be allocated among such Funding
Indemnitors in proportion to the total amount of the
-8-
<PAGE>
Contribution made for or on account of the Borrower by each such Funding
Indemnitor pursuant to the Applicable Contribution. In the event that at
any time any Indemnitor pays an amount under this Agreement in excess of
the amount calculated pursuant to clause (A) of Subsection 15.03 above,
that Indemnitor shall be deemed to be a Funding Indemnitor to the extent of
such excess and shall be entitled to contribution from the other
Indemnitors in accordance with the provisions of this Section.
15.05 Subsidiary Payment. The amount of contribution payable under
------------------
this Section by any Indemnitor shall be reduced by the amount of any
contribution paid hereunder by a Subsidiary of such Indemnitor.
15.06 Equitable Allocation. If as a result of any reorganization,
--------------------
recapitalization, or other corporate change in the Borrower or any of its
Subsidiaries, or as a result of any amendment, waiver or modification of
the terms and conditions of other Sections of this Agreement or the
Obligations, or for any other reason, the contributions under this Section
become inequitable as among the Indemnitors, the Indemnitors shall promptly
modify and amend this Section to provide for an equitable allocation of
contributions. Any of the foregoing modifications and amendments shall be
in writing and signed by all Indemnitors.
15.07 Asset of Party to Which Contribution is Owing. The Indemnitors
---------------------------------------------
acknowledge that the right to contribution hereunder shall constitute an
asset in favor of the Indemnitor to which such contribution is owing.
15.08 Subordination. No payments payable by a Indemnitor pursuant to
-------------
the terms of this Section 15 shall be paid until all amounts then due and
payable by the Borrower to the Administrative Agent, the Documentation
Agent, the Managing Agents or any Bank, pursuant to the terms of the Credit
Documents, are paid in full in cash. Nothing contained in this Section 15
shall affect the obligations of any Indemnitor to the Administrative Agent,
the Documentation Agent, the Managing Agents or any Bank under the Credit
Agreement or any other Credit Documents.
16. Miscellaneous. If there shall be more than one Indemnitor hereunder,
-------------
or pursuant to any other indemnification of Banks relating to Hazardous
Materials arising out of or in connection with the Loan ("Other Indemnitor"),
each Indemnitor and Other Indemnitor agrees that (a) the obligations of the
Indemnitor hereunder, and each Other Indemnitor, are joint and several, (b) a
release of any one or more Indemnitors or Other Indemnitors or any limitation of
this Agreement in favor of or for the benefit of one or more Indemnitors or
Other Indemnitors
-9-
<PAGE>
shall not in any way be deemed a release of or limitation in favor of or for the
benefit of any other Indemnitor or Other Indemnitor and (c) a separate action
hereunder may be brought and prosecuted against any or all Indemnitors or Other
Indemnitors. If any term of this Agreement or any application thereof shall be
invalid, illegal or unenforceable, the remainder of this Agreement and any other
application of such term shall not be affected thereby. No delay or omission in
exercising any right hereunder shall operate as a waiver of such right or any
other right. This Agreement shall be binding upon, inure to the benefit of and
be enforceable by Indemnitor and the Banks, and their respective successors and
assigns, including (without limitation) any assignee or purchaser of all or any
portion of the Banks' interest in (i) the Loan, (ii) the Credit Documents, or
(iii) any of the Properties.
17. Governing Law. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with, the laws of the State of Texas. Each Indemnitor
hereby irrevocably submits to the jurisdiction of any Texas state or federal
court sitting in Dallas, Texas in any action or proceeding arising out of or
relating to this Agreement and the other Credit Documents, and such Indemnitor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such court. Each Indemnitor hereby
irrevocably waives, to the fullest extent it may effectively do so, any right it
may have to the defense of an inconvenient forum to the maintenance of such
action or proceeding. Each Indemnitor hereby agrees that service of copies of
the summons and complaint and any other process which may be served in any such
action or proceeding may be made by mailing or delivering a copy of such process
to such Indemnitor at its address specified below. Each Indemnitor agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the rights of any of the
Banks to serve legal process in any other manner permitted by the law or affect
the right of any of the Banks to bring any action or proceeding against any
Indemnitor or its Property in the courts of any other jurisdiction.
18. Waivers of Jury Trials. EACH INDEMNITOR HEREBY IRREVOCABLY AND
----------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT OR TO ANY COUNTERCLAIM
THEREIN.
19. Amendments/Accession Agreement. No waiver of any provision of this
-------------------------------
Agreement nor consent to any departure by any Indemnitor therefrom shall be
effective unless the same shall be in writing and signed by the Administrative
Agent and the Majority Banks, and no amendment of this Agreement shall be
effective unless the same shall be in writing and signed by the Administrative
Agent, with the consent of the Majority Banks; provided that any
--------
-10-
<PAGE>
amendment or waiver releasing any Indemnitor from any liability hereunder shall
be signed by all the Banks; and provided further that any waiver or consent
----------------
shall be effective only in the specific instance and for the specific purpose
for which given. Notwithstanding the foregoing, in the event that any Subsidiary
or Affiliate of the Borrower hereafter is required in accordance with the terms
of the Credit Agreement or otherwise agrees to become a Indemnitor under this
Agreement, then such Subsidiary or Affiliate may become a party to this
Agreement by executing an Accession Agreement ("Accession Agreement") in the
form attached hereto as Annex 1, and each Indemnitor and the Administrative
-------
Agent hereby agrees that upon such Subsidiary's or Affiliate's execution of such
Accession Agreement, this Agreement shall be deemed to have been amended to make
such Person an Indemnitor hereunder for all purposes and a party hereto and no
signature is required on behalf of the other Indemnitors or the Administrative
Agent to make such an amendment to this Agreement effective.
[INTENTIONALLY BLANK]
-11-
<PAGE>
IN WITNESS WHEREOF, Indemnitor has caused this Agreement to be executed as
of the day and year first written above.
INDEMNITORS:
AMERICAN GENERAL HOSPITALITY
CORPORATION, a Maryland corporation
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
AGH UPREIT, LLC, a Delaware limited liability company
By: American General Hospitality Corporation, member
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-12-
<PAGE>
3100 GLENDALE JOINT VENTURE,
an Ohio general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:___________________________
Name:_________________________
Title:________________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-13-
<PAGE>
MDV LIMITED PARTNERSHIP,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:___________________________
Name:_________________________
Title:________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-14-
<PAGE>
MADISON MOTEL ASSOCIATES,
a Wisconsin general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-15-
<PAGE>
183 HOTEL ASSOCIATES, LTD.,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:___________________________
Name:_________________________
Title:________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-16-
<PAGE>
RICHMOND WILLIAMSBURG ASSOCIATES, LTD., a
Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:___________________________
Name:_________________________
Title:________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-17-
<PAGE>
2929 WILLIAMS LIMITED LIABILITY COMPANY, a
Delaware limited liability company
By: AGH UPREIT, LLC, its member
By: American General Hospitality
Corporation, member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-18-
<PAGE>
LAKE BUENA VISTA PARTNERS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, general partner
By: American General Hospitality
Corporation, member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:___________________________
Name:_________________________
Title:________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-19-
<PAGE>
BCHI ACQUISITION, L.L.C.,
a Delaware limited liability company
By: AGH UPREIT LLC, its member
By: American General Hospitality
Corporation, member
By:________________________________
Name:______________________________
Title:_____________________________
By: American General Hospitality
Operating Partnership, L.P., member
By: AGH GP, Inc., general partner
By:___________________________
Name:_________________________
Title:________________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:________________________________
Name:______________________________
Title:_____________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-20-
<PAGE>
COCOA BEACH HOTELS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:___________________________
Name:_________________________
Title:________________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:______________________
Name:____________________
Title:___________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-21-
<PAGE>
DURHAM I-85 LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:___________________________
Name:_________________________
Title:________________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:______________________
Name:____________________
Title:___________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-22-
<PAGE>
Parent may, if no Default has occurred and is continuing or
would result therefrom make payments to its shareholders
(including in connection with the repurchase of Stock or
Stock Equivalents) which with the previous such cash
payments in the three immediately preceding Fiscal Quarters
are not in excess of the greater of (i) the lesser of (A)
ninety percent (90%) of the Funds From Operations of the
Parent during such Rolling Period or (B) one hundred percent
(100%) of Free Cash Flow of the Parent during such Rolling
Period and (ii) the amount required for the Parent to
maintain its status as a REIT:
(a) Payments to Shareholders during the Rolling
Period ending on
$
(b) Funds From Operations of the Parent during the
Rolling Period ending on
$
(C) Ratio of Payments from Funds From Operations
(d) Free Cash Flow of the Parent during the Rolling
Period ending on
$
Certain other restrictions detailed in Section 6.04(b)
through (e) of the Agreement
Indicate whether Borrower is in compliance with
the foregoing restrictions. If not, explain why and
provide detail.
3.8 Other Restrictions and Covenants (Article 6 of the
Agreement)
Indicate whether Borrower is in compliance with the
covenants and restrictions set forth in Sections 6.05
through 6.14 of the Agreement. If not, explain why and
provide detail.
COMPLIANCE CERTIFICATE -Page 16 of 17
- ----------------------
<PAGE>
EXHIBIT E
FORM OF NOTICE OF BORROWING
_________, 19__
Bank One, Texas, N.A.,
as Administrative Agent under the Credit Agreement herein described
1717 Main Street, 4th Floor
P.O. Box 655415
Commercial Real Estate Department
Dallas, Texas 75201
Attention: Mr. Jeff Etter
Ladies and Gentlemen:
The undersigned, American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "Borrower"), refers to the Subordinate
Unsecured Credit Agreement dated as of February 13, 1998 (as the same may be
amended or modified from time to time, the "Credit Agreement," the defined terms
of which are used in this Notice of Borrowing unless otherwise defined in this
Notice of Borrowing) among the Borrower, the Banks, the Arranger, Syndication
Agent and Documentation Agent, the Administrative Agent and the Managing Agents,
and hereby gives you irrevocable notice pursuant to Section 2.02(a) of the
Credit Agreement that the undersigned hereby requests a Borrowing, and in
connection with that request sets forth below the information relating to such
Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the
Credit Agreement:
(a) Business Day of the Proposed Borrowing is _____________, 19_____.
(b) The Proposed Borrowing will be a Borrowing composed of [Prime Rate
Advances] [LIBOR Rate Advances].
(c) The aggregate amount of the Proposed Borrowing is $____________.
(d) The Interest Period for each LIBOR Rate Advance made as part of the
Proposed Borrowing is [_____ month[s]].
<PAGE>
Bank One, Texas, N.A.
[Date]
Page 2
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(a) the representations and warranties contained in the Credit Agreement
and the other Credit Documents are correct in all material respects,
before and after giving effect to the Proposed Borrowing and the
application of the proceeds therefrom, as though made on the date of the
Proposed Borrowing; and
(b) no Default has occurred and remains uncured, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom.
Very truly yours,
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
EXHIBIT F
FORM OF NOTICE OF CONVERSION OR CONTINUATION
[Date]
Bank One, Texas, N.A.,
as Administrative Agent under the Credit Agreement herein described
1717 Main Street, 4th Floor
P.O. Box 655415
Real Estate Department
Dallas, Texas 75201
Attention: Mr. Jeff Etter
Ladies and Gentlemen:
The undersigned, American General Hospitality Operating Partnership, L.P., a
Delaware limited partnership (the "Borrower"), refers to the Subordinate
Unsecured Credit Agreement dated as of February 13, 1998 (as the same may be
amended or modified from time to time, the "Credit Agreement," the defined terms
of which are used in this Notice of Conversion or Continuation unless otherwise
defined in this Notice of Conversion or Continuation), among the Borrower, the
Banks, the Arranger, Syndication Agent and Documentation Agent, the
Administrative Agent, and the Managing Agents, and hereby gives you irrevocable
notice pursuant to Section 2.02(b) of the Credit Agreement that the undersigned
hereby requests a Conversion or continuation of an outstanding Borrowing, and in
connection with that request sets forth below the information relating to such
Conversion or continuation (the "Proposed Borrowing") as required by Section
2.02(b) of the Credit Agreement:
(a) The Business Day of the Proposed Borrowing is _______________, 19 ____.
(b) The Proposed Borrowing will be composed of [Prime Rate Advances] [LIBOR
Rate Advances].
(c) The aggregate amount of the Borrowing to be Converted or continued is $
_______ and consists of [Prime Rate Advances] [LIBOR Rate Advances].
<PAGE>
Bank One, Texas, N.A.
[Date]
Page 2
(d) The Proposed Borrowing consists of [a Conversion to [Prime Rate
Advances] [LIBOR Rate Advances]] [a continuation of [Prime Rate Advances]
[LIBOR Rate Advances]].
(e) The Interest Period for each LIBOR Rate Advance made as part of the
Proposed Borrowing is [____ month[s]].
Very truly yours,
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
SUBORDINATE UNSECURED CREDIT AGREEMENT
EXHIBIT G
FORM OF PROPERTY ADJUSTMENT REPORT
This Property Adjustment Report is executed this ___ day of _____________,
1998 and is prepared pursuant to Section 2.14 of that certain Subordinate
Unsecured Credit Agreement (the "Agreement") between AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Borrower"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger, Syndication Agent
and Documentation Agent, BANK ONE, TEXAS, N.A., as Administrative Agent, THE
BANK OF NOVA SCOTIA, as Co-Agent, AND WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Co-Managers, and the Banks party to the Credit Agreement. Capitalized terms used
herein but not otherwise defined herein shall have the meanings specified by the
Agreement:
<TABLE>
<CAPTION>
Total Availability
as of last Property Adjusted
Compliance Adjustment Total
Certificate Availability
<S> <C> <C> <C>
1. Adjusted EBITDA of all Parent
Properties $_________ $_________ $_________
2. Line 1 above multiplied by 6 $_________ $_________ $_________
(5 after December 31, 1998)
3. All of Parent's consolidated
outstanding Indebtedness
including face amount of
outstanding letters of credit $_________ $_________ $_________
4. TOTAL AVAILABILITY (Line 2 minus
Line 3) $_________ $_________ $_________
</TABLE>
<PAGE>
The Borrower has caused this Property Adjustment Report to be executed this
____ day of _________, 19__.
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P.
By: AGH GP, Inc., its general partner
By:_________________________________
Name:_______________________________
Title:______________________________
-2-
<PAGE>
EXHIBIT "H"
FORM OF SUBORDINATE GUARANTY AND CONTRIBUTION AGREEMENT
This Subordinate Guaranty and Contribution Agreement (this "Agreement") is
made and entered into effective for all purposes as of the 13th day of February,
1998, by the parties signatory hereto or to an Accession Agreement (as
hereinafter defined) (collectively, the "Guarantor" whether one or more) to and
for the benefit of BANK ONE, TEXAS, N.A., as Administrative Agent (the
"Administrative Agent"), SOCIETE GENERALE, SOUTHWEST AGENCY, as Arranger,
Syndication Agent, and Documentation Agent (the "Documentation Agent"), THE BANK
OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Managing Agents
(the "Managing Agents"), and the banks and other lenders named in the Credit
Agreement herein described.
INTRODUCTION
WHEREAS, this Agreement is given in connection with that certain
Subordinate Unsecured Credit Agreement dated as of February 13, 1998 ("Credit
Agreement"), among AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the "Borrower"), Administrative Agent,
Documentation Agent, the Managing Agents and the banks and other lenders party
thereto (collectively the "Banks");
WHEREAS, pursuant to the Credit Agreement the Banks are considering making
a loan (the "Loan") to Borrower as more specifically described therein;
WHEREAS, the Borrower is the principal financing entity for capital
requirements of its Subsidiaries, and from time to time the Borrower has made
and will continue to make capital contributions and advances to its
Subsidiaries, including the Subsidiaries which are parties hereto. Other than
the Parent, each Guarantor is a direct or indirect subsidiary of the Borrower.
Each Guarantor will derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement; and
WHEREAS, the Banks have required the execution and delivery of this
Agreement as a condition precedent to the execution of the Credit Agreement.
The Banks would not be willing to execute the Credit Agreement in the absence of
the execution and delivery by Guarantor of this Agreement.
<PAGE>
AGREEMENT
---------
NOW, THEREFORE, in order to induce the Banks to make the Advances and the
Issuing Bank to issue its Letters of Credit, each Guarantor hereby agrees as
follows:
Section 1. Defined Terms. All terms used in this Agreement, but not
-------------
defined herein, shall have the meaning given such terms in the Credit Agreement.
Section 2. Guaranty. Each Guarantor hereby unconditionally and
--------
irrevocably guarantees (a) the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Borrower now
or hereafter existing under the Credit Agreement, the Notes and any other Credit
Document, whether for principal, interest, fees, expenses, or otherwise and (b)
the payment and performance of the lessor's obligations under the Participating
Leases (such obligations being the "Guaranteed Obligations") and any and all
expenses (including reasonable counsel fees and expenses) incurred by the
Administrative Agent, the Documentation Agent, the Managing Agents or any Bank
in enforcing any rights under this Agreement. Each Guarantor agrees that its
guaranty obligation under this Agreement is a guarantee of payment, not of
collection and that such Guarantor is primarily liable for the payment of the
Guaranteed Obligations.
Section 3. Limit of Liability. Each Guarantor that is a Subsidiary of
------------------
the Borrower shall be liable under this Agreement with respect to the Guaranteed
Obligations only for amounts aggregating up to the largest amount that would not
render its guaranty obligation hereunder subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provisions of any state
law.
Section 4. Guaranty Absolute. Each Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid and performed strictly in accordance with
the terms of the Credit Agreement, the other Credit Documents and the
Participating Leases, as applicable, regardless of any law, regulation, or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent, the Documentation Agent, the Managing
Agents, the Banks or the Participating Lessees with respect thereto. The
liability of each Guarantor under this Agreement shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement, any
other Credit Document, any Participating Lease or any other agreement or
instrument relating thereto;
-2-
<PAGE>
(b) any change in the time, manner, or place of payment of, or in any
other term of, any of the Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from the Credit Agreement, any Credit
Document or any Participating Lease;
(c) any exchange, release, or nonperfection of any collateral, if
applicable, or any release or amendment or waiver of or consent to departure
from any other agreement or guaranty, for any of the Guaranteed Obligations; or
(d) any other circumstances which might otherwise constitute a defense
available to, or a discharge of the Borrower or a Guarantor.
Section 5. Continuation and Reinstatement, Etc. Each Guarantor agrees
------------------------------------
that, to the extent that the Borrower makes payments to the Administrative
Agent, the Documentation Agent, the Managing Agents or any Bank or the
Administrative Agent, the Documentation Agent, the Managing Agents or any Bank
receives any proceeds of any property of Borrower or any Guarantor and such
payments or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, or otherwise required to be repaid,
then to the extent of such repayment the Guaranteed Obligations shall be
reinstated and continued in full force and effect as of the date such initial
payment or collection of proceeds occurred. The Guarantor shall defend and
indemnify the Administrative Agent, the Documentation Agent, the Managing Agents
and each Bank from and against any claim or loss under this Section 5 (including
reasonable attorneys' fees and expenses) in the defense of any such action or
suit.
Section 6. Certain Waivers.
---------------
6.01. Notice. Each Guarantor hereby waives promptness, diligence, notice of
------
acceptance, notice of acceleration, notice of intent to accelerate and any other
notice with respect to any of the Guaranteed Obligations and this Agreement.
6.02. Other Remedies. Each Guarantor hereby waives any requirement that the
--------------
Administrative Agent, the Documentation Agent, the Managing Agents or any Bank
protect, secure, perfect, or insure any Lien or any Property subject thereto or
exhaust any right or take any action against the Borrower or any other Person or
any collateral, if any, including any action required by Chapter 34 of the Texas
Business and Commerce Code.
-3-
<PAGE>
6.03. Waiver of Subrogation.
---------------------
(a) Each Guarantor hereby irrevocably waives, until payment in full of
all Guaranteed Obligations and termination of all Commitments, any claim or
other rights which it may acquire against the Borrower that arise from such
Guarantor's obligations under this Agreement or any other Credit Document,
including, without limitation, any right of subrogation (including, without
limitation, any statutory rights of subrogation under Section 509 of the
Bankruptcy Code, 11 U.S.C. (S) 509, or otherwise), reimbursement, exoneration,
contribution, indemnification, or any right to participate in any claim or
remedy of the Administrative Agent, the Documentation Agent, the Managing Agents
or any Bank against the Borrower or any collateral which the Administrative
Agent, the Documentation Agent, the Managing Agents or any Bank now has or
acquires. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Guaranteed Obligations shall not have been paid in
full and all of the Commitments terminated, such amount shall be held in trust
for the benefit of the Administrative Agent, the Documentation Agent, the
Managing Agents or any Bank and shall promptly be paid to the Administrative
Agent for the benefit of Administrative Agent, the Documentation Agent, the
Managing Agents and the Banks to be applied to the Guaranteed Obligations,
whether matured or unmatured, as the Administrative Agent may elect. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Credit Agreement and that the
waiver set forth in this Section 6.03(a) is knowingly made in contemplation of
such benefits.
(b) Each Guarantor further agrees that it will not enter into any
agreement providing, directly or indirectly, for any contribution,
reimbursement, repayment, or indemnity by the Borrower or any other Person on
account of any payment by such Guarantor to the Administrative Agent, the
Documentation Agent, the Managing Agents or the Banks under this Agreement.
6.04. California Waivers.
------------------
(a) Guarantor understands and agrees that the waivers contained in this
Section 6.04 are waivers of substantive rights and defenses to which Guarantor
might otherwise be entitled under state and federal law. The rights and
defenses waived include, without limitation, those provided by California laws
of suretyship and guaranty, antideficiency laws, and the Uniform Commercial
Code. Guarantor acknowledges that Guarantor has provided these waivers of
rights and defenses with the intention that they be fully relied upon by the
Banks and/or Agents.
(b) Guarantor waives Guarantor's rights of subrogation, reimbursement,
indemnity and contribution, and any other rights and defenses available to
Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil
Code, as amended or recodified from time to time, including without limitation
(i) any defenses Guarantor may have to the Guaranteed Obligations by
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<PAGE>
reason of an election of remedies by the Banks and/or Agents, and (ii) any
rights or defenses Guarantor may have by reason of protection afforded to
Borrower with respect to the Guaranteed Obligations pursuant to the
antideficiency or other laws of the State of California limiting or discharging
Borrower's indebtedness, including, without limitation, Sections 580a, 580b,
580d, or 726 of the California Code of Civil Procedure, as amended or recodified
from time to time.
(c) If and to the extent such waivers of Guarantor's rights of
subrogation, reimbursement, indemnity and contribution, and any other rights and
defenses waived by Guarantor hereunder are unenforceable, Guarantor hereby
agrees that all such rights shall be junior and subordinate to the rights of the
Banks and/or Agents to obtain payment and performance of the Guaranteed
Obligations and to all rights of the Banks and/or Agents in and to any property,
including the Property, which now or hereafter serves or could serve as
collateral security for the Guaranteed Obligations.
(d) The above waivers include, but are not limited to, the waiver by
Guarantor of:
(i) all rights and defenses arising out of an election of remedies
by the Banks and/or Agents, even though that election of remedies has
destroyed Guarantor's rights or subrogation and/or reimbursement against
Borrower by the operation of Section 580d of the California Code of Civil
Procedure or otherwise;
(ii) all rights and protections of any kind which Guarantor may have
for any reason which would affect or limit the amount of any recovery by
the Banks and/or Agents from Guarantor including, without limitation, the
right to any fair market value hearing pursuant to Section 580a of the
California Code of Civil Procedure.
(iii) any and all benefits available to sureties and creditors which
might otherwise be available to Guarantor under California Civil Code
Sections 2809 (reduction of surety's obligation where larger than
principal's), 2810 (liability of surety when principal is not liable), 2815
(revocation of continuing guaranty), 2819 (exoneration of surety), 2839
(performance of principal obligation or offer of performance), 2845
(requiring creditor to proceed against principal), 2849 (security for
performance of principal obligation), 2850 (hypothecation of surety's
property), 2899 (order of resort to property), and 3433 (creditor's
entitlement to satisfy claim from several funds), as amended or recodified
from time to time; and
(e) Guarantor shall not be discharged, released or exonerated, in any way,
from its absolute, unconditional and independent liabilities hereunder, even
though any rights or defenses which Guarantor may have against Borrower, the
Banks, the Agents or others may be destroyed, diminished or otherwise affected,
by:
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<PAGE>
(i) Any declaration by the Banks and/or Agents of a default in
respect of any of the Guaranteed Obligations;
(ii) The exercise by the Banks and/or Agents of any rights or
remedies against Borrower or any other person;
(iii) The failure of the Banks and/or Agents to exercise any rights
or remedies against Borrower or any other person; or
Section 7. Representations and Warranties. Each Guarantor hereby
------------------------------
represents and warrants as follows:
7.01. Corporate Authority. Such Guarantor is either a corporation, limited
-------------------
liability company or limited partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization. The
execution, delivery and performance by such Guarantor of this Agreement are
within such Guarantor's organizational powers, have been duly authorized by all
necessary organizational action and do not contravene (a) such Guarantor's
organizational authority or (b) any law or material contractual restriction
affecting such Guarantor or its Property.
7.02. Government Approval. No authorization or approval or other action by
-------------------
and no notice to or filing with, any Governmental Authority is required for the
due execution, delivery and performance by such Guarantor of this Agreement.
7.03. Binding Obligations. This Agreement is the legal, valid and binding
-------------------
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights (whether
considered in a proceeding at law or in equity).
Section 8. Covenants. Each Guarantor will comply with all covenant
---------
provisions of Article V and Article VI of the Credit Agreement to the extent
such provisions are applicable.
8.01. Additional Covenant. As soon as possible and in any event within
-------------------
five days after the incurrence of any Indebtedness by the Parent or any
Subsidiary of the Parent other than the Obligations or any other Indebtedness
permitted under the Credit Agreement, the Parent shall notify the Administrative
Agent in writing of such incurrence.
Section 9. Contribution. As a result of the transactions contemplated
------------
by the Credit Agreement, each of the Guarantors will benefit, directly and
indirectly, from the Guaranteed Obligations and in consideration thereof desire
to enter into a contribution agreement among
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<PAGE>
themselves as set forth in this Section 9 to allocate such benefits among
themselves and to provide a fair and equitable arrangement to make contributions
in the event any payment is made by any Guarantor hereunder to the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
(such payment being referred to herein as a "Contribution," and for purposes of
this Agreement, includes any exercise of recourse by the Administrative Agent
against any Property of a Contributor and application of proceeds of such
Property in satisfaction of such Guarantor's obligations under this Agreement).
The Guarantors hereby agree as follows:
9.01. Calculation of Contribution. In order to provide for just and
---------------------------
equitable contribution among the Guarantors in the event any Contribution is
made by a Guarantor (a "Funding Guarantor"), such Funding Guarantor shall be
entitled to a contribution from certain other Guarantors for all payments,
damages and expenses incurred by that Funding Guarantor in discharging any of
the Guaranteed Obligations, in the manner and to the extent set forth in this
Section. The amount of any Contribution under this Agreement shall be equal to
the payment made by the Funding Guarantor to the Administrative Agent or any
other beneficiary pursuant to this Agreement and shall be determined as of the
date on which such payment is made.
9.02. Benefit Amount Defined. For purposes of this Agreement, the "Benefit
----------------------
Amount" of any Guarantor as of any date of determination shall be the net value
of the benefits to such Guarantor and all of its Subsidiaries (including any
Subsidiaries which may be Guarantors) from extensions of credit made by the
Banks to the Borrower under the Credit Agreement and the benefit of entering
into the Participating Leases; provided, that in determining the contribution
liability of any Guarantor which is a Subsidiary to its direct or indirect
parent corporation or of any Guarantor to its direct or indirect Subsidiary, the
Benefit Amount of such Subsidiary and its Subsidiaries, if any, shall be
subtracted in determining the Benefit Amount of the parent corporation. Such
benefits shall include benefits of funds constituting proceeds of Advances made
to the Borrower by the Banks which are in turn advanced or contributed by the
Borrower to such Guarantor or its Subsidiaries and benefits of Letters of Credit
issued pursuant to the Credit Agreement on behalf of, or the proceeds of which
are advanced or contributed or otherwise benefit, directly or indirectly, such
Guarantor and its Subsidiaries (collectively, the "Benefits"). In the case of
any proceeds of Advances or Benefits advanced or contributed to a Person (an
"Owned Entity") any of the equity interests of which are owned directly or
indirectly by a Guarantor, the Benefit Amount of a Guarantor with respect
thereto shall be that portion of the net value of the benefits attributable to
Advances or Benefits equal to the direct or indirect percentage ownership of
such Guarantor in its Owned Entity.
9.03. Contribution Obligation. Each Guarantor shall be liable to a Funding
-----------------------
Guarantor in an amount equal to the greater of (A) the (i) ratio of the Benefit
Amount of such Guarantor to the total amount of Guaranteed Obligations,
multiplied by (ii) the amount of Guaranteed Obligations paid by such Funding
Guarantor and (B) 95% of the excess of the fair saleable value of the property
-7-
<PAGE>
of such Guarantor over the total liabilities of such Guarantor (including the
maximum amount reasonably expected to become due in respect of contingent
liabilities) determined as of the date on which the payment made by a Funding
Guarantor is deemed made for purposes of this Agreement (giving effect to all
payments made by other Funding Guarantors as of such date in a manner to
maximize the amount of such contributions).
9.04. Allocation. In the event that at any time there exists more than one
----------
Funding Guarantor with respect to any Contribution (in any such case, the
"Applicable Contribution"), then payment from other Guarantors pursuant to this
Agreement shall be allocated among such Funding Guarantors in proportion to the
total amount of the Contribution made for or on account of the Borrower by each
such Funding Guarantor pursuant to the Applicable Contribution. In the event
that at any time any Guarantor pays an amount under this Agreement in excess of
the amount calculated pursuant to clause (A) of Subsection 9.03 above, that
Guarantor shall be deemed to be a Funding Guarantor to the extent of such excess
and shall be entitled to contribution from the other Guarantors in accordance
with the provisions of this Section.
9.05. Subsidiary Payment. The amount of contribution payable under this
------------------
Section by any Guarantor shall be reduced by the amount of any contribution paid
hereunder by a Subsidiary of such Guarantor.
9.06. Equitable Allocation. If as a result of any reorganization,
--------------------
recapitalization, or other corporate change in the Borrower or any of its
Subsidiaries, or as a result of any amendment, waiver or modification of the
terms and conditions of other Sections of this Agreement or the Guaranteed
Obligations, or for any other reason, the contributions under this Section
become inequitable as among the Guarantors, the Guarantors shall promptly modify
and amend this Section to provide for an equitable allocation of contributions.
Any of the foregoing modifications and amendments shall be in writing and signed
by all Guarantors.
9.07. Asset of Party to Which Contribution is Owing. The Guarantors
---------------------------------------------
acknowledge that the right to contribution hereunder shall constitute an asset
in favor of the Guarantor to which such contribution is owing.
9.08. Subordination. No payments payable by a Guarantor pursuant to the
-------------
terms of this Section 9 shall be paid until all amounts then due and payable by
the Borrower to any Bank, pursuant to the terms of the Credit Documents, are
paid in full in cash. Nothing contained in this Section 9 shall affect the
obligations of any Guarantor to any Bank under the Credit Agreement or any other
Credit Documents.
Section 10. Subordination.
-------------
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<PAGE>
10.01. Subordination. The payment of any Guaranteed Obligations (including
-------------
interest accruing after the filing of a petition initiating any proceeding
pursuant to any bankruptcy law with respect to the Guarantor as debtor) is
subordinated to the guaranteed obligations (the "Senior Guaranteed Obligations")
as defined in that certain Guaranty and Contribution Agreement (the "Senior
Guaranty") dated as of even date herewith given for the benefit of the Senior
Administrative Agent and the Senior Creditors in connection with the Senior
Credit Agreement, as the Senior Guaranty may be amended, renewed, extended,
increased, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified from time to time; provided that the aggregate principal
--------
amount and face amount of outstanding letters of credit of the Senior Guaranteed
Obligations which shall be senior to the Guaranteed Obligations shall not exceed
$500,000,000.00 on the terms and conditions contained in this Section 10.
10.02. Payment Blockage. No payment by the Guarantor on the Guaranteed
----------------
Obligations (whether pursuant to the terms of the Guaranteed Obligations or upon
acceleration or otherwise) shall be made if, at the time of any such payment,
there exists a default in the payment of any Senior Guaranteed Obligations (a
"Senior Payment Default"), and such Senior Payment Default shall not have been
cured or waived by or on behalf of the holders of such Senior Guaranteed
Obligations. In addition, during the continuance of the breach of any provision
in Article VII of the Senior Credit Agreement ("Financial Covenant Default"),
upon the giving by the Senior Administrative Agent of written notice to the
Administrative Agent of such breach, no such payment may be made by the
Guarantor upon the Guaranteed Obligations for a period (the "Blockage Period")
commencing on the date of the giving of such notice and ending 180 days after
the date of the giving of such notice. Not more than one Blockage Period may be
commenced with respect to the Guaranteed Obligations during any period of 360
consecutive days. No Financial Covenant Default which existed or was continuing
on the date of commencement of any Blockage Period shall be, or be made, the
basis for commencement of a second Blockage Period whether within or without a
period of 360 consecutive days unless such Financial Covenant Default shall have
been cured for a period of not less than 30 consecutive days or waived. During
any period in which payments on the Guaranteed Obligations are not restricted
pursuant to this Section 10.02, the holders of the Guaranteed Obligations shall
be entitled to receive payments in accordance with the terms of the Guaranteed
Obligations, including any payments that were previously restricted in
accordance with this Section 10.02.
Section 10.03. Remedy Blockage.
---------------
(a) At any time when any Senior Guaranteed Obligations remain outstanding,
the holders of the Guaranteed Obligations will not have any of the following
rights: (i) to demand, sue for or take from the Guarantor, by set-off or in any
other manner, any moneys which may then or thereafter be owing by the Guarantor
on the Guaranteed Obligations, (ii) to commence, or to join with any Person in
commencing, any suit, action or proceeding against the Guarantor (A) to enforce
payment
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<PAGE>
of or to collect all or any portion of the Guaranteed Obligations or (B) to
commence judicial enforcement of any of the rights and remedies under the
documents or instruments governing the Guaranteed Obligations or applicable law,
(iii) to accelerate the principal of or interest on or any other amount under
the Guaranteed Obligations, or (iv) as a holder of the Guaranteed Obligations,
to commence, or to join with any Person in commencing, against Guarantor or any
of its property a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding (each of the foregoing a "Remedial Action") until the earlier
of:
(i) the commencement by the Senior Administrative Agent or any
holder of the Senior Guaranteed Obligations of any Remedial Action;
(ii) the commencement of a liquidation or dissolution proceeding
with respect to the Guarantor or a bankruptcy, reorganization, insolvency,
receivership, or other similar proceeding with respect to the Guarantor or
any of its property; or
(iii) the occurrence of an Event of Default and the continuance
thereof unwaived for 360 days.
(b) Notwithstanding the foregoing, the holders of the Guaranteed
Obligations and the Administrative Agent may (i) charge interest at a default
rate, (ii) sue for specific performance, but not for damages or other sums of
money, or obtain injunctive relief, in either case, in respect of the covenants
of the Guaranteed Obligations which do not require, directly or indirectly, the
payment by the Guarantor of money, (iii) give notices and file law suits to
prevent the running of the relevant statute of limitations, pursue rights in
bankruptcy, reorganization, insolvency, receivership, or other similar
proceedings, and otherwise protect legal rights and (iv) send notices of default
under the Credit Agreement.
Section 10.04. Certain Distributions. Upon any distribution to creditors
---------------------
of the Guarantor in a liquidation or dissolution of the Guarantor or in a
bankruptcy, reorganization, insolvency, receivership, or other similar
proceeding with respect to the Guarantor or any of its property, (a) the holders
of the Senior Guaranteed Obligations will be entitled to receive payment in full
in cash, or to have such payment duly provided for in cash, of all amounts
payable under or in respect of the Senior Guaranteed Obligations (including
interest accrued after the commencement of such proceeding) before the holders
of the Guaranteed Obligations will be entitled to receive from the Guarantor or
its assets any payment under or in respect of the Guaranteed Obligations and (b)
until the holders of the Senior Guaranteed Obligations have received such
payment in full in cash, or such payment is duly provided for in cash, any
distribution from the Guarantor or its assets to which the holders of the
Guaranteed Obligations would otherwise be entitled will be made to the holders
of the Senior Guaranteed Obligations (or one or more trustees or representatives
acting on their behalf).
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<PAGE>
Subject to the prior payment in full in cash of all Senior Guaranteed
Obligations (or provision made for payment in full in cash of all Senior
Guaranteed Obligations), the holders of the Guaranteed Obligations shall be
subrogated to the rights of the holders of the Senior Guaranteed Obligations to
receive payments or distribution of assets of the Guarantor applicable to the
Senior Guaranteed Obligations until all amounts owing on the Guaranteed
Obligations shall be paid in full.
Section 10.05. Payment in Trust. The Administrative Agent and each of
----------------
the Banks (or a trustee, representative, or agent acting on their behalf) will
be obligated to hold in trust for, and to pay over promptly to, the holders of
the Senior Guaranteed Obligations (or one or more trustees, representatives, or
agents acting on their behalf) all payments and distributions received by the
Administrative Agent or such Bank in contravention of the restrictions contained
in this Section 10; provided, however, that notwithstanding such restrictions,
the Administrative Agent and the Banks shall be entitled to receive and to
retain any and all payments (a) made in securities of the Guarantor provided the
same are subordinated to the Senior Guaranteed Obligations at least to the same
extent as the Guaranteed Obligations or (ii) made in accordance with any
relevant court order respecting the subordination provided for herein.
Section 10.06. Liens. The Administrative Agent and the Banks will not
-----
create, assume, or suffer to exist any Lien securing the repayment of the
Guaranteed Obligations. Any such Lien existing in violation of the foregoing
shall be fully subordinate to any Lien in favor of the Senior Administrative
Agent or the Senior Creditors which secures any of the Senior Guaranteed
Obligations. At the request of the Senior Administrative Agent, the
Administrative Agent, the Banks, and the Guarantor will take any and all steps
necessary to fully effect the release of any such Lien.
Section 10.07. Miscellaneous.
-------------
(a) The Administrative Agent, the Banks, and the Guarantor agree to
execute any and all other instruments requested by the Senior Administrative
Agent to further evidence the subordination of the Guaranteed Obligations to the
Senior Guaranteed Obligations as herein provided.
(b) The provisions of this Section 10 are irrevocable and the Senior
Administrative Agent and the Senior Creditors may, without notice to any of the
parties hereto and without impairing or releasing the obligations of the
Guarantor, the Administrative Agent, and the Banks hereunder, (i) create Senior
Guaranteed Obligations by extending credit under the Senior Credit Agreement;
(ii) subject to the limitation on total principal contained in Section 10.01,
change the terms of or increase the amount of the Senior Guaranteed Obligations
by increasing, extending, rearranging, amending, supplementing, or otherwise
modifying any instrument or agreement creating Senior Guaranteed
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<PAGE>
Obligations; (iii) sell, exchange, release, or otherwise deal with any
collateral securing any Senior Guaranteed Obligations; (iv) release anyone,
including the Guarantor or any other guarantor, liable in any manner for the
payment or collection of any Senior Guaranteed Obligations; (v) exercise or
refrain from exercising any rights against the Guarantor or any other Person;
and (vi) apply any sums received by any Senior Creditor, from whatever source,
to the payment of the Senior Guaranteed Obligations.
(c) The foregoing provisions will be enforceable against the Administrative
Agent and the Banks, by or on behalf of the holders of the Senior Guaranteed
Obligations and such holders are intended third party beneficiaries of this
Section 10.
Section 11. Miscellaneous.
-------------
11.01. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing, including telegraphic communication
and delivered or teletransmitted to the Administrative Agent, as set forth in
the Credit Agreement and to each Guarantor, at the address set forth under such
Guarantor's signature hereto or in the Accession Agreement executed by such
Guarantor, or to such other address as shall be designated by any Guarantor or
the Administrative Agent in written notice to the other parties. All such
notices and other communications shall be effective when delivered or
teletransmitted to the above addresses.
11.02. Amendments, Etc. No waiver of any provision of this Agreement nor
----------------
consent to any departure by any Guarantor therefrom shall be effective unless
the same shall be in writing and signed by the Administrative Agent, the
Majority Banks and the Borrower and no amendment of this Agreement shall be
effective unless the same shall be in writing and signed by each Guarantor and
the Administrative Agent, with the consent of the Majority Banks; provided that
--------
any amendment or waiver releasing any Guarantor from any liability hereunder
shall be signed by all the Banks; and provided further that any waiver or
----------------
consent shall be effective only in the specific instance and for the specific
purpose for which given. Notwithstanding the foregoing, in the event that any
Subsidiary or Affiliate of the Borrower hereafter is required in a accordance
with the terms of the Credit Agreement or otherwise agrees to become a guarantor
of the Borrower's obligations under the Credit Documents, then such Subsidiary
or Affiliate may become a party to this Agreement by executing an Accession
Agreement ("Accession Agreement") in the form attached hereto as Annex 1 and
-------
each Guarantor and the Administrative Agent hereby agrees that upon such
Subsidiary's or Affiliate's execution of such Accession Agreement, this
Agreement shall be deemed to have been amended to make such Person a Guarantor
hereunder for all purposes and a party hereto and no signature is required on
behalf of the other Guarantors or the Administrative Agent to make such an
amendment to this Agreement effective.
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<PAGE>
11.03. No Waiver; Remedies. No failure on the part of Administrative
-------------------
Agent, the Documentation Agent, the Managing Agents or any Bank to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
11.04. Right of Set-Off. Upon the occurrence and during the continuance of
----------------
any Event of Default, the Administrative Agent, the Documentation Agent, the
Managing Agents and the Banks are hereby authorized at any time, to the fullest
extent permitted by law, to set off and apply any deposits (general or special,
time or demand, provisional or final) and other indebtedness owing by the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
to the account of any Guarantor against any and all of the obligations of such
Guarantor under this Agreement, irrespective of whether or not the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
shall have made any demand under this Agreement and although such obligations
may be contingent and unmatured. The Administrative Agent, the Documentation
Agent, the Managing Agents and the Banks agree promptly to notify each Guarantor
affected by any such set-off after any such set-off and application made by the
Administrative Agent, the Documentation Agent, the Managing Agents or the Banks
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Administrative Agent, the
Documentation Agent, the Managing Agents and the Banks under this Section 11.04
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Administrative Agent, the Documentation
Agent, the Managing Agents and the Banks may have.
11.05. Continuing Guaranty; Transfer of Interest. This Agreement shall
-----------------------------------------
create a continuing guaranty and shall (a) remain in full force and effect until
payment in full and termination of the Guaranteed Obligations, (b) be binding
upon each Guarantor, its successors and assigns, and (c) inure, together with
the rights and remedies of the Administrative Agent hereunder, to the benefit of
the Administrative Agent, the Documentation Agent, the Managing Agents, the
Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause, when any Bank assigns or
otherwise transfers any interest held by it under the Credit Agreement or other
Credit Document to any other Person pursuant to the terms of the Credit
Agreement or other Credit Document, that other Person shall thereupon become
vested with all the benefits held by such Bank under this Agreement. Upon the
payment in full and termination of the Guaranteed Obligations, the guaranties
granted hereby shall terminate and all rights hereunder shall revert to each
Guarantor to the extent such rights have not been applied pursuant to the terms
hereof. Upon any such termination, the Administrative Agent will, at each
Guarantor's expense, execute and deliver to such Guarantor such documents as
such Guarantor shall reasonably request and take any other actions reasonably
requested to evidence or effect such termination.
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<PAGE>
11.06. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with, the laws of the State of Texas. Each Guarantor
hereby irrevocably submits to the jurisdiction of any Texas state or federal
court sitting in Dallas, Texas in any action or proceeding arising out of or
relating to this Agreement and the other Credit Documents and such Guarantor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such court. Each Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, any right it
may have to the defense of an inconvenient forum to the maintenance of such
action or proceeding. Each Guarantor hereby agrees that service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding may be made by mailing or delivering a copy of such process
to such Guarantor at its address specified below. Each Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the rights of any Bank,
the Documentation Agent or the Administrative Agent to serve legal process in
any other manner permitted by the law or affect the right of any Bank, the
Documentation Agent or the Administrative Agent to bring any action or
proceeding against any Guarantor or its Property in the courts of any other
jurisdiction.
11.07 WAIVERS OF JURY TRIAL. THE GUARANTORS HEREBY IRREVOCABLY AND
---------------------
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT OR TO ANY COUNTERCLAIM
THEREIN.
11.08. ENTIRE AGREEMENT. PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS
----------------
AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE LOAN
AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN AGREEMENT
IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED
REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
[INTENTIONALLY BLANK]
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<PAGE>
Each Guarantor has caused this Agreement to be duly executed as of the date
first above written.
GUARANTORS:
AMERICAN GENERAL HOSPITALITY
CORPORATION, a Maryland corporation
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
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<PAGE>
AGH UPREIT, LLC, a Delaware limited liability company
By: American General Hospitality Corporation, member
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
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<PAGE>
3100 GLENDALE JOINT VENTURE,
an Ohio general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:____________________________________
Name:__________________________________
Title:_________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:_______________________________
Name:_____________________________
Title:____________________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:____________________________________
Name:__________________________________
Title:_________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
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<PAGE>
MDV LIMITED PARTNERSHIP,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:______________________________________
Name:____________________________________
Title:___________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-18-
<PAGE>
MADISON MOTEL ASSOCIATES,
a Wisconsin general partnership
By: AGH UPREIT, LLC, its partner
By: American General Hospitality
Corporation, member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., its general partner
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., its partner
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-19-
<PAGE>
183 HOTEL ASSOCIATES, LTD.,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:______________________________
Name:____________________________
Title:___________________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-20-
<PAGE>
RICHMOND WILLIAMSBURG ASSOCIATES, LTD.,
a Texas limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality Corporation,
member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc.,
general partner
By:______________________________
Name:____________________________
Title:___________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-21-
<PAGE>
2929 WILLIAMS LIMITED LIABILITY COMPANY, a Delaware
limited liability company
By: AGH UPREIT, LLC, its member
By: American General Hospitality
Corporation, member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-22-
<PAGE>
LAKE BUENA VISTA PARTNERS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, general partner
By: American General Hospitality
Corporation, member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality Operating
Partnership, L.P., member
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-23-
<PAGE>
BCHI ACQUISITION, L.L.C.,
a Delaware limited liability company
By: AGH UPREIT LLC, its member
By: American General Hospitality
Corporation, member
By:___________________________________
Name:_________________________________
Title:________________________________
By: American General Hospitality
Operating Partnership, L.P., member
By: AGH GP, Inc., general partner
By:______________________________
Name:____________________________
Title:___________________________
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., general partner
By:___________________________________
Name:_________________________________
Title:________________________________
Address: 5605 MacArthur Blvd., Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-24-
<PAGE>
COCOA BEACH HOTELS, LTD.,
a Florida limited partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:______________________________
Name:____________________________
Title:___________________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:_________________________
Name:_______________________
Title:______________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-25-
<PAGE>
DURHAM I-85 LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: AGH UPREIT LLC, its general partner
By: American General Hospitality
Corporation, Member
By:______________________________
Name:____________________________
Title:___________________________
By: American General Hospitality
Operating Partnership, L.P., Member
By: AGH GP, INC., its general
partner
By:_________________________
Name:_______________________
Title:______________________
Address: 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Attn: Mr. Kenneth E. Barr
Telephone: (972) 550-6800
Facsimile: (972) 550-6895
-26-
<PAGE>
EXHIBIT "I"
[LETTER HEAD OF BATTLE FOWLER LLP APPEARS HERE]
February 13, 1998
Societe Generale
Southwest Agency
2001 Ross Ave, Suite 4900
Dallas, Texas 75201
Bank One, Texas, N.A.
1717 Main Street, 4th Floor
Commercial Real Estate Department Lending
Dallas, Texas 75201
The Banks and the other financial
institutions party to the hereinafter
described Credit Agreement
Re: Subordinate Unsecured Credit Agreement dated of even date
herewith (the "CREDIT AGREEMENT") by and between American General
Hospitality Operating Partnership, L.P., a Delaware limited
partnership (the "BORROWER") and Societe Generale, a French
banking corporation acting through its Southwest Agency as
arranger, syndication agent and documentation agent; Bank One,
Texas N.A., as administrative agent, The Bank of Nova Scotia and
Wells Fargo Bank, National Association, as co-agents and other
financial institutions party thereto dated as of even date
herewith (the "BANKS")
----------------------
<PAGE>
BATTLE FOWLER LLP Page 2
Ladies and Gentlemen:
We have acted as counsel to the Borrower in connection with the Credit
Agreement. This opinion is being furnished pursuant to Section 3.01(a)(v) of the
Credit Agreement. Capitalized terms used herein and not defined herein shall
have the meanings ascribed to such terms in the Credit Agreement.
In connection with this opinion, we have examined the following
materials:
(a) the Credit Agreement and the other documents executed and
delivered in connection therewith identified on Schedule I hereto
----------
(collectively referred to herein as the "CREDIT DOCUMENTS");
(b) the certificate of limited partnership, as amended (the "BORROWER
PARTNERSHIP CERTIFICATE"), of the Borrower, as certified by the Secretary of
State of the State of Delaware, as being as a true and correct copy of such
document as filed in the office of the Secretary of State;
(c) the amended and restated agreement of limited partnership (the
"OPERATING PARTNERSHIP AGREEMENT") of the Borrower, dated as of July 31, 1996,
as certified by the Secretary of AGH GP, Inc., a Nevada corporation ("AGH GP"),
as general partner of the Borrower, on the date hereof as being complete,
correct and in effect;
(d) the amended and restated articles of incorporation (the
"CHARTER") of American General Hospitality Corporation (the "COMPANY"), as
certified by the State Department of Assessments and Taxation of the State of
Maryland as being a true and complete copy of such document as filed in the
office of the State Department of Assessments and Taxation (the "SDAT");
(e) the Bylaws of the Company as certified by the Secretary of the
Company and as the case may be, as of the date hereof as being complete, correct
an in effect;
(f) the certificate of limited partnership (the "DURHAM PARTNERSHIP
CERTIFICATE") of Durham I-8 Limited Partnership, a Delaware limited partnership
("DURHAM" and together with AGH GP, the Company and the Borrower, each a "LOAN
PARTY" and, collectively, the "LOAN PARTIES"), as certified by the Secretary of
State of Delaware, as being as a true and correct copy of such document as filed
in the office of the Secretary of State;
(g) the amended and restated agreement of limited partnership (the
"DURHAM PARTNERSHIP AGREEMENT") of Durham, dated as of November 30, 1997, as
certified by the Secretary of AGH UPREIT LLC ("UPREIT") as general partner of
Durham on the date hereof as being complete, correct and in effect;
<PAGE>
(h) certificates of good standing issued by the State of
incorporation or formation, as applicable, of each Loan Party;
(i) a certificate of the Secretary of the Company and a certificate
of the Secretary of AGH GP, each dated as of the date hereof, as to the
incumbency and signatures of certain officers of the Company and AGH GP,
respectively;
(j) an executed copy of each of the Credit Documents; and
(k) the other instruments and documents delivered at today's closing,
including certificates or telegrams of public officials as to matters set forth
therein and certificates of representatives of the Borrower as to matters set
forth therein.
In rendering this opinion, we have assumed the capacity to sign and
the genuineness of all signatures of all persons executing agreements,
instruments or documents examined or relied upon by us, the authenticity of all
agreements, instruments or documents submitted to us as originals and the
conformity with the original agreements, instruments or documents of all
agreements, instruments or documents submitted to us as copies.
We have also assumed that as to all parties other than Loan Parties
the due authorization, execution, acknowledgement as indicated thereon and
delivery of documents referred to herein, and the validity, binding effect and
enforceability thereof against all parties thereto other than the Loan Parties
and that each of the Agents and each of the Banks has full power, authority and
legal right, under its charter and other governing documents and all applicable
laws to execute, deliver and perform their respective obligations under the
Credit Agreement, the other Credit Documents and the other documents referred to
therein and herein to which it is a party.
With respect to matters of fact, we have relied upon the written
statements and certificates of officers AGH GP (on behalf of the Borrower), or
UPREIT (on behalf of Durham) and authorized representatives of the Company
(including, without limitation, in the certificate attached hereto as Exhibit A
---------
and referred to herein as the "OFFICERS CERTIFICATE"), representations made by
the Borrower in the Credit Documents, and certificates of public officials.
Where matters are stated to be "to the best of our knowledge" or "known to us,"
our knowledge is limited to the actual knowledge of those attorneys in our
office who have directly participated in this engagement, their review of
documents provided to us by the Loan Parties in connection with this engagement
and inquires of officers of AGH GP, UPREIT and the Company, the results of which
are reflected in the Officers Certificate. We have not independently verified
the accuracy of the matters set forth in the written statements or certificates
upon which we have relied, including the organization, existence, good standing,
assets, business or affairs of the Loan Parties.
<PAGE>
BATTLE FOWLER LLP Page 4
Insofar as our opinion relates to matters of (i) Maryland law, we
have relied upon the opinion of Ballard Spahr Andrews & Ingersoll, LLP addressed
to us, dated the date hereof, a copy of which is attached hereto as Exhibit B
---------
and (ii) Nevada law, we have relied exclusively upon the opinion McDonald
Carano Wilson McCune Bergin Frankovich & Hicks LLP a copy of which is attached
hereto as Exhibit C.
---------
Except for the opinions set forth in paragraphs (1) through (3)
below, we express no opinions and no opinions should be implied.
We are not admitted to practice law in any jurisdiction other
than the State of New York and we do not express any opinion as to the laws of
any states or jurisdictions except as to New York law, the Delaware General
Corporation Law, the Delaware Revised Uniform Limited Partnership Act, the
Delaware Limited Liability Company Act and the Federal law of the United States
of America.
Upon the basis of and subject to the foregoing and solely in
reliance thereon, we are of the opinion that:
1. Each of the Borrower and Durham is a limited partnership
duly formed validly existing and in good standing under the laws of its
jurisdiction of formation with full partnership power and authority to own,
lease and operate its properties and to conduct its business as currently
conducted and to execute and perform its obligations under the Credit Documents
to which it is a party.
2. The execution and delivery of, and the performance by each
of the Borrower and Durham of its obligations under, the Credit Documents to
which it is a party have been duly and validly authorized.
3. Each of the Credit Documents has been duly executed and
delivered by each Loan Party which is a party thereto.
This opinion is being rendered to you and the other Banks and the
Bank's respective counsel for your and their sole use and may not be made
available to or relied upon by any other person, firm or entity without our
express prior written consent except for future Banks or participants in the
Credit Agreement.
Very truly yours,
/s/ Battle Fowler LLP
BATTLE FOWLER LLP
<PAGE>
SCHEDULE I
----------
CREDIT DOCUMENTS
----------------
1. Notes in the aggregate amount of $100,000,000 executed by the Borrower in
favor of Bank One, SG, Co-Agents and the banks;
2. Environmental Indemnification Agreement by the Company and certain of its
subsidiaries in favor of the Agents and the banks; and
3. Subordinate Guaranty and Contribution Agreement by the Company and certain
of its subsidiaries in favor of the Agents and the banks.
<PAGE>
Exhibit A
---------
OFFICER'S CERTIFICATE
<PAGE>
Exhibit B
---------
[Opinion of Ballard Spahr Andrews & Ingersoll, LLP]
<PAGE>
Exhibit C
---------
[Opinion Of McDonald Carano as to Nevada Law]
<PAGE>
SCHEDULE I
----------
CREDIT DOCUMENTS
----------------
1. Notes in the aggregate amount of $100,000,000 executed by the Borrower in
favor of Bank One, SG, Co-Agents and the banks;
2. Environmental Indemnification Agreement by the Company and certain of its
subsidiaries in favor of the Agents and the banks; and
3. Subordinate Guaranty and Contribution Agreement by the Company and certain
of its subsidiaries in favor of the Agents and the banks.
<PAGE>
SUBORDINATE UNSECURED CREDIT AGREEMENT
Schedule 1.01(a)
<TABLE>
<CAPTION>
BANK COMMITMENT
---- ----------
<S> <C>
Societe Generale, Southwest Agency $ 20,000,000.00
Bank One, Texas, N.A. $ 15,000,000.00
Wells Fargo Bank, National Association $ 30,000,000.00
The Bank of Nova Scotia $ 5,000,000.00
NationsBank of Texas, N.A. $ 15,000,000.00
BANKBOSTON, N.A. $ 15,000,000.00
---------------
TOTAL $100,000,000.00
===============
</TABLE>
<PAGE>
SCHEDULE 1.01 (b)
AMERICAN GENERAL HOSPITALITY CORPORATION
BORROWING BASE COMPLIANCE CERTIFICATE
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Hotel Properties Owned by Type of Service Total Rooms Hotel Eligible
the Parent at Parent's (Limited/Extended Number Out of Acquisition Yes - Y Adjusted
Subsidiaries Stay/Full) of Rooms Service Date No - N EBITDA EBITDA
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Eligible Properties
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Holiday Inn, DFW West, Full Service 243 31-Jul-95 Y $ 1,735,673 $ 1,487,024
Bedford, TX
- ------------------------------------------------------------------------------------------------------------------------------
2. Hampton Inn - Richmond, VA Limited Service 124 39 31-Jul-95 Y 1,216,570 1,111,794
- ------------------------------------------------------------------------------------------------------------------------------
3. Hilton Hotel - Toledo, OH Full Service 213 31-Jul-95 Y 1,045,298 792,323
- ------------------------------------------------------------------------------------------------------------------------------
4. Holiday Inn - N.O. Full Service 304 31-Jul-95 Y 3,525,305 3,173,783
Airport, Kenner, LA
- ------------------------------------------------------------------------------------------------------------------------------
5. Crowne Plaza - Madison, WI Full Service 227 31-Jul-95 Y 2,651,247 2,327,254
- ------------------------------------------------------------------------------------------------------------------------------
6. Holiday Inn - San Jose, CA Full Service 239 31-Jul-95 Y 2,952,221 2,589,050
- ------------------------------------------------------------------------------------------------------------------------------
7. Wyndham Hotel - Full Service 276 31-Jul-96 Y 1,349,379 1,097,097
Albuquerque, NM
- ------------------------------------------------------------------------------------------------------------------------------
8. Hotel Maison de Ville - Full Service 23 31-Jul-96 Y 448,717 360,105
New Orleans, LA
- ------------------------------------------------------------------------------------------------------------------------------
9. Hampton Inn - Ocean City, Limited Service 168 31-Jul-96 Y 1,115,369 1,013,522
MD
- ------------------------------------------------------------------------------------------------------------------------------
10. Holiday Inn - San Siego, Ca Full Service 317 48 31-Jul-96 Y 2,392,816 2,091,858
- ------------------------------------------------------------------------------------------------------------------------------
11. Wyndham Hotel - San Jose, Full Service 356 31-Jul-96 Y 3,495,516 3,017,111
CA
- ------------------------------------------------------------------------------------------------------------------------------
12. Durham Hilton - Durham, Full Service 184 08-Jan-97 Y 1,718,195 1,492,107
N.C.
- ------------------------------------------------------------------------------------------------------------------------------
13. Holiday Inn Resort - Full Service 204 82 21-Nov-95 Y 1838,117 1,578,204
Monteray, CA
- ------------------------------------------------------------------------------------------------------------------------------
14. Wyndham LBV - Orlando, FL Full Service 480 22-Oct-95 Y 3,484,016 3,009,225
- ------------------------------------------------------------------------------------------------------------------------------
15. Westin Resort - Key Largo, Full Service 200 17-Mar-97 Y 2,889,885 2,493,768
FL
- ------------------------------------------------------------------------------------------------------------------------------
16. Wyndham Gardens - Full Service 219 17-Mar-97 Y 1,280,857 1,104,095
Marletta, GA
- ------------------------------------------------------------------------------------------------------------------------------
17. Holiday Inn - Phoenix, AZ Full Service 249 2 04-Apr-97 Y 1,445,743 1,205,534
- ------------------------------------------------------------------------------------------------------------------------------
18. Hilton Hotel - Grand Full Service 226 18-Apr-97 Y 1,855,801 1,849,394
Rapids, MI
- ------------------------------------------------------------------------------------------------------------------------------
19. Marriott West Loop - Full Service 302 25-Jun-97 Y 2,651,985 2,368,847
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------
19a. Office Bldg West Loop - 25-Jun-97 935,583 843,338
Houston, TX
- ------------------------------------------------------------------------------------------------------------------------------
20. Ralison Twin Towers - Full Service 742 25-Jun-97 Y 8,383,761 7,382,733
Orlando, FL
- ------------------------------------------------------------------------------------------------------------------------------
21. Hilton Hotel - Coral Full Service 285 54 27-Jun-97 Y 2,802,481 2,560,017
Beach, FL
- ------------------------------------------------------------------------------------------------------------------------------
22. Holiday Inn - Bucks Full Service 215 20-Jun-97 Y 2,399,851 2,076,030
County, PA
- ------------------------------------------------------------------------------------------------------------------------------
23. Holiday Inn - Alexandria, Full Service 176 22-Jan-96 Y 1,851,320 1,673,061
VA
- ------------------------------------------------------------------------------------------------------------------------------
24. Ramada Old Town - Full Service 258 22-Jan-96 Y 2,241,651 1,921,645
Alexandria, VA
- ------------------------------------------------------------------------------------------------------------------------------
25. Holiday Inn - Annapolis, MD Full Service 280 22-Jan-96 Y 1,519,896 1,380,723
- ------------------------------------------------------------------------------------------------------------------------------
26. Holiday Inn BLM - Hanover, Limited Service 159 22-Jan-96 Y 1,353,241 1,219,997
MD
- ------------------------------------------------------------------------------------------------------------------------------
27. Courtyard by Marriott - Full Service 146 25-Nov-97 Y 783,247 690,871
Durham, NC
- ------------------------------------------------------------------------------------------------------------------------------
28. Sharaton Crossroads - Full Service 225 08-Jan-96 Y 4,051,005 3,448,127
Mahwah, NJ
- ------------------------------------------------------------------------------------------------------------------------------
29. Ramada Inn - Mahwah, NJ Full Service 128 08-Jan-96 Y 1,329,122 1,212,293
- ------------------------------------------------------------------------------------------------------------------------------
30. Crowne Plaza - Las Vegas, Full Service 201 08-Jan-96 Y 2,419,526 2,135,153
NV
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Hotel Properties Owned by Adjusted Adjusted EBITDA Cost Cost Cost Basis
the Parent at Parent's EBITDA Divided by 10% Basis Basis (Limited/
Subsidiaries Seasoned Seasoned All Hotels New Hotels Extended Stay)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Eligible Properties
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Holiday Inn, DFW West, $1,487,024 $14,870,240 $ 13,650,714 $ - $ -
Bedford, TX
- ----------------------------------------------------------------------------------------------------------------------
2. Hampton Inn - Richmond, VA - - 8,165,545 8,165,545 8,165,545
- ----------------------------------------------------------------------------------------------------------------------
3. Hilton Hotel - Toledo, OH 792,323 7,923,228 10,868,248 - -
- ----------------------------------------------------------------------------------------------------------------------
4. Holiday Inn - N.O. 3,173,763 31,737,828 28,435,480 - -
Airport, Kenner, LA
- ----------------------------------------------------------------------------------------------------------------------
5. Crowne Plaza - Madison, WI 2,327,254 23,272,540 23,280,637 - -
- ----------------------------------------------------------------------------------------------------------------------
6. Holiday Inn - San Jose, CA - - 21,163,741 21,153,741 -
- ----------------------------------------------------------------------------------------------------------------------
7. Wyndham Hotel - - - 10,028,914 19,028,994 -
Albuquerque, NM
- ----------------------------------------------------------------------------------------------------------------------
8. Hotel Maison de Ville - 380,195 3,801,946 3,289,203 - -
New Orleans, LA
- ----------------------------------------------------------------------------------------------------------------------
9. Hampton Inn - Ocean City, - - 9,962,732 9,952,732 9,952,732
MD
- ----------------------------------------------------------------------------------------------------------------------
10. Holiday Inn - San Siego, Ca - - 22,437,436 22,437,438 -
- ----------------------------------------------------------------------------------------------------------------------
11. Wyndham Hotel - San Jose, - - 30,001,018 30,006,018 -
CA
- ----------------------------------------------------------------------------------------------------------------------
12. Durham Hilton - Durham, - - 15,471,747 15,471,747 -
N.C.
- ----------------------------------------------------------------------------------------------------------------------
13. Holiday Inn Resort - - - 17,676,654 17,376,651 -
Monteray, CA
- ----------------------------------------------------------------------------------------------------------------------
14. Wyndham LBV - Orlando, FL - - 44,617,816 41,647,995 -
- ----------------------------------------------------------------------------------------------------------------------
15. Westin Resort - Key Largo, - - 20,340,011 29,340,099 -
FL
- ----------------------------------------------------------------------------------------------------------------------
16. Wyndham Gardens - - - 18,050,129 16,680,129 -
Marletta, GA
- ----------------------------------------------------------------------------------------------------------------------
17. Holiday Inn - Phoenix, AZ - - 21,121,039 21,121,038 -
- ----------------------------------------------------------------------------------------------------------------------
18. Hilton Hotel - Grand - - 17,070,985 17,070,918 -
Rapids, MI
- ----------------------------------------------------------------------------------------------------------------------
19. Marriott West Loop - - - 28,910,433 26,810,433 -
Houston, TX
- ----------------------------------------------------------------------------------------------------------------------
19a. Office Bldg West Loop - - - 12,893,005 12,893,808 -
Houston, TX
- ----------------------------------------------------------------------------------------------------------------------
20. Ralison Twin Towers - - - 80,870,002 80,570,092 -
Orlando, FL
- ----------------------------------------------------------------------------------------------------------------------
21. Hilton Hotel - Coral - - 23,794,328 23,794,328 -
Beach, FL
- ----------------------------------------------------------------------------------------------------------------------
22. Holiday Inn - Bucks - - 21,847,142 21,87,142 -
County, PA
- ----------------------------------------------------------------------------------------------------------------------
23. Holiday Inn - Alexandria, - - 15,315,875 15,316,675 -
VA
- ----------------------------------------------------------------------------------------------------------------------
24. Ramada Old Town - - - 17,241,100 17,241,100 -
Alexandria, VA
- ----------------------------------------------------------------------------------------------------------------------
25. Holiday Inn - Annapolis, MD - - 14,329,050 14,329,050 -
- ----------------------------------------------------------------------------------------------------------------------
26. Holiday Inn BLM - Hanover, - - 6,784,175 6,764,176 6,764,175
MD
- ----------------------------------------------------------------------------------------------------------------------
27. Courtyard by Marriott - - - 11,501,049 11,501,049 -
Durham, NC
- ----------------------------------------------------------------------------------------------------------------------
28. Sharaton Crossroads - - - 24,915,000 24,895,000 -
Mahwah, NJ
- ----------------------------------------------------------------------------------------------------------------------
29. Ramada Inn - Mahwah, NJ - - 8,432,000 8,432,000 -
- ----------------------------------------------------------------------------------------------------------------------
30. Crowne Plaza - Las Vegas, - - 26,800,000 28,800,000 -
NV
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------
Hotel Properties Owned by Cost Basis Cost Basis Cost Basis
the Parent at Parent's Non-Wholly Non- Ground
Subsidiaries Owned Franchised Leases
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Eligible Properties
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Holiday Inn, DFW West, $ - $ -
Bedford, TX
- ----------------------------------------------------------------------------------------------
2. Hampton Inn - Richmond, VA - 10,888,248
- ----------------------------------------------------------------------------------------------
3. Hilton Hotel - Toledo, OH - -
- ----------------------------------------------------------------------------------------------
4. Holiday Inn - N.O. - -
Airport, Kenner, LA
- ----------------------------------------------------------------------------------------------
5. Crowne Plaza - Madison, WI -
- ----------------------------------------------------------------------------------------------
6. Holiday Inn - San Jose, CA - -
- ----------------------------------------------------------------------------------------------
7. Wyndham Hotel - - 19,028,991
Albuquerque, NM
- ----------------------------------------------------------------------------------------------
8. Hotel Maison de Ville - 3,288,203 -
New Orleans, LA
- ----------------------------------------------------------------------------------------------
9. Hampton Inn - Ocean City, - -
MD
- ----------------------------------------------------------------------------------------------
10. Holiday Inn - San Siego, Ca - -
- ----------------------------------------------------------------------------------------------
11. Wyndham Hotel - San Jose, - 30,006,016
CA
- ----------------------------------------------------------------------------------------------
12. Durham Hilton - Durham, - -
N.C.
- ----------------------------------------------------------------------------------------------
13. Holiday Inn Resort - - -
Monteray, CA
- ----------------------------------------------------------------------------------------------
14. Wyndham LBV - Orlando, FL - -
- ----------------------------------------------------------------------------------------------
15. Westin Resort - Key Largo, - -
FL
- ----------------------------------------------------------------------------------------------
16. Wyndham Gardens - - -
Marletta, GA
- ----------------------------------------------------------------------------------------------
17. Holiday Inn - Phoenix, AZ - -
- ----------------------------------------------------------------------------------------------
18. Hilton Hotel - Grand - -
Rapids, MI
- ----------------------------------------------------------------------------------------------
19. Marriott West Loop - - -
Houston, TX
- ----------------------------------------------------------------------------------------------
19a. Office Bldg West Loop - - -
Houston, TX
- ----------------------------------------------------------------------------------------------
20. Ralison Twin Towers - - -
Orlando, FL
- ----------------------------------------------------------------------------------------------
21. Hilton Hotel - Coral - -
Beach, FL
- ----------------------------------------------------------------------------------------------
22. Holiday Inn - Bucks - -
County, PA
- ----------------------------------------------------------------------------------------------
23. Holiday Inn - Alexandria, - -
VA
- ----------------------------------------------------------------------------------------------
24. Ramada Old Town - - -
Alexandria, VA
- ----------------------------------------------------------------------------------------------
25. Holiday Inn - Annapolis, MD - -
- ----------------------------------------------------------------------------------------------
26. Holiday Inn BLM - Hanover, - -
MD
- ----------------------------------------------------------------------------------------------
27. Courtyard by Marriott - - -
Durham, NC
- ----------------------------------------------------------------------------------------------
28. Sharaton Crossroads - - -
Mahwah, NJ
- ----------------------------------------------------------------------------------------------
29. Ramada Inn - Mahwah, NJ - -
- ----------------------------------------------------------------------------------------------
30. Crowne Plaza - Las Vegas, - -
NV
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
BORROWING BASE COMPLIANCE CERTIFICATE
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Hotel Properties Owned by Type of Service Total Rooms Hotel Eligible
the Parent at Parent's (Limited/Extended Number Out of Acquisition Yes - Y Adjusted
Subsidiaries Stay/Full) of Rooms Service Date No - N EBITDA EBITDA
Eligible Properties
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
31. St. Tropez - Las Vegas, NV Full Service 149 08-Jan-96 Y 2,492,283 2,314,683
- ------------------------------------------------------------------------------------------------------------------------------
32. Ramada Place - Meriden, CT Full Service 150 08-Jan-96 Y 1,256,418 1,045,649
- ------------------------------------------------------------------------------------------------------------------------------
33. Tampa Airport Hotel - Full Service 495 13-Feb-96 Y 2,381,327 1,951,714
Tampa, FL
- ------------------------------------------------------------------------------------------------------------------------------
34. Radisson Inn - Rochester, Full Service 171 13-Feb-96 Y 701,922 525,558
NY
- ------------------------------------------------------------------------------------------------------------------------------
35. Courtyard By Marriott - Full Service 276 13-Feb-96 Y 2,670,662 2,625,052
Marina del Ray, CA
- ------------------------------------------------------------------------------------------------------------------------------
36. Courtyard By Marriott - Full Service 134 13-Feb-96 Y 1,822,118 1,839,538
Century City, CA
- ------------------------------------------------------------------------------------------------------------------------------
37. Holiday Inn - Madeira Full Service 149 13-Feb-96 Y 709,406 641,687
Beach, FL
- ------------------------------------------------------------------------------------------------------------------------------
38. Howard Johnson Resort - Limited Service 100 13-Feb-96 Y 1,228,204 1,122,877
Key Largo, FL
- ------------------------------------------------------------------------------------------------------------------------------
39. Holiday Inn - Ft. Full Service 240 13-Feb-96 Y 2,037,728 1,776,859
Lauderdale, FL
- ------------------------------------------------------------------------------------------------------------------------------
40. Courtyard By Marriott LBV Full Service 323 13-Feb-96 Y 4,024,708 3,458,819
- Orlando, FL
- ------------------------------------------------------------------------------------------------------------------------------
41. Clearwater Beach Resort - Full Service 428 13-Feb-96 Y 6,216,622 4,514,218
Clearwater FL
- ------------------------------------------------------------------------------------------------------------------------------
Total Borrowing Base Pool 9,858 225 $ 94,803,697 $ 12,001,177
- ------------------------------------------------------------------------------------------------------------------------------
2.3%
- ------------------------------------------------------------------------------------------------------------------------------
42. Holiday Inn - St. Louis, MO Full Service 120 13-Feb-96 N 814,269 698,688
- ------------------------------------------------------------------------------------------------------------------------------
43. Holiday Inn - Richmond, VA Full Service 280 13-Feb-96 N 1,291,114 1,074,008
- ------------------------------------------------------------------------------------------------------------------------------
44. Ramada Inn Gulfview - Full Service 789 13-Feb-96 N 1,913,602 1,718,928
Clearwater, FL
- ------------------------------------------------------------------------------------------------------------------------------
45. Lodge At The Seaport - Limited Service 77 13-Feb-96 N 584,428 610,911
Mystic, CT
- ------------------------------------------------------------------------------------------------------------------------------
46. Four Points Hotel - Mt. Full Service 124 08-Jan-96 N 612,599 435,455
Arlington, NJ
- ------------------------------------------------------------------------------------------------------------------------------
47. Holiday Inn DFW South, Full Service 409 31-Jul-96 N 3,421,916 2,955,108
Irving TX
- ------------------------------------------------------------------------------------------------------------------------------
48. Courtyard By Marriott - Full Service 165 31-Jul-96 N 2,003,049 1,768,258
Secaucus, NJ
- ------------------------------------------------------------------------------------------------------------------------------
49. Radisson Hotel, Arlington Full Service 201 24-Feb-97 N 1,380,060 1,161,033
Heights, IL
- ------------------------------------------------------------------------------------------------------------------------------
50. Double Tree Galaria, Full Service 165 28 17-Mar-97 N 1,406,902 1,818,142
Atlanta, GA
- ------------------------------------------------------------------------------------------------------------------------------
51. Holiday Inn, Chicago, IL Full Service 507 03-Feb-96 N 5,117,452 4,146,141
- ------------------------------------------------------------------------------------------------------------------------------
52. Crowne Plaza, Portland, OR Full Service 161 08-Jan-96 N 2,176,725 1,947,995
- ------------------------------------------------------------------------------------------------------------------------------
53. Ramada Plaza Hotel, Full Service 155 08-Jan-96 N 2,451,228 2,212,342
Shallon, CT
- ------------------------------------------------------------------------------------------------------------------------------
Total Parent 12,699 254 $117,668,626 $101,849,075
- ------------------------------------------------------------------------------------------------------------------------------
1.0%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Hotel Properties Owned by Adjusted Adjusted EBITDA Cost Cost Cost Basis
the Parent at Parent's EBITDA Divided by 10% Basis Basis (Limited/
Subsidiaries Seasoned Seasoned All Hotels New Hotels Extended Stay)
Eligible Properties
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
31. St. Tropez - Las Vegas, NV - - 26,355,000 28,355,000 -
- --------------------------------------------------------------------------------------------------------------------
32. Ramada Place - Meriden, CT - - 9,785,000 1,785,000 -
- --------------------------------------------------------------------------------------------------------------------
33. Tampa Airport Hotel - - - 23,045,408 23,845,408 -
Tampa, FL
- --------------------------------------------------------------------------------------------------------------------
34. Radisson Inn - Rochester, - - 7,216,181 7,216,181 -
NY
- --------------------------------------------------------------------------------------------------------------------
35. Courtyard By Marriott - - - 27,213,151 27,241,161 -
Marina del Ray, CA
- --------------------------------------------------------------------------------------------------------------------
36. Courtyard By Marriott - - - 19,180,537 18,160,537 -
Century City, CA
- --------------------------------------------------------------------------------------------------------------------
37. Holiday Inn - Madeira - - 15,240,767 16,240,787 -
Beach, FL
- --------------------------------------------------------------------------------------------------------------------
38. Howard Johnson Resort - - - 15,245,449 15,245,449 15,245,449
Key Largo, FL
- --------------------------------------------------------------------------------------------------------------------
39. Holiday Inn - Ft. - - 19,738,782 19,798,782 -
Lauderdale, FL
- --------------------------------------------------------------------------------------------------------------------
40. Courtyard By Marriott LBV - - 46,979,146 46,979,145 -
- Orlando, FL
- --------------------------------------------------------------------------------------------------------------------
41. Clearwater Beach Resort - - - 52,075,112 12,076,112 -
Clearwater FL
- --------------------------------------------------------------------------------------------------------------------
Total Borrowing Base Pool $8,140,878 $81,408,782 $ 806,787,837 $ 620,261,606 $42,137,901
- --------------------------------------------------------------------------------------------------------------------
4.6%
- --------------------------------------------------------------------------------------------------------------------
42. Holiday Inn - St. Louis, MO - - 6,657,600 4,067,500 -
- --------------------------------------------------------------------------------------------------------------------
43. Holiday Inn - Richmond, VA - - 9,742,000 9,742,500 -
- --------------------------------------------------------------------------------------------------------------------
44. Ramada Inn Gulfview - - - 21,619,687 21,619,687 -
Clearwater, FL
- --------------------------------------------------------------------------------------------------------------------
45. Lodge At The Seaport - - - 5,582,800 5,582,600 5,682,500
Mystic, CT
- --------------------------------------------------------------------------------------------------------------------
46. Four Points Hotel - Mt. - - 4,700,000 4,700,000 -
Arlington, NJ
- --------------------------------------------------------------------------------------------------------------------
47. Holiday Inn DFW South, - - 27,914,872 27,914,612 -
Irving TX
- --------------------------------------------------------------------------------------------------------------------
48. Courtyard By Marriott - 1,768,258 17,681,158 8,167,886 - -
Secaucus, NJ
- --------------------------------------------------------------------------------------------------------------------
49. Radisson Hotel, Arlington - - 12,241,000 12,241,000 -
Heights, IL
- --------------------------------------------------------------------------------------------------------------------
50. Double Tree Galaria, - - 21,083,487 21,883,487 -
Atlanta, GA
- --------------------------------------------------------------------------------------------------------------------
51. Holiday Inn, Chicago, IL - - 65,600,000 65,600,000 -
- --------------------------------------------------------------------------------------------------------------------
52. Crowne Plaza, Portland, OR - - 24,875,000 24,875,000 -
- --------------------------------------------------------------------------------------------------------------------
53. Ramada Plaza Hotel, - - 14,525,000 14,525,000 -
Shallon, CT
- --------------------------------------------------------------------------------------------------------------------
Total Parent $8,905,834 $99,081,331 $1,128,787,070 $1,044,102,862 $47,730,401
- --------------------------------------------------------------------------------------------------------------------
4.2%
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
Hotel Properties Owned by Cost Basis Cost Basis Cost Basis
the Parent at Parent's Non-Wholly Non- Ground
Subsidiaries Owned Franchised Leases
Eligible Properties
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
31. St. Tropez - Las Vegas, NV 28,355,000 -
- --------------------------------------------------------------------------------------------
32. Ramada Place - Meriden, CT - -
- --------------------------------------------------------------------------------------------
33. Tampa Airport Hotel - 23,945,406 -
Tampa, FL
- --------------------------------------------------------------------------------------------
34. Radisson Inn - Rochester, - 7,216,191
NY
- --------------------------------------------------------------------------------------------
35. Courtyard By Marriott - - -
Marina del Ray, CA
- --------------------------------------------------------------------------------------------
36. Courtyard By Marriott - - -
Century City, CA
- --------------------------------------------------------------------------------------------
37. Holiday Inn - Madeira - -
Beach, FL
- --------------------------------------------------------------------------------------------
38. Howard Johnson Resort - - -
Key Largo, FL
- --------------------------------------------------------------------------------------------
39. Holiday Inn - Ft. - -
Lauderdale, FL
- --------------------------------------------------------------------------------------------
40. Courtyard By Marriott LBV - 46,978,146
- Orlando, FL
- --------------------------------------------------------------------------------------------
41. Clearwater Beach Resort - 62,076,112 52,075,112
Clearwater FL
- --------------------------------------------------------------------------------------------
Total Borrowing Base Pool $ - $105,553,721 $161,173,709
- --------------------------------------------------------------------------------------------
0.0% 11.7% 10.3%
- --------------------------------------------------------------------------------------------
42. Holiday Inn - St. Louis, MO 8,657,600 - -
- --------------------------------------------------------------------------------------------
43. Holiday Inn - Richmond, VA 9,742,600 - -
- --------------------------------------------------------------------------------------------
44. Ramada Inn Gulfview - 21,619,687 - -
Clearwater, FL
- --------------------------------------------------------------------------------------------
45. Lodge At The Seaport - 6,592,600 6,692,500
Mystic, CT
- --------------------------------------------------------------------------------------------
46. Four Points Hotel - Mt. - 4,790,000
Arlington, NJ
- --------------------------------------------------------------------------------------------
47. Holiday Inn DFW South, - -
Irving TX
- --------------------------------------------------------------------------------------------
48. Courtyard By Marriott - - 8,187,880
Secaucus, NJ
- --------------------------------------------------------------------------------------------
49. Radisson Hotel, Arlington - -
Heights, IL
- --------------------------------------------------------------------------------------------
50. Double Tree Galaria, - -
Atlanta, GA
- --------------------------------------------------------------------------------------------
51. Holiday Inn, Chicago, IL - -
- --------------------------------------------------------------------------------------------
52. Crowne Plaza, Portland, OR - -
- --------------------------------------------------------------------------------------------
53. Ramada Plaza Hotel, - -
Shallon, CT
- --------------------------------------------------------------------------------------------
Total Parent $ 43,312,111 $111,246,221 $178,131,888
- --------------------------------------------------------------------------------------------
3.8% 9.8% 10.9%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 1.01(c)
ENGINEER REPORT
SCOPE OF SERVICES
PROPERTY CONDITION REVIEW
(PCR)
ASSIGNMENT OBJECTIVES
- ---------------------
The purpose of the Property Condition Review (PCR) is: To determine the existing
conditions of the building(s) and its systems including structural, plumbing,
heating and ventilating, air conditioning, electrical, fire protection, finish
materials, exterior facades, roof, and site amenities. To identify any areas of
materials which may require repair or corrective action due to deferred
maintenance or present deficient conditions. To identify and list any
outstanding code violations against the property on file with the various
Municipal and Federal agencies, including the local building department, fire
department, etc. To evaluate the adequacy of the capacities of the HVAC and
electrical systems. To perform an Americans with Disabilities Act (ADA) survey
of the existing building(s) and property to determine compliance with the
legislation. To estimate the cost of the required remedial work indicated by any
of the preceding determinations. Note: The Property Condition Review (PCR)
assignment does not include any work with environmental issues, but Consultant
should be generally aware of and note any obvious existing or potential
conditions. Consultant shall utilize personnel having the appropriate
professional designations for those tasks outlined above (at a minimum, an ALA
and PE).
The Property Condition Review (PCR) assignment should include, at a minimum, a
review and description of the following aspects of the Project:
1. A description of the site and all improvements thereon, based upon field
observations as well as a review of all available documents.
2. Determine the general conformance of visible construction of the building
and site development to the construction documents, soils report, and
industry standards for such construction.
3. Consultant shall list all codes, regulations and public sector criteria
with which the Project must comply, including special permits, zoning,
development orders and other actions of local, state, and federal
authorities. Copies of the actual documents (building permits,
certificates of occupancy, etc.) should be included in the report.
4. Review of existing conditions of the building including exterior, roof,
interior spaces, MEP systems, structural members (including seismic
conditions, where applicable), site drainage, parking, landscaping and site
utilities; with conclusions and recommendations for conceivable repairs and
deficiencies along with cost estimates for the suggested repairs.
Estimates should be provided in the following format: IMMEDIATE, SHORT-
TERM (1-5 years), and LONG-TERM REPAIRS (1-10 years).
<PAGE>
5. Review should include interviews and discussions with the property manager,
building engineer, maintenance staff, etc. Interior spaces reviewed should
include an adequate number of units or leased spaces to conclude an
opinion.
6. Determine the appropriateness of the existing building materials found in
place, with regard to the need for extraordinary maintenance or low
durability potential, and with respect to the quality of materials and
findings for the type of facility as built.
7. Conduct a replacement cost analysis (insurable value) to determine the
potential cost of all construction in current year's dollars adjusted for
project location.
8. Consultant shall determine and state the estimated remaining useful life of
the property.
9. Conduct a through review of the overall project for owner-related Americans
with Disabilities Act (ADA) requirements to determine compliance with this
legislation, listing all current violations and cost estimates for their
recommended implementation.
10. Consultant shall provide two original reports, including color photographs
with labeled descriptions to more clearly define examples of unique
features, overall building condition, defective conditions and potential
repair/maintenance requirements as determined by any of the proceeding
findings. Consultant shall also provide statement of qualifications
information on their respective firm, including evidence of required
insurance coverages (naming Societe Generale, Southwest Agency, as
additional insured).
SAMPLE OUTLINE REPORT FORMAT
PROPERTY CONDITION REVIEW
-------------------------
I. Executive Summary
II. Objectives
III Project Description and Overview
IV. Replacement Cost Analysis
V. ADA Survey Results
VI. Conclusions
VII. Project Documentation Log - listing and copies of documents received and
reviewed.
VIII Project Observations - note date of review, parties present, and
interviews held.
IX. Photographs
<PAGE>
SCHEDULE 1.01(d)
APPROVED ENGINEERS
SOCIETE GENERALE
U.S. REAL ESTATE GROUP
May 30, 1997
APPROVED LIST OF CONSULTANTS
PROPERTY CONDITION REVIEW (P? & DOCUMENT AND CONSTRUCTION REVIEW (DCR)
- -----------------------------------------------------------------------
ECKLAND CONSULTANTS, INC. CONSTRUCTION ASSET ADVISORS, INC.
100 Field Drive, Suite 140 5603 South Prince Street
Lake Forest, IL 60045 Littleton, CO 80120
Robert A. Eckland George M. Pales
(708) 234-1500 (303) 738-9880
THE BENTLEY GROUP WOZGROUP
The Lincoln Building 1586 South 21st Street, Suite A
60 East 42nd Street Colorado Springs, CO 80904-4234
New York, NY 10165 Gordon A. Rothoff
Laurence T. Goldberg (719) 473-4277
(212) 972-3635 (719) 635-3087 FAX
EMJ CONSTRUCTION CONSULTANTS INC. CARTER & BURGESS, INC.
60 East 42nd Street, Suite 1701 3880 Hulen Street
New York, NY 10165 Fort Worth, TX 76107
Elizabeth Koeckert Larry E. Garrett
(212) 972-2777 (212) 697-3052 FAX (817) 735-6000
MERRITT & HARRIS, INC. GEORGE A. KENNEDY & ASSOC., INC.
110 East 42nd Street 6 North Michigan Avenue
New York, NY 10017 Chicago, IL 60602
Ronald D. Gibney George A. Kennedy
(212) 697-3188 (312) 332-7060
HNTB CORPORATION MARX/OKUBO
1201 Walnut, Suite 700 723 Delaware Street
Kansas City, MO 64106 Denver, CO
Philip L. Hannon T. Larry Okubo
(816) 472-1201 (303) 321-4495
JAMES, HARWICK & PARTNERS, INC. LAW ENGINEERING
8340 Meadow Road, Suite 248 7616 LBJ Freeway
Dallas, TX 75231 Park Central I, Suite 600
Ronald E. Harwick Dallas, TX 75251
(214) 363-5687 Timothy Higgins
(214) 934-0800
LEVIEN-RICH BOYKEN INTERNATIONAL
150 N. Wacker Drive, Suite 2675 115 Perimeter Center Place, Suite 650
Chicago, IL 60606 Atlanta, GA 30346-1238
John Hyman Carol Orndorff/Joe Bond
(312) 578-1313 (770) 913-1300
(800) 842-5489
<PAGE>
SCHEDULE 1.01(e)
ENVIRONMENTAL REPORT
SCOPE OF SERVICES
PHASE I ENVIRONMENTAL SITE ASSESSMENT
(ESA)
ASSIGNMENT OBJECTIVES
- ---------------------
The Phase I Environmental Site Assessment (ESA) survey is for the determination
of the condition of the Property (building(s) and site) as it relates to any
existing and potential hazardous waste materials or situations. The Scope of
the ESA should address and comply with the current ASTM Environmental Assessment
standards or the standards set forth below, whichever is more stringent.
The ESA assignment should include at a minimum a review and description of the
following aspects of the Property:
1. Identify project name, legal description, geographic coordinates, local
address, city, county and state for each site.
2. Provide a general description of the Property and site improvements,
including acres, square footages and age of improvements.
3. Identify the inspection date and consultant performing the inspection.
Describe the qualifications of the individual conducting the inspection.
4. Conduct and review a fifty-year recorded Chain of Title search. Identify
and review historical and current property uses/ownership's. Use Sanborn
maps and local directories when available and appropriate.
5. Review historical and current aerial photographs, and provide in the report
at least two original aerials (one from pre-1975, and one after 1985).
Provide a narrative discussion of the aerial photo review. Aerial
photographs should show the subject Property and surrounding areas.
6. Perform an on-site environmental inspection of the subject Property.
Interview on-site personnel and adjacent property owners where appropriate,
and provide records of all such communications. Review the available on-
site environmental records, including the compliance history of the subject
Property, if any.
7. Review and discuss ground water and surface water characteristics. Include
a general direction of the gradient as well as depth to potable and shallow
groundwater. Include a description of groundwater uses and surface water
bodies on-site. Discuss any available existing data on water quality.
Consultant should have someone with Hydrology or Hydro-Geology credentials
specifically comment on this matter.
8. Review and discus area geology and soil characteristics. Identify the
general soil permeability and corrosiveness tendencies. Discuss any
available data on soil conditions.
1
<PAGE>
9. Identify and describe any hazardous materials used or stored on-site,
significant spills, dumping, emissions, evidence of contaminated soils or
water. Specifically,
a) Describe uses for hazardous materials; identify all wastestreams
generated at the site; and describe handling the disposal methods and
waste management handling, storage, and disposal areas. Also include a
discussion about areas previously used for thee purposes, if any.
b) List permits and authorization held, and describe permitted activities,
operating restrictions, and compliance reports, inspections, and
orders.
c) Discuss whether on-site electrical equipment contains PCBs, and
identify the party with compliance responsibility.
d) Describe in detail the observed on-site conditions of waters, soils,
vegetation, and production and waste management areas.
e) Review records of spills and release events, and describe materials and
area involved, remediation activities, and regulatory agency
involvement, if any.
f) Consultant should address all environmental concerns, including but not
limited to special statutory issues, lead paint, lead in drinking
water and wetlands.
10. Perform and discuss a one mile area reconnaissance, and describe all
adjacent site usages. Identify all potential sources of off-site
contamination and the impact of these findings, including landfills,
gasoline stations, industrial facilities, tank terminals, airports and
military bases or installations.
11. Review and provide all applicable local, state and federal regulatory
agency inquire (EPA, DERM, TWC, etc.) results for the site - as well as for
properties contained within a one mile radius of the site. Specifically
discuss: The NPL List, CERCLIS, SARA Title III, RCRA Notifiers List, TSD
List, UST List, LUST List, and Landfill List. For Properties found on
these lists, identify distance, direction and any potential impact to the
subject site.
12. For LUST's UST's and AST's on-site or within one mile radius - identify the
number of tanks, registration, size, age, tank contents and tank material
for each. For offsite tanks, identify distance, direction and subsurface
gradient direction from site for each. Describe former UST's on-site and
also the compliance status of current on-site UST's.
13. Review and provide local government and municipal inquiry results. Include
at least the following: the electric company, water/sewer authorities,
city/county health department and local fire Marshall's office. Provide a
record of these communications.
14. If applicable, a sufficient number of asbestos, lead (paint, water), and
radon samples should be taken, analyzed, and discussed to provide a
representative sampling. The number of samples may vary, but the rationale
for determining the number and location of the samples should be described.
Provide information on: methods of analysis and laboratory used, sample
collection method, and certification of the inspectors, as per the attached
Exhibit A (for asbestos only). Describe and locate on plan the locations
and materials sampled.
15. Provide a color topographical area site map, with scale, nothing the
subject site.
2
<PAGE>
16. If available, describe the circumstances of any known citizen complaints in
the area, the nature of the facility's relationship with its neighbors and
citizens, etc.
17. Provide a professionally prepared and detailed site map of the project,
noting all adjacent properties, location of any LUST's UST's AST's, drums,
transformers, areas of contamination, waste management areas, etc.
18. Provide a minimum of eight color labeled photographs depicting the site and
adjacent sites.
19. A copy of all records of communications (ROC's) should be provided in the
report for each including: date and time of a conversation, name and title
of person, name of company and a brief summary of the topic discussed.
Also provide a copy of all related permits, available soil and water data,
and any available enforcement records and documents.
20. Provide a list of any and all published references utilized.
21. Provide a statement of qualifications on the firm conducting the
assessment, and evidence of all required insurance coverage's (naming
Societe Generale, Southwest Agency, as additional insured).
22. Two original reports are required for this assignment, and should follow,
in general, the outline on the last page of this document.
3
<PAGE>
EXHIBIT "A"
ASBESTOS SURVEY
The asbestos survey shall be performed by appropriately trained personnel,
trained in accordance with the most recent federal, state and local
requirements, including but not limited to AHERA. The personnel shall determine
if suspect ACM is present. Suspect friable ACM shall be reported on and sampled
according to the following scope. Suspect non-friable ACM shall be reported on
according to the following scope, but without sampling.
The consultant's report shall include the following:
- ---------------------------------------------------
- The date(s) the inspections/sampling was performed.
- A general description of construction, mechanical, and electrical
systems at the property based on the site visit and a cursory review of
construction documents (drawings, specifications, change orders, etc.), if
available.
- A description of the history of the property, including the dates of
original construction and the dates and scopes of major remodeling work.
- A description of any prior asbestos abatement work that was performed
at the property and on evaluation of the work's compliance with governing codes,
statutes, regulations and ordinances.
- A review of the suspect materials throughout the property and a
description of the sampling strategy. A sufficient number of samples should be
obtained in order to conclude the specific results required.
- An evaluation of the condition of any and all positive material found
at the property in accordance with a hazard ranking system. Note material
locations with respect to building occupants, potential for disturbance and air
flow.
- A description of the process for inspection and representative
sampling for asbestos-containing materials.
- A summary of testing results and graphic representation of the
locations from which the samples were taken indicating which samples are
positive.
- An estimate of the total quantity of ACM (friable and non-friable)
within the entire facility, including each tenant space, mechanical area, office
area, maintenance area and common area. Provide an estimate of probable costs
to correct or remove ACM's identified from the positive sampling process and
survey.
- A list of tenants at the property, by name and space number, the
materials sampled and the results of the analysis and the quantity of asbestos
found.
- The signature of the responsible individual. The individual shall
certify that the sampling and report has been conducted and prepared according
to the licensing requirements of the state in which the property is located.
4
<PAGE>
SAMPLE OUTLINE REPORT FORMAT
PHASE I ENVIRONMENTAL SITE ASSESSMENT
1. Executive Summary
2. Objectives
3. Site Overview
4. Site Background/Operating History
a) Current Ownership
b) Prior Ownership
c) Review of Aerial Photographs
d) Historical City Directories/Fire Insurance Maps
5. Environmental Setting
a) Surface Water Characteristics
b) Ground Water Characteristics
c) Soils/Geology
6. Results of the On-Site Inspection
a) Observations
b) Hazardous Substance Identification/Inventory
c) Area Reconnaissance
d) Sampling Results (Asbestos) (Radon)
7. Regulatory/Governmental Agency Inquiries
a) Federal and State Regulatory Agency Inquires
b) City Government Inquiries
8. Conclusions
9. Recommendations
a) Additional Studies (File Review, Phase 2, etc.)
b) O & M Program
10. References
11. Appendices
a) Recorded Chain of Title
b) Aerial Photographs
c) Photographs
d) Permits/Records
12. Tables
a) Asbestos, Lead, and Radon Sampling Results
5
<PAGE>
SCHEDULE 1.01(f)
APPROVED LIST OF CONSULTANTS
ENVIRONMENTAL SITE ASSESSMENTS
- ------------------------------
DAMES & MOORE LAW ENGINEERING
12 Commerce Drive 7616 LBJ Freeway
Cranford, NJ 07016-1101 Dallas, TX 75251
(908) 272-8300 (972) 934-0800
5151 Beltline, Suite 700 222 W. Exchange, Suite 100
Dallas, TX 75240 Ft. Worth, TX 76106
Mike Pisarik Richard D. Varnell
(972) 980-4961 (817) 740-1177
3445 W. Shaw Avenue, Suite 101 FOREE & VANN, INC.
Fresno, CA 93711 9013 North 24th Avenue, Suite 7
Michael Padgett Phoenix, AZ 85021-2851
(209) 271-1093 Stanley O'Sick
(602) 943-6997
FUGRO/ENSR GROUNDWATER TECHNOLOGY
3140 North Argyle, Suite 104 23933 Research Drive
Fresno, CA 93710 Farmington Hills, MI 48335
David Sholes (810) 473-0720
(209) 292-5736
2201 Brookhollow Plaza, Suite 120
44 Montgomery St., Suite 1010 Arlington, TX 76006
San Francisco, CA (817) 633-1466
Steven Boudreau Roger Smith
(415) 296-1041
EMG
12201 Merit Drive, Suite 900 2701 West 15th St., Suite 644
Dallas, TX 75251 Plano, TX 75075
Timothy McMahon Steve Jones
(972) 484-8301 (972) 612-2276
RONE ENGINEERS, INC. G.M.T. ENVIRONMENTAL
11234 Goodnight Lane 22446 Davis Drive, Suite 127
Dallas, TX 75229-3319 Sterling, VA 20164
G. Robert Nell Ahmed Elrefai/George Walker
(214) 241-4517 (703) 406-8702
<PAGE>
ENVIRONMENTAL SITE ASSESSMENTS (ESA)(Continued)
- -----------------------------------------------
ATEC ASSOCIATES, INC. MAXIM ENGINEERS, INC.
11121 Canal Road 2342 Fabens
Cincinnati, OH 45241-1861 PO Box 59902
Robert L. Hearn Dallas, TX 75229
(513) 771-2112 (214) 247-7575
FLOUR DANIEL GTI
12502 Exchange Drive, Suite 440
Stafford, TX 77477
(713) 263-1200
Ed Fiffick
KERAMIDA ENVIRONMENTAL,INC.
330 North College Avenue
Indianapolis, IN 46202
(317) 685-6600
Vasiliki Keramida/Jodie Crandell
APPRAISAL ASSIGNMENT REPORT (AAR)
- ---------------------------------
(See Scope of Services)
STRUCTUAL ENGINEERS
- -------------------
MULLEN AND POWELL-TECHNI STRUCTURES
3500 Maple Avenue, Suite 1475 LB-3
Dallas, TX 75219
(214) 528-1725
K.S. Rajagopalan (Raja)
JOE NAGLER
(214) 828-9400
Charles Terry
TMBP
(214) 871-2302
Frank Merrit
<PAGE>
SCHEDULE 1.01(g)
Franchisors
Brand or Affiliation Consideration for AGHC Future Acquisitions
Double Tree Hotels Corporation DoubleTree Hotel or Resort
DoubleTree Club Hotel
DoubleTree Guest Suites Hotel
Hilton Hotels Corporation Hilton Hotel, Inn or Resort
Hilton Suites Hotel
Hilton Garden Inn
Holiday Inn Worldwide Crowne Plaza Hotel or Resort
Holiday Inn
Holiday Inn Express
Holiday Inn Hotel & Suites
Holiday Inn Select
Holiday Inn Sunspree Resort
Hyatt Hotels Corporation Hyatt Regency Hotel or Resort
Hyatt Hotel
ITT Sheraton Corporation Sheraton Hotel or Resort
Sheraton Suites Hotel
Four Points Hotel
Mariott Corporation Marriott Hotel or Resort
Mariott Suite Hotel
Residence Inn
Fairfield Inn, Inn & Suites
Courtyard by Marriott
Omni Hotels Omni Hotel or Resort
Promus Hotel Corporation Embassy Suite Hotel or Resort
Homewood Suites
Homewood Suites
Hampton Inn, Inn & Suites
Radisson Hotels Worldwide Radisson Hotel, Plaza Hotel or
Resort Radisson Inn
Radisson Suite Hotel
Westin Hotels & Resorts Westin Hotel or Resort
Wyndham Hotels and Resorts Wyndham Hotel or Resort
Wynham Garden Hotel
Possible (If franchising becomes available) Renaissance Hotels & Resorts
Red Lion Hotels & Inns
Ritz-Carlton
Inter-Continental
Four Seasons
Sofitel/Novotel
Nikkko
Le Meridian/Forte
AmeriSuites
Vista/Hilton International
Fairmont
Adam's Mark
<PAGE>
SCHEDULE 1.01(h)
Ground Leases
-------------
ALBUQUERQUE, NEW MEXICO
That certain ground lease by and between the City of Albuquerque, New
Mexico and Fred Harvey, Inc. dated November 10, 1969 as amended by the
First Supplemental Lease Agreement dated May 17, 1971 and the Second
Supplemental Lease Agreement dated October 2, 1972.
NOTE: Ground Lessee may not assign or mortgage its interest without the
consent of Ground Lessor.
NEW ORLEANS, LOUISIANA
That certain Sublease Agreement between James L. Monaghan, as sub-lessor,
and Grantor, as sublessee, dated July 8, 1994 and recorded in COB 923,
Folio 521, records of Orleans Parish of that certain Lease of Commercial
Property granted by Mon-Tay Enterprises, Inc., as owner, and James
Monaghan, as lessee, dated December 11, 1985 recorded in COB 808A, Folio
15, records of Orleans Parish.
SAN JOSE, CALIFORNIA
That certain Sublease dated as of February 1, 1973 executed by and between
Claitor Properties Co. and Hotel Circle, Inc. and recorded on February 7,
1973 in Book 0225, Page 727 of the Official Records, as assigned to 1350
North First Street Company, as recorded on June 14, 1976 in Book C080, Page
157 in the Official Records, as further assigned to The Chase Manhattan
Bank (National Association), and recorded on September 17, 1976 in Book
C288, Page 36, as further assigned to North First-Gish Corporation, as
recorded on September 17, 1976 in Book C288, Page 45, as amended by that
certain Amendment to Sublease dated December 1, 1978 by and between Claitor
Properties Co. and North First-Gish Corporation and recorded on March 13,
1979 in Book E340, Page 285, as further assigned to Le Baron Hotels, Inc.
and recorded on March 13, 1979 in Book E341, Page 258, and as further
amended by that certain Consent to Amendment of Sublease and Release of
Reserved Right dated April 11, 1980 executed by and between William E.
Kiersted and
<PAGE>
William S. Boyd, as Trustees, Le Baron Hotels, Inc. and The Chase Manhattan
Bank, N.A. and recorded on April 29, 1980 in Book F298, Page 632 of the
Official Records.
TOLEDO, OHIO
That certain Lease by and among the State of Ohio, acting by and through
the Department of Administrative Services, the Medical College of Ohio at
Toledo, an Ohio College of Medicine authorized and created by Section
3350.01, Ohio Revised Code ("MCO"), and Toledo Hotel Investors Limited
Partnership, an Ohio limited partnership ("Original Lessee"), recorded at
Recorder's Number 86-0812A01 of the records of the Lucas County Recorder,
under which State and MCO leased to Original Lessee a certain unimproved
approximately 8.781 acre tract of land located on the campus of MCO in
Toledo, Lucas County, Ohio; as modified by an Affidavit dated November 15,
1986, recorded December 16, 1986, at Recorder's Number 86-1943A08 of the
records of the Lucas County Recorder; as further amended by First Amendment
to Lease by and among State, MCO, and Original Lessee, recorded March 24,
1988, at Recorder's Number 88-332C11 of the records of the Lucas County
Recorder; as further amended by Second Amendment to Lease by and among
State, MCO, and Original Lessee, recorded October 30, 1992, at Recorder's
Number 92-3155C04 of the records of the Lucas County Recorder; as further
affected by that certain Cooperating Agreement dated May 23, 1986, by and
between MCO and Original Lessee.
NOTE: Leasehold Mortgage requires consent of Ground Lessor. Ground Lessor
is not required to enter into a new lease with Leasehold Mortgagee upon
foreclosure.
LAKE BUENA VISTA, FLORIDA
That certain Lease Agreement dated September 28, 1971, between Buena Vista
Land Company, Inc. and Howard Johnson Company (Inc.) ("HJC"); as amended by
that certain Amendment to Lease dated August 15, 1978 between Lake Buena
Vista Communities, Inc. (f/k/a Buena Vista Land Company, Inc.) ("LBV") and
HJC; that certain Amendment to Lease dated December 18, 1986 between LBV
and Southeast Hotel Associates ("SHA"); that certain Amendment to Lease
dated November 6, 1989 between LBV and SHA; and that certain Fourth
Amendment to Lease effective as of September 5, 1996, between LBV and FSA
ZETA LBV Hotel, Inc.
Note: Ground Lessee's interest may be assigned only to a subsidiary.
Mortgage of the Leasehold Estate requires the consent of Ground Lessor
which shall not be unreasonably withheld so long as certain criteria are
met (including, Leasehold Mortgagee must be a
-2-
<PAGE>
financial institution with a good reputation, insurance requirements,
Ground Lease not in default).
CLEARWATER BEACH, FLORIDA
That certain Ground Lease dated as of February 14, 1980, by and among John
S. Taylor, III, Mary Ann Taylor, Marion Jean Taylor Carter, H. Richard
Carter, Mary Taylor Hancock and Harry Hancock, and W.B. Johnson Properties,
Inc., a Georgia corporation.
ROCHESTER, NEW YORK
That certain Lease dated as of January 1, 1971, between Rochester Institute
of Technology ("RIT") and Inn Camp, Inc. ("IC") as amended by that certain
Lease Amendment I dated November 8, 1971 between RIT and IC; that certain
Lease Amendment II dated as of April 30, 1981, between RIT and Rochilt
Associates; and that certain Lease Amendment III dated as of November 10,
1988, between RIT and Hotel Partners of Rochester.
-3-
<PAGE>
SCHEDULE 1.01(i)
Guarantors
----------
American General Hospitality Corporation, a Maryland corporation
AGH UPREIT, LLC, a Delaware limited liability company
3100 Glendale Joint Venture, an Ohio general partnership
MDV Limited Partnership, a Texas limited partnership
Madison Motel Associates, a Wisconsin general partnership
183 Hotel Associates, Ltd., a Texas limited partnership
Richmond Williamsburg Associates, Ltd., a Texas limited partnership
2929 Williams Limited Liability Company, a Delaware limited liability company
Lake Buena Vista Partners, Ltd., a Florida limited partnership
BCHI Acquisition, L.L.C., a Delaware limited liability company
Cocoa Beach Hotels, Ltd., a Florida limited partnership
Durham I-85 Limited Partnership, a Delaware limited partnership
Mt. Arlington New Jersey, LLC, a Delaware limited liability company
<PAGE>
Schedule 1.01(j)
Participating Leases
1. Lease Agreement between American General Hospitality Operating Partnership,
L.P. ("Borrower") and AGH Leasing, L.P. (the "Lessee") with respect to
Holiday Inn Select Mission Valley, CA, dated July 31, 1996.
2. Lease Agreement between Borrower and Lessee with respect to Hampton Inn
Ocean City, dated July 31, 1996.
3. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Secaucus, NJ, dated July 31, 1996.
4. Lease Agreement between Borrower and Lessee with respect to Wyndham Hotel-
San Jose, CA, dated July 31, 1996.
5. Lease Agreement between Borrower and Lessee with respect to Wyndham
Albuquerque Hotel, dated July 31, 1996.
6. Lease Agreement between 2929 Williams Limited Liability Company and Lessee
with respect to Holiday Inn Select New Orleans Airport Kenner, dated July
31, 1996.
7. Lease Agreement between 3100 Glendale Joint Venture and Lessee with respect
to Hilton Hotel Toledo, dated July 31, 1996
8. Lease Agreement between MDV Limited Partnership and Lessee with respect to
Hotel Maison de Ville, dated July 31, 1996.
9. Lease Agreement between Madison Motel Associates and Lessee with respect to
Crowne Plaza Madison, dated July 31, 1996.
10. Lease Agreement between 183 Hotel Associates, Ltd. And Lessee with respect
to Holiday Inn Dallas DFW Airport West, dated July 31, 1996.
11. Lease Agreement between Richmond Williamsburg Associates, Ltd. and Lessee
with respect to Hampton Inn - Richmond Airport, dated July 31, 1996.
12. Lease Agreement between Borrower and Lessee with respect to the Wyndham
Safari Hotel, Lake Buena Vista, FL, dated October 22, 1996.
13. Lease Agreement between 2780 Atlanta Limited Partnership, L.P. and Lessee
with respect to Doubletree Guest Suites Hotel-Atlanta, GA, dated March 17,
1997.
14. Lease Agreement between Borrower and Lessee with respect to Hilton Hotel -
Durham, dated January 6, 1997.
15. Lease Agreement between Borrower and Lessee with respect to Holiday Inn
Select DFW South, dated July 31, 1996.
16. Lease Agreement between Borrower and Lessee with respect to Grand Rapids
Hilton dated April 18, 1997.
17. Lease Agreement between Borrower and Lessee with respect to Crowne Plaza
Phoenix, dated April 1, 1997.
18. Lease Agreement between Lessee and Manager with respect to Holiday Inn
Resort - Monterey, dated November 20, 1996.
19. Lease Agreement between 75 Arlington Heights Limited Partnership, L.P. and
Lessee with respect to Radisson Hotel - Arlington Heights, dated February
28, 1997.
20. Lease Agreement between Borrower and Lessee with respect to Westin Key
Largo Resort, dated March 17, 1997.
21. Lease Agreement between Borrower and Lessee with respect to Wyndham Garden
Hotel-Marietta, GA, dated March, 17, 1997.
22. Lease Agreement between BCHI Acquisitions, L.L.C and Lessee with respect
to Holiday Inn Select-Bucks County, PA, dated June 20, 1997.
<PAGE>
23. Lease Agreement between Borrower and Lessee with respect to Radisson Twin
Tower-Orlando, FL, dated June 25, 1997.
24. Lease Agreement between Borrower and Lessee with respect to Marriott West
Loop-Houston, TX, dated June 25, 1997.
25. Lease Agreement between Cocoa Beach Hotels, Ltd. and Lessee with respect
to Hilton Hotel-Cocoa Beach, FL, dated June 27, 1997.
26. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Durham, NC, dated November 26, 1997.
27. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
Ramada Hotel-Mahwah, NJ, dated January 8, 1998.
28. Lease Agreement between Borrower and Mahwah Holding Corp. with respect to
Sheraton Crossroads-Mahwah, NJ, dated January 8, 1998.
29. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
Ramada Plaza-Meriden, CT, dated January 8, 1998.
30. Lease Agreement between Portland/Shelton LLC and Fairfield Holding Corp.
with respect to Ramada Plaza-Shelton, CT, dated January 8, 1998.
31. Lease Agreement between Portland/Shelton LLC and Fairfield Holding Corp.
with respect to Crowne Plaza-Portland, OR, dated January 8, 1998.
32. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
Crowne Plaza Suites-Las Vegas, NV, dated January 8, 1998.
33. Lease Agreement between Borrower and Clinton Holding Corp. with respect to
St. Tropez Suites-Las Vegas, NV, dated January 8, 1998.
34. Lease Agreement between Mt. Arlington New Jersey, LLC and Clinton Holding
Corp. with respect to Four Points-Mt. Arlington, NJ, dated January 8, 1998.
35. Lease Agreement between Borrower and Lessee with respect to Holiday Inn
Express-Hanover, MD, dated January 22, 1998.
36. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Annapolis, MD, dated January 22, 1998.
37. Lease Agreement between Borrower and Lessee with respect to Ramada Hotel
Old Town-Alexandria, VA, dated January 22, 1998.
38. Lease Agreement between Borrower and Lessee with respect to Holiday Inn &
Suites-Alexandria, VA, dated January 22, 1998.
39. Lease Agreement between AGH O'Hare International LLC and Lessee with
respect to the Holiday Inn-O'Hare International, Rosemont, IL, dated
February 3, 1998.
40. Lease Agreement between Borrower and Lessee with respect to Doubletree
Resort-Clearwater Beach, FL, dated February 13, 1998.
41. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Lake Buena Vista, FL, dated February 13, 1998.
42. Lease Agreement between Borrower and Lessee with respect to Doubletree
Hotel, Tampa, FL, dated February 13, 1998.
43. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Marina del Rey, CA, dated February 13, 1998.
44. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Ft. Lauderdale, FL, dated February 13, 1998.
45. Lease Agreement between Borrower and Lessee with respect to Ramada Inn-
Clearwater Beach, FL, dated February 13, 1998.
46. Lease Agreement between Borrower and Lessee with respect to Courtyard by
Marriott-Century City, CA, dated February 13, 1998.
<PAGE>
47. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Madeira Beach, FL, dated February 13, 1998.
48. Lease Agreement between Borrower and Lessee with respect to Howard Johnson-
Key Largo, FL, dated February 13, 1998.
49. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
Richmond, VA, dated February 13, 1998.
50. Lease Agreement between Borrower and Lessee with respect to Holiday Inn-
St. Louis, MO, dated February 13, 1998.
51. Lease Agreement between Borrower and Lessee with respect to Radisson
Hotel-Henrietta, NY, dated February 13, 1998.
52. Lease Agreement between Borrower and Lessee with respect to Mystic Hotel-
Mystic, CT, dated February 13, 1998.
53. Lease Agreement between Borrower and Lessee with respect to Select Inn-
Bloomington, MN, dated February 13, 1998.
<PAGE>
Schedule 4.01
SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF FORMATION PRINCIPAL OFFICE
---- ------------------ ----------------
<S> <C> <C>
2929 Williams Limited Liability Company Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
BCHI Acquisition, L.L.C. Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
3100 Glendale Joint Venture Ohio 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
MDV Limited Partnership Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Madison Motel Associates Wisconsin 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
183 Hotel Associates, Ltd. Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
455 Meadowlands Associates, Ltd.* Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
DFW South Limited Partnership* Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Richmond Williamsburg Associates, Ltd. Texas 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH UPREIT LLC Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
AGH Secaucus LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH DFW South LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Lake Buena Vista Partners, Ltd. Florida 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Cocoa Beach Hotels, Ltd. Florida 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Durham I-85 Limited Partnership Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Portland/Shelton LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
Mt. Arlington New Jersey, LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH O'Hare International, LLC* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C> <C>
75 Arlington Heights Limited Partnership, L.P.* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
2780 Atlanta Limited Partnership, L.P.* Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
AGH PSS I, Inc. Delaware 5605 MacArthur Blvd.
Suite 1200
Irving, Texas 75038
</TABLE>
___________________________
*Permitted other subsidiary
<PAGE>
SCHEDULE 4.03
AMERICAN GENERAL HOSPITALITY CORPORATION
----------------------------------------
(LISTING OF ALL PENDING OR THREATENED LEGAL PROCEEDINGS, WHETHER OR NOT COVERED
- -------------------------------------------------------------------------------
BY INSURANCE, TO WHICH THE AGHC, THE LESSEE, THE OPERATING PARTNERSHIP OR ANY
- -----------------------------------------------------------------------------
SUBSIDIARY IS A PARTY OR WHICH MAY AFFECT THEIR RESPECTIVE PROPERTIES OR
- ------------------------------------------------------------------------
BUSINESS.)
- ----------
CLINT FRUITMAN VS. AMERICAN GENERAL HOSPITALITY, INC.; HOLIDAY INNS, INC.;
HOLIDAY INNS B.V.; HOLIDAY INN PARK CENTER PLAZA; PARK CENTER HOTEL COMPANY
COURT: SUPERIOR COURT OF CALIFORNIA, COUNTY OF SANTA CLARA
CASE NUMBER CV768996
Date of Service:
10/20/97
Date of Incident:
9/26/96
Hotel Address:
Courtyard by Marriott
455 Harmon Meadow Blvd.
Secaucus, New Jersey 07094-3672
Mr. Fruitman reported that a headboard fell on his head. The Chief Maintenance
Engineer examined the headboard and noted that the brackets were secure
suggesting the event may not have occurred as described by the Plaintiff. Mr.
Fruitman retained legal counsel immediately after the event. The amount the
Plaintiff is seeking is not specified in the Complaint. There will be no cost
to the Company for this event. There is a zero deductible insurance program
through Fireman's Fund Insurance Company for the first 2 million and a $10,000
deductible for the next 50 million of insurance. This is presently being
monitored by the Fraud Unit at Fireman's Fund.
MILES RICCARDI VS. RED ROBIN, HARTZ, INC., DAYS HOTEL, AMERICAN GENERAL CORP,
ABC-XYZ CORPORATION & JOHN DOE-RICHARD ROE (A SERIES OF FICTITIOUS NAMES)
COURT: SUPERIOR COURT OF NEW JERSEY
LAW DIVISION: HUDSON COUNTY
DOCKET NUMBER : HUD-L-8048-97
Date of Service: 9/30/97
Date of Incident: 10/18/96
The Plaintiff alleges his slip and fall in the restaurant, Red Robin was a
result of not taking certain actions to alleviate the dangerous condition of the
property. The Date of Service was our first notice of this event. It is our
intention to seek a dismissal from this litigation since at the time of the
event Red Robin was operated as a separate business entity which assumed all
responsibility for occurrences within the restaurant area. The
<PAGE>
responsible parties for this law suit should be Magic Restaurant, Inc. and Red
Robin. The Plaintiff Attorney has been advised of such. The amount of damages
the Plaintiff is seeking is no specified in the Complaint. Until dismissed from
this matter Fireman's Fund insurance company will defend and indemnify American
General Hospitality Corporation with the limits noted above. We seek a Voluntary
Discontinuance.
VISTANA DEVELOPMENT, LTD, A FLORIDA LIMITED PARTNERSHIP VS. LAKE BUENA VISTA
PARTNERS, LTD., A FLORIDA LIMITED PARTNERSHIP
COURT: CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT IN AND FOR
ORANGE COUNTY, FL
CASE NO. = CI 97-7023
Date of Service: 8/20/97
Date of Incident: 8/20/97
Temporarily prohibited from evicting the Plaintiff from the leased premises. The
Plaintiff wants to remain at the information service desk or booth for the
purpose of providing guests of the Hotel with information on timeshare resort
sales and tours, and all related tourist information, etc. They will remain on
the premises until this matter is resolved. The Plaintiff continues to pay
rent. So, there is no fiscal loss to the Company.
February 3, 1998
Heather Bertini, ARM
Director, Risk and Insurance Services
###-##-####
<PAGE>
SCHEDULE 4.17
Legal Requirements; Zoning; Utilities; Access
None
<PAGE>
SCHEDULE 4.18
<TABLE>
<CAPTION>
NAME OF PROPERTY NAME OF MORTGAGE HOLDER OUTSTANDING BALANCE
- ---------------- ----------------------- -------------------
<S> <C> <C>
Radisson-Arlington Heights Farmers Bank $ 8,218,755.05
Holiday Inn Select-DFW South Midland Loan Services $13,674,675.29
Courtyard by Marriott-Secaucus Fleet Bank $ 4,406,056.95
Doubletree-Atlanta First Union $ 9,346,513.06
Crowne Plaza-Portland Bank One Mortgage $ 5,296,995.61
Ramada Plaza-Shelton Bank One Mortgage $ 4,919,417.54
Holiday Inn-O'Hare International Travelers Insurance Co. $21,756,299.16
</TABLE>
<PAGE>
Schedule 4.21
LIST OF FRANCHISORS
<TABLE>
<CAPTION>
NAME OF PROPERTY NAME OF FRANCHISOR TERM
<S> <C> <C>
Holiday Inn Park Center Plaza-San Jose, CA Holiday Inn 10 years
Holiday Inn Select Mission Valley-San Diego, CA Holiday Inn Select 10 years
Hampton Inn-Ocean City, MD Hampton Inn 12 years
Wyndham Hotel-San Jose, CA Wyndham Hotel 12 years
Courtyard by Marriott/Meadowlands Courtyard by Marriott 12 years
Wyndham Albuquerque Hotel-Albuquerque, NM Wyndham Hotel 12 years
Holiday Inn Select New Orleans Airport-Kenner, LA Holiday Inn Select 10 years
Hilton Hotel-Toledo, OH Hilton Hotel 10 years
Hotel Maison de Ville-New Orleans, LA Small Luxury Hotels 12 years
Crowne Plaza Hotel-Madison, WI Crowne Plaza 10 years
Holiday Inn DFW West-Bedford, TX Holiday Inn 10 years
Hampton Inn-Richmond Airport Hampton Inn 12 years
Wyndham Royal Safari LBV-Orlando, FL Wyndham Royal Safari 12 years
Doubletree Guest Suites-Atlanta, GA Doubletree Guest Suites 12 years
Hilton Hotel-Durham, NC Hilton Hotel 12 years
Holiday Inn Select DFW South Holiday Inn Select 10 years
Hilton Hotel-Grand Rapids, MI Hilton Hotel 12 years
Crowne Plaza-Phoenix, AZ Crowne Plaza 10 years
Holiday Inn Resort-Monterey, CA Holiday Inn Resort 10 years
Radisson Hotel-Arlington Heights, IL Radisson Hotel 12 years
Westin Resort-Key Largo, FL Westin Resort 12 years
Wyndham Garden Hotel-Marietta, GA Wyndham Garden Hotel 12 years
Holiday Inn Select-Bucks County, PA Holiday Inn Select 10 years
Radisson Twin Towers-Orlando, FL Radisson 12 years
Marriott West Loop-Houston, TX Marriott 20 years
Hilton Hotel-Cocoa Beach, FL Hilton 12 years
Courtyard by Marriott-Durham, NC Courtyard by Marriott 20 years
Holiday Inn Express-Hanover, MD Holiday Inn Express 10 years
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Ramada Old Town-Alexandria, VA Ramada Hotel Old Town 10 years
Holiday Inn-Alexandria, VA Holiday Inn 10 years
Holiday Inn-Annapolis, MD Holiday Inn 10 years
Holiday Inn-O'Hare International Holiday Inn 10 years
Doubletree Hotel-Tampa, FL Doubletree 10 years
Holiday Inn-St. Louis, MO Holiday Inn 10 years
Radisson Hotel-Rochester, NY Radisson 10 years
Holiday Inn-Richmond, VA Holiday Inn 10 years
Ramada Inn-Clearwater Beach, FL Ramada Inn 15 years
Courtyard by Marriott-Marina del Rey, CA Courtyard by Marriott 20 years
Courtyard by Marriott-Century City, CA Courtyard by Marriott 20 years
Holiday Inn-Madeira Beach, FL Holiday Inn 10 years
Howard Johnson Resort-Key Largo, FL Howard Johnson 1 year
Holiday Inn-Ft. Lauderdale, FL Holiday Inn 10 years
Courtyard by Marriott-Lake Buena Vista, FL Courtyard by Marriott 20 years
Doubletree Resort-Clearwater Beach, FL Doubletree 10 years
</TABLE>
<PAGE>
Schedule 4.22
MANAGEMENT AGREEMENTS
1. Holiday Inn Park Center Plaza-San Jose, CA - Management Agreement between
AGH Leasing, L.P. ("Lessee") and American General Hospitality, Inc.
("Manager"), dated July 31, 1996.
2. Holiday Inn Select Mission Valley-San Diego, CA - Management Agreement
between Lessee and Manager, dated July 31, 1996.
3. Hampton Inn-Ocean City, MD - Management Agreement between Lessee and
Manager, dated July 31, 1996.
4. Wyndham Hotel-San Jose, CA - Management Agreement between Lessee and
Manager, dated July 31, 1996.
5. Courtyard by Marriott/Meadowlands-Secaucus, NJ - Management Agreement
between Lessee and Manager, dated July 31, 1996.
6. Wyndham Albuquerque Hotel-Albuquerque, NM - Management Agreement between
Lessee and Manager, dated July 31, 1996.
7. Holiday Inn Select New Orleans Airport-Kenner, LA - Management Agreement
between Lessee and Manager, dated July 31, 1996.
8. Hilton Hotel-Toledo, OH - Management Agreement between Lessee and Manager,
dated July 31, 1996
9. Hotel Maison de Ville-New Orleans, LA - Management Agreement between Lessee
and Manager, dated July 31, 1996.
10. Crowne Plaza Hotel-Madison, WI - Management Agreement between Lessee and
Manager, dated July 31, 1996.
11. Holiday Inn DFW West-Bedford, TX - Management Agreement between Lessee and
Manager, dated July 31, 1996.
12. Hampton Inn-Richmond Airport - Management Agreement between Lessee and
Manager, dated July 31, 1996.
13. Wyndham Royal Safari Lake Buena Vista, FL - Management Agreement between
Lessee and Manager, dated October 22, 1996.
14. Doubletree Guest Suites-Atlanta, GA - Management Agreement between Lessee
and Manager, dated March 17, 1997.
15. Hilton Hotel-Durham, NC - Management Agreement between Lessee and Manager,
dated January 8, 1997.
16. Holiday Inn Select DFW South - Management Agreement between Lessee and
Manager, dated July 31, 1996.
17. Grand Rapids Hilton Hotel - Management Agreement between Lessee and
Manager, dated April 18, 1997.
18. Crowne Plaza-Phoenix, AZ - Management Agreement between Lessee and
Manager, dated April 1, 1997.
19. Holiday Inn Resort-Monterey, CA - Management Agreement between Lessee and
Manager, dated November 20, 1996.
20. Radisson Hotel-Arlington Heights, IL - Management Agreement between Lessee
and Manager, dated February 28, 1997.
21. Westin Resort-Key Largo - Management Agreement between Lessee and Manager,
dated March 17, 1997.
22. Wyndham Garden Hotel-Marietta, GA - Management Agreement between Lessee
and Wyndham Management Corporation, dated March, 17, 1997.
<PAGE>
23. Holiday Inn Select-Bucks County, PA - Management Agreement between Lessee
and Manager, dated June 20, 197.
24. Marriott Hotel West Loop-Houston, TX - Management Agreement between Lessee
and Manager, dated June 25, 1997.
25. Radisson Twin Towers-Orlando, FL - Management Agreement between Lessee and
Manager, dated June 25, 1997.
26. Hilton Hotel-Cocoa Beach, FL - Management Agreement between Lessee and
Manager dated June 27, 1997.
27. Courtyard by Marriott-Durham, NC - Management Agreement between Lessee and
Manager dated November 26, 1997.
28. Holiday Inn Express-Hanover, MD - Management Agreement between Lessee and
Manager dated January 22, 1998.
29. Holiday Inn-Annapolis, MD - Management Agreement between Lessee and Manager
dated January 22, 1998.
30. Ramada Hotel Old Town-Alexandria, VA - Management Agreeement between Lessee
and Manager dated January 22, 1998.
31. Holiday Inn Hotel & Suites-Alexandria, VA - Management Agreement between
Lessee and Manager dated January 22, 1998.
32. Holiday Inn-O'Hare International-Rosemont, IL - Management Agreement
between Lessee and Manager dated February 3, 1998.
33. Doubletree Resort-Clearwater Beach, FL - Management Agreement between
Lessee and Manager dated February 13, 1998.
34. Courtyard by Marriott-Lake Buena Vista, FL - Management Agreement between
Lessee and Manager dated February 13, 1998.
35. Doubletree Hotel-Tampa, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
36. Courtyard by Marriott-Marina del Rey, CA - Management Agreement between
Lessee and Manager dated February 13, 1998.
37. Holiday Inn-Ft. Lauderdale, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
38. Ramada Inn-Clearwater Beach, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
39. Courtyard by Marriott-Century City, CA - Management Agreement between
Lessee and Manager dated February 13, 1998.
40. Holiday Inn-Madeira Beach, FL - Management Agreement between Lessee and
Manager dated February 13, 1998.
41. Howard Johnson Lodge-Key Largo, FL - Management Agreement between Lessee
and Manager dated February 13, 1998.
42. Holiday Inn-Richmond, VA - Management Agreement between Lessee and Manager
dated February 13, 1998.
43. Holiday Inn-St. Louis, MO - Management Agreement between Lessee and Manager
dated February 13, 1998.
44. Radisson Hotel-Henrietta, NY - Management Agreement between Lessee and
Manager dated February 13, 1998.
45. Mystic Hotel-Mystic, CT - Management Agreement between Lessee and Manager
dated February 13, 1998.
46. Select Inn-Bloomington, MN - Management Agreement between Lessee and
Manager dated February 13, 1998.
<PAGE>
Section 5.05
ESA REQUIRED WORK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AMERICAN GENERAL HOSPITALITY TRUST
- ----------------------------------------------------------------------------------------------------
ENVIRONMENTAL SITE ASSESSMENT (ESA)
- ----------------------------------------------------------------------------------------------------
REQUIRED ITEMS
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FIRM REPORT DATE
- ----------------------------------------------------------------------------------------------------
PROPERTY NAME LOCATION NAME DATE DESCRIPTION REQ'D
- ------------- -------- ---- ---- ----------- -----
<S> <C> <C> <C> <C> <C>
Wyndham Lake Orlando, FL ATEC 10/21/96 Annual testing and quarterly 5/14/98
- ----------------------------------------------------------------------------------------------------
Buena Vista reporting on the status of the
- ----------------------------------------------------------------------------------------------------
nearby Texaco an 7-11 RAP.
Sheraton Crossroads Mahwah, NJ ENSR 1/6/98 Semi-annual reporting on 8/13/98
- ----------------------------------------------------------------------------------------------------
status of ongoing
- ----------------------------------------------------------------------------------------------------
remediation efforts/site
- ----------------------------------------------------------------------------------------------------
closure by Ford.
Ramada Inn Clearwater Dames 12/8/97 Provide documentation on 5/14/98
- ----------------------------------------------------------------------------------------------------
Gulfview Beach, FL & the former on-site UST's
- ----------------------------------------------------------------------------------------------------
Moore removal in November of
- ----------------------------------------------------------------------------------------------------
1997.
Holiday Inn Madeira Dames 12/15/97 Obtain NFA status for the 5/14/98
- ----------------------------------------------------------------------------------------------------
Beach, FL & site from the Pinellas
- ----------------------------------------------------------------------------------------------------
Moore County Health
- ----------------------------------------------------------------------------------------------------
Department.
Lodge at the Mystic, CT Dames 12/5/97 Confirm and provide 5/14/98
- ----------------------------------------------------------------------------------------------------
Seaport & documentation on the
- ----------------------------------------------------------------------------------------------------
Moore integrity of the two on-site
- ----------------------------------------------------------------------------------------------------
UST's.
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Section 5.06
PCR REQUIRED WORK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AMERICAN GENERAL HOSPITALITY TRUST
- ----------------------------------------------------------------------------------------------------
PROPERTY CONDITION REVIEW (PCR)
- ----------------------------------------------------------------------------------------------------
REQUIRED REPAIRS
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FIRM REPORT DATE
- ----------------------------------------------------------------------------------------------------
PROPERTY NAME LOCATION NAME DATE DESCRIPTION REQ'D
- ------------- -------- ---- ---- ----------- -----
<S> <C> <C> <C> <C> <C>
None required
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 5.07
INSURANCE
(a) INSURANCE POLICIES REQUIRED. While any obligation of the Borrower or
---------------------------
any Guarantor under any Credit Document remains outstanding, the Borrower shall
procure and maintain or shall cause to be procured and maintained continuously
in effect policies of insurance in form and amounts and issued by companies,
associations or organizations licensed to do business in the states the Hotel
Properties are located, with a Best's Rating of no less than A, XI and otherwise
satisfactory to the Agents covering such casualties, risks, perils, liabilities
and other hazards required by Agents. All original policies, or certificates
thereof, and endorsements and renewals thereof shall be delivered to and
retained by the Administrative Agent unless the Administrative Agent waives this
requirement in writing. Without limiting the generality of the foregoing, the
Borrower shall provide or cause to be provided the following types of insurance
coverage:
i. until repayment of the Notes and satisfaction of all obligations
under the Credit Documents: (i) property insurance on an "all risks" full
replacement cost basis without deduction for depreciation (or fire,
extended coverage and difference in conditions basis), including flood,
earthquake (for any Hotel Property located in the State of California, or
in any other location that, according to determination by the appropriate
agency of the United States Government, has an above average risk of
seismic activity) and sinkhole coverages in an amount equal to the
replacement cost of the Improvements (except for earthquake insurance which
for each required Hotel Property shall be in an amount which is equal to or
greater than the maximum probable loss determined pursuant to a written
report by a seismic engineer, which report and engineer are acceptable to
the Agents, provided, however, that the aggregate amount of such earthquake
-------- -------
insurance coverage and the deductibles thereunder may be modified at the
request of the Borrower based upon industry standards, subject to approval
of the Agents); (ii) Comprehensive General Liability Insurance (including
contractual liability, owners and contractors protective coverages,
products & completed operations, personal & advertising injury liability,
fire damage legal liability and alienated premises coverage) and
Comprehensive Auto Liability Insurance in a minimum amount of $50,000,000
each occurrence; (iii) Statutory Workers' Compensation and Employer's
Liability Insurance in the minimum amounts of $1,000,000 each accident,
$1,000,000 each employee - disease, $1,000,000 policy limit - disease; and
(iv) Rent loss insurance against loss of income by reason of any hazard
covered under the insurance required under this subparagraph (a) in an
amount sufficient to avoid any co-insurance penalty, but in any event for
not less than two (2) years gross receipts from all sources of income from
the Hotel Property. Each such policy of property insurance shall contain a
replacement cost
<PAGE>
endorsement and such other endorsements as are sufficient to prevent the
Borrower, the Agents and/or the Borrower's Subsidiaries from becoming a co-
insurer with respect to such buildings and improvements.
ii. During the renovation or expansion of any Hotel Property the
Borrower will additionally provide: (i) Builder's Risk Insurance on an "all
risks" basis including flood, earthquake (if required pursuant to the
provisions of and in the amount stated in clause (a)) and sinkhole
coverages, and also including Stored Materials and materials while in
transit, and (ii) Statutory Workers' Compensation and Employer's Liability
Insurance in the minimum amounts of $1,000,000 each accident, $1,000,000
each employee - disease, $1,000,000 policy limit - disease, covering each
contractor and all other contractors or subcontractors who may have
occasion to be at the job site.
iii Such additional insurance as may be reasonably required by the
Administrative Agent from time to time in the event that any Hotel Property
is exposed to hazards and risks with respect to which the Administrative
Agent deems the existing insurance inadequate to properly protect its
interests.
All policies of liability insurance shall name the Agents, the Banks and
their respective directors, officers, representatives, agents and employees (the
"Banks' Parties") as additional insureds. The Borrower shall furnish the
Administrative Agent with a certified copy of an original or a certificate of
insurance of all policies of insurance required. All policies or certificates,
as the case may be, of insurance shall set forth the coverage, the limits of
liability, the name of the carrier, the policy number, the Best's Rating of the
carrier and the period of coverage. In addition, all policies of insurance
required under the terms hereof shall contain an endorsement or agreement by the
insurer that any loss shall be payable in accordance with the terms of such
policy notwithstanding any act or negligence of the Borrower, the Participating
Lessee, the Manager or any party holding under any such Person which might
otherwise result in a forfeiture of said insurance and the further agreement of
the insurer waiving all rights of setoff, counterclaim or deductions against the
Borrower. At least 15 days prior to the expiration of each required policy, the
Borrower shall deliver to the Administrative Agent evidence of the renewal or
replacement of such policy, continuing such insurance in the form as required by
this Agreement. All such policies shall contain a provision that
notwithstanding any contrary agreement between the Borrower and the applicable
insurance company, such policies will not be canceled, allowed to lapse without
renewal, surrendered or amended (which provision shall include any reduction in
the scope or limits of coverage) without at least 15 days' prior written notice
to the Administrative Agent.
-2-
<PAGE>
SUBORDINATE UNSECURED CREDIT AGREEMENT
SCHEDULE 11.02
Notices
-------
<TABLE>
<CAPTION>
DOMESTIC LENDING OFFICE LIBOR LENDING OFFICE
- ----------------------- --------------------
<S> <C>
SOCIETE GENERALE, SOUTHWEST AGENCY SOCIETE GENERALE, SOUTHWEST AGENCY
4900 Trammell Crow Center 4900 Trammell Crow Center
2001 Ross Avenue 2001 Ross Avenue
Dallas, Texas 75201 Dallas, Texas 75201
Attn: Mr. Thomas K. Day Attn: Mr. Thomas K. Day
Vice President Vice President
Telephone: (214) 979-2774 Telephone: (214) 979-2774
Telecopy: (214) 979-2727 Telecopy: (214) 979-2727
BANK ONE, TEXAS, N.A. BANK ONE, TEXAS, N.A.
1717 Main Street, 4th Floor 1717 Main Street, 4th Floor
Dallas, Texas 75201 Dallas, Texas 75201
Attn: Commercial Real Estate Department Attn: Commercial Real Estate Department
Mr. Jeff Etter Mr. Jeff Etter
Vice President Vice President
Telephone: (214) 290-2385 Telephone: (214) 290-2385
Telecopy: (214) 290-7205 Telecopy: (214) 290-7205
THE BANK OF NOVA SCOTIA THE BANK OF NOVA SCOTIA
580 California Street 580 California Street
Suite 2100 Suite 2100
San Francisco, California 94119 San Francisco, California 94119
Attn: Mr. Paul Stiplosek Attn: Mr. Paul Stiplosek
Telephone: (415) 986-1100 Telephone: (415) 986-1100
Telecopy: (415) 397-0791 Telecopy: (415) 397-0791
</TABLE>
<PAGE>
<TABLE>
<S> <C>
WELLS FARGO BANK, NATIONAL ASSOCIATION WELLS FARGO BANK, NATIONAL ASSOCIATION
12377 Merrit Drive 4120 E. Park Place
Suite 300 Suite 100
Dallas, Texas 75251 El Segundo, California 90245
Attn: Ms. Coleene Cox Attn: Anne Colvin/Nancy Tam-Izumi
Telephone: (972) 661-8980 Telephone: Ann Colvin: (310) 335-9472
Telecopy: (972) 386-4723 Nancy Tam-Izumi: (310)335-9492
Telecopy: (310) 615-1014
BANKBOSTON, N.A. BANKBOSTON, N.A.
115 Perimeter Center Northeast, Suite 500 115 Perimeter Center Northeast, Suite 500
Atlanta, Georgia 30346 Atlanta, Georgia 30346
Attn: Mr. Steven Selbo Attn: Mr. Steven Selbo
Telephone: (770) 390-6500 Telephone: (770) 390-6500
Telecopy: (770) 390-8434 Telecopy: (770) 390-8434
NATIONSBANK OF TEXAS, N.A. NATIONSBANK OF TEXAS, N.A.
901 Main Street, 51st Floor 901 Main Street, 51st Floor
Dallas, Texas 75202 Dallas, Texas 75202
Attn: Mr. David Howard & John E. Hall, III Attn: Mr. David Howard & John E. Hall, III
Real Estate Administration Officer Real Estate Administration Officer
Telephone: (214) 508-2089 Telephone: (214) 508-2089
Telecopy: (214) 508-0085 Telecopy: (214) 508-0085
</TABLE>
-2-
<PAGE>
EXHIBIT 99.1
Report of Independent Accountants
To the Board of Directors
American General Hospitality Corporation:
We have audited the accompanying combined balance sheets and financial
statement schedule of the FSA Portfolio Acquisition Hotels (described in Note 1)
as of December 31, 1996 and September 30, 1997 and the related combined
statements of operations, equity and cash flows for the years ended December 31,
1995 and 1996, and for the nine month period ended September 30, 1997. These
combined financial statements are the responsibility of the FSA Portfolio
Acquisition Hotels' management. Our responsibility is to express an opinion on
these financial statements and financial statement schedule 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.
The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission ("SEC") as described in Note 1 to the financial statements and are
not intended to be a complete presentation of the FSA Portfolio Acquisition
Hotels.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the combined financial position of the FSA
Portfolio Acquisition Hotels as of December 31, 1996 and September 30, 1997 and
the combined results of their operations and their cash flows for the years
ended December 31, 1995 and 1996, and for the nine month period ended September
30, 1997, in conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedule referred to above
which is presented for the purpose of additional analysis and to comply with the
rules and regulations of the SEC, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
January 15, 1998
1
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1996 1997
-------------- --------------
<S> <C> <C>
Investments in hotel properties, at cost:
Land and land improvement......................................... $ 17,410,300 $ 17,410,300
Buildings and improvements........................................ 153,600,775 156,963,663
Furniture, fixtures and equipment................................. 13,817,423 23,559,780
-------------- --------------
184,828,498 197,933,743
Less accumulated depreciation......................................... (11,870,537) (17,834,042)
-------------- --------------
Net investment in hotel properties.................................... 172,957,961 180,099,701
Cash and cash equivalents............................................. 6,115,749 5,848,141
Accounts receivable, net.............................................. 3,650,813 4,115,546
Intercompany receivable............................................... 1,314,695 1,635,944
Inventories........................................................... 450,067 479,897
Prepaid expenses...................................................... 775,341 1,209,378
Other assets, net..................................................... 443,216 498,040
-------------- --------------
Total assets.............................................. $ 185,707,842 $ 193,886,647
============== ==============
LIABILITIES AND EQUITY
Accounts payable, trade............................................... $ 1,156,129 $ 1,080,662
Accrued expenses and other liabilities................................ 3,475,479 5,459,184
-------------- --------------
Total liabilities......................................... 4,631,608 6,539,846
-------------- --------------
Commitments and contingencies (Notes 4 and 5)
Capital............................................................... 198,664,240 190,258,581
Accumulated deficit................................................... (17,588,006) (2,911,780)
-------------- --------------
Total equity.............................................. 181,076,234 187,346,801
-------------- --------------
Total liabilities and equity.............................. $ 185,707,842 $ 193,886,647
============== ==============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
2
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended For the Nine Month Period Ended
December 31, September 30,
-------------------------------- ---------------------------------
1995 1996 1996 1997
--------------- --------------- ---------------- ----------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues:
Room revenue.......................... $ 49,889,032 $ 53,420,099 $ 41,249,204 $ 52,212,194
Food and beverage revenue............. 12,559,730 13,093,606 9,484,045 11,920,407
Lease revenue......................... 415,799 433,136 296,952 353,972
Other revenue......................... 3,754,443 4,064,616 3,062,649 3,483,513
--------------- --------------- ---------------- ----------------
Total revenues................ 66,619,004 71,011,457 54,092,850 67,970,086
--------------- --------------- ---------------- ----------------
Expenses:
Property operating costs and
expenses............................ 14,513,577 15,385,916 11,729,413 13,553,302
Food and beverage costs and expenses.. 10,257,783 10,696,785 7,814,850 9,340,014
General and administrative............ 7,058,768 7,412,892 5,472,295 5,704,824
Advertising and promotion............. 4,476,519 5,243,745 3,907,476 4,535,476
Repairs and maintenance............... 3,847,221 4,029,018 2,970,054 3,166,285
Utilities............................. 4,194,643 4,308,091 3,273,599 3,295,026
Management fees....................... 1,465,413 1,453,691 1,113,672 1,423,762
Franchise costs....................... 2,114,220 1,863,307 1,426,694 1,915,319
Depreciation.......................... 5,629,152 6,241,385 4,681,039 5,963,505
Real estate and personal property
taxes, and property insurance....... 3,282,075 3,584,526 2,747,393 2,624,371
Other expenses........................ 2,269,517 1,961,239 1,340,197 1,771,976
--------------- --------------- ---------------- ----------------
Total expenses................ 59,108,888 62,180,595 46,476,682 53,293,860
--------------- --------------- ---------------- ----------------
Net income.................... $ 7,510,116 $ 8,830,862 $ 7,616,168 $ 14,676,226
=============== =============== ================ ================
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
3
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
COMBINED STATEMENTS OF EQUITY
<TABLE>
<CAPTION>
Equity
-----------------
<S> <C>
Balance, December 31, 1994................................... $ 175,645,663
Net income............................................... 7,510,116
Capital contributions.................................... 3,235,946
Distributions............................................ (6,833,286)
-----------------
Balance, December 31, 1995................................... 179,558,439
Net income............................................... 8,830,862
Capital contributions.................................... 4,461,757
Distributions............................................ (11,774,824)
-----------------
Balance, December 31, 1996................................... 181,076,234
Net income............................................... 14,676,226
Capital contributions.................................... 14,820,420
Distributions............................................ (23,226,079)
-----------------
Balance, September 30, 1997.................................. $ 187,346,801
=================
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
4
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended For the Nine Month Period Ended
December 31, September 30,
-------------------------------- ---------------------------------
1995 1996 1996 1997
--------------- ---------------- ---------------- ----------------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................. $ 7,510,116 $ 8,830,862 $ 7,616,168 $ 14,676,226
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation.............................. 5,629,152 6,241,385 4,681,039 5,963,505
Changes in assets and liabilities:
Accounts receivable....................... (1,641,507) (717,628) (1,148,983) (464,733)
Intercompany receivable................... (57,130) (28,256) (13,561) (321,249)
Inventories............................... (111,670) (15,978) (4,247) (29,830)
Prepaid expenses.......................... (620,467) (9,300) (56,231) (434,037)
Other assets.............................. (233,774) (21,772) (356,833) (54,824)
Accounts payable, trade................... 511,021 (426,348) (227,061) (75,467)
Accrued expenses and other liabilities.... (662,190) 1,021,258 2,079,041 1,983,705
--------------- ---------------- ---------------- ----------------
Net cash provided by operating
activities........................... 10,323,551 14,874,223 12,569,332 21,243,296
--------------- ---------------- ---------------- ----------------
Cash flows from investing activities:
Improvements and additions to hotel
properties................................ (5,248,803) (5,476,695) (2,367,533) (13,105,245)
--------------- ---------------- ---------------- ----------------
Net cash used in investing activities.. (5,248,803) (5,476,695) (2,367,533) (13,105,245)
--------------- ---------------- ---------------- ----------------
Cash flows from financing activities:
Capital contributions....................... 3,235,946 4,461,757 1,441,332 14,820,420
Distributions paid.......................... (6,833,286) (11,774,824) (10,384,556) (23,226,079)
--------------- ---------------- ---------------- ----------------
Net cash used in financing activities.. (3,597,340) (7,313,067) (8,943,224) (8,405,659)
--------------- ---------------- ---------------- ----------------
Net change in cash and cash equivalents......... 1,477,408 2,084,461 1,258,575 (267,608)
Cash and cash equivalents at beginning of
periods....................................... $ 2,553,880 $ 4,031,288 $ 4,031,288 $ 6,115,749
--------------- ---------------- ---------------- ----------------
Cash and cash equivalents at end of periods..... $ 4,031,288 $ 6,115,749 $ 5,289,863 $ 5,848,141
=============== ================ ================ ================
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
5
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Organization - American General Hospitality Operating Partnership, L.P.
(the "Operating Partnership"), a subsidiary of American General Hospitality
Corporation (the "Company" or "Registrant"), has contracted to acquire a 100%
equity interest in 14 hotels (the "FSA Portfolio Acquisition Hotels") from
entities (the "Selling Entities") unaffiliated with the Operating Partnership.
American General Hospitality Corporation (the "Company"), established to
acquire, own and lease hotel properties, was formed as a Maryland corporation
qualifying as a real estate investment trust ("REIT"). The Company completed an
Initial Public Offering of its common stock on July 31, 1996.
Basis of Presentation - The FSA Portfolio Acquisition Hotels are under
common control by virtue of various contractual agreements, and it is intended
that every Selling Entity be the subject of a business combination with the
Company. Therefore, the accompanying financial statements of the FSA Portfolio
Acquisition Hotels have been presented on a combined basis and have been
prepared to comply with the rules and regulations of the Securities and Exchange
Commission ("SEC"). The FSA Portfolio Acquisition Hotels consist of the
following:
<TABLE>
<CAPTION>
No. of
Property Name Location Rooms
------------- -------- ------
<S> <C> <C>
Select Inn Bloomington Bloomington, Minnesota 148
Courtyard by Marriott Century City Century City, California 134
DoubleTree Resort Surfside Clearwater Beach Clearwater Beach, California 426
Ramada Inn Gulfview Clearwater Beach Clearwater Beach, California 289
Holiday Inn Fort Lauderdale Beach Fort Lauderdale Beach, Florida 240
Howard Johnson Resort Key Largo Key Largo, Florida 100
Courtyard by Marriott Disney Village Lake Buena Vista, Florida 323
Holiday Inn Madeira Beach Madeira Beach, California 149
Courtyard by Marriott Marina del Rey Marina del Rey, California 276
Mystic Hotel Mystic, Connecticut 77
Holiday Inn Richmond West Richmond, Virginia 280
Radisson Inn Rochester Rochester, New York 171
Holiday Inn Forest Park St. Louis St. Louis, Missouri 120
DoubleTree Hotel Tampa Airport Tampa, Florida 496
</TABLE>
The Selling Entities conducted business so that income taxes were the
responsibility of the owners. Substantially all of the assets and operations of
the Selling Entities will be acquired by the Company, which is a REIT and
accordingly, not subject to federal income taxes. Therefore, the financial
statements have been presented with no provision for federal income taxes.
2. Summary of Significant Accounting Policies
Investment in Hotel Properties - The individual hotel properties were
acquired by the respective Selling Entities during the period from 1992 to 1994,
either through foreclosure or deed-in-lieu of foreclosure of the collateral of
the loan receivables. Hotel properties are stated at the lower of cost or fair
value less selling costs and are depreciated using the straight-line method over
estimated useful lives of 39 years for buildings and improvements and 5 to 10
years for furniture, fixtures and equipment.
6
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS - (Continued)
The individual Selling Entities review the carrying value of each
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 affected Selling Entity will prepare a projection of the
undiscounted future cash flows, without interest charges, of the specific hotel
property and determine if the investment in the hotel property is recoverable
based on the undiscounted future cash flows.
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 the related accumulated depreciation are removed from
the accounts and the gain or loss is included in operations.
Cash and Cash Equivalents - All highly liquid investments with a
maturity of three months or less when purchased are considered to be cash
equivalents.
Inventories - Inventories consist primarily of supplies, food and
beverage items, china, glass and silver, and linen and are stated at the lower
of cost (generally, first-in, first-out) or market.
Income Taxes - The Selling Entities conducted business so that income
taxes were the responsibility of their respective owners. The owners' 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 said owners could be changed accordingly.
The Company is a REIT under the Code and accordingly not subject to corporate
income taxes. Accordingly, the financial statements contain no provision for
federal income taxes.
Revenue Recognition - Revenue is recognized as 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.
Recently Issued Statement of Financial Accounting Standards - The FSA
Portfolio Acquisition Hotels adopted the Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," during the year ended December 31,
1995. The adoption of SFAS No. 121 had no material effect on the FSA Portfolio
Acquisition Hotels financial statements.
Interim Financial Information - The interim financial statements for
the period ended September 30, 1996 have been prepared pursuant to the rules and
regulations of the SEC. The accompanying interim financial statements reflect,
in the opinion of management, all adjustments necessary for a fair presentation
of the interim financial statements. All such adjustments are of a normal and
recurring nature.
7
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS - (Continued)
3. Lease Revenue
The Select Inn Bloomington hotel is operated by a third party entity
under a Fee Lease which expires in December 2000 with one extension option of 10
years. Minimum future rental income under the Fee Lease at September 30, 1997 is
as follows:
<TABLE>
<CAPTION>
Year Amount
---- ---------------
<S> <C>
1997........................................... $ 80,000
1998........................................... 320,000
1999........................................... 320,000
2000........................................... 320,000
---------------
$ 1,040,000
===============
</TABLE>
In addition to the $320,000 annual base rent, a percentage rent shall
be paid equal to 23% of the amount, if any, by which the annual gross sales, as
defined, shall exceed $1,391,304. The lease requires the tenant to pay all
expenses of owning and operating the hotel, including real estate taxes and
structural maintenance and repairs.
The Mystic Hotel was operated by a third party entity under a Fee Lease
that terminated in December 1995. Upon the termination of the lease, the lessor
retained all rights and obligations related to owning and operating the hotel.
4. Ground Leases
Three of the FSA Portfolio Acquisition Hotels are subject to ground
leases with third parties with respect to the land underlying each such hotel.
The ground leases require the tenant to pay all expenses of owning and operating
the hotels, including real estate taxes and structural maintenance and repairs.
The Radisson Inn Rochester hotel is encumbered by a ground lease
expiring on December 31, 2021 with two 25 year renewal options. The lease
requires minimum annual rent payments of $60,000 through 1999 and thereafter an
annual rent of $60,000 plus a percentage rent payment equal to 1% of gross
receipts in excess of the minimum annual rent.
The DoubleTree Resort Surfside Clearwater Beach hotel is encumbered by
a ground lease expiring in February 2079. Annual lease payments are based upon
the greater of a $283,970 base rent or a percentage rent equal to 3% of gross
room revenues and 1% of gross receipts from the sale of food and beverage. The
annual base rent shall be adjusted every 10 years to equal the average rental
payments for the preceding 10 year period.
The Courtyard by Marriott Disney Village hotel is encumbered by a
ground lease expiring on September 30, 2046. Annual lease payments are based
upon the greater of a $500,000 base rent or a percentage rent equal to 8.5% of
gross room revenues, 4% of gross receipts from the sale of food, 6% of gross
receipts from the sale of beverages, 25% of gross receipts from subleases,
concessionaires and rent of exhibition, and meeting and conference facilities,
and 7% of gross receipts from all other sources, including sale of merchandise,
service charges, and vending machines. The annual base rent shall be adjusted
every five years to the greater of the minimum annual rent during the prior five
years or 75% of the average total rent paid during such five year period.
8
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS - (Continued)
Minimum future rental payments required under the ground leases at
September 30, 1997 are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ---------------
<S> <C>
1997........................................... $ 210,992
1998........................................... 843,970
1999........................................... 843,970
2000........................................... 843,970
2001........................................... 843,970
Thereafter..................................... 45,849,660
---------------
$ 49,436,532
===============
</TABLE>
Ground lease expense included in Other expenses was $1,005,460 and
$1,531,659, for the years ended December 31, 1995 and 1996, respectively, and
$1,168,050 for the nine month period ended September 30, 1997.
5. Commitments
Management fees represent amounts paid to third party entities for
various operational services. The base management fee is based upon a percentage
of gross revenues ranging from 1% to 2%. An incentive fee is paid based upon a
percentage of gross operating profits ranging from 2.25% to 4.5%. Management and
incentive fees of $1,465,413 and $1,453,691 were paid as of December 31, 1995
and 1996, respectively, and $1,423,762 was paid for the nine month period ended
September 30, 1997.
Franchise fees represent the annual expense for franchise royalties,
sales and advertising expenses and reservation services under the terms of hotel
franchise agreements. Franchise fees are based upon a percentage of gross room
revenue ranging from 3.25% to 7.5%.
In addition, accounting fees are paid for various record keeping
services ranging from $500 to $3,000 per month.
6. Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 requires all
entities to disclose the fair value of certain financial instruments in their
financial statements. Accordingly, the FSA Portfolio Acquisition Hotels report
the carrying amount 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.
7. Related Party Transactions
Intercompany receivables related to hotel operations are due from
affiliates of the owners in the amount of $1,314,695 and $1,635,944 as of
December 31, 1996 and September 30, 1997, respectively, and are non-interest
bearing.
8. Subsequent Events
As discussed in Note 1, the Company has entered into an agreement to
purchase the FSA Portfolio Acquisition Hotels in 1998. The acquisition will be
accounted for by the Company using the purchase method of accounting. These
financial statements do not reflect any transaction in connection with the
acquisition of the FSA Portfolio Acquisition Hotels by the Company.
9
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of and for the period ended September 30, 1997
Real estate as of September 30, 1997:
- ------------------------------------
<TABLE>
<CAPTION>
Life Upon
Accumulated Net Which
Depreciation Book Value Expected Depreciation
Land and Building and Building and Building and Date of Date of in Statement
Description Improvements Improvements Total Improvements Improvements Construction Acquisition Is Computed
----------- ------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Select Inn Bloomington..... $ 200,000 $ 1,800,000 $ 2,000,000 $ 150,192 $ 1,849,808 1962 1998 39 Yrs.
Courtyard by Marriott
Century City............. 1,400,000 13,081,381 14,481,381 1,147,490 13,333,891 1986 1998 39 Yrs.
DoubleTree Resort Surfside
Clearwater Beach......... 3,771,500 33,943,500 37,715,000 2,832,251 34,882,749 1980 1998 39 Yrs.
Ramada Inn Gulfview
Clearwater Beach......... 2,062,400 23,158,550 25,220,950 2,466,905 22,754,045 1969 1998 39 Yrs.
Holiday Inn Fort
Lauderdale Beach......... 1,616,700 21,608,966 23,225,666 2,623,866 20,601,800 1969 1998 39 Yrs.
Howard Johnson Resort
Key Largo................ 900,000 8,204,855 9,104,855 696,808 8,408,047 1971 1998 39 Yrs.
Courtyard by Marriott
Disney Village........... 1,210,000 11,511,982 12,721,982 1,032,888 11,689,094 1972 1998 39 Yrs.
Holiday Inn
Madeira Beach............ 1,311,900 15,212,513 16,524,413 1,665,330 14,859,083 1972 1998 39 Yrs.
Courtyard by Marriott
Marina del Rey........... 1,436,200 18,125,668 19,561,868 2,117,070 17,444,798 1976 1998 39 Yrs.
Mystic Hotel............... 370,000 3,696,993 4,066,993 351,153 3,715,840 1967 1998 39 Yrs.
Holiday Inn
Richmond West............ 1,078,700 11,216,786 12,295,486 1,111,343 11,184,143 1975 1998 39 Yrs.
Radisson Inn
Rochester................ 400,000 3,759,666 4,159,666 332,274 3,827,392 1971 1998 39 Yrs.
Holiday Inn Forest
Park St. Louis........... 430,000 4,055,880 4,485,880 360,038 4,125,842 1978 1998 39 Yrs.
DoubleTree Hotel
Tampa Airport............ 1,222,900 11,146,703 12,369,603 946,434 11,423,169 1972 1998 39 Yrs.
------------ ------------ ------------ ------------ ------------
$ 17,410,300 $180,523,443 $197,933,743 $ 17,834,042 $180,099,701
============ ============ ============ ============ ============
</TABLE>
10
<PAGE>
FSA PORTFOLIO ACQUISITION HOTELS
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of and for the period ended September 30, 1997 - (Continued)
<TABLE>
<S> <C>
Reconciliation of Real Estate:
-----------------------------
Balance at December 31, 1995........................... $ 179,351,803
Additions............................................ 5,476,695
----------------
Balance at December 31, 1996........................... 184,828,498
Additions............................................ 13,105,245
----------------
Balance at September 30, 1997.......................... $ 197,933,743
================
Reconciliation of Accumulated Depreciation:
------------------------------------------
Balance at December 31, 1995........................... $ 5,629,152
Depreciation......................................... 6,241,385
----------------
Balance at December 31, 1996........................... 11,870,537
Depreciation......................................... 5,963,505
----------------
Balance at September 30, 1997.......................... $ 17,834,042
================
</TABLE>
11
<PAGE>
EXHIBIT 99.2
AMERICAN GENERAL HOSPITALITY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
The following unaudited Pro Forma Consolidated Balance Sheet is
presented as if the Company had completed (i) the sale of 2,671,705 shares
of common stock to certain investment funds and separate accounts advised by
ABKB/LaSalle Securities Limited Partnership and LaSalle Advisors Limited
Partnership (the "ABKB Offering") and the follow-on primary offering of
4,250,000 shares of common stock (the "Second 1997 Offering") and (ii) the
acquisition of the 40 Acquired and Proposed Acquisition Hotels (collectively
with the 26 current hotels the "Hotels") including the Prime Portfolio
Acquisition Hotels, the Potomac Portfolio Acquisition Hotels, the FSA Portfolio
Acquisition Hotels, the Holiday Inn O'Hare International Hotel and the Madison
Hotel Acquisition as of September 30, 1997.
In management's opinion, all material adjustments necessary to reflect
the effect of these transactions have been made.
The following unaudited Pro Forma Consolidated Balance Sheet is derived
from the Company's Consolidated Balance Sheet as of September 30, 1997 and
should be read in conjunction with the financial statements filed with American
General Hospitality Corporation's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1997.
The following Pro Forma Consolidated Balance Sheet is not necessarily
indicative of what the actual financial position would have been assuming such
transactions had been completed as of September 30, 1997, nor does it purport to
represent the future financial position of American General Hospitality
Corporation.
1
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(unaudited)
<TABLE>
<CAPTION>
ABKB Offering
Phase I Hotel Acquisitions
Company and Second and Pro Forma
Historical 1997 Offering Pro Forma Offerings Combined
(A) (B) Balance Sheet (C)(D) Pro Forma
------------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in hotel
properties, net.......... $544,181,550 $544,181,550 $790,022,876 (I) $1,334,204,426
Cash and cash equivalents.. 1,537,567 1,537,567 1,537,567
Restricted cash............ 653,796 653,796 653,796
Accounts receivable, net... 9,740,389 9,740,389 9,740,389
Deferred expenses, net..... 4,670,759 4,670,759 1,499,900 (J) 6,170,659
Other assets............... 981,170 981,170 981,170
Notes receivable - Lessee.. 248,160 248,160 248,160
------------- -------------- ------------- ------------- ---------------
Total assets........... $562,013,391 $562,013,391 $791,522,776 $1,353,536,167
============= ============== ============= ============= ===============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Debt....................... $ 36,336,431 $ 36,336,431 $ 32,459,365 (K) 68,795,796
Debt, Line of Credit....... 180,501,000 $(127,938,823) (E) 52,562,177 409,838,783 (L) 462,400,960
Distributions payable...... 7,239,591 7,239,591 7,239,591
Accounts payable, trade,
accrued expenses and
other liabilities........ 11,602,161 11,602,161 11,602,161
Minority interest in
Operating Partnership.... 41,705,512 3,222,148 (F) 44,927,660 (F) 45,358,121 (M) 90,285,781
------------- -------------- ------------- ------------- ---------------
Total liabilities...... 277,384,695 (124,716,675) 152,668,020 487,656,269 640,324,289
------------- -------------- ------------- ------------- ---------------
Common stock............... 147,701 49,401 (G) 197,102 114,865 311,967
Additional paid-in
capital.................. 286,863,208 124,667,274 (H) 411,530,482 303,751,642 715,282,124
Unearned officers'
compensation............. (769,167) (769,167) (769,167)
Earnings in excess of
distributions............ (1,613,046) (1,613,046) (1,613,046)
------------- -------------- ------------- ------------- ---------------
Total shareholders'
equity............... 284,628,696 124,716,675 409,345,371 303,866,507 713,211,878
------------- -------------- ------------- ------------- ---------------
Total liabilities
and shareholders'
equity............... $562,013,391 $ $562,013,391 $791,522,776 $1,353,536,167
============= ============== ============= ============= ===============
</TABLE>
2
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(A) Represents the historical balance sheet of the Company as of September
30, 1997.
(B) Represents the net proceeds and related allocation to minority interest
in connection with (i) the sale of approximately $18 million of common
stock to certain investment funds and separate accounts advised by
ABKB/LaSalle Securities Limited Partnership (the "ABKB Offering Phase
I") and (ii) the follow-on primary offering of 4,250,000 shares of
common stock (the "Second 1997 Offering").
(C) Represents the acquisition of the assets relating to the Acquired and
Proposed Acquisition Hotels, including estimated closing costs. The
acquisitions are financed through borrowings under the Company's Line
of Credit, the assumption of indebtedness and the issuance of
approximately 1,902,457 units of limited partnership interests of
Operating Partnership ("OP Units"). Additionally, franchise transfer
costs of $1,499,900 related to the Acquired and Proposed Acquisition
Hotels were estimated.
(D) Represents the net proceeds and related allocation to minority interest
in connection with (i) the sale of approximately $50 million of common
stock to certain investment funds and separate accounts advised by
ABKB/LaSalle Securities Limited Partnership and LaSalle Advisors
Limited Partnership (the "ABKB Offering Phase II", together with the
ABKB Offering Phase I, the "ABKB Offering") and (ii) a pro forma
follow-on primary offering of 9,500,000 shares of common stock (the
"Pro Forma 1998 Offering") at $27.6875 per share (the last reported
sale price of the Common Stock on the New York Stock Exchange) to
decrease its Line of Credit. The Prime Group II Acquisition may be
closed at any time from September 30, 1998 through March 31, 1999, at
the option of the Company. Because the Company is able to control the
timing of the acquisition, it will endeavor to consummate the Pro Forma
1998 Equity Offering at such time that it is able to secure favorable
pricing and maximize the proceeds from that offering.
(E) Represents the use of the net proceeds from the ABKB Offering Phase I
and the Second 1997 Offering to repay borrowings outstanding at
September 30, 1997. The Company's borrowing limit under its current
Line of Credit is $300 million. The Company has received a commitment
from its credit facility lenders to increase the Credit Facility to
$600 million.
(F) Represents the recognition of minority interest in the Operating
Partnership that will not be owned by the Company (9.9%).
(G) Represents the $0.01 par value of (i) the 688,837 shares of common
stock issued in connection with the ABKB Offering Phase I and (ii)
4,250,000 shares of common stock issued in connection with the Second
1997 Offering.
(H) Represents the net proceeds from the ABKB Offering Phase I and the
Second 1997 Offering.
(I) Represents the increase resulting from the purchase of Acquired and
Proposed Acquisition Hotels, including estimated closing costs (the
purchase included only the land, building and improvements and
furniture, fixtures and equipment).
(J) The increase represents the estimated franchise transfer costs relating
to the Acquired and Proposed Acquisition Hotels.
(K) Represents the mortgage indebtedness assumed on three of the Acquired
and Proposed Acquisition Hotels.
(L) Represents the borrowings made under the Company's Credit Facility and
the repayment of borrowings with the net proceeds from the ABKB
Offering Phase II and the Pro Forma 1998 Offering.
(M) Represents the issuance of 1,902,457 of OP Units and the recognition of
minority interest in the Operating Partnership that will not be owned
by the Company (11.2%).
(N) Represents the $0.01 par value of (i) the 1,982,868 shares of common
stock issued in connection with the ABKB Offering Phase II and (ii)
9,500,000 shares of common stock issued in connection with the Pro
Forma 1998 Offering.
(O) Represents the net proceeds from the ABKB Offering Phase II and the Pro
Forma 1998 Offering after the appropriate allocations to common stock
and minority interest in the Operating Partnership.
3
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997
The following unaudited Pro Forma Consolidated Statements of Operations
are presented as if the Company had completed (i) the initial public offering of
8,075,000 shares of common stock (the "IPO"), the follow-on primary public
offering of 6,368,300 shares of common stock (the "1997 Public Offering"), the
sale of 2,671,705 shares of common stock to certain investment funds and
separate accounts advised by ABKB/LaSalle Securities Limited Partnership and
LaSalle Advisors Limited Partnership (the "ABKB Offering") and the follow-on
primary offering of 4,250,000 shares of common stock (the "Second 1997
Offering") and (ii) the acquisition of the 26 hotels and office building owned
as of September 30, 1997 and the acquisition of the 40 Acquired and Proposed
Acquisition Hotels (collectively the "Hotels") including the Prime Portfolio
Acquisition Hotels, the Potomac Portfolio Acquisition Hotels, the FSA Portfolio
Acquisition Hotels, the Holiday Inn O'Hare International Hotel and the Madison
Hotel Acquisition as of January 1, 1996.
In management's opinion, all material adjustments necessary to reflect
the effect of these transactions have been made.
The following unaudited Pro Forma Consolidated Statements of Operations
are derived from the Company's Consolidated Statements of Operations as of
December 31, 1996 and September 30, 1997 and should be read in conjunction with
the financial statements filed with American General Hospitality Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996 and Quarterly
Report on Form 10-Q for the nine months ended September 30, 1997, respectively
The following Pro Forma Consolidated Statements of Operations are not
necessarily indicative of what the actual results of operations would have been
assuming such transactions had been completed as of January 1, 1996.
4
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Historical Second Hotel
July 31, 1996 Quarter 1997 ABKB Offering Acquisitions
through Acquisitions Phase I and Pro Forma
December 31, Pro Forma Pro Forma and Second Pro Forma Year Ended
1996 Adjustments Adjustments 1997 Offering Offerings December 31,
(A) (B) (B) (C) (B)(C) 1996
-------------- ------------ ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Participating Lease
revenue (D).............. $13,387,719 $32,064,815 $20,324,107 $ 80,622,571 $146,399,212
Office building rental
income (E)............... 2,143,833 2,143,833
Interest income (F)........ 108,075 (8,602) 99,473
-------------- ------------ ------------ -------------- ------------- -------------
Total revenue............ $13,495,794 $32,056,213 $22,467,940 $ 80,622,571 $148,642,518
-------------- ------------ ------------ -------------- ------------- -------------
Expenses
Depreciation (G)........... 2,635,380 6,983,615 6,852,384 30,539,495 47,010,874
Amortization (H)........... 273,425 636,028 334,047 149,990 1,393,490
Real estate and personal
property taxes and
property insurance (I)... 1,444,592 3,611,733 2,111,542 9,102,827 16,270,694
Office building
operating expense (E).... 1,344,552 1,344,552
General and
administrative (J)....... 822,113 877,887 233,488 1,066,648 3,000,136
Ground lease expense (K)... 545,279 504,245 5,581,514 6,631,038
Amortization of
unearned officers'
compensation (L)......... 36,979 51,771 88,750
Interest expense (M)....... 1,412,117 1,707,104 11,678,888 (9,595,412) 33,075,130 38,277,827
-------------- ------------ ------------ -------------- ------------- -------------
Total expenses........... 7,169,885 14,372,383 22,554,901 (9,595,412) 79,515,604 114,017,361
-------------- ------------ ------------ -------------- ------------- -------------
Income before
minority interest........ 6,325,909 17,683,830 (86,961) 9,595,412 1,106,967 34,625,157
Minority interest (N)...... 1,196,728 3,890,689
============== =============
Net income applicable to
common stockholders...... $ 5,129,181 $ 30,734,468
============== =============
Net income per
common share............. $ 0.63 $ 0.98
============== =============
Weighted average number
of shares of common
stock outstanding........ 8,170,029 31,296,980
============== =============
</TABLE>
5
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1997
(unaudited)
<TABLE>
<CAPTION>
Historical
Nine Months ABKB Offering Hotel
Ended Phase I Acquisitions Pro Forma Nine
September 30, Pro Forma and Second and Pro Forma Months Ended
1997 Adjustments 1997 Offering Offerings September 30,
(O) (P) (C) (B)(C) 1997
------------- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues
Participating Lease revenue (D).......... $42,108,012 $13,549,658 $72,539,863 $128,197,533
Office building rental income (E)........ 592,629 1,134,582 1,727,211
Interest income (F)...................... 738,688 738,688
------------- ------------ ------------- ------------- --------------
Total revenue.......................... 43,439,329 14,684,240 72,539,863 130,663,432
------------- ------------ ------------- ------------- --------------
Expenses
Depreciation (G)......................... 9,209,942 3,790,044 23,260,121 36,260,107
Amortization (H)......................... 763,975 168,649 112,493 1,045,117
Real estate and personal property
taxes and property insurance (I)....... 4,929,000 1,099,916 7,198,552 13,227,468
Office building operating expense (E).... 303,979 658,611 962,590
General and administrative (J)........... 1,450,116 799,986 2,250,102
Ground lease expense (K)................. 956,518 4,468,555 5,425,073
Amortization of unearned
officers' compensation (L)............. 81,354 81,354
Interest expense (M)..................... 5,973,945 6,772,725 (7,196,559) 25,443,857 30,993,968
------------- ------------ ------------- ------------- --------------
Total expenses......................... 23,668,829 12,489,945 (7,196,559) 61,283,564 90,245,779
------------- ------------ ------------- ------------- --------------
Income before minority interest.......... $19,770,500 $ 2,194,295 $ 7,196,559 $11,256,299 $ 40,417,653
Minority interest (N).................... 2,558,352 4,541,568
------------- --------------
Net income applicable to
common stockholders.................... $17,212,148 $ 35,876,085
============= ==============
Net income per common share.............. $ 1.25 $ 1.15
============= ==============
Weighted average number of shares
of common stock outstanding............ 13,768,442 31,296,980
============= ==============
</TABLE>
6
<PAGE>
AMERICAN GENERAL HOSPITALITY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(A) Represents the historical consolidated statement of operations of the
Company for the period July 31, 1996 (inception of operations) through
December 31, 1996.
(B) Represents the adjustments to reflect the pro forma operations of the
20 hotels acquired prior to April 1, 1997 that were owned by the
Company as of September 30, 1997, the 6 hotels acquired during the
second quarter during 1997 ("Second Quarter 1997 Acquisitions") that
were owned by the Company as of September 30, 1997 and the 40 Acquired
and Proposed Acquisition Hotels (together, the "Hotels") as if all of
the Hotels were acquired on January 1, 1996 and leased to a Lessee
pursuant to a Participating Lease since that date.
(C) Represents the adjustments to interest expense due to the change in
borrowings outstanding after the ABKB Offering, the Second 1997
Offering and the Pro Forma 1998 Offering.
(D) Represents lease payments from the Lessees to the Operating Partnership
pursuant to the Participating Leases calculated on a pro forma basis by
applying the rent provisions of the Participating Leases to the
revenues of the Hotels. The departmental revenue thresholds in the
Participating Leases are seasonally adjusted for interim periods.
(E) Represents the rental income and operating expenses associated with the
Houston Office Building.
(F) Represents interest income on the advance to AGH Leasing for the
purchase of certain furniture, fixtures and equipment from the
Company. The current balance is $248,160.
(G) Represents depreciation on the Hotels. Pro forma depreciation is
computed based upon estimated useful lives of 39 years for buildings
and improvements and 5 years for furniture, fixtures and equipment.
(H) Represents amortization of deferred loan costs related to the Company's
Credit Facility, amortization of franchise transfer costs and
amortization of organizational costs and other deferred expenses.
Deferred loan costs are amortized utilizing a method which approximates
the interest method over the remaining term of the Credit Facilities
(including extension options). Franchise transfer costs are amortized
over the term of the related franchise agreements which approximates 10
years. Organizational costs and other deferred expenses are amortized
over terms ranging from 5 to 12 years.
(I) Represents amounts to be paid by the Operating Partnership for real
estate and personal property taxes and property insurance. The amounts
included were derived from the historical amounts paid with respect to
the Hotels adjusted for estimated probable real estate and personal
property tax increases.
(J) Represents estimated general and administrative expenses. The expenses
include salaries and wages, professional fees, directors' and officers'
insurance, Board of Directors' fees and other operating expenses.
(K) Represents the amounts to be paid by the Operating Partnership for
ground leases underlying the properties. In addition to the four
current hotels with ground leases, eight additional Acquired and
Proposed Acquisition Hotels are subject to ground leases.
(L) Represents amortization of unearned officers' compensation represented
by an aggregate of 50,000 shares of restricted common stock issuable to
executive officers which shares vest 10% at the date of grant, 20% on
the first and second anniversary dates of the IPO and 25% on the third
and fourth anniversary dates of the IPO. The shares were issued at
$17.75.
(M) Represents interest expense on the: Credit Facility, the mortgage
indebtedness related to the Holiday Inn DFW South, the mortgage
indebtedness related to the Courtyard by Marriott Secaucus, the
mortgage indebtedness related to the DoubleTree Guest Suites Atlanta,
the mortgage indebtedness related to the Radisson Hotel Arlington
Heights, the mortgage indebtedness related to the Crowne Plaza
Portland, the mortgage indebtedness related to the Ramada Plaza Shelton
and the mortgage indebtedness related to the Holiday Inn O'Hare
International Airport. Also, represents the adjustment to interest
expense due to change in borrowings after the Pro Forma 1998 Offering
is considered.
(N) Calculated at 11.2% of income before minority interest.
(O) Represents the Company's historical statement of operations for the
nine months ended September 30, 1997.
(P) Represents the adjustments to reflect the pro forma operations of the
26 hotels that were owned by the Company as of September 30, 1997
7
<PAGE>
AGH LEASING, L.P.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997
The following unaudited Pro Forma Consolidated Statements of Operations
are presented as if the Company had completed the acquisition of the 26 hotels
owned as of September 30, 1997 and the acquisition of 21 of the Acquired and
Proposed Acquisition Hotels leased to AGH Leasing, L.P. (collectively the "AGH
Hotels") including the Potomac Portfolio Acquisition Hotels, the FSA Portfolio
Acquisition Hotels, the Holiday Inn O'Hare International Hotel and the Madison
Hotel Acquisition as of January 1, 1996.
In management's opinion, all material adjustments necessary to reflect
the effect of these transactions have been made.
The following unaudited Pro Forma Consolidated Statements of Operations
are derived from the AGH Leasing's Consolidated Statements of Operations as of
December 31, 1996 and September 30, 1997 and should be read in conjunction with
the financial statements filed with American General Hospitality Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996 and Quarterly
Report on Form 10-Q for the nine months ended September 30, 1997, respectively
The following Pro Forma Consolidated Statements of Operations are not
necessarily indicative of what the actual results of operations would have been
assuming such transactions had been completed as of January 1, 1996.
8
<PAGE>
AGH LEASING, L.P.
PRO FORMA STATEMENT OF OPERATIONS
For The Year Ended December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Historical July
31, 1996 September 30, Acquired
through 1997 Hotels And
December 31, Pro Forma Proposed Management Fees
1996 Adjustments Acquisitions Adjustment Combined
(A) (B) (B) (F) Pro Forma
--------------- ------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues
Room revenue (C)....................... $ 26,725,200 $ 110,086,642 $ 84,639,642 $ 221,451,484
Food and beverage revenue (C).......... 8,374,459 35,801,976 27,587,810 71,764,245
Other revenue (C)...................... 1,691,472 7,845,837 6,369,467 15,906,776
Minority interest income D)............ 1,284,177 1,284,177
--------------- -------------- ------------- --------------- ---------------
Total revenue........................ $ 36,791,131 $ 155,018,632 $118,596,919 $ 310,406,682
--------------- -------------- ------------- --------------- ---------------
Expenses
Property operating costs and
expenses (E)......................... 7,235,297 30,349,334 24,467,818 62,052,449
Food and beverage costs and
expenses (E)......................... 6,262,071 26,331,855 21,719,066 54,312,992
General and administrative (E)......... 3,270,481 13,129,314 11,376,346 27,776,141
Advertising and promotion (E).......... 2,305,776 10,413,836 7,925,128 20,644,740
Repairs and maintenance (E)............ 1,450,987 7,503,668 6,364,962 15,319,617
Utilities (E).......................... 1,628,490 6,835,787 6,356,010 14,820,287
Management fees (F).................... 947,632 4,123,386 2,363,095 (1,273,350) 6,160,763
Franchise costs (G).................... 950,307 3,776,900 3,221,776 7,948,983
Depreciation (H)....................... 26,250 36,750 63,000
Amortization (I)....................... 6,753 6,753
Interest expense (J)................... 13,314 18,375 31,689
Other expense.......................... 27,093 331,916 359,009
Participating Lease expenses (K)....... 13,387,719 52,388,922 37,730,212 103,506,853
--------------- -------------- ------------- -------------- ---------------
Total expenses....................... 37,512,170 155,240,043 121,524,413 (1,273,350) 313,003,276
--------------- -------------- ------------- -------------- ---------------
Net loss............................. $ (721,039) $ (221,411) $ (2,927,494) $ 1,273,350 $ (2,596,594)
=============== ============== ============= ============== ===============
</TABLE>
9
<PAGE>
AGH LEASING, L.P.
PRO FORMA STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1997
(unaudited)
<TABLE>
<CAPTION>
Historical Nine September 30, Acquired
Months Ended 1997 Hotels And
September 30, Pro Forma Proposed Management Fees
1997 Adjustments Acquisitions Adjustment Combined
(L) (B) (B) (F) Pro Forma
--------------- ------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues
Room revenue (C).................. $ 88,220,166 $25,705,067 $ 79,192,841 $193,118,074
Food and beverage revenue (C)..... 22,974,602 9,163,567 23,298,450 55,436,619
Other revenue (C)................. 5,639,468 1,651,882 5,427,799 12,719,149
Minority interest income (D)...... 906,115 70,009 976,124
--------------- ------------- ------------ --------------- ---------------
Total revenue................... $117,740,351 $36,590,525 $107,919,090 $262,249,966
--------------- ------------- ------------ --------------- ---------------
Expenses
Property operating costs and
expenses (E).................... 23,768,303 6,275,280 21,080,178 51,123,761
Food and beverage costs and
expenses (E).................... 18,599,366 6,298,355 18,560,884 43,458,605
General and administrative (E).... 10,557,733 2,718,131 9,027,141 22,303,005
Advertising and promotion (E)..... 8,549,791 2,362,637 6,598,915 17,511,343
Repairs and maintenance (E)....... 4,688,910 1,698,630 4,999,116 11,386,656
Utilities (E)..................... 5,157,997 1,453,801 4,962,149 11,573,947
Management fees (F)............... 1,740,554 1,049,217 2,108,767 1,099,569 5,998,107
Franchise costs (G)............... 3,282,760 957,253 3,117,428 7,357,441
Depreciation (H).................. 47,250 47,250
Amortization (I).................. 30,649 30,649
Interest expense (J).............. 20,605 20,605
Other expense..................... 120,924 170,085 291,009
Participating Lease expenses (K).. 42,108,012 13,549,661 35,977,605 91,635,278
--------------- ------------- ------------ --------------- ---------------
Total expenses.................. 118,672,854 36,533,050 106,432,183 1,099,569 262,737,656
--------------- ------------- ------------ --------------- ---------------
Net loss........................ $ (932,503) $ 57,475 $ 1,486,907 $(1,099,569) $ (487,690)
=============== ============= ============ =============== ===============
</TABLE>
10
<PAGE>
AGH LEASING, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma consolidated statements of operations of AGH Leasing,
L.P. (the "AGH Lessee") include the results of operations of the 47 hotels
leased from the American General Hospitality Operating Partnership, L.P. (the
"Operating Partnership") due to the AGH Lessee's control over the operations of
the hotels during the twelve-year term of the Participating Leases. The AGH
Lessee has complete discretion in establishing room rates and all rates for
hotel goods and services. Likewise, all operating expenses of the hotels are
under the control of the AGH Lessee. The AGH Lessee has the right to manage or
to enter into management contracts with other parties to manage the hotels. If
the AGH Lessee elects to enter into management contracts with parties other than
American General Hospitality, Inc. ("AGHI"), the AGH Lessee must obtain the
prior written consent of the Company, which consent may not be unreasonably
withheld.
The AGH Lessee's results of operations are seasonal. The aggregate room
revenues in the second and third quarters in the pro forma statements of
operations are generally higher than room revenues in the first and fourth
quarters of each fiscal year.
(A) Represents the historical consolidated statement of operations of the
Company for the period July 31, 1996 (inception of operations) through
December 31, 1996.
(B) Represents the adjustments to reflect the pro forma operations of the
26 hotels owned by the Company as of September 30, 1997 and 21 of the
Acquired and Proposed Acquisition Hotels leased to AGH Leasing, L.P.
(together, the "AGH Lessee Hotels") as if all of the Hotels were
acquired on January 1, 1996 and leased to the AGH Lessee pursuant to a
Participating Lease since that date.
(C) Represents historical room, food and beverage and other revenues of
the AGH Lessee Hotels.
(D) Represents the amount of the AGH Lessee's minority interest investment
in Twin Towers Leasing, L.P. (the "Twin Towers Lessee", together with
AGH Leasing, L.P. the "AGH Lessee") which leases the Radisson Orlando
Twin Towers hotel from the Operating Partnership. The Twin Towers
Lessee is owned 51% by the AGH Lessee, which is the sole general
partner, and 49% by Regent Carolina Corporation, which is the sole
limited partner. Regent Carolina Corporation is not affiliated with
the Company, the Operating Partnership or the AGH Lessee.
(E) Represents the historical expenses of the AGH Hotels.
(F) Represents management fees to be incurred under the Management
Agreements. The management fees payable to AGHI consist of a base fee
of 1.5% of total revenue and an incentive fee of up to 2.0% of total
revenue. The incentive fee, if applicable, is equal to 0.025% of
annual total revenue for each 0.01% increase in annual total revenues
over the total revenues for the preceding twelve month period up to
the maximum incentive fee. The payment of the management fees to AGHI
by the AGH Lessee is subordinate to the AGH Lessee's obligations to
the Company under the Participating Leases. The full management fee
payable during 1996 and 1997 will be earned only to the extent that
the Lessee has taxable income equal to or greater than $50,000. If
the AGH Lessee's taxable income is below $50,000 in 1996 and 1996,
management fees are forfeited by AGHI to increase the AGH Lessee's
taxable income to $50,000.
(G) Represents the historical franchise fees of the Hotels. Franchise fees
associated with the hotel conversions are not included in the pro forma
statements of operations since other impact including possible revenue
enhancements and operating expense reductions are also not included.
(H) Historical depreciation at the AGH Hotels has been eliminated due to
depreciation being recorded by the Operating Partnership. Represents
depreciation related to the $315,000 of furniture, fixtures and
equipment ("FF&E") purchased by the AGH Lessee from the Operating
Partnership. The FF&E is depreciated over an estimated useful life of 5
years.
(I) Historical deferred loan costs and the related amortization has been
eliminated since the AGH Lessee is not expected to incur similar costs.
Amortization expense relates to the amortization of organization costs
which are being amortized over a 60 month period.
(J) Any future interest expense related to debt for the AGH Hotels will be
incurred and paid by the Operating Partnership. Interest expense
related to an advance made by the Operating Partnership to the AGH
Lessee for the FF&E purchase. The advance of $315,000 bears interest at
10%. The September 30, 1997 balance of the note is $248,160.
(K) Represents lease payments to the Operating Partnership from the AGH
Lessee pursuant to the Participating Leases calculated on a pro forma
basis by applying the rent provisions of the Participating Leases to
the revenues of the AGH Hotels. The departmental thresholds in the
Participating Leases are seasonally adjusted for interim periods.
(L) Represents the Company's historical statement of operations for the
nine months ended September 30, 1997.
11
