<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MERISTAR HOSPITALITY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MARYLAND 75-2648842
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
1010 WISCONSIN AVENUE N.W.
WASHINGTON, D.C. 20007
(202) 295-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PAUL W. WHETSELL
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
MERISTAR HOSPITALITY CORPORATION
1010 WISCONSIN AVENUE N.W.
WASHINGTON, D.C. 20007
(202) 295-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
RICHARD S. BORISOFF, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
212-373-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM OFFERING PROPOSED AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER MAXIMUM AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED SECURITY OFFERING PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
8 3/4% Senior Subordinated Notes
due 2007................................ $55,000,000 97.25% $53,487,500 $14,869.53
</TABLE>
(1) Estimated pursuant to Rule 457(f)(1) under the Securities Act of 1933 solely
for the purposes of calculating the registration fee.
(2) The registration fee has been calculated pursuant to Rule 457(f)(1) of the
Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 10, 1999
PRELIMINARY PROSPECTUS
MERISTAR HOSPITALITY CORPORATION
EXCHANGE OFFER FOR
$55,000,000
8 3/4% SENIOR SUBORDINATED NOTES DUE 2007
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED.
TERMS OF THE EXCHANGE OFFER:
o We will exchange all outstanding notes that are validly tendered and not
withdrawn before the expiration of the exchange offer.
o You may withdraw tendered outstanding notes at any time before the
expiration of the exchange offer.
o We believe that the exchange of outstanding notes will not be a taxable
exchange for United States federal income tax purposes, but you should
see the section entitled "Certain United States Federal Tax
Considerations" on page 73 for more information.
o The terms of the exchange notes to be issued are substantially identical
to the terms of the outstanding notes, except for specific transfer
restrictions and registration rights relating to the outstanding notes.
o There is no existing market for the exchange notes to be issued, and we
do not intend to apply for their listing on any securities exchange.
YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 12
FOR A DISCUSSION OF SPECIFIC FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN
INVESTMENT IN THE EXCHANGE NOTES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is May , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY......................................................................................... 1
RISK FACTORS............................................................................................... 10
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS................................................................ 19
SELECTED HISTORICAL FINANCIAL AND OTHER INFORMATION........................................................ 20
USE OF PROCEEDS............................................................................................ 22
CAPITALIZATION............................................................................................. 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................... 23
THE EXCHANGE OFFER......................................................................................... 29
DESCRIPTION OF THE EXCHANGE NOTES.......................................................................... 39
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS........................................................... 71
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER...................................................... 71
PLAN OF DISTRIBUTION....................................................................................... 74
LEGAL MATTERS.............................................................................................. 75
EXPERTS.................................................................................................... 75
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 75
</TABLE>
This prospectus incorporates important business and financial information
about our company that is not included in or delivered with this document. This
information is available without charge to you upon written or oral request of
our company at the following address:
John Emery, Chief Financial Officer
MeriStar Hospitality Corporation
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
Telephone requests may be directed to (202) 295-1000.
To obtain timely delivery of this information, you must request the
information no later than , 1999.
ii
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus. Because
it is a summary, it does not contain all of the information that you should
consider before participating in the exchange offer. You should read the entire
prospectus carefully, including the section entitled "Risk Factors" and the
consolidated financial statements and the related notes to those statements
considered to be a part of this prospectus.
Unless the context otherwise requires, references in this prospectus to
"MeriStar," "we," "us" and "our" are to MeriStar Hospitality Corporation and its
subsidiaries (including our subsidiary operating partnership through which we
operate all of our businesses).
ABOUT MERISTAR
GENERAL
We are a real estate investment trust which owns a portfolio of primarily
upscale, full-service hotels, diversified geographically as well as by franchise
and brand affiliations, in the United States and Canada. As of December 31,
1998, we owned 117 hotels that contain 29,351 rooms. The hotels are located in
major metropolitan areas or rapidly growing secondary markets and are well
located within these markets. A majority of the hotels are operated under
nationally recognized brand names such as Hilton(Registered),
Sheraton(Registered), Westin(Registered), Marriott(Registered),
Doubletree(Registered) and Embassy Suites(Registered). All of the hotels and our
other assets are held by, and all of our operations are conducted by, MeriStar
Hospitality Operating Partnership, L.P. We are the sole general partner of the
operating partnership and control its operations.
We believe that the upscale, full-service segment of the lodging industry
is the most attractive segment in which to own hotels. The upscale, full-service
segment is attractive for several reasons. First, the real estate market has
experienced a significant slow down in the past year in the development of
upscale, full-service hotels. Second, upscale, full-service hotels appeal to a
wide variety of customers, thus reducing the risk of decreasing demand from any
particular customer group. Additionally, such hotels have particular appeal to
both business executives and upscale leisure travelers, customers who are
generally less price sensitive than travelers who use limited-service hotels.
THE MERGER
Our company was created on August 3, 1998, when American General
Hospitality Corporation, a corporation operating as a real estate investment
trust, and its associated entities merged with CapStar Hotel Company and its
associated entities under an Agreement and Plan of Merger, dated as of March 15,
1998.
Prior to the merger, CapStar transferred specific assets and liabilities to
MeriStar Hotels & Resorts, Inc., a wholly owned subsidiary of CapStar, so that
MeriStar Hotels would own the hotel management and leasing business previously
operated by CapStar and its subsidiaries. CapStar then through a spin-off
distributed to its stockholders all of the outstanding capital stock of MeriStar
Hotels. Immediately following the merger, MeriStar Hotels acquired all of the
partnership interests in AGH Leasing, L.P., the third-party lessee that leased
most of the hotels American General owned. MeriStar Hotels also acquired most of
the assets and specific liabilities of American General Hospitality, Inc., the
third-party manager that managed most of the hotels American General owned.
MeriStar Hotels is also the lessee and manager of 109 of the hotels as well as
over 100 properties owned by other hotel owners. We share two key officers and
four board members with MeriStar Hotels. An intercompany agreement aligns our
interests with the interests of MeriStar Hotels, with the objective of
benefiting both companies' shareholders.
BUSINESS
Our business strategy is to opportunistically acquire hotel properties with
the potential for cash flow growth, and to renovate and reposition each hotel
according to the characteristics of the hotel and its market. During the year
ended December 31, 1998, we spent (including expenditures by both CapStar and
American
1
<PAGE>
General before the merger) a total of $200 million on renovations at our owned
hotels. We intend to spend an additional $175 million during 1999 completing our
renovation programs.
ACQUISITION STRATEGY
We focus our attention on investments in hotels located in markets with
economic, demographic and supply dynamics favorable to hotel owners. Through our
extensive due diligence process, we select those acquisition targets where we
believe selective capital improvements and well selected third-party management
will increase the hotel's ability to attract key demand segments, enhance hotel
operations and increase long-term value. In order to evaluate the relative
merits of each investment opportunity, our senior management, together with
MeriStar Hotels, create detailed plans covering all areas of renovation and
operation. These plans serve as the basis for our acquisition decisions and
guide subsequent renovation and operating plans, which will be carried out by a
third-party hotel operator.
In order to maintain our qualification as a real estate investment trust,
we must make annual distributions to our stockholders of at least 95% of our
real estate investment trust taxable income (excluding net capital gains). As a
result, to complete acquisitions, we rely heavily on our ability to raise new
capital through debt and equity offerings; that ability is dependent on the
then-current status of the capital markets. During the last six to nine months,
the capital markets have changed and equity capital is not available at prices
that make it beneficial to acquire new assets.
Although we are not currently pursuing direct acquisition opportunities, we
continue to be aware of acquisition opportunities in the upscale, full-service
hotel market. We currently anticipate that we may make investments in hotels
through co-investments with strategic partners.
FRANCHISES
We employ a flexible strategy in selecting brand names based on a
particular hotel's market environment and the hotel's unique characteristics.
Accordingly, we use various national trade names under licensing arrangements
with national franchisors.
PARTICIPATING LEASES
Subsidiaries of MeriStar Hotels lease all but eight of the hotels. Each of
our leases with MeriStar Hotels is a participating lease designed to allow us to
achieve substantial participation in any future growth of revenues generated at
our owned hotels. Each of the participating leases has a term of twelve years
from the inception of the lease, though each can be terminated earlier if
specific events occur. Under each participating lease, MeriStar Hotels is
obligated to pay us fixed base rent plus participating rent based on a
percentage of revenues at each of our owned hotels.
2
<PAGE>
THE PROPERTIES
Our corporate headquarters is in Washington, D.C. and we own hotel
properties throughout the United States and Canada. As of December 31, 1998, we
owned 117 hotels.
The following table sets forth selected information with respect to our
owned hotels for the year ended December 31, 1998:
<TABLE>
<CAPTION>
GUEST AVERAGE DAILY AVERAGE
HOTEL LOCATION ROOMS RATE OCCUPANCY
- ---------------------------------- ---------------------------------- ------ ------------- ---------
<S> <C> <C> <C> <C>
Sheraton Hotel Mesa, AZ 273 $85.15 53.0%
Crowne Plaza Hotel Phoenix, AZ 250 84.32 52.8
Embassy Suites Tucson, AZ 204 83.72 74.8
Courtyard by Marriott Century City, CA 134 115.24 85.6
Hilton Hotel Irvine, CA 289 100.04 73.0
Marriott Hotel Los Angeles, CA 469 118.78 68.5
Courtyard by Marriott Marina Del Rey, CA 276 90.08 92.2
Hilton Hotel Monterey, CA 204 114.62 62.5
Doubletree Resort Palm Springs, CA 285 81.62 52.8
Hilton Hotel Sacramento, CA 331 100.09 71.9
Holiday Inn Select San Diego, CA 317 75.54 84.0
Sheraton Hotel San Francisco, CA 525 151.62 86.9
Crowne Plaza Hotel San Jose, CA 239 129.05 72.7
Wyndham Hotel San Jose, CA 355 133.51 65.3
Hilton Hotel San Pedro, CA 226 71.83 81.0
Santa Barbara Inn Santa Barbara, CA 71 149.60 82.3
Holiday Inn Colorado Springs, CA 200 66.38 70.7
Sheraton Hotel Colorado Springs, CO 500 76.89 69.2
Embassy Suites Denver Englewood, CO 236 109.99 76.3
Hilton Hotel Hartford, CT 388 102.60 74.3
Ramada Meriden, CT 150 78.20 72.2
The Lodge at the Seaport Mystic, CT 77 81.73 54.7
Ramada Shelton, CT 155 122.03 75.9
Doubletree Bradley Airport Windsor Locks, CT 200 81.97 69.4
Embassy Row Hilton Washington, DC 193 125.84 74.9
Georgetown Inn Washington, DC 96 133.96 83.2
The Latham Hotel Washington, DC 143 124.03 83.0
South Seas Plantation Captiva, FL 579 221.00 59.4
Hilton Hotel Clearwater, FL 426 100.57 70.6
Ramada Hotel Clearwater, FL 289 72.95 66.9
Hilton Hotel Cocoa Beach, FL 296 84.93 76.8
Holiday Inn Ft. Lauderdale, FL 240 73.69 73.1
Howard Johnson Resort Key Largo, FL 100 78.57 84.6
Westin Hotel Key Largo, FL 200 133.37 70.2
Courtyard by Marriott Lake Buena Vista, FL 314 102.48 84.9
Sheraton Safari Hotel Lake Buena Vista, FL 489 77.11 77.8
Radisson Hotel Marco Island, FL 268 126.19 69.7
Holiday Inn Madeira Beach, FL 149 76.09 65.5
Radisson Hotel Orlando, FL 742 88.05 71.2
Best Western Hotel Sanibel Island, FL 46 133.76 75.6
Sanibel Inn Sanibel Island, FL 96 148.93 74.3
Seaside Inn Sanibel Island, FL 32 148.12 71.2
Song of the Sea Sanibel Island, FL 30 170.91 86.3
Sundial Beach Resort Sanibel Island, FL 243 184.43 72.7
Doubletree Hotel Tampa, FL 496 58.97 71.4
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
GUEST AVERAGE DAILY AVERAGE
HOTEL LOCATION ROOMS RATE OCCUPANCY
- ---------------------------------- ---------------------------------- ------ ------- -----
<S> <C> <C> <C> <C>
Doubletree Guest Suites Atlanta, GA 155 $107.45 65.9
Westin Atlanta Airport Atlanta, GA 495 85.14 78.7
Jekyll Inn Jekyll Island, GA 262 65.59 52.8
Wyndham Hotel Marietta, GA 218 63.60 72.0
Radisson Hotel Arlington Heights, IL 201 87.15 70.3
Radisson Hotel & Suites Chicago, IL 350 150.26 78.0
Holiday Inn Rosemont, IL 507 110.26 80.4
Radisson Hotel Schaumburg, IL 200 89.11 70.2
Doubletree Guest Suites Indianapolis, IN 137 90.00 69.0
Radisson Plaza Lexington, KY 367 84.00 62.7
Seelbach Hilton Hotel Louisville, KY 321 107.54 65.6
Holiday Inn Select Kenner, LA 303 85.60 76.6
Lafayette Hilton & Towers Lafayette, LA 327 76.89 72.6
Maison de Ville New Orleans, LA 23 267.25 67.6
Holiday Inn Annapolis, MD 219 91.11 70.4
Radisson Hotel Baltimore, MD 148 106.25 75.5
Sheraton Hotel Columbia, MD 287 102.77 73.4
Holiday Inn Express Hanover, MD 159 75.43 82.5
Hampton Inn Ocean City, MD 168 82.67 53.7
Hilton Hotel Detroit, MI 151 93.12 85.1
Hilton Hotel Grand Rapids, MI 224 85.91 66.7
Holiday Inn Sports Complex Kansas City, MO 163 69.87 73.0
Holiday Inn St. Louis, MO 120 71.91 81.7
Sheraton Airport Plaza Charlotte, NC 222 90.87 73.4
Hilton Hotel Durham, NC 194 88.98 62.0
Courtyard by Marriott Durham, NC 146 81.01 72.0
Four Points Hotel Cherry Hill, NJ 213 78.64 62.8
Ramada Hotel Mahwah, NJ 128 91.11 73.2
Sheraton Hotel Mahwah, NJ 225 117.79 78.0
Westin Morristown Morristown, NJ 199 121.67 59.1
Four Points Hotel Mt. Arlington, NJ 124 100.86 75.7
Doral Forrestal Princeton, NJ 290 154.39 65.3
Courtyard by Marriott Secaucus, NJ 165 115.84 87.8
Marriott Hotel Somerset, NJ 440 123.13 74.9
Doubletree Hotel Albuquerque, NM 295 75.26 71.4
Wyndham Hotel Albuquerque, NM 276 65.89 80.8
Crowne Plaza Hotel Las Vegas, NV 202 86.40 82.2
St. Tropez Suites Las Vegas, NV 149 97.35 72.6
Radisson Hotel Rochester, NY 171 69.93 71.4
Radisson Hotel Middleburg Heights, OH 237 75.41 66.8
Hilton Hotel Toledo, OH 213 70.81 60.7
Westin Hotel Oklahoma City, OK 395 74.64 52.9
Crowne Plaza Hotel Lake Oswego, OR 161 109.06 64.4
Sheraton Great Valley Frazer, PA 198 110.18 75.4
Embassy Suites Center City Philadelphia, PA 288 136.31 74.7
Holiday Inn Select Trevose, PA 215 92.77 72.2
Hilton Hotel Arlington, TX 309 86.18 76.8
Doubletree Hotel Austin, TX 350 95.80 66.8
Austin Hilton & Towers Austin, TX 320 80.52 67.3
Holiday Inn Select Bedford, TX 243 66.62 80.1
Radisson Hotel Dallas, TX 304 65.08 71.8
Renaissance Hotel Dallas, TX 289 94.91 58.0
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
GUEST AVERAGE DAILY AVERAGE
HOTEL LOCATION ROOMS RATE OCCUPANCY
- ---------------------------------- ---------------------------------- ------ ------- -----
<S> <C> <C> <C> <C>
Sheraton Hotel Dallas, TX 348 $68.29 60.9
Hilton Hotel Houston, TX 291 67.56 69.2
Marriott Hotel Houston, TX 302 117.52 69.4
Hilton Hotel Houston, TX 295 105.85 78.7
Sheraton Hotel Houston, TX 382 80.55 56.3
Holiday Inn Select Irving, TX 409 77.76 79.7
Hilton Hotel Midland, TX 249 74.88 51.9
Hilton Hotel Salt Lake City, UT 287 78.35 80.8
Holiday Inn Alexandria, VA 178 107.75 75.4
Ramada Inn Alexandria, VA 253 99.52 68.0
Hilton Hotel Arlington, VA 209 117.10 82.4
Hilton Hotel Arlington, VA 386 99.25 71.2
Hampton Inn Richmond, VA 124 70.01 75.6
Holiday Inn Richmond, VA 280 55.56 60.9
Hilton Hotel Bellevue, WA 179 118.91 79.0
Crowne Plaza Hotel Madison, WI 226 94.11 71.5
Holiday Inn Calgary Airport Calgary, Alberta 170 48.36 78.7
Sheraton Hotel Guildford, B.C. 278 66.61 70.1
Holiday Inn Metrotown Vancouver, B.C. 100 72.74 83.1
Ramada Vancouver Centre Vancouver, B.C. 118 68.74 79.9
------ ------- -----
Total/Weighted Average 29,351 $95.00 71.5%
------ ------- -----
------ ------- -----
</TABLE>
5
<PAGE>
CORPORATE ORGANIZATION
[FLOW CHART]
Public
|
|
v
------------------------------------
|-------------| MeriStar Hospitality Corporation |
| | (MD Corp.) |
| .001% ------------------------------------
| ownership | \ 100%
| | \
| | 1% ---------------------
| | General | MeriStar LP, Inc. |
| | Partner | (NV Corp.) |
| | ---------------------
| | /
| | / 86.6%
| | / Limited
| | / Partner
| | /
| ------------------------------------
| | MeriStar Hospitality |
| /| Operating Partnership, L.P. |---------------
| / | (DE LP) | |
| / ------------------------------------ |
| / | ^ | |
| 99.999% ownership | | 100% 12.4%
| / | | | Other
| / | | | Limited Partners
| / | | |
- ---------------- | | -------------------------
| Subsidiaries | | | | Directly owned hotels |
- ---------------- | | -------------------------
| |
| |
Participating Leases Base and Participating Rent
| |
| |
| |
v |
------------------------------------
| MeriStar Hotels & |
| Resorts, Inc. |
| (DE Corp.) |
------------------------------------
6
<PAGE>
ABOUT THIS TRANSACTION
On March 18, 1999, we privately placed $55 million of our 8 3/4% Senior
Subordinated Notes due 2007.
Simultaneously with the private placement, we entered into a registration
rights agreement with the initial purchasers of the outstanding notes, in which
we agreed to deliver this prospectus to you and to complete this exchange offer
on or before August 27, 1999. If we do not complete this exchange before
August 27, 1999, we must pay liquidated damages until the exchange offer is
completed. You should read the discussion under the heading "The Exchange Offer"
and "Description of the Exchange Notes" for further information regarding the
notes to be issued in the exchange offer.
We issued the outstanding notes to reduce outstanding indebtedness under
our revolving credit facility and to invest in real estate ventures. The
indebtedness under the revolving credit facility was used to refinance existing
indebtedness and for the acquisition and renovation of hotel properties. Please
refer to the section in this prospectus entitled "Use of Proceeds."
ABOUT THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered.......................... $55 million in principal amount of new 8 3/4% Senior Subordinated
Notes due 2007, which have been registered under the Securities Act
of 1933. The terms of the notes offered in the exchange offer are
substantially identical to those of the outstanding notes, except
that the transfer restrictions, registration rights and liquidated
damages provisions relating to the outstanding notes do not apply to
the new registered notes.
The Exchange Offer.......................... We are offering to issue these registered notes in exchange for a
like principal amount of our outstanding notes. You may tender your
outstanding notes for exchange by following the procedures described
under the heading "The Exchange Offer."
Tenders; Expiration Date; Withdrawal........ The exchange offer will expire at 5:00 p.m., New York City time on
, 1999, unless we extend it. If you decide to exchange your
outstanding notes for new notes, you must acknowledge that you are
not engaging in, and do not intend to engage in, a distribution of
the new notes. You may withdraw any notes that you tender for
exchange at any time before , 1999. If we decide for any
reason not to accept any notes you have tendered for exchange, those
notes will be returned to you without cost promptly after the
expiration or termination of the exchange offer. See "The Exchange
Offer--Terms of the Exchange Offer."
United States Federal Income Tax
Considerations............................ Your exchange of outstanding notes for notes to be issued in the
exchange offer will not cause you to realize any gain or loss for
United States federal income tax purposes. See "Certain United
States Federal Tax Considerations."
Use of Proceeds............................. We will not receive any cash proceeds from the exchange offer.
Exchange Agent.............................. IBJ Whitehall Bank & Trust Company.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Consequences of Failure to Exchange Your
Outstanding Notes......................... If you do not exchange your outstanding notes in the exchange offer,
your ability to transfer them will still be restricted as described
in the legend on those notes. In general, you may offer or sell your
outstanding notes only if they are registered under, or offered or
sold under an exemption from, the Securities Act and applicable
state securities laws. We do not currently intend to register the
outstanding notes under the Securities Act.
</TABLE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
<TABLE>
<S> <C>
Securities Offered.......................... $55,000,000 aggregate principal amount of 8 3/4% Senior Subordinated
Notes due 2007.
Maturity Date............................... August 15, 2007.
Interest Payment Dates...................... February 15 and August 15 of each year, commencing August 15, 1999.
Mandatory Redemption........................ None.
Optional Redemption......................... On or after August 15, 2002, we may redeem some or all of the notes
being issued in the exchange offer at the redemption prices listed
in this document under the heading "Description of the Exchange
Notes--Optional Redemption," together with accrued and unpaid
interest and liquidated damages, if any, to the applicable
redemption date.
Before August 15, 2000, we may redeem up to 35% of the aggregate
principal amount of the outstanding notes and the exchange notes
with the proceeds of public offerings of equity in our company at
the prices listed below under the heading "Description of the
Exchange Notes--Optional Redemption." In addition, before
August 15, 2002, we may redeem the notes at a price equal to the
approximate present value of the Notes at the time of redemption,
together with accrued and unpaid interest and liquidated damages, if
any, to the date of redemption. However, no optional redemption of
the outstanding notes or the exchange notes shall be made unless a
proportionate redemption of our 8 3/4% Senior Subordinated Notes
issued under a previous indenture on August 19, 1997 is made under
that indenture. Please refer to the section in this prospectus
entitled "Description of Notes--Optional Redemption."
Change of Control........................... After a change of control of our company, you will have the right to
require us to purchase all or some of your exchange notes at a
purchase price in cash equal to 101% of the aggregate principal
amount of these exchange notes, together with accrued and unpaid
interest and liquidated damages, if any, to the date of purchase.
Please refer to the section in this prospectus entitled "Description
of Notes--Repurchase at the Option of Holders--Change of Control."
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Ranking..................................... The exchange notes will be general unsecured obligations and will
rank junior in right of payment to all existing and future senior
debt. They will also effectively rank junior in right of payment to
all obligations of our subsidiaries, including trade payables in the
ordinary course of our business. The notes will rank equally in
right of payment with any present and future senior subordinated
indebtedness and will rank senior to all other subordinated
indebtedness.
None of our subsidiaries is presently required to guarantee the
notes, although under specific future circumstances, we may be
required to cause one or more of our subsidiaries to guarantee the
notes on a senior subordinated basis. On a pro forma basis, we would
have approximately $1.65 billion of indebtedness outstanding,
including $913.1 million of senior debt and $370.0 million of
non-recourse indebtedness of some of our subsidiaries. Please refer
to the section in this prospectus entitled "Description of the
Exchange Notes--Subordination" and "--Subsidiary Guarantees."
Restrictive Covenants....................... The indenture under which the exchange notes will be issued limits
the ability of our company and some of our subsidiaries to
(a) incur indebtedness or issue preferred stock, (b) pay dividends,
(c) repurchase equity interests and junior indebtedness, (d) complete
specific asset sales, (e) enter into transactions with related
entities, (f) make investments, (g) create or incur liens, (h) merge
or consolidate with any person or (i) transfer, lease, or otherwise
dispose of all or substantially all of our assets. All of these
limitations and prohibitions have a number of important
qualifications and exceptions. Please refer to the section in this
prospectus entitled "Description of the Exchange Notes--Covenants"
and "--Asset Sales."
Risk Factors................................ You should consider carefully the information provided in the
section in this prospectus entitled "Risk Factors" beginning on
page 12 and all the other information provided to you in this
prospectus in deciding whether to tender your outstanding notes in
the exchange offer.
</TABLE>
9
<PAGE>
Summary Historical Financial and Other Information
The following table shows summary historical financial information for our
company. We did not provide for federal income taxes for the year ended
December 31, 1995 because, before the August 1996 initial public offering, our
predecessor entities were partnerships and all federal income tax liabilities
were passed through to the individual partners. From 1995 to 1998, certain loan
facilities were refinanced and the write-offs of deferred costs associated with
the prior facilities were recorded as extraordinary losses.
On July 1, 1998, we adopted AICPA Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities." The effect of this accounting change as shown
below was a pre-tax charge against income for the year ended December 31, 1998
of $1,485,000 ($921,000 net of tax effect).
The average occupancy rate given below represents the total number of paid
rooms our hotel guests occupied divided by the total number of available rooms.
The average daily rate represents total room revenues at our hotels divided by
the total number of paid rooms our hotel guests occupied. Finally, revenue per
available room represents total room revenues at our hotels divided by the total
number of available rooms.
The following information should be read together with our consolidated
financial statements and related notes, which are considered part of this
document, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" starting on page 25. The selected operating results and
balance sheet data have been extracted from the consolidated financial
statements for each of the periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- -------- -------- ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND
OPERATING DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Revenue:
Hotel operations:
Participating lease revenue...................... $ 135,994 $ -- $ -- $ -- $ --
Rooms............................................ 275,610 207,736 68,498 4,456 --
Food, beverage, office rental & other............ 110,519 103,521 36,949 7,471 --
Management services & other revenues............. 3,174 5,136 4,345 4,436 4,418
---------- ---------- -------- -------- ------
Total revenues..................................... 525,297 316,393 109,792 26,363 4,418
---------- ---------- -------- -------- ------
Operating expenses:
Departmental expenses:
Rooms............................................ 65,048 51,075 17,509 4,190 --
Food, beverage and other......................... 80,327 77,373 27,102 5,437 --
Undistributed operating expenses:
Administrative and general....................... 62,350 50,332 20,448 8,078 4,508
Property and other operating costs............... 122,963 55,111 17,151 3,934 --
Depreciation and amortization.................... 60,703 20,990 8,248 2,097 23
---------- ---------- -------- -------- ------
Total operating expenses........................... 391,391 254,881 90,458 23,736 4,531
---------- ---------- -------- -------- ------
Net operating income (loss)........................ 133,906 61,512 19,334 2,627 (113)
Interest expense, net.............................. 64,378 21,024 12,346 2,414 --
Minority interest.................................. 5,121 1,425 (39) (18) --
Provision for income taxes......................... 15,699 14,911 2,674 -- --
---------- ---------- -------- -------- ------
Income (loss) before extraordinary loss............ 48,708 24,152 4,353 231 (113)
Extraordinary loss, net of tax..................... (4,080) (4,092) (1,956) (888) --
Cumulative effect of accounting change, net of
tax.............................................. (921) -- -- -- --
---------- ---------- -------- -------- ------
Net income (loss).................................. $ 43,707 $ 20,060 $ 2,397 $ (657) $ (113)
---------- ---------- -------- -------- ------
---------- ---------- -------- -------- ------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- -------- -------- ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND
OPERATING DATA)
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Investments in hotel properties, gross........... $2,909,439 $ 950,052 $343,092 $110,883 $ 176
Total assets..................................... 2,998,460 1,124,642 379,161 132,650 1,232
Long term debt................................... 1,602,352 492,771 200,361 73,574 --
OTHER FINANCIAL AND OPERATING DATA:
Ratio of earnings to fixed charges................. 1.89x 1.62x 1.46x 1.05x --
Owned hotels:
Number of hotels................................. 117 47 19 6 --
Number of guest rooms............................ 29,351 12,019 5,166 2,101 --
Total revenues................................... $ 522,123 $ 311,257 $105,447 $ 21,927 $ --
Average occupancy................................ 71.5% 72.0% 71.6% 72.3% --
Average daily rate............................... $ 95.00 $ 86.87 $ 82.84 $ 71.58 $ --
Revenue per available room....................... $ 67.90 $ 62.55 $ 59.31 $ 51.75 $ --
</TABLE>
11
<PAGE>
RISK FACTORS
You should consider carefully the information below, as well as all the
other information included or considered to be part of this prospectus before
you decide to tender your outstanding notes in the exchange offer. Our actual
results could differ materially from those anticipated in forward-looking
statements made in this prospectus, including those described in the following
risk factors and elsewhere in this prospectus. Please refer to the section of
this prospectus entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Special Note Regarding Forward-Looking
Statements."
WE HAVE SIGNIFICANT DEBT, WHICH MAY LIMIT OUR ABILITY TO BORROW, RESTRICT THE
USE OF OUR CASH FLOWS AND EXPOSE US TO SIGNIFICANT REFINANCING RISKS.
We currently have significant amounts of debt outstanding and, accordingly,
are exposed to the risks normally associated with debt financing, including the
risk that:
o our cash flow from operations will be insufficient to make required
payments of principal and interest, including principal and interest on
the outstanding and exchange notes;
o existing indebtedness, including secured indebtedness, may not be
refinanced; or
o the terms of any refinancing will not be as favorable as the terms of
existing indebtedness.
If we do not have sufficient funds to repay our indebtedness at maturity,
it may be necessary to refinance our indebtedness through additional debt
financing, private or public offerings of debt securities or additional equity
offerings. If, at the time of any of the refinancing, prevailing interest rates
or other factors result in higher interest rates on refinancings, increases in
interest expense could adversely affect cash flow, and, consequently, cash
available for repayment of indebtedness. If we are unable to refinance our
indebtedness on acceptable terms, we might be forced to dispose of hotels or
other assets on disadvantageous terms, potentially resulting in losses and
adverse effects on cash flow from operating activities. If we are unable to make
required payments of principal and interest on indebtedness secured by our
hotels, the properties could be foreclosed upon by the lender with a consequent
loss of income and asset value.
Likewise our credit facility requirements could affect our financial
condition. We have in place a senior secured credit facility that, at inception,
provided for a maximum borrowing amount of up to $1.0 billion. The credit
facility is structured as a $300 million, five-year term loan facility; a $200
million, five-and-a-half year term loan facility; and a $500 million, three-year
revolving credit facility with two one-year optional extensions. Our ability to
borrow under the credit facility is limited by financial covenants, including
leverage and interest rate coverage ratios and minimum net worth requirements.
Our credit facility limits our ability to effect mergers, asset sales and change
of control events and limits dividends to the lesser of
o 90% of funds from operation; and
o 100% of funds from operations less a capital reserve equal to 4% of gross
room revenues.
The credit facility also contains a cross-default provision which would be
triggered by a default or acceleration of
o $20 million or more of indebtedness secured by our assets, or
o $5 million or more of any other indebtedness.
We also have outstanding $150 million aggregate principal amount of senior
subordinated unsecured notes due 2007 that bear interest at an annual rate of
8.75% and $173 million of outstanding convertible notes due 2004 that bear
interest at 4.75%. The indentures relating to these notes contain, as does the
indenture relating to the exchange notes, limitations on our ability to effect
mergers and change of control events. The indenture relating to the $150 million
of senior subordinated unsecured notes, and the indenture relating to the
outstanding and exchange notes contain financial covenants, including:
o limitations on incurring additional indebtedness and the issuance of
capital stock unless an interest coverage ratio is met;
o limitations on the declaration and payment of dividends;
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<PAGE>
o limitations on the sale of our assets;
o limitations on transactions with our affiliates; and
o limitations on liens.
Our organizational documents do not limit the amount of indebtedness which
we may incur. As of the date of this prospectus, approximately 25% of our hotel
assets, based on the number of guest rooms, were encumbered by mortgage debt.
PAYMENT OF PRINCIPAL AND INTEREST ON THE EXCHANGE NOTES IS JUNIOR IN RIGHT OF
PAYMENT TO EXISTING AND FUTURE SENIOR DEBT, AND EFFECTIVELY JUNIOR IN RIGHT OF
PAYMENT TO THE OBLIGATIONS OF OUR SUBSIDIARIES.
On a pro forma basis, we would have approximately $1.63 billion of
indebtedness outstanding, including $1,091.7 million of senior debt and $370.0
million of non-recourse indebtedness of our unrestricted subsidiaries. The
exchange notes will rank junior in right of payment to all existing and future
senior debt, including the principal, premium (if any) and interest with respect
to our credit facility. The exchange notes will also effectively rank junior in
right of payment to all of the obligations of our subsidiaries, including trade
payables in the ordinary course of business.
WE MAY NOT PAY THE PRINCIPAL OR INTEREST ON THE EXCHANGE NOTES IF A DEFAULT
OCCURS AND IS CONTINUING IN THE PAYMENT DUE ON OUR SENIOR DEBT.
We may not pay principal of, premium (if any) on, or interest on, the
exchange notes, or repurchase or redeem or otherwise retire any exchange notes,
if any default occurs and is continuing in the payment when due of any senior
debt, except that you may receive debt or equity securities that are junior in
right of payment to our senior debt and payments made from a defeasance trust.
In addition, if any other event of default exists with respect to designated
senior debt and specific other conditions are satisfied, we may not make any
payments on the exchange notes for up to 179 days, except that you may receive
debt or equity securities that are junior in right of payment to our senior debt
and payments made from a defeasance trust. Upon any payment or distribution of
assets in connection with a total or partial liquidation or dissolution or
reorganization of our company or similar proceeding, the holders of senior debt
will be entitled to receive payment in full before you are entitled to receive
any payment. Please refer to the section of this prospectus entitled
"Description of Exchange Notes--Subordination."
SOME OF OUR BORROWINGS BEAR INTEREST AT VARIABLE RATES; THEREFORE, OUR CASH FLOW
AND ABILITY TO PAY PRINCIPAL AND INTEREST ON THE EXCHANGE NOTES MAY BE ADVERSELY
AFFECTED BECAUSE WE ARE EXPOSED TO THE RISK OF RISING INTEREST RATES.
Some of our borrowings bear interest at variable rates, including amounts
outstanding under our credit facility. In addition, we may incur indebtedness in
the future that bears interest at a variable rate or we may be required to
retain our existing indebtedness at higher interest rates. Accordingly,
increases in interest rates could increase our interest expense and adversely
affect our cash flow.
PAYMENT OF PRINCIPAL AND INTEREST ON THE EXCHANGE NOTES IS DEPENDENT ON THE
ABILITY OF OUR LESSEES TO MAKE RENT PAYMENTS TO US UNDER THE HOTEL LEASES.
Our revenues and our ability to make principal and interest payments on the
exchange notes depend solely upon the ability of MeriStar Hotels and our other
hotel lessee to make rent payments under hotel leases. We receive both base rent
and a percentage of gross sales above a minimum level under our hotel leases. As
a result, we will participate in the economic operations of our hotels only
through our share of gross revenues. Any failure or delay by MeriStar Hotels or
our other hotel lessee in making rent payments would adversely affect our
ability to make principal and interest payments on the exchange notes. The
failure or delay by MeriStar Hotels or our other hotel lessee may be caused by
reductions in revenue from the hotels they lease from us.
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<PAGE>
EXTERNAL FACTORS THAT AFFECT OUR HOTEL LESSEES COULD AFFECT OUR REVENUES AND
ABILITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON THE EXCHANGE NOTES.
MeriStar Hotels and our other hotel lessee will be affected by factors
beyond their control such as changes in the level of demand for rooms and
related services of our hotels, the ability of MeriStar Hotels and our other
lessee to maintain and increase gross revenues at our hotels and other factors
relating to the operations of our hotels. Although failure on the part of either
MeriStar Hotels or our other lessee to materially comply with the terms of a
hotel lease (including failure to pay rent when due) gives us the non-exclusive
right to terminate the lease, repossess the applicable hotel and enforce the
payment obligations under the lease, we would then be required to find another
lessee to lease the hotel because we cannot operate hotels directly due to
federal income tax restrictions. In addition, it is possible that we will be
unable to enforce the payment obligations under the leases following the
termination. We cannot assure you that we would be able to find another lessee
or that, if another lessee were found, we would be able to enter into a new
lease on terms favorable to us.
THERE ARE POSSIBLE CONFLICTS OF INTEREST IN OUR RELATIONSHIP WITH MERISTAR
HOTELS THAT COULD AFFECT OUR REVENUES AND ABILITY TO MAKE PAYMENTS OF PRINCIPAL
AND INTEREST ON THE EXCHANGE NOTES.
We share a number of board members and senior executives with MeriStar
Hotels, which may cause our interests to conflict.
We share four of the nine members of our board of directors, as well as two
senior executives, with MeriStar Hotels. Our relationship with MeriStar Hotels
is governed by an intercompany agreement, which restricts each party from taking
advantage of business opportunities without first presenting those opportunities
to the other party. We may have conflicting views with MeriStar Hotels on the
manner in which our hotels are operated and managed, and with respect to lease
arrangements, acquisitions and dispositions. As a result, our directors and
senior executives, who serve in similar capacities at MeriStar Hotels, may well
be presented with several decisions which provide them the opportunity to
benefit us to the detriment of MeriStar Hotels or benefit MeriStar Hotels to our
detriment. Similar inherent potential conflicts of interest will be present in
all of the numerous transactions between us and MeriStar Hotels.
Our revenues and ability to make payments of principal and interest on the
exchange notes could be affected by restrictions that prohibit MeriStar Hotels
from making investments that a real estate investment trust could make unless we
decline the opportunity in a particular situation.
The certificate of incorporation of MeriStar Hotels provides that, for as
long as the intercompany agreement with us remains in effect, MeriStar Hotels is
prohibited from engaging in activities or making investments that a real estate
investment trust could make unless we are first given the opportunity but choose
not to pursue those activities or investments. Under the intercompany agreement,
MeriStar Hotels has, with limited exceptions, agreed not to acquire or make
(1) investments in real estate which, for purposes of the intercompany
agreement, include the provision of services related to real estate and
investment in hotel properties, real estate mortgages, real estate derivatives
or entities that invest in real estate assets, or (2) any other investments that
may be structured in a manner that qualifies under the federal income tax
requirements applicable to real estate investment trusts, unless in either case
it has notified us of the acquisition or investment opportunity and we have
determined not to pursue the acquisition or investment. MeriStar Hotels also has
agreed to assist us in structuring and completing any acquisition or investment
which we do elect to pursue, on terms determined by us.
Our revenues and ability to make payments of principal and interest on the
exchange notes could be affected by restrictions that require us to offer lessee
opportunities to MeriStar Hotels.
The intercompany agreement grants MeriStar Hotels the right of first
refusal to become the lessee of any real property that we acquire and are
required, consistent with our status as a real estate investment trust, to lease
to a third party. This lessee opportunity will be available to MeriStar Hotels
only if we determine that MeriStar Hotels is qualified to be the lessee. Because
of the provisions of the intercompany agreement and the MeriStar Hotels charter,
the nature of MeriStar Hotels' business and the opportunities it may pursue are
restricted.
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<PAGE>
Our operating income could be affected if we sell a hotel because we
generally have to pay a lease termination fee to MeriStar Hotels if we do so.
We generally will be obligated under our leases with MeriStar Hotels to pay
a lease termination fee to MeriStar Hotels if we (1) elect to sell a hotel or
(2) elect not to restore a hotel after a casualty and do not replace it with
another hotel on terms that would create a leasehold interest in the hotel with
a fair market value equal to the fair market value of MeriStar Hotels's
remaining leasehold interest under the lease to be terminated. When applicable,
the termination fee is equal to the fair market value of MeriStar Hotels'
leasehold interest in the remaining term of the lease to be terminated. A
decision to sell a hotel may, therefore, have significantly different
consequences for us and for MeriStar Hotels.
Our financial condition could be adversely affected because we lack control
over the management and operation of our owned hotels.
We are dependent on the ability of MeriStar Hotels and our other hotel
lessee to operate and manage our hotels. In order to maintain our real estate
investment trust status, we cannot operate our hotels or any subsequently
acquired hotels. As a result, we are unable to directly implement strategic
business decisions for the operation and marketing of our hotels, including
decisions with respect to the setting of room rates, food and beverage
operations and similar matters.
Our relationship with MeriStar Hotels could have a negative impact on our
acquisitions because other potential parties may not approach us.
Our relationship with MeriStar Hotels could negatively impact our ability
to acquire additional hotels because hotel management companies, franchisees and
others who would have approached us with acquisition opportunities in hopes of
establishing lessee or management relationships may not do so knowing that we
will rely primarily on MeriStar Hotels to lease and/or manage the acquired
properties. These persons may instead provide those acquisition opportunities to
hotel companies that will allow them to manage the properties following the
sale. This could have a negative impact on our acquisition activities in the
future.
There was no arm's-length bargaining of the intercompany agreement with
MeriStar Hotels.
The terms of the intercompany agreement with MeriStar Hotels were not
negotiated on an arm's-length basis. Because the two companies share some of the
same executive officers and directors, there is a potential conflict of interest
with respect to the enforcement and termination of the intercompany agreement to
our benefit to the detriment of MeriStar Hotels or to benefit MeriStar Hotels to
our detriment. Because of these conflicts, the executive officers and directors
may have conflicts of interest with respect to their decisions relating to
enforcement of the intercompany agreement.
OUR FRANCHISE AND LICENSE AGREEMENTS MAY CONFLICT WITH OUR BUSINESS PHILOSOPHY
AND ADVERSELY AFFECT OUR FINANCIAL CONDITION BECAUSE THE AGREEMENTS SET
STANDARDS FOR AND LIMITATIONS ON THE OPERATIONS OF THE HOTELS AT THE DISCRETION
OF THE FRANCHISOR.
Substantially all of our hotels are operated under existing franchise or
license agreements with nationally recognized hotel brands. The franchise
agreements generally contain specific standards for, and restrictions and
limitations on, the operation and maintenance of a hotel to maintain uniformity
within the franchisor system. Those limitations may conflict with our
philosophy, shared with MeriStar Hotels, of creating specific business plans
tailored to each hotel and to each market. Those standards are often changed
over time, in some cases at the discretion of the franchisor, and may restrict a
franchisee's ability to make improvements or modifications to a hotel without
the consent of the franchisor. In addition, compliance with those standards
could require a franchisee to incur significant expenses or capital
expenditures. Action or inaction on our part, by MeriStar Hotels or by our other
third-party operators, could result in a breach of those standards or other
terms and conditions of the franchise agreements and could result in the loss or
cancellation of a franchise license.
Terminating a franchise or license agreement could adversely affect our
operations.
In connection with terminating or changing the franchise affiliation of a
hotel or a subsequently acquired hotel, we may be required to incur significant
expenses or capital expenditures. Moreover, the loss of a
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<PAGE>
franchise license could have a material adverse effect upon the operations or
the underlying value of the hotel covered by the franchise because of the loss
of associated name recognition, marketing support and centralized reservation
systems provided by the franchisor. The franchise agreements covering the hotels
expire or terminate, without specified renewal rights, at various times and have
differing remaining terms. As a condition to renewal, the franchise agreements
frequently contemplate a renewal application process, which may require
substantial capital improvements to be made to the hotel.
OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED BY
THE POTENTIAL COSTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in those property. Those laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of those
hazardous or toxic substances. In addition, the presence of contamination from
hazardous or toxic substances, or the failure to properly remediate the
contaminated property, may adversely affect the owner's ability to sell or rent
such real property or to borrow funds using such real property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the costs of removal or remediation of the
substances at the disposal or treatment facility, whether or not the facility is
or ever was owned or operated by that person.
The operation and removal of underground storage tanks are also regulated
by federal and state laws. In connection with the ownership and operation of the
hotels, we could be held liable for the costs of remedial action with respect to
regulated substances and storage tanks and claims related to them. Activities
have been undertaken to close or remove storage tanks located on the property of
several of the hotels.
All of our hotels have undergone Phase I environmental site assessments,
which generally provide a nonintrusive physical inspection and database search,
but not soil or groundwater analyses, by a qualified independent environmental
engineer. The purpose of a Phase I assessment is to identify potential sources
of contamination for which the hotels may be responsible and to assess the
status of environmental regulatory compliance. The Phase I assessments have not
revealed any environmental liability or compliance concerns that we believe
would have a material adverse effect on our results of operation or financial
condition, nor are we aware of any environmental liability or concerns.
In addition, our hotels have been inspected to determine the presence of
asbestos. Federal, state and local environmental laws, ordinances and
regulations also require abatement or removal of asbestos-containing materials
and govern emissions of and exposure to asbestos fibers in the air.
Asbestos-containing materials are present in various building materials such as
sprayed-on ceiling treatments, roofing materials or floor tiles at some of the
hotels. Operations and maintenance programs for maintaining asbestos-containing
materials have been or are in the process of being designed and implemented, or
the asbestos-containing materials have been scheduled to be or have been abated,
at the hotels. Any liability resulting from non-compliance or other claims
relating to environmental matters could have a material adverse effect on our
results of operations or financial condition.
OUR INVESTMENTS ARE IN A SINGLE INDUSTRY, WHICH EXPOSES US TO GREATER FINANCIAL
RISKS THAN IF WE HAD DIVERSIFIED INVESTMENTS.
Our current strategy is to acquire interests only in hospitality and
lodging properties. As a result, we are exposed to the risks inherent in
investing in a single industry. The effects on cash available for distribution
resulting from a downturn in the hotel industry may be more pronounced than if
we had diversified our investments.
THERE ARE VARIOUS REAL ESTATE INVESTMENT TRUST TAX RISKS THAT COULD ADVERSELY
AFFECT OUR FINANCIAL CONDITION.
A loss of our qualification as a real estate investment trust could require
us to make significant income tax payments, and we might have to borrow funds to
do so.
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<PAGE>
We have operated and intend to continue to operate in a manner designed to
permit us to qualify as a real estate investment trust for federal income tax
purposes. Qualification as a real estate investment trust involves the
application of highly technical and complex provisions of the Internal Revenue
Code of 1986, for which there are only limited judicial or administrative
interpretations. The determination of various factual matters and circumstances
not entirely within our control may affect our ability to continue to qualify as
a real estate investment trust. The complexity of these provisions and of the
applicable income tax regulations under the Internal Revenue Code is greater in
the case of a real estate investment trust that holds its assets through a
partnership, as we do. Moreover, no assurance can be given that legislation, new
regulations, administrative interpretations or court decisions will not change
the tax laws with respect to qualification as a real estate investment trust or
the federal income tax consequences of that qualification.
If we fail to qualify as a real estate investment trust in any taxable
year, we will not be allowed a deduction for distributions to our stockholders
in computing our taxable income and will have to pay federal income tax
(including any applicable alternative minimum tax) on our taxable income at the
applicable corporate rate. In addition, unless we were entitled to relief under
statutory provisions, we would be disqualified from treatment as a real estate
investment trust for the four taxable years following the year during which
qualification is lost. This disqualification would reduce our funds available
for repayment of indebtedness because of our additional tax liability for the
year or years involved.
If the Internal Revenue Service were successfully to determine that our
operating partnership, or any of the partnerships, joint ventures or limited
liability companies in which we or our operating partnership hold an interest,
is properly treated for federal income tax purposes as a corporation, rather
than as a partnership (or, in the case of some single-member limited liability
companies, disregarded as an entity separate from the member), we would cease to
qualify as a real estate investment trust. The imposition of a corporate income
tax on the particular entity, with a concomitant loss of our real estate
investment trust status, would substantially reduce the amount of cash available
for repayment of indebtedness.
If we were to fail to qualify as a real estate investment trust, we no
longer would have to meet the distribution requirements of the Internal Revenue
Code. To the extent that distributions to stockholders would have been made in
anticipation of our qualifying as a real estate investment trust, we might be
required to borrow funds or to liquidate assets to pay the applicable corporate
income tax. Although we currently operate in a manner designed to qualify as a
real estate investment trust, it is possible that future economic, market,
legal, tax or other considerations may cause us to decide to revoke the real
estate investment trust election.
The income distribution requirements applicable to real estate investment
trusts could cause us to distribute amounts that otherwise would be spent on
future acquisitions, unanticipated capital expenditures or repayment of debt
which would require us to borrow funds or to sell assets to fund the cost of
those items.
To obtain the favorable tax treatment accorded to real estate investment
trusts under the Internal Revenue Code, we generally will be required each year
to distribute to our stockholders at least 95% of our real estate investment
trust taxable income. We will have to pay income tax on any undistributed real
estate investment trust taxable income and net capital gain, and a 4%
nondeductible excise tax on the amount, if any, by which distributions we pay
with respect to any calendar year are less than the sum of:
o 85% of our ordinary income for the calendar year;
o 95% of our capital gain net income for that year; and
o 100% of our undistributed income from prior years.
We intend to make distributions to our stockholders to comply with the
distribution provisions of the Internal Revenue Code and generally to avoid
federal income taxes and the nondeductible 4% excise tax. Our income will
consist primarily of our share of income of our operating partnership and our
cash flow will consist primarily of our share of distributions from the
operating partnership. It is possible, however, that differences in timing
between the receipt of income and the payment of expenses in arriving at our
taxable income or the taxable income of the operating partnership and the effect
of nondeductible capital expenditures, the creation of reserves or required debt
amortization payments could in the future require us to borrow funds directly or
through the operating partnership on a short or long-term basis to meet the
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<PAGE>
distribution requirements that are necessary to continue to qualify as a real
estate investment trust and avoid federal income taxes and the 4% nondeductible
excise tax. In those circumstances, we might need to borrow funds directly to
avoid adverse tax consequences even if we believe that the then-prevailing
market conditions generally are not favorable for borrowing or that borrowing is
not advisable in the absence of those tax considerations.
Distributions by the operating partnership will be determined by us and are
dependent on a number of factors, including:
o the amount of cash available for distribution;
o the operating partnership's financial condition;
o our decision to reinvest funds rather than to distribute the funds;
o the operating partnership's capital expenditure requirements; and
o the annual distribution requirements under the real estate investment
trust provisions of the Internal Revenue Code.
However, the limited partnership agreement of the operating partnership
generally authorizes us, as the general partner of the operating partnership, to
take any steps necessary to cause the operating partnership to distribute to its
partners an amount needed to meet the real estate investment trust minimum
distribution requirements. Accordingly, although we intend to continue to
satisfy the annual distribution requirement to avoid corporate income taxation
on the earnings that we distribute, we cannot assure you that we will be able to
do so.
THERE ARE POTENTIAL CONFLICTS RELATING TO OUR "PAPER-CLIP" STRUCTURE, WHICH MAY
BE DETRIMENTAL TO OUR INTERESTS.
Under the intercompany agreement with MeriStar Hotels, each of us will
provide the other with reciprocal rights to participate in specific transactions
entered into by us. In particular, MeriStar Hotels will generally have a right
of first refusal to become the lessee of any real property we acquire if we
determine that, consistent with our status as a real estate investment trust, we
are required to enter into a specific lease arrangement. This is only the case,
though, if we determine that MeriStar Hotels or an entity that it controls is
qualified to be the lessee. This is known as the "paper-clip" real estate
investment trust structure. However, because of the independent trading of the
stock of the two companies, stockholders in each company may develop divergent
interests which could lead to conflicts of interest. This divergence of
interests could also reduce the anticipated benefits of the "paper-clip" real
estate investment trust structure.
OUR OPERATIONS COULD BE ADVERSELY AFFECTED BECAUSE WE ARE DEPENDENT ON KEY
PERSONNEL.
We place substantial reliance on the lodging industry knowledge and
experience and the continued services of our senior management, led by Paul W.
Whetsell. While we believe that, if necessary, we could find a replacement for
Mr. Whetsell, the loss of his services could have a material adverse effect on
our operations. In addition, Mr. Whetsell is currently engaged, and in the
future will continue to engage, in the management of MeriStar Hotels.
Mr. Whetsell may experience conflicts of interest in allocating management time,
services and functions between us and MeriStar Hotels.
THERE ARE RISKS RELATED TO POTENTIAL YEAR 2000 COMPLIANCE PROBLEMS THAT COULD
ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
We are in the process of conducting a review of our computer systems to
identify the systems that could be affected by the "Year 2000" problem and have
initiated an implementation plan to address the problem. The Year 2000 problem
is the result of computer programs being written using two digits rather than
four to define the applicable year. Any of our programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If not corrected, this could result in a major systems failure or
miscalculations.
Our leased and managed hotel properties contain various information
technology and embedded technology systems. Both types of systems contain
microprocessors and microcontrollers that must be
18
<PAGE>
assessed for Year 2000 compliance. We have developed a comprehensive
implementation plan to address the potential Year 2000 problems caused by such
systems. This plan involves six stages:
o increase awareness of issue;
o assign responsibility for coordinating response to issue;
o information collection;
o analysis;
o modification, repair or replacement; and
o testing.
We are currently in our analysis stage and expect to complete this stage in
May 1999. The following stages are expected to be completed as follows:
modification, repair or replacement--August 1999; and testing--September 1999.
As an additional part of our implementation plan to address the Year 2000
problem, we have also initiated communications with third parties with which we
have material relationships to determine the extent of potential Year 2000
problems with these parties' services provided to us.
The most critical of these services involve such items as reservations
systems for our hotels. Without such systems, we could suffer a material decline
in business at many of our properties. We expect to complete our communications
and assessment of third parties' services in May 1999.
We anticipate completing our Year 2000 implementation plan no later than
September 1999. As of December 31, 1998, historical costs incurred to address
the Year 2000 problem approximate $0.8 million. We have not yet completed a
final cost estimate related to fixing Year 2000 issues, but an initial estimate
of these remediation costs for our properties is $10-15 million. This cost
estimate is based on our preliminary assessment, and will be refined and
adjusted as we continue to complete the stages of our implementation plan to
address the potential Year 2000 problems.
Although we are in the process of modifying our existing software and
converting to new software, if such modifications and conversions are not
completed timely, the Year 2000 problem could have a material impact on our
financial position and operations. Our operations are highly dependent upon
participating lease revenue earned from the lessees of our properties. These
participating lease revenue amounts are based upon revenues generated at the
leased properties. To the extent that the Year 2000 problems materially affect
the conduct of operations at those properties, it is likely that those lessees'
revenues would be affected, and that our participating lease revenues would
ultimately be affected.
A COURT COULD DECLARE THE EXCHANGE NOTES VOID, JUNIOR IN RIGHT OF PAYMENT OR
TAKE OTHER ACTIONS DETRIMENTAL TO YOUR INTERESTS.
An unpaid creditor or representative of creditors, such as a lender under
our revolving credit facility, could file a lawsuit claiming that the issuance
of the exchange notes constitutes a fraudulent conveyance. If the court were to
make such a finding, it could:
o void our obligations under the exchange notes;
o declare the exchange notes junior in right of payment to other
indebtedness; or
o take other actions detrimental to you as a holder of the exchange notes.
To make this determination, a court would have to find that:
o we did not receive fair consideration or reasonably equivalent value for
the exchange notes; and
o at the time the exchange notes were issued, we were insolvent or rendered
insolvent by the issuance of the exchange notes; were engaged in a
business or transaction for which our remaining assets constituted
unreasonably small capital; or intended to incur, or believed that we
would incur, debts which would be beyond our ability to pay as they
matured.
19
<PAGE>
The measure of insolvency for these purposes will vary depending upon the
law of the jurisdiction and upon the valuation assumptions and the methodology
applied by the court.
Moreover, regardless of solvency, a court could also void the issuance of
the exchange notes if it determined that the transaction was made with the
intent to hinder, delay or defraud creditors, or a court could subordinate the
exchange notes to the claims of all existing and future creditors on similar
grounds.
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE
CONSEQUENCES.
The outstanding notes were not registered under the Securities Act or under
the securities laws of any state and you may not resell them, offer them for
resale or otherwise transfer them unless they are subsequently registered or
resold under an exemption from the registration requirements of the Securities
Act and applicable state securities laws. If you do not exchange your
outstanding notes for exchange notes pursuant to the exchange offer, or if you
do not properly tender your outstanding notes in the exchange offer, you will
not be able to resell, offer to resell or otherwise transfer the outstanding
notes unless they are registered under the Securities Act or unless you resell
them, offer to resell or otherwise transfer them under an exemption from the
registration requirements of, or in a transaction not subject to, the Securities
Act. In addition, you will no longer be able to obligate us to register the
outstanding notes under the Securities Act except in the limited circumstances
provided under our registration rights agreement.
YOU MAY FIND IT DIFFICULT TO SELL YOUR EXCHANGE NOTES.
The exchange notes will be registered under the Securities Act but will not
be eligible for trading on the Private Offerings, Resales and Trading through
Automated Linkages market. The exchange notes will constitute a new issue of
securities with no established trading market, and there can be no assurance as
to:
o the development of any market for the exchange notes;
o the liquidity of any market for the exchange notes that may develop;
o your ability to sell your exchange notes; or
o the price at which you would be able to sell your exchange notes.
We have been advised by the initial purchasers for the outstanding notes
that they presently intend to make a market in the exchange notes. However, they
are not obligated to do so and may discontinue any market-making activity with
respect to the exchange notes at any time without notice. If a market for the
exchange notes were to exist, the exchange notes could trade at prices that may
be higher or lower than their principal amount or purchase price, depending on
many factors, including prevailing interest rates, the market for similar
debentures and the financial performance of our company. Historically, the
market for non-investment grade debt has been subject to disruptions that have
caused substantial volatility in the prices of securities similar to the
exchange notes. We cannot assure you that the market for the exchange notes, if
any, will not be subject to similar disruptions. Any disruption may adversely
affect you as a holder of the exchange notes.
20
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
The following unaudited pro forma statement of operations gives effect to
the merger of our predecessors and the spin-off of MeriStar Hotels as if both
transactions occurred on January 1, 1998. The unaudited pro forma statement of
operations is not necessarily indicative of what our financial position or
results of operations actually would have been if the merger and the spin-off
actually occurred on January 1, 1998. Additionally, the unaudited pro forma
statement of operations does not purport to project our financial position or
results of operations at any future date or for any future period. The unaudited
pro forma statement of operations should be read in conjunction with our
historical consolidated financial statements and related notes, which are
considered part of this prospectus. Please refer to the section of this document
entitled "Where You Can Find More Information."
The average occupancy rate shown below represents the total number of paid
rooms our hotel guests occupied divided by the total number of available rooms.
The average daily rate represents total room revenues at our hotels divided by
the total number of paid rooms our hotel guests occupied. Finally, revenue per
available room represents total room revenues at our hotels divided by the total
number of available rooms.
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1998
---------------------
(IN THOUSANDS,
EXCEPT PER
SHARE AMOUNTS
AND OPERATING
STATISTICS)
<S> <C>
Revenue
Participating lease revenue.............................................................. $ 327,309
Office rental and other revenue.......................................................... 5,323
---------
Total revenue.............................................................................. 332,632
---------
Expenses
Administrative and general............................................................... 5,607
Office rental and other expense.......................................................... 2,190
Property taxes, insurance and other...................................................... 41,698
Depreciation and amortization............................................................ 87,910
Interest expense, net.................................................................... 86,196
---------
Total expenses............................................................................. 223,601
---------
Income before minority interests and income taxes.......................................... 109,031
Minority interests......................................................................... 10,533
Income taxes............................................................................... 2,266
---------
Net income................................................................................. $ 96,232
---------
---------
Diluted funds from operations.............................................................. $ 199,426
---------
---------
Weighted average number of diluted shares of common stock outstanding...................... 55,790
---------
---------
Funds from operations per diluted share.................................................... $ 3.57
---------
---------
Earnings before interest, income taxes, depreciation and amortization...................... $ 283,137
Interest expense........................................................................... 86,196
Ratio of EBITDA to interest expense........................................................ 3.28x
</TABLE>
The following is a reconciliation between pro forma net income and pro
forma diluted funds from operations for the twelve months ended December 31,
1998:
<TABLE>
<S> <C>
Pro forma net income....................................................................... $ 96,232
Minority interest.......................................................................... 9,883
Interest on convertible debt............................................................... 8,194
Hotel depreciation and amortization........................................................ 85,117
---------
Pro forma diluted funds from operations.................................................... $ 199,426
---------
---------
Pro forma operating statistics:
Average occupancy...................................................................... 71.5%
Average daily rate..................................................................... $ 95.00
Revenue per available room............................................................. $ 67.90
</TABLE>
21
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OTHER INFORMATION
The following table shows selected historical financial information for our
company. We did not provide for federal income taxes for the year ended
December 31, 1995 because, before the August 1996 initial public offering, our
predecessor entities were partnerships and all federal income tax liabilities
were passed through to the individual partners. From 1995 to 1998, certain loan
facilities were refinanced and the write-offs of deferred costs associated with
the prior facilities were recorded as extraordinary losses.
On July 1, 1998, we adopted AICPA Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities." The effect of this accounting change as shown
below was a pre-tax charge against income for the year ended December 31, 1998
of $1,485,000 ($921,000 net of tax effect).
The average occupancy rate given below represents the total number of paid
rooms our hotel guests occupied divided by the total number of available rooms.
The average daily rate represents total room revenues at our hotels divided by
the total number of paid rooms our hotel guests occupied. Finally, revenue per
available room represents total room revenues at our hotels divided by the total
number of available rooms.
The following information should be read together with our consolidated
financial statements and related notes, which are considered part of this
document, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" starting on page 25. The selected operating results and
balance sheet data have been extracted from the consolidated financial
statements for each of the periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- -------- -------- ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND
OPERATING DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Revenue:
Hotel operations:
Participating lease revenue...................... $ 135,994 $ -- $ -- $ -- $ --
Rooms............................................ 275,610 207,736 68,498 4,456 --
Food, beverage, office rental & other............ 110,519 103,521 36,949 7,471 --
Management services & other revenues............. 3,174 5,136 4,345 4,436 4,418
---------- ---------- -------- -------- ------
Total revenues..................................... 525,297 316,393 109,792 26,363 4,418
---------- ---------- -------- -------- ------
Operating expenses:
Departmental expenses:
Rooms............................................ 65,048 51,075 17,509 4,190 --
Food, beverage and other......................... 80,327 77,373 27,102 5,437 --
Undistributed operating expenses:
Administrative and general....................... 62,350 50,332 20,448 8,078 4,508
Property and other operating costs............... 122,963 55,111 17,151 3,934 --
Depreciation and amortization.................... 60,703 20,990 8,248 2,097 23
---------- ---------- -------- -------- ------
Total operating expenses........................... 391,391 254,881 90,458 23,736 4,531
---------- ---------- -------- -------- ------
Net operating income (loss)........................ 133,906 61,512 19,334 2,627 (113)
Interest expense, net.............................. 64,378 21,024 12,346 2,414 --
Minority interest.................................. 5,121 1,425 (39) (18) --
Provision for income taxes......................... 15,699 14,911 2,674 -- --
---------- ---------- -------- -------- ------
Income (loss) before extraordinary loss............ 48,708 24,152 4,353 231 (113)
Extraordinary loss, net of tax..................... (4,080) (4,092) (1,956) (888) --
Cumulative effect of accounting change, net of
tax.............................................. (921) -- -- -- --
---------- ---------- -------- -------- ------
Net income (loss).................................. $ 43,707 $ 20,060 $ 2,397 $ (657) $ (113)
---------- ---------- -------- -------- ------
---------- ---------- -------- -------- ------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- -------- -------- ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND
OPERATING DATA)
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Investments in hotel properties, gross........... $2,909,439 $ 950,052 $343,092 $110,883 $ 176
Total assets..................................... 2,998,460 1,124,642 379,161 132,650 1,232
Long term debt................................... 1,602,352 492,771 200,361 73,574 --
OTHER FINANCIAL AND OPERATING DATA:
Ratio of earnings to fixed charges................. 1.89x 1.62x 1.46x 1.05x --
Owned hotels:
Number of hotels................................. 117 47 19 6 --
Number of guest rooms............................ 29,351 12,019 5,166 2,101 --
Total revenues................................... $ 522,123 $ 311,257 $105,447 $ 21,927 $ --
Average occupancy................................ 71.5% 72.0% 71.6% 72.3% --
Average daily rate............................... $ 95.00 $ 86.87 $ 82.84 $ 71.58 $ --
Revenue per available room....................... $ 67.90 $ 62.55 $ 59.31 $ 51.75 $ --
</TABLE>
23
<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes in exchange for the outstanding notes. We are making this exchange offer
solely to satisfy our obligations under our registration rights agreement. In
consideration for issuing the exchange notes, we will receive outstanding notes
in like aggregate principal amount.
The net proceeds to us from the original issuance of the outstanding notes,
after deducting the estimated discounts, commissions and other expenses, were
approximately $51.0 million. The net proceeds were used to reduce outstanding
indebtedness under our revolving credit facility and to invest in real estate
ventures. The amounts repaid bore interest at a weighted average interest rate
of 6.8% and mature August 2001, with two one-year optional extensions. The
indebtedness under the revolving credit facility was used to refinance existing
indebtedness and for the acquisition and renovation of hotel properties.
Lehman Brothers Holdings Inc., a company associated with the initial
purchasers, held a percentage of the outstanding indebtedness repaid with the
proceeds of the original issuance.
CAPITALIZATION
The following table shows our capitalization as of December 31, 1998 and as
adjusted solely to reflect the issuance of the outstanding notes. You should
read this table in conjunction with the consolidated financial statements and
related notes considered to be a part of this prospectus, and the information in
the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Debt:
Secured Facility................................................ $ 250,000 $ 250,000
Non-Recourse Facility........................................... 52,750 52,750
Mortgage Debt and Other......................................... 67,276 67,276
Credit Facility................................................. 910,000 890,000
Senior Subordinated Notes....................................... 149,826 201,732
Convertible Notes............................................... 172,500 172,500
---------- -----------
Total Debt................................................... 1,602,352 1,634,258
Stockholders' Equity:
Common stock, par value $0.01 per share
Authorized--100,000 shares
Issued and outstanding--46,718 shares........................ 467 467
Additional paid-in capital...................................... 1,133,357 1,333,357
Retained earnings............................................... 23,655 23,655
Accumulated other comprehensive income.......................... (6,487) (6,487)
---------- -----------
Total Stockholders' Equity........................................ 1,150,992 1,150,992
---------- -----------
Total Capitalization.............................................. $2,753,344 $ 2,785,250
---------- -----------
---------- -----------
</TABLE>
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
We own a portfolio of primarily upscale, full-service hotels, diversified
by franchise and brand affiliations, in the United States and Canada.
Substantially all of our hotels are leased to and operated by MeriStar Hotels.
As of December 31, 1998, we owned 117 hotels (with 29,351 rooms), 109 of which
are leased and operated by MeriStar Hotels.
On March 15, 1998, CapStar and American General Hospitality Corporation
entered into an agreement under which the parties agreed to merge, with the
surviving entity being named "MeriStar Hospitality Corporation." The merger was
approved at a special meeting of stockholders of CapStar and the annual meeting
of stockholders of American General on July 28, 1998. The merger and related
transactions became effective August 3, 1998.
Under the merger agreement, CapStar also distributed equally to its
stockholders all of the capital stock of MeriStar Hotels, whose assets consisted
of CapStar's hotel operations (including leased hotels) and management business.
On August 3, 1998, our common stock, par value $0.01 per share, and the common
stock of MeriStar Hotels began trading on the New York Stock Exchange.
The merger was accounted for as a purchase for financial reporting
purposes. As provided in Accounting Principles Board Opinion No. 16, "Business
Combinations," CapStar was considered the acquiring enterprise for financial
reporting purposes. We established a new accounting basis for American General's
assets and liabilities based on their fair values. For financial reporting
purposes, the results of operations of American General were included in our
statement of operations from August 3, 1998. We have included expenditures
related directly to the acquisition of American General as part of the cost of
acquiring American General and those expenditures relating to the spin-off as
expenses incurred (see "--Results of Operations").
We purchased American General for approximately $1.3 billion through
(1) the issuance of 23.9 million shares of common stock and units of limited
partnership interest in our subsidiary operating partnership, valued at $795
million and (2) the assumption of debt and other liabilities of $550 million.
The acquisition has been recorded at the fair value of the net assets acquired.
Before August 3, 1998, our consolidated financial statements included the
operating results for the owned and leased hotels as well as management fees
from hotels managed for third-party owners. After August 3, 1998, we own some
hotels that are leased to hotel operators and we no longer manage hotels.
Therefore, the financial statements for each of the years in the three-year
period ended December 31, 1998 reflect differing numbers of owned, leased, and
managed hotels throughout the periods. The following table outlines our
portfolio of owned, leased and managed hotels:
<TABLE>
<CAPTION>
OWNED LEASED MANAGED TOTAL
---------------- --------------- --------------- ----------------
HOTELS ROOMS HOTELS ROOMS HOTELS ROOMS HOTELS ROOMS
------ ------ ------ ----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1998................ 117 29,351 -- -- -- -- 117 29,351
December 31, 1997................ 47 12,019 40 5,687 27 4,631 114 22,337
December 31, 1996................ 19 5,166 -- -- 28 4,619 47 9,785
</TABLE>
FINANCIAL CONDITION DECEMBER 31, 1998 COMPARED WITH DECEMBER 31, 1997
Total assets increased by $1,873.9 million to $2,998.5 million at
December 31, 1998 from $1,124.6 million at December 31, 1997. This growth was
due to the acquisition of 70 hotels during 1998, including 53 hotels from the
merger.
Total liabilities increased by $1,152.5 million to $1,708.9 million at
December 31, 1998 from $556.4 million at December 31, 1997 due mainly to an
increase in long-term debt. Long-term debt increased by $1,109.6 million to
$1,602.4 million at December 31, 1998 from $492.8 million at December 31, 1997
as a result of the debt assumed in connection with the merger and borrowings
under new credit facilities to finance the acquisitions of specific hotels.
25
<PAGE>
Minority interests increased $89.7 million to $138.5 million at
December 31, 1998 from $48.8 million at December 31, 1997, reflecting the value
of units of limited partnership interest of our operating partnership
subsidiaries issued in conjunction with the merger and with the acquisitions of
specific hotels and South Seas Properties Company, Limited Partnership. The
increase in additional paid-in capital resulted primarily from the merger and
the redemption of units of limited partnership interest.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1997
After August 3, 1998, we earned participating lease revenue of $136.0
million. Substantially all of our hotels are leased to and operated by MeriStar
Hotels. Participating lease revenue represents lease payments to us from the
lessees under our participating lease agreements. Total revenue increased by
$208.9 million or 66% to $525.3 million in 1998 compared to $316.4 million in
1997. This increase was primarily attributable to the merger, the acquisition of
new hotels and revenue growth from hotels in our portfolio that benefited from
renovation and repositioning programs. On a pro forma basis for the year ended
December 31, 1998, revenue per available room increased 7.0% to $67.90 compared
to 1997. On a pro forma basis same-store average daily rate for the hotels rose
5.7% to $95.00, coupled with a 1% increase in occupancy to 71.5%.
Hotel department and other operating expenses increased slightly for the
year ended December 31, 1998 compared to the prior year. Hotel operations for
the year are only reflected through August 3, 1998. After that date, in
conjunction with the merger and the spin-off, hotel operations were leased to
MeriStar Hotels. The increase in hotel department and other operating expenses
is primarily due to an increase in the number of owned and leased hotels in 1998
before the merger and the spin-off.
Undistributed operating expenses increased significantly in 1998 from the
acquisition of new properties in 1998 and the merger. After August 3, 1998, we
are responsible for real estate taxes, property insurance and various other
undistributed expenses that are not included in hotel operations which are
leased to MeriStar Hotels.
Net interest expense increased $43.4 million to $64.4 million for the year
ended December 31, 1998, from $21.0 million in 1997. This increase was
attributable to the borrowings made to finance the acquisition of hotels during
1998 and the debt assumed in connection with the merger.
Minority interests increased $3.7 million to $5.1 million from $1.4 million
in 1997 due to the issuance of units of limited partnership interest in
conjunction with the merger and the acquisition of selected hotels. Income taxes
increased $0.8 million in 1998 to $15.7 million from $14.9 million in 1997.
After August 3, 1998, our overall effective tax rate decreased to 3% from the
elimination of federal income taxes due to our becoming a real estate investment
trust. The slight increase in income taxes compared to the prior year is a
result of the substantial increase in pre-tax income in 1998 coupled with an
overall effective tax rate of 38.2% through August 2, 1998.
On August 3, 1998, we recognized extraordinary losses of $4.1 million (net
of a tax benefit of $2.1 million), due to the write-off of unamortized deferred
financing fees in conjunction with refinancing certain credit facilities.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities," which requires that all non-governmental entities expense costs of
start-up activities, including organizational costs, as those costs are incurred
and requires the write-off of any unamortized balances upon implementation. SOP
98-5 is effective for financial statements issued for periods beginning after
December 15, 1998. We chose to adopt SOP 98-5 effective July 1, 1998. The effect
of this accounting change was a charge against income for the year ended
December 31, 1998 of $0.9 million (net of tax benefit of $0.6 million).
Earnings before interest expense, income taxes, depreciation and
amortization grew $112.1 million to $194.6 million in 1998 from $82.5 million in
1997. This growth reflects both the increases in the number of hotels owned and
improved operating margins on our overall hotel portfolio.
26
<PAGE>
The White Paper on funds from operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts in March 1995
defines funds from operations as net income (loss) computed according to
generally accepted accounting principles, excluding gains (or losses) from debt
restructuring and sales of properties, plus real estate related depreciation and
amortization and after comparable adjustments for our portion of these items
related to unconsolidated entities and joint ventures. We believe that funds
from operations is helpful to investors as a measure of the performance of an
equity real estate investment trust because, along with cash flow from operating
activities, financing activities and investing activities, it provides investors
with an indication of our ability to incur and service debt, to make capital
expenditures and to fund other cash needs. Funds from operations does not
represent cash generated from operating activities determined by GAAP and should
not be considered as an alternative to net income, determined according to GAAP,
as an indication of our financial performance or to cash flow from operating
activities as a measure of our liquidity, nor is it indicative of funds
available to fund our cash needs, including our ability to make cash
distributions. Funds from operations may include funds that may not be available
for management's discretionary use due to functional requirements to conserve
funds for capital expenditures and property acquisitions, and other commitments
and uncertainties.
Our pro forma information is presented as if the merger, the spin-off and
the acquisition of all hotels of CapStar and American General had occurred as of
the beginning of the period presented. The following is a reconciliation between
pro forma net income and pro forma funds from operations for the year ended
December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
1998
--------
<S> <C>
Pro forma net income.......................................... $ 96,232
Minority interest............................................. 9,883
Interest on convertible debt.................................. 8,194
Hotel depreciation and amortization........................... 85,117
--------
Pro forma funds from operations............................... $199,426
--------
--------
</TABLE>
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1996
Total revenue increased by $206.6 million or 188% to $316.4 million in 1997
compared to $109.8 million in 1996. This increase resulted from acquiring 28
hotels and leasing 40 hotels during the year, and revenue growth from hotels in
our portfolio that benefited from renovation and repositioning programs.
Operating expenses increased $164.4 million to $254.9 million in 1997 from $90.5
million in 1996 due to the increase in the number of hotels owned and leased
during 1997. Net operating income as a percentage of total revenue increased to
19.4% in 1997 from 17.6% in 1996, reflecting increased operational efficiencies
in our hotel portfolio.
Net interest expense increased $8.7 million to $21.0 million in 1997 from
$12.3 million in 1996. This increase was attributable to the borrowings made to
finance the acquisition of hotels during 1997, partially offset by the use of
proceeds from common stock offerings to repay outstanding indebtedness in 1997
and lower average interest rates charged on our borrowings in 1997 as compared
to 1996.
Minority interests of $1.4 million in 1997 were significantly higher than
in 1996 due to the minority interest related to the units of limited partnership
interest issued in 1997. Income taxes increased $12.2 million to $14.9 million
in 1997 compared to $2.7 million in 1996, due to substantially higher levels of
pre-tax income in 1997. Our overall effective tax rate decreased to 38.2% in
1997 from 40.0% in 1996 from lower state and local taxes.
Earnings before interest expense, income taxes, depreciation and
amortization grew $54.9 million to $82.5 million in 1997 from $27.6 million in
1996. This growth reflects both the increase in the number of hotels owned and
operated, and improved operating margins on our overall hotel portfolio.
During 1997, we recognized extraordinary losses of $4.1 million (net of tax
benefits of $2.5 million) and during 1996 we recognized extraordinary losses of
$2.0 million (net of tax benefits of $1.3 million), in each case related to the
write-off of unamortized loan costs in connection with expanding our credit
facilities.
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LIQUIDITY AND CAPITAL RESOURCES
Before the merger and related transactions, CapStar's primary sources of
liquidity were cash on hand, cash generated from operations and funds from
external borrowings and debt and equity offerings. CapStar's continuing
operations were funded through cash generated from hotel operations. Hotel
acquisitions and joint venture improvements were financed through a combination
of internally generated cash, external borrowings and the issuance of units of
limited partnership interest and/or common stock. CapStar did not pay dividends
to stockholders.
Following the merger and the spin-off, our principal sources of liquidity
are cash on hand, cash generated from operations and funds from external
borrowings and debt and equity offerings. We expect to fund our continuing
operations through cash generated by the participating leases. We also expect to
finance future hotel acquisitions and joint venture investments through a
combination of internally generated cash, external borrowings and the issuance
of units of limited partnership interest and/or common stock. Additionally, to
maintain favorable tax treatment accorded to a real estate investment trust
under the Internal Revenue Code of 1986, we will be required to distribute to
our stockholders at least 95% of our real estate investment trust taxable
income. We expect to fund those distributions through cash generated from
operations or borrowings on our credit facility.
Operating activities provided $162.8 million of net cash for the year ended
December 31, 1998, mainly due to higher levels of net income and depreciation
and amortization. We used $785.5 million of cash in investing activities for the
year ended December 31, 1998, primarily for the acquisition of hotels and
capital expenditures at our hotels and a note receivable from MeriStar Hotels.
Net cash provided by financing activities of $543.3 million resulted primarily
from net borrowings under our credit facilities.
In conjunction with the merger, CapStar terminated its existing credit
facility effective August 3, 1998, and we entered into a $1.0 billion senior
secured credit facility. The new credit facility is structured as a $300
million, five-year term loan facility; a $200 million, five-and-a-half year term
loan facility; and a $500 million, three-year revolving credit facility with two
one-year optional extensions. The interest rate on the term loans and revolving
facility ranges from 100 to 200 basis points over the 30-day London Inter-Bank
Offered Rate, depending on specific financial performance covenants and
long-term senior unsecured debt ratings. The weighted average interest rate on
borrowings outstanding under the new credit facility as of December 31, 1998 was
7.4%. The initial proceeds from the new credit facility were used to refinance
CapStar's and American General's existing credit facilities. As of December 31,
1998, we had $90 million available under the new credit facility's revolving
facility.
Effective August 3, 1998, we also entered into a $250 million secured
facility, which is expected to be converted into a commercial mortgage-backed
security secured by 16 hotels. The interest rate on the secured facility is 110
basis points over the 30-day London Inter-Bank Offered Rate. The weighted
average interest rate on the secured facility as of December 31, 1998 was 6.8%.
Capital for renovation work has historically been and is expected to
continue to be provided by a combination of internally generated cash and
external borrowings. Once initial renovation programs for a hotel are completed,
we expect to spend approximately 4% annually of hotel revenues for ongoing
capital expenditure programs, including room and facilities refurbishments,
renovations and furniture and equipment replacements. For the year ended
December 31, 1998, we spent (including expenditures by both CapStar and American
General before the merger) $200 million on initial renovation and ongoing
capital expenditure programs. We expect to spend $175 million in 1999, with
$125 million used for renovations and $50 million in recurring refurbishment
projects.
We believe that cash generated by operations, together with anticipated
borrowing capacity under our senior secured credit facility, will be sufficient
to fund our existing working capital, ongoing capital expenditures and debt
service requirements. We believe, however, that our future capital decisions
will also be made in response to specific acquisition and/or investment
opportunities, depending on conditions in the capital and/or other financial
markets. Accordingly, we may consider increasing our borrowing capacity or
issuing additional debt or equity securities, the proceeds of which could be
used to finance acquisitions or investments, or to refinance existing debt.
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SEASONALITY
Demand in the lodging industry is affected by recurring seasonal patterns.
Demand is lower in the winter months due to decreased travel and higher in the
spring and summer months during peak travel season. Accordingly, our operations
are seasonal in nature, with lower participating lease payments made to us in
the first and fourth quarters and higher participating lease payments made to us
in the second and third quarters.
YEAR 2000 CONVERSION
We are in the process of conducting a review of our computer systems to
identify the systems that could be affected by the Year 2000 problem and have
initiated an implementation plan to address the problem. The Year 2000 problem
is the result of computer programs being written using two digits rather than
four to define the applicable year. Any of our programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If not corrected, this could result in a major systems failure or
miscalculations.
Our hotel properties contain various information technology and embedded
technology systems. Both types of systems contain microprocessors and
microcontrollers that must be assessed for Year 2000 compliance. We have
developed a comprehensive implementation plan to address the potential Year 2000
problems caused by those systems. This plan involves six stages:
o increase awareness of issue;
o assign responsibility for coordinating response to issue;
o information collection;
o analysis;
o modification, repair or replacement; and
o testing.
We are currently in our analysis stage and expect to complete this stage by
May 1999. The subsequent stages are expected to be completed as follows:
modification, repair or replacement--August 1999; and testing--September 1999.
As an additional part of our implementation plan to address the Year 2000
problem, we have also initiated communications with third parties with which we
have material relationships to determine the extent of potential Year 2000
problems with these parties' services provided to us. The most critical of these
services involve such items as reservations systems for our hotels. Without
those systems, we could suffer a material decline in business at many of our
properties. We expect to complete our communications and assessment of these
outside parties' services in May 1999. Also, we expect to develop contingency
plans in 1999 to allow for manual or other alternative operation of specific
computerized systems, in case modification, repair, and replacement efforts are
not completed timely.
We anticipate completing our Year 2000 implementation plan no later than
September 30, 1999, which is before any anticipated impact on our operating
systems. Historical costs incurred to address the Year 2000 problem were
approximately $0.8 million as of December 31, 1998. We have not yet completed a
final cost estimate related to fixing Year 2000 issues, but an initial estimate
of these remediation costs for our properties is $10-15 million. This cost
estimate is based on our preliminary assessment, and will be refined and
adjusted as we continue to complete the stages of our implementation plan to
address the potential Year 2000 problems.
Based on our preliminary assessment, we believe that our risks of Year 2000
non-compliance (that is, our "most reasonably likely worst case scenario"), with
modifications to existing software and converting to new software, will not pose
significant operational problems for our computer systems as so modified and
converted. If, however, the modifications and conversions are not completed
timely, the Year 2000 problem could have a material impact on our financial
position and operations. Our operations are highly dependent upon participating
lease revenue earned from the lessees of our properties. These participating
lease revenue
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amounts are based upon revenues generated at the leased properties. To the
extent that the Year 2000 problems materially affect the conduct of operations
at those properties, it is likely that those lessees' revenues would be
affected, and that our participating lease revenues would ultimately be
affected.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates on long-term
debt obligations that impact the fair value of these obligations. Our policy is
to manage interest rates through the use of a combination of fixed and variable
rate debt. Our interest rate risk management objective is to limit the impact of
interest rate changes on earnings and cash flows and to lower our overall
borrowing costs. To achieve our objectives, we borrow at a combination of fixed
and variable rates. We may enter into derivative financial instruments such as
interest rate swaps, caps and treasury locks to mitigate our interest rate risk
on a related financial instrument. We do not enter into derivative or interest
rate transactions for speculative purposes. We have no cash flow exposure due to
general interest rate changes for our fixed long-term debt obligations. All
items described are non-trading (in thousands of dollars).
The table below presents the principal amounts, weighted average interest
rates and fair values by year of expected maturity to evaluate the expected cash
flows and sensitivity to interest rate changes.
<TABLE>
<CAPTION>
LONG-TERM DEBT
--------------------------------------------------------
FIXED AVERAGE VARIABLE AVERAGE
EXPECTED MATURITY RATE INTEREST RATE RATE INTEREST RATE
- ------------------------------------------------- -------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
1999............................................. $ 5,109 7.1% $ 54,750 7.4%
2000............................................. 3,420 7.1 252,000 6.4
2001............................................. 6,513 7.1 427,000 7.3
2002............................................. 10,731 7.1 32,000 6.9
2003............................................. 2,994 7.1 257,000 6.9
Thereafter....................................... 360,835 6.7 190,000 6.9
-------- --- ---------- ---
Total............................................ $389,602 6.7% $1,212,750 7.0%
-------- --- ---------- ---
-------- --- ---------- ---
Fair Value at 12/31/98........................... $389,602 $1,212,750
-------- ----------
-------- ----------
</TABLE>
During 1998, we entered into six separate $100,000 swap agreements with
financial institutions to hedge against the impact future interest rate
fluctuations may have on our existing floating rate debt instruments. The swap
agreements effectively fix the 30-day London Inter-Bank Offered Rate at between
4.9% and 5.4%. During the period ended December 31, 1998, we made payments
totaling $211 relating to these hedges. This amount is included in interest
expense. The hedge agreements terminate at various times between November 1999
and September 2000.
On February 18, 1997, we entered into a $40,000 swap agreement and a
$40,000 collar agreement with Lehman Brothers Special Financing, Inc. and
Canadian Imperial Bank of Commerce. The swap agreement effectively fixes the
30-day London Inter-Bank Offered Rate at 5.9% while the collar agreement creates
a 30-day London Inter-Bank Offered Rate floor of 5.1% and ceiling of 7.5%.
During the years ended December 31, 1998 and 1997, we made payments totaling $56
and $88, respectively, relating to these hedges. This amount is included in
interest expense. Both hedge agreements terminate in September 1999.
Additionally, in anticipation of the August 1997 offering of $150,000
aggregate principal amount of our 8.75% senior subordinated notes due 2007, we
entered into separate hedge transactions during June and July 1997. When we
completed the subordinated notes offering, we terminated the underlying swap
agreements, resulting in a net payment to us of $836. This amount was deferred
and is being recognized as a reduction to interest expense over the life of the
underlying debt. As a result, the effective interest rate on the subordinated
notes has been reduced to 8.69%.
Although we conduct business in Canada, the Canadian operations were not
material to our consolidated financial position, results of operations or cash
flows as of December 31, 1998. Additionally, foreign currency transaction gains
and losses were not material to our results of operations for the year ended
December 31, 1998. Accordingly, we had no material foreign currency exchange
rate risk from the effects
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that exchange rate movements of foreign currencies would have on our future
costs or on future cash flows we would receive from our foreign subsidiaries. To
date, we have not entered into any significant foreign currency forward exchange
contracts or other derivative financial instruments to hedge the effects of
adverse fluctuations in foreign currency exchange rates.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Any statements in this prospectus about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements. These statements are often, but not always,
made through the use of words or phrases such as "will likely result," "expect,"
"will continue," "anticipate," "estimate," "intend," "plan," "projection,"
"would" and "outlook." Accordingly, these statements involve estimates,
assumptions and uncertainties which could cause actual results to differ
materially from those expressed in them. Any forward-looking statements are
qualified in their entirety by reference to the factors discussed throughout
this prospectus. These factors are discussed in "Risk Factors" and elsewhere in
this document.
Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
Our registration rights agreement requires us to file not later than
May 17, 1999, which is 60 days following the date of original issuance of the
outstanding notes, the registration statement of which this prospectus is a part
for a registered exchange offer with respect to an issue of new notes in
exchange for our outstanding notes. These exchange notes will be substantially
identical in all material respects to the outstanding notes except that the
exchange notes will be registered under the Securities Act, will not bear
legends restricting their transfer and will not be entitled to registration
rights under our registration rights agreement. This summary of the registration
rights agreement does not contain all the information that you should consider
and we refer you to the provisions of the registration rights agreement, which
has been filed as an exhibit to the registration statement of which this
prospectus is a part and a copy of which is available as indicated under the
heading "Where You Can Find More Information."
We are required to:
o use our best efforts to cause the registration statement to be declared
effective no later than July 16, 1999, which is 120 days after the date
of issuance of the outstanding notes;
o keep the exchange offer effective for not less than 20 business days, or
longer if required by applicable law, after the date that notice of the
exchange offer is mailed to holders of the outstanding notes; and
o use our best efforts to consummate the exchange offer no later than
August 27, 1999, which is 162 days after the date of issuance of the
outstanding notes.
The exchange offer being made here, if commenced and completed within the
time periods described in this paragraph, will satisfy those requirements under
the registration rights agreement.
This prospectus, together with the letter of transmittal, is being sent to
all record holders of outstanding notes as of , 1999.
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<PAGE>
Based on interpretations by the staff of the Securities and Exchange
Commission in no-action letters issued to third parties, we believe that the
exchange notes issued under the exchange offer may be offered for resale, resold
or otherwise transferred by each holder of exchange notes other than, (a) a
broker-dealer who acquires the outstanding notes directly from us for resale
under Rule 144A under the Securities Act or any other available exemption under
the Securities Act, and (b) any holder that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with us, without compliance with the registration and prospectus delivery
provisions of the Securities Act, so long as this holder:
o is acquiring the exchange notes in the ordinary course of its business;
o is not participating in, and does not intend to participate in, a
distribution of the exchange notes within the meaning of the Securities
Act and has no arrangement or understanding with any person to
participate in a distribution of the exchange notes within the meaning of
the Securities Act; and
o is not a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with us.
By tendering the outstanding notes in exchange for exchange notes, each
holder, other than a broker-dealer, will be required to make representations to
that effect. If a holder of outstanding notes is participating in or intends to
participate in, a distribution of the exchange notes, or has any arrangement or
understanding with any person to participate in a distribution of the exchange
notes to be acquired in this exchange offer, that holder may be deemed to have
received restricted securities and may not rely on the applicable
interpretations of the staff of the Securities and Exchange Commission. Any
holder so deemed will have to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes may be deemed to be an underwriter within the
meaning of the Securities Act and must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of those exchange notes. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an underwriter within the meaning of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with offers to resell, resales and other
transfers of exchange notes received in exchange for outstanding notes which
were acquired by that broker-dealer as a result of market making or other
trading activities. We have agreed that we will make this prospectus available
to any broker-dealer for a period of time not to exceed 180 days after the
completion of the exchange offer for use in connection with any offer to resell,
resale or other transfer. Please refer to the section in this prospectus
entitled "Plan of Distribution."
SHELF REGISTRATION STATEMENT
In the event that:
(a) we are not permitted to file a registration statement as part of the
exchange offer or to complete the exchange offer because it is not permitted by
law or the policies of the Securities and Exchange Commission, in either case
after having sought relief from the Commission; or
(b) selected institutional holders of outstanding notes notifies us at
least 20 days before the completion of the exchange offer that (1) the holder
was prohibited by law or policy of the Securities and Exchange Commission from
participating in the exchange offer, or (2) the holder may not resell the
exchange notes acquired by it in the exchange offer to the public without
delivering a prospectus and this prospectus is not appropriate or available for
that resale, or (3) the holder is a broker-dealer and holds notes acquired
directly from us or any of our affiliates (within the meaning of the Securities
Act), then we will instead of, or in the case of clause (b) of this sentence, in
addition to registering the exchange notes:
o use our best efforts, before the earlier of (A) 30 days after we
determine that we are not required to file a registration statement
relating to the exchange offer or (B) 30 days after we receive notice
from
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a holder as described in clause (b) above, to file with the Securities
and Exchange Commission a shelf registration statement covering resales
of the outstanding notes;
o use our best efforts to cause the shelf registration statement to be
declared effective under the Securities Act within 90 days after the date
we are required to file a shelf registration statement; and
o use our best efforts to keep the shelf registration statement
continuously effective, supplemented and amended as required by the
Securities Act, in order to permit the prospectus which is a part of the
shelf registration statement to be usable by holders until March 18,
2001.
We will, in the event that a shelf registration statement is filed, provide
to each holder of the outstanding notes being registered copies of the
prospectus that is a part of the shelf registration statement. We will also
notify each holder when the shelf registration statement has become effective
and take those other actions that are required to permit unrestricted resales of
the outstanding notes being registered. A holder that sells outstanding notes
under the shelf registration statement will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with those sales and will be bound by the
provisions of the registration rights agreement that are applicable to that
holder, including specific indemnification rights and obligations.
LIQUIDATED DAMAGES
In the event that:
(a) we do not file the registration statement or the shelf registration
statement, as the case may be, with the Securities and Exchange Commission on or
before the dates specified above for those filings,
(b) the registration statement or the shelf registration statement, as the
case may be, is not declared effective on or before the dates specified above
for that effectiveness,
(c) the exchange offer is not completed on or before August 27, 1999,
162 days after the date of issuance of the outstanding notes, or
(d) the registration statement or the shelf registration statement, as the
case may be, is filed and declared effective but after the filing and
declaration ceases to be effective or usable in connection with its intended
purpose, each event referred to in clauses (a) through (d), being called a
registration default,
then we will be obligated to pay to each holder of transfer restricted
securities liquidated damages. The outstanding notes remain restricted until:
(a) the date on which the outstanding notes have been exchanged by a person
other than a broker-dealer for exchange notes in a registered exchange offer;
(b) following the exchange by a broker-dealer in a registered exchange
offer of outstanding notes for exchange notes, the date on which the exchange
notes is sold to a purchaser who receives from the broker-dealer on or before
the date of the sale a copy of a prospectus contained in an exchange offer
registration statement;
(c) the date on which the outstanding notes have been effectively
registered under the Securities Act and disposed of in accordance with a shelf
registration statement; or
(d) the date on which the outstanding notes are distributed to the public
under Rule 144 under the Securities Act.
Liquidated damages will accrue and be payable semi-annually on the
outstanding notes and the exchange notes, in addition to the stated interest on
the outstanding notes and the exchange notes, in an amount equal to $0.05 per
week per $1,000 principal amount of outstanding notes during the first 90-day
period, which will increase by $0.05 per week per $1,000 principal amount of
outstanding notes for each subsequent 90-day period. In no event will the rate
exceed $0.50 per week per $1,000 principal amount of outstanding notes,
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<PAGE>
regardless of the number of registration defaults. Liquidated damages will
accrue from the date a registration default occurs until the date on which:
o the registration statement is filed;
o the registration statement or shelf registration statement is declared
effective and the exchange offer is completed;
o the shelf registration statement is declared effective; or
o the shelf registration statement again becomes effective or made usable,
as the case may be.
Following the cure of all registration defaults, the accrual of liquidated
damages will cease.
Upon completion of the exchange offer, holders of outstanding notes who do
not exchange their outstanding notes for exchange notes in the exchange offer
will generally no longer be entitled to registration rights and will not be able
to offer or sell their outstanding notes, unless those outstanding notes are
subsequently registered under the Securities Act, which, with limited exception,
we will have no obligation to do, or under an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. Please refer to the section in this prospectus entitled "Terms of the
Exchange Offer-Your failure to participate in the exchange offer will have
adverse consequences."
TERMS OF THE EXCHANGE OFFER
Expiration Date; Extensions; Amendments; Termination
The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we extend it in our reasonable discretion. The
expiration date of the exchange offer will be at least 20 business days after
the commencement of the exchange offer as provided in Rule 14e-1(a) under the
Securities Exchange Act of 1934 and our registration rights agreement.
To extend the expiration date, we will need to notify the exchange agent of
any extension by oral, promptly confirmed in writing, or written notice. We will
also need to notify the holders of the outstanding notes by mailing an
announcement or by means of a press release or other public announcement
communicated, unless otherwise required by applicable law or regulation, before
9:00 a.m., New York City time, on the next business day after the previously
scheduled expiration date.
We expressly reserve the right:
o to delay acceptance of any outstanding notes, to extend the exchange
offer or to terminate the exchange offer and not permit acceptance of
outstanding notes not previously accepted if any of the conditions
described below under "-- Conditions" have occurred and have not been
waived by us, if permitted to be waived, by giving oral or written notice
of this delay, extension or termination to the exchange agent; or
o to amend the terms of the exchange offer in any manner.
If we amend the exchange offer in a manner determined by us to constitute a
material change, we will promptly disclose this amendment in a manner reasonably
calculated to inform the holders of the outstanding notes of this amendment
including providing public announcement, or giving oral or written notice to the
holders of the outstanding notes. A material change in the terms of the exchange
offer could include, among other things, a change in the timing of the exchange
offer, a change in the exchange agent and other similar changes in the terms of
the exchange offer. If any material change is made to terms of the exchange
offer, we will disclose this change by means of a post-effective amendment to
the registration statement of which this prospectus is a part and will
distribute an amended or supplemented prospectus to each registered holder of
outstanding notes. In addition, we will also extend the exchange offer for an
additional five to ten business days as required by the Securities Exchange Act
of 1934, depending on the significance of the amendment, if the exchange offer
would otherwise expire during this period. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral, promptly confirmed in writing, or written notice of the delay to the
exchange agent.
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Procedures for Tendering
To tender your outstanding notes in the exchange offer, you must complete,
sign and date the letter of transmittal, or a facsimile of the letter, have the
signatures thereon guaranteed if required by the letter of transmittal, and mail
or otherwise deliver the letter of transmittal or the facsimile, or an agent's
message, together with the certificates representing the outstanding notes being
tendered and any other required documents, to the exchange agent on or before
5:00 p.m., New York City time, on the expiration date. Alternatively, you may
either:
o send a timely confirmation of a book-entry transfer of the outstanding
notes, if this procedure is available, into the exchange agent's account
at The Depository Trust Company by following the procedure for book-entry
transfer described below, on or before 5:00 p.m. on the expiration date;
or
o comply with the guaranteed delivery procedures described below.
The term "agent's message" means a message, transmitted by The Depository
Trust Company to, and received by, the exchange agent and forming a part of a
book-entry confirmation, which states that The Depository Trust Company has
received an express acknowledgment from its participant tendering outstanding
notes which are the subject of this book-entry confirmation that this
participant has received and agrees to be bound by the terms of the letter of
transmittal, and that we may enforce this agreement against this participant.
THE METHOD OF DELIVERY OF THE OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION AND RISK. INSTEAD OF
DELIVERY BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND-DELIVERY
SERVICE. IF YOU CHOOSE THE MAIL, WE RECOMMEND THAT YOU USE REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. YOU SHOULD NOT SEND ANY LETTERS OF
TRANSMITTAL OR OUTSTANDING NOTES TO US. YOU MUST DELIVER ALL DOCUMENTS TO THE
EXCHANGE AGENT AT ITS ADDRESS PROVIDED BELOW. YOU MAY ALSO REQUEST YOUR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
TENDER YOUR OUTSTANDING NOTES ON YOUR BEHALF.
Your tender of outstanding notes will constitute an agreement between you
and us as provided in the terms and under the conditions provided in this
prospectus and in the letter of transmittal.
Only a holder of outstanding notes may tender the outstanding notes in the
exchange offer. A holder, with respect to the exchange offer, is any person in
whose name outstanding notes are registered on our books or any other person who
has obtained a properly completed bond power from the registered holder.
If you are the beneficial owner of outstanding notes that are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
and you wish to tender your outstanding notes, you should contact this
registered holder promptly and instruct this registered holder to tender on your
behalf. If you wish to tender on your own behalf, you must, before completing
and executing the letter of transmittal and delivering your outstanding notes,
either make appropriate arrangements to register ownership of the outstanding
notes in your name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an eligible guarantor institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, each referred to as an
eligible institution, unless the outstanding notes are tendered:
o by a registered holder, or by a participant in The Depository Trust
Company whose name appears on a security position listing as the owner,
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the letter of transmittal if the
exchange notes are being issued directly to this registered holder, or
deposited into the participant's account at The Depository Trust Company;
or
o for the account of an eligible institution.
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If the letter of transmittal is signed by the recordholder(s) of the
outstanding notes tendered, the signature must correspond with the name(s)
written on the face of the outstanding notes without alteration, enlargement or
any change whatsoever. If the letter of transmittal is signed by a participant
in The Depository Trust Company, the signature must correspond with the name as
it appears on the security position listing as the holder of the outstanding
notes.
If the letter of transmittal is signed by a person other than the
registered holder of any outstanding notes listed, the outstanding notes must be
endorsed or accompanied by bond powers and a proxy that authorize that person to
tender the outstanding notes on behalf of the registered holder in satisfactory
form to us as determined in our sole discretion, in each case as the name of the
registered holder or holders appears on the outstanding notes.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless waived by us,
evidence satisfactory to us of their authority to so act must also be submitted
with the letter of transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed letter of transmittal accompanied by the
outstanding notes tendered, or a timely confirmation received of a book-entry
transfer of outstanding notes into the exchange agent's account at The
Depository Trust Company with an agent's message, or a notice of guaranteed
delivery from an eligible institution is received by the exchange agent.
Issuances of exchange notes in exchange for outstanding notes tendered under a
notice of guaranteed delivery by an eligible institution will be made only
against delivery of the letter of transmittal, and any other required documents,
and the tendered outstanding notes, or a timely confirmation received of a
book-entry transfer of outstanding notes into the exchange agent's account at
The Depository Trust Company with an agent's message, with the exchange agent.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered outstanding notes will be
determined by us in our sole discretion. Our determination will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not properly tendered or any outstanding notes which, if accepted, would, in our
opinion or our counsel's opinion, be unlawful. We also reserve the absolute
right to waive any conditions of the exchange offer or irregularities or defects
in tender as to particular outstanding notes. Our interpretation of the terms
and conditions of the exchange offer, including the instructions in the letter
of transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of outstanding notes must
be cured within the amount of time we determine. We, the exchange agent or any
other person will be under no duty to give notification of defects or
irregularities with respect to tenders of outstanding notes. Neither the
exchange agent nor our company will incur any liability for failure to give the
notification. Tenders of outstanding notes will not be deemed to have been made
until those irregularities have been cured or waived. Any outstanding notes
received by the exchange agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost by the exchange agent to the tendering holders of the outstanding
notes, unless otherwise provided in the letter of transmittal, as promptly as
practicable following the expiration date.
In addition, we reserve the right in our sole discretion, as limited by the
provisions of the indenture for the initial and exchange notes, to:
o purchase or make offers for any outstanding notes that remain outstanding
after the expiration date, or, as described under "--Expiration Date;
Extensions; Amendments; Termination," to terminate the exchange offer as
provided in the terms of our registration rights agreement; and
o to the extent permitted by applicable law, purchase outstanding notes in
the open market, in privately negotiated transactions or otherwise. The
terms of any purchases or offers could differ from the terms of the
exchange offer.
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Acceptance of Outstanding Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept all outstanding notes properly tendered, promptly after the
expiration date, and will issue the exchange notes promptly after the expiration
date and acceptance of the outstanding notes. Please refer to the section of
this prospectus entitled "--Conditions" below. For purposes of the exchange
offer, outstanding notes will be deemed to have been accepted as validly
tendered for exchange when, as and if we had given oral or written notice to the
exchange agent.
In all cases, issuance of exchange notes for outstanding notes that are
accepted for exchange under the exchange offer will be made only after timely
receipt by the exchange agent of (a) certificates for the outstanding notes or a
timely book-entry confirmation of the outstanding notes into the exchange
agent's account at the book-entry transfer facility, (b) a properly completed
and duly executed letter of transmittal or an agent's message and (c) all other
required documents, in each case, in form satisfactory to us and the exchange
agent. If any tendered outstanding notes are not accepted for any reason
described in the terms and conditions of the exchange offer or if outstanding
notes are submitted for a greater principal amount than the holder desires to
exchange, those unaccepted or non-exchanged outstanding notes will be returned
without expense to the tendering holder of the notes thereof, or, in the case of
outstanding notes tendered by book-entry transfer procedures described below,
the non-exchanged outstanding notes will be credited to an account maintained
with the book-entry transfer facility, as promptly as practicable after
withdrawal, rejection of tender, the expiration date or earlier termination of
the exchange offer.
Book-Entry Transfer
The exchange agent will make a request to establish an account with respect
to the outstanding notes at The Depository Trust Company for purposes of the
exchange offer within two business days after the date of this prospectus. Any
financial institution that is a participant in The Depository Trust Company's
systems may make book-entry delivery of outstanding notes by causing The
Depository Trust Company to transfer the outstanding notes into the exchange
agent's account at The Depository Trust Company as provided in The Depository
Trust Company's procedures for transfer.
However, although delivery of outstanding notes may be effected through
book-entry transfer into the exchange agent's account at The Depository Trust
Company, an agent's message or the letter of transmittal or facsimile of the
message or letter with any required signature guarantees and any other required
documents must, in any case, be transmitted to and received by the exchange
agent at the address indicated below under "--Exchange Agent" on or before the
expiration date or the guaranteed delivery procedures described below must be
complied with. DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All references in the prospectus to
deposit of outstanding notes will be deemed to include The Depository Trust
Company's book-entry delivery method.
Guaranteed Delivery Procedure
If you are a registered holder of outstanding notes and desire to tender
those outstanding notes, and (a) the outstanding notes are not immediately
available, (b) time will not permit your outstanding notes or other required
documents to reach the exchange agent before the expiration date or (c) the
procedures for book-entry transfer cannot be completed on a timely basis and an
agent's message delivered, you may still tender in the exchange offer if:
o you tender through an eligible institution;
o before the expiration date, the exchange agent receives from this
eligible institution a properly completed and duly executed letter of
transmittal, or facsimile of the letter, and notice of guaranteed
delivery, substantially in the form provided by us, by facsimile
transmission, mail or hand delivery, setting forth your name and address
as holder of the outstanding notes and the amount of outstanding notes
tendered, stating that the tender is being made thereby and guaranteeing
that within five business days after the expiration date the certificates
for all tendered outstanding notes, in proper form for transfer, or a
book-entry confirmation with an agent's message, as the case may be, and
any other documents required by the letter of transmittal will be
deposited by the eligible institution with the exchange agent; and
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o the certificates for all tendered outstanding notes, in proper form for
transfer, or a book-entry confirmation as the case may be, and all other
documents required by the letter of transmittal are received by the
exchange agent within five business days after the expiration date.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, you may withdraw tenders
of outstanding notes at any time before 5:00 p.m., New York City time, on the
expiration date.
For a withdrawal to be effective, you must send a written or facsimile
transmission notice of withdrawal to the exchange agent before 5:00 p.m., New
York City time, on the expiration date at the address provided below under
"--Exchange Agent" and before acceptance of the outstanding notes for exchange
by us. Any notice of withdrawal must:
o specify the name of the person having tendered the outstanding notes to
be withdrawn;
o identify the outstanding notes to be withdrawn, including, if applicable,
the registration number or numbers and total principal amount of these
outstanding notes;
o be signed by the person having tendered the outstanding notes to be
withdrawn in the same manner as the original signature on the letter of
transmittal by which these outstanding notes were tendered, including any
required signature guarantees, or be accompanied by documents of transfer
sufficient to permit the trustee with respect to the outstanding notes to
register the transfer of these outstanding notes into the name of the
person having made the original tender and withdrawing the tender;
o specify the name in which these outstanding notes are to be registered,
if different from that of the person having tendered the outstanding
notes to be withdrawn; and
o if applicable because the outstanding notes have been tendered under the
book-entry procedures, specify the name and number of the participant's
account at The Depository Trust Company to be credited, if different than
that of the person having tendered the outstanding notes to be withdrawn.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of the notices and our determination will be final
and binding on all parties. Any outstanding notes so withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the exchange
offer. Any outstanding notes which have been tendered for exchange which are not
exchanged for any reason will be returned to the holder of the outstanding notes
without cost to the holder, or, in the case of outstanding notes tendered by
book-entry transfer into the exchange agent's account at The Depository Trust
Company under the book-entry transfer procedures described above, the
outstanding notes will be credited to an account maintained with The Depository
Trust Company for the outstanding notes, as promptly as practicable after the
withdrawal, rejection of tender, expiration date or earlier termination of the
exchange offer. Properly withdrawn outstanding notes may be retendered by
following one of the procedures described under "--Procedures for Tendering" and
"--Book-Entry Transfer" above at any time on or before the expiration date.
Conditions
Notwithstanding any other term of the exchange offer, we will not be
required to accept outstanding notes for exchange, or issue exchange notes in
exchange for any outstanding notes, and we may terminate or amend the exchange
offer as provided in this prospectus before the acceptance of the outstanding
notes, if:
o any court or governmental agency shall have issued any injunction, order
or decree that would prohibit, prevent or otherwise materially impair our
ability to proceed with the exchange offer; or
o the exchange offer shall violate any applicable law or any applicable
interpretation of the staff of the Securities and Exchange Commission.
These conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any of these conditions or may be
waived by us, in whole or in part, at any time and from time to time, if we
determine in our reasonable discretion that any of the foregoing events or
conditions has occurred or exists or has not been satisfied, except as limited
by applicable law. Our failure at any time to exercise any of the foregoing
rights will not be deemed a waiver of any of these rights and each of these
rights will be deemed an ongoing right which we may assert at any time and from
time to time.
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If we determine that we may terminate the exchange offer, as provided
above, we may:
o refuse to accept any outstanding notes and return any outstanding notes
that have been tendered to the holders of the outstanding notes;
o extend the exchange offer and retain all outstanding notes tendered
before the expiration date, without prejudice to the rights of the
holders of tendered outstanding notes to withdraw their tendered
outstanding notes; or
o waive the termination event with respect to the exchange offer and accept
all properly tendered outstanding notes that have not been withdrawn or
otherwise amend the terms of the exchange offer in any respect as
provided under the section in this prospectus entitled "--Expiration
Date; Extensions; Amendments; Termination."
The exchange offer is not conditioned upon any minimum principal amount of
outstanding notes being tendered for exchange.
We have no obligation to, and will not knowingly, accept tenders of
outstanding notes from our affiliates, within the meaning of Rule 405 under the
Securities Act, or from any other holder or holders who are not eligible to
participate in the exchange offer under applicable law or interpretations of the
Securities Act by the Securities and Exchange Commission, or if the exchange
notes to be received by the holder or holders of outstanding notes in the
exchange offer, upon receipt, will not be tradable by this holder without
restriction under the Securities Act and the Securities Exchange Act of 1934 and
without material restrictions under the blue sky or securities laws of
substantially all of the states of the United States.
Accounting Treatment
We will record the exchange notes at the same carrying value as the
outstanding notes, as reflected in our accounting records on the date of the
exchange. Accordingly, we will not recognize any gain or loss for accounting
purposes. We will amortize the costs of the exchange offer and the unamortized
expenses related to the issuance of the exchange notes over the term of the
exchange notes.
Exchange Agent
We have appointed IBJ Whitehall Bank & Trust Company as exchange agent for
the exchange offer. You should direct all questions and requests for assistance
or additional copies of this prospectus or the letter of transmittal to the
exchange agent as follows:
By Mail:
IBJ Whitehall Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
Attention: Reorganization Operations Department
By Hand/Overnight Delivery:
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Securities Processing Window, Subcellar One,
(SC-1)
Facsimile Transmission: (212) 858-2611
Confirm by Telephone: (212) 858-2103
Via Telex No.: 177754
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Fees and Expenses
We will bear the expenses of soliciting tenders under the exchange offer.
The principal solicitation for tenders under the exchange offer is being made by
mail; however, our offices and regular employees may make additional
solicitations by telegraph, telephone, telecopy or in person.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. However, we will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket expenses in connection with the
exchange offer. We may also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of the prospectus, letters of transmittal and related
documents to the beneficial owners of the outstanding notes, and in handling or
forwarding tenders for exchange.
We will pay the expenses incurred in connection with the exchange offer,
including the fees and expenses of the exchange agent and trustee and
accounting, legal, printing and related fees and expenses.
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes in the exchange offer. However, tendering holders will pay the
amount of any transfer taxes, whether imposed on the registered holder or any
other persons, if:
o certificates representing exchange notes or outstanding notes for
principal amounts not tendered or accepted for exchange are to be
delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the outstanding notes
tendered;
o tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or
o a transfer tax is imposed for any reason other than the exchange of
outstanding notes in the exchange offer.
If satisfactory evidence of payment of the taxes or exemption therefrom is
not submitted with the letter of transmittal, the amount of the transfer taxes
will be billed directly to the tendering holder.
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES
If you do not exchange your outstanding notes for exchange notes in the
exchange offer or if you do not properly tender your outstanding notes in the
exchange offer, you will not be able to resell, offer to resell or otherwise
transfer the outstanding notes unless they are registered under the Securities
Act or unless you resell them, offer to resell or otherwise transfer them under
an exemption from the registration requirements of, or in a transaction not
under, the Securities Act. In addition, you will no longer be able to obligate
us to register the outstanding notes under the Securities Act except in the
limited circumstances provided under our registration rights agreement. The
restrictions on transfer of your outstanding notes arise because we issued the
outstanding notes under exemptions from, or in transactions outside the
registration requirements of the Securities Act and applicable state securities
laws. In addition, if you want to exchange your outstanding notes in the
exchange offer for the purpose of participating in a distribution of the
exchange notes, you may be deemed to have received restricted securities, and,
if so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent the outstanding notes are tendered and accepted in the exchange
offer, the trading market, if any, for the outstanding notes would be adversely
affected. Please refer to the section in this prospectus entitled "Risk
Factors."
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DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes, except that the exchange notes have been registered
under the Securities Act, will not bear legends restricting the transfer of the
notes and will not be entitled to registration rights under our registration
rights agreement. We issued the outstanding notes and will issue the exchange
notes under the indenture, dated as of March 18, 1999, between us and IBJ
Whitehall Bank & Trust Company, as trustee. The terms of the exchange notes will
include those stated in the indenture and those made part of the indenture by
reference to the Trust Indenture Act of 1939. The exchange notes follow all
those terms, and we refer you to the indenture and the Trust Indenture Act for a
statement of the terms.
Except as otherwise indicated, the following description relates both to
the outstanding notes and the exchange notes and is a summary of the material
provisions of the indenture. It does not restate the indenture in its entirety.
We urge you to read the indenture because it, and not this description, defines
your rights as holder of the exchange notes. We have filed copies of the
indenture as an exhibit to the registration statement which includes this
prospectus.
The definitions of specific terms used in the following summary are
indicated below under "--Definitions." For purposes of this summary, the term
"MeriStar" refers only to MeriStar Hospitality Corporation, and not to any of
our subsidiaries. Also, in this description "outstanding notes" and "exchange
notes" are collectively referred to as the "notes."
The notes are unsecured obligations of MeriStar, ranking junior in right of
payment to all our Senior Debt. Please refer to the caption below under the
section entitled "--Subordination." In addition, the notes are effectively
junior in right of payment to all obligations of our subsidiaries, including
without limitation trade payables in the ordinary course of business. On a pro
forma basis, MeriStar would have approximately $1.63 billion of Indebtedness
outstanding, including $1,091.7 million of Senior Debt and $370.0 million of
Non-Recourse Indebtedness of Unrestricted Subsidiaries of MeriStar. The
indenture permits the incurrence of additional Senior Debt in the future.
The notes rank equally in right of payment with our $150.0 million
aggregate principal amount of outstanding 8 3/4% Senior Subordinated Notes due
2007 which were issued in August 1997 under the Original Indenture. Although the
terms of the notes and the terms of these existing notes are substantially
identical, the notes will constitute a separate class of indebtedness of
MeriStar and there may be significantly different federal income tax
consequences for the purchasers of the notes from those consequences for the
purchasers of the existing notes. Please refer to the caption below under the
section entitled "--Certain United States Federal Tax Considerations."
For purposes of the indenture, our subsidiaries are divided into two
categories--Restricted Subsidiaries, which generally are bound by the
restrictive covenants in the indenture, and Unrestricted Subsidiaries, which
generally are not. On the date of the indenture, some of our subsidiaries were
designated as Unrestricted Subsidiaries. None of our Restricted Subsidiaries is
presently required to guarantee the notes, although under specific future
circumstances we may be required to cause one or more restricted subsidiaries to
guarantee the notes on a senior subordinated basis. Please refer to the caption
below under the section entitled "--Subsidiary Guarantees." Subsidiaries that
are properly designated and maintained as Unrestricted Subsidiaries by us will
not be required to guarantee the notes under any circumstances.
PRINCIPAL, MATURITY AND INTEREST
The notes are limited in aggregate principal amount to $55,000,000. We have
agreed not to offer or sell any additional amounts of debt securities for a
period of 180 days from the date of the indenture without the prior written
consent of the initial purchasers. The notes will mature on August 15, 2007.
Interest on the notes will accrue from March 18, 1999 and will be payable
semi-annually in arrears in cash on February 15 and August 15 of each year,
commencing August 15, 1999, at the rate of 8 3/4% per annum to holders of notes
of record on the immediately preceding February 1 and August 1.
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Interest on the notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 18, 1999.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
Principal of and premium, interest and liquidated damages, if any, on the
notes will be payable at the office or agency maintained for that purpose or, at
our option, payment of interest and liquidated damages may be made by check
mailed to the holders of the notes at their addresses as written in the register
of holders of notes. However, all payments to noteholders who have given us wire
transfer instructions will be required to be made by wire transfer of
immediately available funds to the accounts specified by the noteholders. Until
we otherwise designate, our office or agency will be the office of the trustee
maintained for this purpose. The notes were and will be issued in denominations
of $1,000 and integral multiples of $1,000.
OPTIONAL REDEMPTION
Except as described in the last paragraph under this caption "--Optional
Redemption," at any time on or after August 15, 2002, the notes will be
redeemable at our option, in whole or in part, upon not less than 30 nor more
than 60 days notice, at the redemption prices (expressed as percentages of
principal amount) described below, plus accrued and unpaid interest and
liquidated damages thereon, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------------------ ----------
<S> <C>
2002.................................................................... 104.375%
2003.................................................................... 102.917
2004.................................................................... 101.458
2005 and thereafter..................................................... 100.000
</TABLE>
Notwithstanding the foregoing, except as described in the last paragraph
under this caption "--Optional Redemption," before August 15, 2000, we may
redeem, on any one or more occasions, with the net cash proceeds of one or more
public offerings of our common equity (within 60 days of the completion of any
public equity offering), up to 35% of the aggregate principal amount of the
notes at a redemption price equal to 108.750% of the principal amount of the
notes plus accrued and unpaid interest and liquidated damages thereon, if any,
to the redemption date. However, in order to redeem the notes with the net cash
proceeds of an offering, at least 65% of the aggregate principal amount of notes
originally issued must remain outstanding immediately after each redemption. Our
June 1997 senior credit facility prohibits the purchase of the notes with the
net cash proceeds of a public equity offering, unless and until the indebtedness
under the credit facility is repaid in full.
In addition, except as described in the last paragraph under this caption
"--Optional Redemption," at any time before August 15, 2002, we may, at our
option, redeem the notes, in whole or in part (if in part, by lot or by any
other method as the trustee shall deem fair or appropriate) at the Make-Whole
Price, plus accrued and unpaid interest and liquidated damages thereon, if any,
to the applicable redemption date.
No optional redemption of the notes shall be made unless we make a
proportional redemption of the existing notes issued under the Original
Indenture.
MANDATORY REDEMPTION
We are not required to make mandatory redemption or sinking fund payments
with respect to the notes.
SUBORDINATION
The payment of all obligations on the notes is junior in right of payment,
as set forth in the indenture, to the prior payment in full in cash or Cash
Equivalents of all obligations on Senior Debt, whether outstanding on March 18,
1999 or incurred after that date. Upon any payment or distribution of our assets
of any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding up, reorganization, assignment for
the benefit of creditors or marshaling of our assets or in a bankruptcy,
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reorganization, insolvency, receivership or other similar proceeding relating to
us or our property, whether voluntary or involuntary, all obligations due upon
all Senior Debt shall first be paid in full in cash or Cash Equivalents, or the
payment shall be duly provided for to the satisfaction of the holders of Senior
Debt, before any payment or distribution of any kind or character is made on
account of any obligations on the notes, or for the acquisition by us or any of
our subsidiaries of any of the notes for cash or property or otherwise. In
addition, until all obligations with respect to senior debt are paid in full in
cash or Cash Equivalents, any distribution to which the holders would be
entitled shall be made to the holders of senior debt, except that holders of
notes may receive debt or equity securities that rank junior in right of payment
to Senior Debt and payments made from the trust described under "--Legal
Defeasance and Covenant Defeasance."
If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Designated Senior Debt, no payment
of any kind or character shall be made by or on our behalf or any other person
on its behalf with respect to any obligations on the notes or to acquire any of
the notes for cash or property or otherwise. However, holders of notes may
receive debt and equity securities that rank junior in right of payment to
Senior Debt and payments made from the trust described under "--Legal Defeasance
and Covenant Defeasance."
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as that event of default is defined in
the instrument creating or evidencing that Designated Senior Debt, permitting
the holders of that Designated Senior Debt then outstanding to accelerate the
maturity of the debt and if the representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
trustee, then, unless and until all events of default have been cured or waived
or have ceased to exist or the trustee receives notice from the representative
for the respective issue of Designated Senior Debt terminating the blockage
period, during the 179 days after the delivery of that default notice, neither
we nor any of our subsidiaries shall:
(a) make any payment of any kind or character with respect to any
obligations on the notes, except the holders of notes may receive
debt and equity securities that rank junior in right of payment to
Senior Debt and payments made from the trust described under
"--Legal Defeasance and Covenant Defeasance"; or
(b) acquire any of the notes for cash or property or otherwise.
Notwithstanding anything to the contrary contained in this document, in no
event will a blockage period extend beyond 179 days from the date the payment on
the notes was due and only one blockage period may be commenced within any 365
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any blockage period with respect to the Designated
Senior Debt shall be, or be made, the basis for commencement of a second
blockage period by the representative of the Designated Senior Debt whether or
not within a period of 365 consecutive days, unless the event of default shall
have been cured or waived for a period of not less than 180 consecutive days.
Any subsequent action, or any breach of any financial covenants for a period
commencing after the date of commencement of the blockage period that, in either
case, would give rise to an event of default under any provisions under which an
event of default previously existed or was continuing shall constitute a new
event of default for this purpose.
By reason of the above subordination, in the event of our insolvency, our
creditors who are not holders of Senior Debt, including the holders of the
notes, may recover less ratably than holders of Senior Debt. On a pro forma
basis, we would have approximately $1.63 billion of Indebtedness outstanding,
including $1,091.7 million of Senior Debt and $370.0 million of Non-Recourse
Indebtedness of our Unrestricted Subsidiaries.
None of our subsidiaries is presently required to guarantee the notes,
although under specific future circumstances we may be required to cause one or
more Restricted Subsidiaries to guarantee the notes on a senior subordinated
basis. The Indebtedness represented by any guarantee by a Restricted Subsidiary
(i.e., the payment of obligations on the notes) will be ranked junior in right
of payment on the same basis as the notes that are ranked junior in right of
payment to our Senior Debt.
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REPURCHASE AT THE OPTION OF HOLDERS
Change of Control. The indenture provides that upon the occurrence of a
Change of Control, each holder will have the right to require that we purchase
all or a portion of the holder's notes under the offer described below, at a
purchase price equal to 101% of the principal amount of the notes plus accrued
and unpaid interest and liquidated damages, if any, to the date of purchase.
Within 10 days following the date upon which the Change of Control occurs,
we must send, by first class mail, a notice to each holder, with a copy to the
trustee, which notice shall govern the terms of the Change of Control offer. The
notice shall state, among other things, the purchase date, which must be no
earlier than 30 days nor later than 60 days from the date the notice is mailed,
other than as may be required by law. Holders electing to have a note purchased
under a Change of Control offer will be required to surrender their note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
note completed, to the trustee or paying agent, if any, at the address specified
in the notice before the close of business on the third business day before the
Change of Control payment date.
If a Change of Control offer is made, we cannot assure you that we will
have available funds sufficient to pay the Change of Control purchase price for
all the notes that might be delivered by holders seeking to accept that Change
of Control offer plus the existing notes that might be delivered by holders of
the notes seeking to accept a Change of Control offer made under the Original
Indenture. Our senior credit facility prohibits the purchase of notes by us in
the event of a Change of Control, unless and until the time the Indebtedness
under the credit facility is repaid in full. Any future credit agreements or
other agreements relating to Senior Debt to which we become a party may contain
similar restrictions and provisions.
In the event a Change of Control occurs at a time when we are prohibited
from purchasing notes, we could seek the consent of our lenders to purchase
notes or could attempt to refinance the borrowings that contain that
prohibition. If we do not obtain that consent or repay those borrowings, we will
remain prohibited from purchasing notes. In that case, our failure to purchase
tendered notes would constitute an event of default under the indenture which
would, in turn, constitute a default under our senior credit facility In those
circumstances, the subordination provisions in the indenture would likely
restrict payments to the holders of notes.
The Change of Control provisions described above are applicable whether or
not any other provisions of the indenture are applicable. Except as described
above with respect to a Change of Control, the indenture does not contain
provisions that permit the holders of the notes to require that we repurchase or
redeem the notes in the event of a takeover, recapitalization or similar
transaction.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of our assets. Although there is a developing body of case law interpreting the
phrase "substantially all," there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a holder of notes to
require us to repurchase the notes because of a sale, lease, transfer,
conveyance or other disposition of less than all of our assets to another person
may be uncertain.
We will comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934 and any other securities laws and regulations under the
Securities Exchange Act to the extent those laws and regulations are applicable
in connection with the repurchase of notes under a Change of Control offer. To
the extent that the provisions of any securities laws or regulations conflict
with the "Change of Control" provisions of the indenture, we shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached our obligations under the "Change of Control" provisions of the
indenture by virtue of that compliance.
We will not be required to make a Change of Control offer upon a Change of
Control if a third party makes the Change of Control offer in the manner, at the
times and otherwise in compliance with the requirements described in the
indenture applicable to a Change of Control offer made by us and purchases all
notes validly tendered and not withdrawn under the Change of Control offer.
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Asset Sales. The indenture provides that we will not, and will not permit
any of our Restricted Subsidiaries to, conduct an Asset Sale, unless:
(a) we or our Restricted Subsidiary, as the case may be, receives
consideration at the time of the Asset Sale at least equal to the
fair market value of the assets sold or otherwise disposed of, to
be evidenced by a resolution of the board of directors described
in an officer's certificate delivered to the trustee; and
(b) at least 75% of the consideration therefor received by us or our
Restricted Subsidiary is in the form of cash or Cash Equivalents.
However, the principal amount of the following shall be deemed to
be cash for purposes of this provision:
(1) any of our liabilities or those of our Restricted Subsidiaries,
as shown on our or our Restricted Subsidiary's most recent
balance sheet or in the related notes (other than liabilities
that by their terms rank junior in right of payment to the
notes or any guarantee of the notes) that are assumed by the
transferee of those assets; and
(2) any notes or other obligations received by us or any Restricted
Subsidiary from a transferee that are converted by us or the
Restricted Subsidiary into cash within 90 days of the closing
of the Asset Sale (to the extent of the cash received).
Notwithstanding the foregoing, the restriction in clause (b) above will not
apply with respect to mortgages, other notes receivable or other securities
received by us or any Restricted Subsidiary from a transferee of any assets to
the extent those mortgages, other notes receivable or other securities are
Investments permitted to be made by us or the Restricted Subsidiary under the
covenant described below entitled "Restricted Payments."
Within 365 days of any Asset Sale, we or our Restricted Subsidiary may:
(a) apply the Net Proceeds from the Asset Sale to prepay any
Indebtedness that ranks by its terms senior to the notes (or any
guarantee of the notes) and, in the case of any Indebtedness under
our senior credit facility, to effect a permanent reduction in the
amount of Indebtedness that may be incurred under clause (b) of
the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Certain Capital Stock"; or
(b) invest the Net Proceeds from the Asset Sale in property or assets
used in a Hospitality-Related Business, provided that we or our
Restricted Subsidiary will have complied with this clause (b) if,
within 365 days of the Asset Sale, we or our Restricted Subsidiary
shall have commenced and not completed or abandoned an Investment
in compliance with this clause (b) and shall have segregated the
Net Proceeds from our general funds and our subsidiaries for that
purpose and the Investment is substantially completed within
180 days after the first anniversary of the Asset Sale.
Any Net Proceeds from an Asset Sale that are not applied or invested as
provided above will be deemed to constitute "excess proceeds." When the
aggregate amount of excess proceeds exceeds $10.0 million, we shall make an
offer, to all holders of notes and other Indebtedness (including the existing
notes) that ranks by its terms equally in right of payment with the notes and
the terms of which contain substantially similar requirements with respect to
the application of Net Proceeds from Asset Sales as are contained in the
indenture to purchase on a proportional basis the maximum principal amount of
notes, that is an integral multiple of $1,000, that may be purchased out of the
excess proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount of the notes plus accrued and unpaid interest and liquidated
damages thereon, if any, to the date of purchase, as provided in the procedures
described in the indenture. To the extent that the aggregate amount of notes and
other such Indebtedness tendered under an Asset Sale offer is less than the
excess proceeds, we may use any remaining excess proceeds for general corporate
purposes. If the aggregate principal amount of notes surrendered by holders of
the notes exceeds the amount of excess proceeds available for purchase of those
notes, the trustee shall select the notes to be purchased in the manner
described under the caption "--Selection And Notice" below. When the offer to
purchase is completed, the amount of excess proceeds shall be reset at zero.
Pending the final application of any Net
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Proceeds from an Asset Sale under this paragraph, we or any Restricted
Subsidiary may temporarily reduce our Indebtedness or that of a Restricted
Subsidiary that ranks by its terms senior to the notes or otherwise invest the
Net Proceeds in Cash Equivalents. Our senior credit facility generally prohibits
the purchase of notes by us in the circumstances described above unless and
until the time as the Indebtedness under the credit facility is repaid in full.
We will comply, to the extent applicable, with the requirements of Rule
14e-1 under the Securities Exchange Act and other securities laws and
regulations under the Securities Exchange Act to the extent those laws and
regulations are applicable in connection with any offer to purchase and the
purchase of notes as described above. To the extent that the provisions of any
securities laws or regulations conflict with the "Asset Sale" provisions of the
indenture, we shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached our obligations under the "Asset Sale"
provisions of the indenture by virtue of compliance.
SELECTION AND NOTICE
If less than all of the notes are to be purchased in an Asset Sale offer or
redeemed at any time, selection of notes for purchase or redemption will be made
by the trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the notes are listed, or, if the notes are
not so listed, on a proportional basis, by lot or by any method as the trustee
shall deem fair and appropriate. However, no notes of a principal amount of
$1,000 or less shall be redeemed in part, and, if a partial redemption is made
with the proceeds of a public offering of our common equity securities,
selection of the notes or portions of the notes for redemption shall be made by
the trustee only on a proportional basis or on as nearly a proportional basis as
is practicable (except as required by the procedures of The Depository Trust
Company), unless that method is otherwise prohibited.
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the purchase or redemption date to each holder of
notes to be purchased or redeemed at its registered address. If any note is to
be purchased or redeemed in part only, the notice of redemption that relates to
that note shall state the portion of the principal amount of that note to be
purchased or redeemed.
A new note in principal amount equal to the unpurchased or unredeemed
portion of any note purchased or redeemed in part will be issued in the name of
the holder of the note upon cancellation of the original note. On and after the
purchase or redemption date, interest ceases to accrue on notes or portions of
the note called for purchase or redemption as long as we have deposited with the
trustee funds in satisfaction of the applicable redemption price under the
indenture.
COVENANTS
The indenture contains, among others, the following covenants:
Restricted Payments. The indenture provides that we will not, and will not
permit any of our Restricted Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any distribution on account of our
or any of our Restricted Subsidiaries' Equity Interests, other than:
(1) dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of our company; (2) dividends or distributions by a
Restricted Subsidiary of ours, except that to the extent that a portion
of that dividend or distribution is paid to a holder of Equity
Interests of a Restricted Subsidiary other than MeriStar or a
Restricted Subsidiary, the portion of that dividend or distribution is
not greater than that holder's proportional aggregate common equity
interest in that Restricted Subsidiary; and (3) dividends or
distributions payable on Existing Preferred OP Units and Preferred OP
Units issued in compliance with the covenant described below under the
caption "--Incurrence of Indebtedness and Issuance of Certain Capital
Stock");
(b) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of our company or any Restricted Subsidiary or other
Affiliate of ours, other than (1) any Equity Interests owned by us or
any Restricted Subsidiary of ours; (2) any Existing Preferred OP Units;
and (3) any Preferred OP
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Units issued in compliance with the covenant described below under the
caption "--Incurrence of Indebtedness and Issuance of Certain Capital
Stock";
(c) purchase, redeem or otherwise acquire or retire for value any of
our Indebtedness or of any Restricted Subsidiary that ranks junior
in right of payment, by its terms, to the notes or any guarantee
of the notes before the scheduled final maturity or sinking fund
payment dates for payment of principal and interest as provided in
the original documentation for the subordinated or junior
Indebtedness; or
(d) make any Investment (all the payments and other actions described
in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"), unless, at the time of the Restricted
Payment:
(1) no default or event of default shall have occurred and be
continuing or would occur as a consequence of the Restricted
Payment;
(2) we would, at the time of the Restricted Payment and after
giving pro forma effect thereto as if the Restricted Payment
had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of
additional Indebtedness under the Fixed Charge Coverage Ratio
test described in the covenant described under the caption
"--Incurrence of Indebtedness and Issuance of Certain Capital
Stock"; and
(3) the Restricted Payment, together with the aggregate of all
other Restricted Payments made by us and our Restricted
Subsidiaries after the date of the Original Indenture,
excluding Restricted Payments permitted by clauses (b), (c),
(d), (e) and (f)(1) of the next succeeding paragraph, is less
than the sum, without duplication, of
(A) 50% of our Consolidated Net Income for the period (taken as
one accounting period) from June 30, 1997 to the end of our
most recently ended fiscal quarter for which internal
financial statements are available at the time of the
Restricted Payment (or, if the Consolidated Net Income for
the period is a deficit, less 100% of the deficit), plus
(B) 100% of the aggregate net proceeds (including the fair
market value of non-cash proceeds as determined in good
faith by the board of directors) received by us from the
issue or sale, in either case, since the date of the
Original Indenture of either (a) our Equity Interests or of
(b) our debt securities that have been converted or
exchanged into those Equity Interests (other than Equity
Interests (or convertible or exchangeable debt securities)
sold to one of our Restricted Subsidiaries and other than
Disqualified Stock or debt securities that have been
converted or exchanged into Disqualified Stock), plus
(C) in case, after the date of the Original Indenture, any
Unrestricted Subsidiary has been redesignated a Restricted
Subsidiary under the terms of the indenture or has been
merged, consolidated or amalgamated with or into, or
transfers or conveys assets to, or is liquidated into us or
a Restricted Subsidiary and, only if no default or event of
default shall have occurred and be continuing or would occur
as a consequence of the Restricted Payment, the lesser of
(a) the book value at the date of the redesignation,
combination or transfer of the aggregate Investments made by
us and our Restricted Subsidiaries in the Unrestricted
Subsidiary (or of the assets transferred or conveyed, as
applicable) and (b) the fair market value of the Investment
in the Unrestricted Subsidiary at the time of the
redesignation, combination or transfer (or of the assets
transferred or conveyed, as applicable), in each case as
determined in good faith by our board of directors, whose
determination shall be conclusive and evidenced by a
resolution of the board and, in each case, after deducting
any Indebtedness associated with the Unrestricted Subsidiary
so designated or combined or with the assets so transferred
or conveyed, plus
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(D) 100% of any dividends, distributions or interest actually
received in cash by us or a Restricted Subsidiary after the
date of the Original Indenture from (a) a Restricted
Subsidiary the Net Income of which has been excluded from
the computation of Consolidated Net Income, (b) an
Unrestricted Subsidiary, (c) a person that is not a
subsidiary or (d) a person that is accounted for on the
equity method plus
(E) $15.0 million.
The foregoing provisions do not prohibit the following Restricted Payments:
(a) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the
payment would have complied with the provisions of the indenture;
(b) (1) the redemption, purchase, retirement or other acquisition of
any OP Unit in exchange for Equity Interests of our company (other
than Disqualified Stock) and (2) the redemption, purchase,
retirement or other acquisition of any Equity Interests of our
company or a Restricted Subsidiary (other than OP Units or
Preferred OP Units) in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Restricted
Subsidiary of ours) of other Equity Interests of our company
(other than any Disqualified Stock). However, in the case of
(1) and (2) the amount of any proceeds that is utilized for the
redemption, repurchase, retirement or other acquisition shall be
excluded from clause (3)(B) of the preceding paragraph;
(c) the defeasance, redemption, repayment or purchase of our
Indebtedness or any Restricted Subsidiary that ranks junior in
right of payment, by its terms, to the notes and any guarantee of
the notes in a Permitted Refinancing;
(d) the defeasance, redemption, repayment or purchase of our
Indebtedness or any Restricted Subsidiary that is junior in right
of payment, by its terms, to the notes and any guarantee of the
notes with the proceeds of a substantially concurrent sale (other
than to one of our subsidiaries) of Equity Interests (other than
Disqualified Stock) of our company. However, the amount of any
proceeds that is utilized for the defeasance, redemption,
repayment or purchase shall be excluded from clause (3)(B) of the
preceding paragraph;
(e) the purchase, redemption or other acquisition or retirement for
value of any Equity Interests of our company under any management
equity subscription agreement or stock option agreement. However,
the aggregate price paid for all the purchased, redeemed, acquired
or retired Equity Interests shall not exceed $1,000,000 in any 12
month period; and
(f) (1) the making of any Permitted Investment described in
clauses (a), (b), (c), (d) or (f) of the definition of Permitted
Investments and (2) the making of any Permitted Investment
described in clause (e) of the definition of Permitted
Investments. However, in the case of clauses (b)(2), (c), (d), (e)
and (f)(2), no default or event of default shall have occurred and
be continuing or would occur as a consequence of the Permitted
Investments.
In determining whether any Restricted Payment is permitted by the foregoing
covenant, we may allocate or reallocate all or any portion of the Restricted
Payment among the clauses (a) through (f) of the preceding paragraph or among
the clauses and the first paragraph of this covenant including clauses (1), (2)
and (3). However, at the time of the allocation or reallocation, all the
Restricted Payments, or allocated portions of the Restricted Payments, must be
permitted under the various provisions of the foregoing covenant.
The amount of all Restricted Payments (other than cash) shall be the fair
market value, evidenced by a resolution of our board of directors described in
an officer's certificate delivered to the trustee, on the date of the Restricted
Payment of the asset(s) proposed to be transferred by us or the Restricted
Subsidiary, as the case may be, under the Restricted Payment. Not later than
(a) the end of any calendar quarter in which any Restricted Payment is made or
(b) the making of a Restricted Payment which, when added to the sum of all
previous Restricted Payments made in a calendar quarter, would cause the
aggregate of all Restricted Payments made in the quarter to exceed
$5.0 million, we shall deliver to the trustee an officer's certificate stating
that the Restricted Payment is permitted and setting forth the basis upon which
the calculations
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required by this covenant were computed, which calculations may be based upon
our latest available financial statements.
Our board of directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if the designation would not cause a default or event of
default. For purposes of making the determination as to whether the designation
would cause a default or event of default, all outstanding Investments by us and
our Restricted Subsidiaries (except to the extent repaid in cash) in the
subsidiary so designated will be deemed to be Restricted Payments at the time of
the designation and will reduce the amount available for Restricted Payments
under the first paragraph of this covenant. All the outstanding Investments will
be deemed to constitute Investments in an amount equal to the greatest of (a)
the net book value of the Investments at the time of the designation, (b) the
fair market value of the Investments at the time of the designation and (c) the
original fair market value of the Investments at the time they were made. The
designation will only be permitted if the Restricted Payment would be permitted
at the time and if the Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
Any designation of a Restricted Subsidiary to be our Unrestricted
Subsidiary by our board of directors shall be evidenced to the trustee by filing
with the trustee a certified copy of the resolution of our board of directors
giving effect to the designation and an officer's certificate certifying that
the designation complied with the foregoing conditions.
Incurrence of Indebtedness and Issuance of Certain Capital Stock. The
indenture provides that (1) we will not, and will not permit any of our
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness (including Acquired Debt), (2) we will not issue, and will
not permit any of our Restricted Subsidiaries to issue, any shares of
Disqualified Stock and (3) we will not permit any of our Restricted Subsidiaries
to issue any Preferred Stock. However, we or any Guarantor may incur
Indebtedness or issue shares of Disqualified Stock and the Restricted
Subsidiaries may incur Indebtedness under our senior credit facility if the
Fixed Charge Coverage Ratio for our most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which the additional Indebtedness is incurred or the
Disqualified Stock is issued would have been at least 2.0 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of that
four-quarter period.
The foregoing provisions do not apply to:
(a) the incurrence by our Unrestricted Subsidiaries of Non-Recourse
Indebtedness. However, if any of the Indebtedness ceases to be
Non-Recourse Indebtedness of an Unrestricted Subsidiary, that
event shall be deemed to constitute an incurrence of Indebtedness
by one of our Restricted Subsidiaries;
(b) the incurrence by us or our Restricted Subsidiaries of
Indebtedness under our senior credit facility in an aggregate
principal amount not to exceed $300.0 million at any one time
outstanding minus any Net Proceeds that have been applied to
permanently reduce the outstanding amount of the Indebtedness
under clause (a) of the third paragraph of the covenant described
under the caption "--Repurchase at the Option of Holders--Asset
Sales";
(c) the incurrence by us and our Restricted Subsidiaries of Existing
Indebtedness;
(d) the incurrence by us or our Restricted Subsidiaries of
Indebtedness under Hedging Obligations that do not increase our
Indebtedness or that of the Restricted Subsidiary, as the case may
be, other than from fluctuations in interest or foreign currency
exchange rates. However, the Hedging Obligations must be incurred
for the purpose of providing interest rate protection with respect
to Indebtedness permitted under the indenture or to provide
currency exchange protection in connection with revenues generated
in currencies other than U.S. dollars;
(e) the incurrence or the issuance by us of Refinancing Indebtedness
or Refinancing Disqualified Stock or the incurrence or issuance by
a Restricted Subsidiary of Refinancing Indebtedness or
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Refinancing Disqualified Stock. However, the Refinancing
Indebtedness or Refinancing Disqualified Stock must be a Permitted
Refinancing;
(f) the incurrence by us or any of our Restricted Subsidiaries of
intercompany Indebtedness between or among us and any of our
Restricted Subsidiaries. However, (1) any subsequent issuance or
transfer of Equity Interests that results in any of the
Indebtedness being held by a person other than a Restricted
Subsidiary and (2) any sale or other transfer of any of the
Indebtedness to a person that is not either us or a Restricted
Subsidiary will be deemed, in each case, to constitute an
incurrence of the Indebtedness by us or a Restricted Subsidiary,
as the case may be;
(g) the incurrence of Indebtedness represented by the notes and any
guarantee of the notes;
(h) the incurrence by us or any of our Restricted Subsidiaries, in the
ordinary course of business and consistent with past practice, of
surety, performance or appeal bonds;
(i) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other
clause of this paragraph) in an aggregate principal amount at any
time outstanding not to exceed $50.0 million;
(j) the incurrence by us or any of our Restricted Subsidiaries of
Assumed Indebtedness, except that, after giving effect to the
incurrence of Assumed Indebtedness, we must be able to incur at
least $1.00 of additional Indebtedness under the Fixed Charge
Coverage Ratio test described in the preceding paragraph; and
(k) the issuance of Preferred OP Units by us or any of our Restricted
Subsidiaries as full or partial consideration for the acquisition
of lodging facilities and related assets, except that, after
giving effect to the issuance of the Preferred OP Units, we must
be able to incur at least $1.00 of additional Indebtedness under
the Fixed Charge Coverage Ratio test described in the preceding
paragraph.
Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The indenture provides that the we will not, and will not permit
any of our Restricted Subsidiaries to, directly or indirectly, create any
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(a) (1) pay dividends or make any other distributions to us or any of
our Restricted Subsidiaries (A) on its Capital Stock or (B) with
respect to any other interest or participation in, or measured by,
its profits, or (2) pay any Indebtedness owed to us or any of our
Restricted Subsidiaries;
(b) make loans or advances or capital contributions to us or any of
our Restricted Subsidiaries; or
(c) sell, lease or transfer any of its properties or assets to us or
any of our Restricted Subsidiaries, except for those encumbrances
or restrictions existing under or by reasons of:
(1) Existing Indebtedness as in effect on the date of the Original
Indenture;
(2) our senior credit facility, except that the encumbrances or
restrictions contained in the facility, as amended or modified
in any manner, must be no more restrictive than those contained
in our senior credit facility as in effect on the date of the
Original Indenture;
(3) the Original Indenture and the existing notes under that
indenture and the indenture governing the outstanding notes and
the exchange notes;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of a
person we or any of our Restricted Subsidiaries acquire or of
any person that becomes a Restricted Subsidiary as in effect at
the time of the acquisition or the person becoming a Restricted
Subsidiary (except to the extent the Indebtedness was incurred
in connection with or in contemplation of the acquisition or
that person becoming a Restricted Subsidiary), which
encumbrance or
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restriction is not applicable to any person, or the properties
or assets of any person, other than the person, or the property
or assets of the person, so acquired; however, the Consolidated
Cash Flow of that person is not taken into account (to the
extent of the restriction) in determining whether the
acquisition was permitted by the terms of the indenture;
(6) restrictions described in clause (c) above by reason of
customary non-assignment provisions in leases entered into in
the ordinary course of business;
(7) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature described in clause (c) above on the property so
acquired;
(8) Permitted Refinancings, except that the encumbrance or
restrictions contained in the agreements governing the
Permitted Refinancings must be no more restrictive than those
contained in the agreements governing the Indebtedness or
Disqualified Stock being refinanced; or
(9) customary restrictions in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary to the extent
the restrictions restrict the transfer of the property, except
as required by the security agreements and mortgages.
Prohibition on Incurrence of Senior Subordinated Debt. The indenture
provides that:
(a) we will not incur, guarantee or otherwise become liable for any
Indebtedness that is senior in right of payment to the notes and
subordinate or junior in right of payment to any other of our
Indebtedness; and
(b) no Guarantor will incur, guarantee or otherwise become liable for
any Indebtedness that is senior in right of payment to the
guarantee of the notes by that Guarantor and subordinate or junior
in right of payment to any other Indebtedness of the Guarantor.
Liens. The indenture provides that we will not, and will not permit any of
our Restricted Subsidiaries to, directly or indirectly create or incur any Lien
that secures obligations under any Indebtedness which is equal to or ranks
junior to the notes, unless the notes are equally and ratably secured with the
obligations so secured or until the time when those obligations are no longer
secured by a Lien.
Merger, Consolidation or Sale of Assets. The indenture provides that we
may not consolidate or merge with or into, or sell, transfer or otherwise
dispose of all or substantially all of our properties or assets in one or more
related transactions, to another corporation, person or entity unless:
(a) we are the surviving corporation or the person formed by or
surviving any the consolidation or merger (if other than us) or to
which the sale, transfer or other disposition shall have been made
is a corporation organized or existing under the laws of the
United States, any state of the United States or the District of
Columbia;
(b) the person formed by or surviving any the consolidation or merger
(if other than us) or the person to which the sale, transfer or
other disposition shall have been made assumes all of our
obligations under a supplemental indenture under the notes and the
indenture;
(c) immediately after the transaction no default or event of default
exists; and
(d) we or any person formed by or surviving any the consolidation or
merger, or to which the sale, transfer or other disposition shall
have been made (1) will have Consolidated Net Worth (immediately
after the transaction) equal to or greater than our Consolidated
Net Worth immediately preceding the transaction and (2) will, at
the time of the transaction and after giving pro forma effect
thereto as if the transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness under the Fixed Charge Coverage
Ratio test as provided in the covenant described under the caption
"--Incurrence of Indebtedness and Issuance of Certain Capital
Stock."
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Upon any the consolidation, merger or transfer as provided above, the
successor person formed by the consolidation or into which we are merged or to
which the transfer is made shall succeed to, and be substituted for us, and may
exercise all of our rights and powers under the indenture with the same effect
as if the successor had been named as us therein and thereafter (except in the
case of a lease) the predecessor corporation will be relieved of all further
obligations and covenants under the indenture and the notes.
Transactions with Affiliates. The indenture provides that we will not, and
will not permit any of our Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any agreement or understanding with, or
for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(a) the Affiliate Transaction is on terms that are no less favorable
to us or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by us or the
Restricted Subsidiary on an arm's-length basis with an unrelated
person;
(b) we deliver to the trustee:
(1) with respect to any Affiliate Transaction involving aggregate
payments in excess of $5.0 million, an officer's certificate
certifying that the Affiliate Transaction complies with clause
(a) above and the Affiliate Transaction is approved by a
majority of the disinterested members of our board of
directors; and
(2) with respect to any Affiliate Transaction involving aggregate
payments in excess of $10.0 million, other than an Affiliate
Transaction involving the acquisition or disposition of a
lodging facility by us or any of our Restricted Subsidiaries,
an opinion as to the fairness to us or the Restricted
Subsidiary from a financial point of view issued, at our
option, by an investment banking firm of national standing or a
qualified appraiser; and
(c) we deliver to the trustee in the case of an Affiliate Transaction
involving the acquisition or disposition of a lodging facility by
us or our Restricted Subsidiaries, and
(1) involving aggregate payments of more than $5.0 million and less
than $25.0 million, an appraisal by a qualified appraiser
stating that the transaction is being undertaking at fair
market value, or
(2) involving aggregate payments of $25.0 million or more, an
opinion as to the fairness of the transaction to us or the
Restricted Subsidiary from a financial point of view issued by
an investment banking firm of national standing. However, the
following shall not be deemed Affiliate Transactions:
(A) any employment, deferred compensation, stock option,
noncompetition, consulting or similar agreement we or any of
our Restricted Subsidiaries enter into in the ordinary
course of business and consistent with our past practice or
that of the Restricted Subsidiary;
(B) transactions between or among us and/or our Restricted
Subsidiaries;
(C) the incurrence of fees in connection with the provision of
hotel management services, except that the fees must be paid
in the ordinary course of business and are consistent with
past practice; and
(D) Restricted Payments permitted by the provisions of the
indenture described above under the covenant described under
the caption "--Restricted Payments."
Line of Business. The indenture provides that for so long as any notes are
outstanding, we will not, and will not permit any of our Restricted Subsidiaries
to, engage in any business or activity other than a Hospitality-Related
Business.
Payments for Consent. The indenture provides that neither we nor any of
our subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any holder of
any notes for or as an inducement to any consent, waiver or amendment of any of
the terms or
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provisions of the indenture or the notes unless the consideration is offered to
be paid or agreed to be paid to all holders of the notes that consent, waive or
agree to amend in the time frame described in the solicitation documents
relating to the consent, waiver or agreement.
Purchase/Redemptions of Notes under Original Indenture. The indenture
provides that so long as any note is outstanding, neither we nor any of our
subsidiaries or Affiliates shall redeem or offer to purchase any of the existing
notes unless we are redeeming or offering to purchase the outstanding notes on a
proportional basis and at the same purchase or redemption price.
SUBSIDIARY GUARANTEES
As of March 18, 1999, none of our subsidiaries will be required to act as a
Guarantor in respect of the notes. However, the indenture provides that, before
guaranteeing any of our other Indebtedness, other than our senior credit
facility, a Restricted Subsidiary that is also a Significant Subsidiary must
execute and deliver to the trustee a supplemental indenture under which the
Restricted Subsidiary shall guarantee, on an unsecured senior subordinated
basis, all of our Obligations with respect to the notes together with an opinion
of counsel stating that the supplemental indenture has been duly executed and
delivered by the Restricted Subsidiary and is in compliance in all material
respects with the terms of the indenture. The Indebtedness represented by the
guarantee (i.e., the payment of Obligations on the notes) will be junior in
right of payment on the same basis to Senior Debt of the Guarantor as the notes
are junior in right of payment to our Senior Debt. Our senior credit facility
generally prohibits the incurrence of these guarantees unless and until a time
when the indebtedness under the credit facility is repaid in full.
The indenture provides that no Guarantor may consolidate with or merge with
or into another corporation, person or entity, other than us or another
Guarantor, unless:
(a) except as limited by the provisions of the following paragraph,
the person formed by or surviving the consolidation or merger (if
other than the Guarantor) assumes all the obligations of the
Guarantor under a supplemental indenture in form and substance
reasonably satisfactory to the trustee under the indenture;
(b) immediately after giving effect to the transaction, no default or
event of default exists; and
(c) the Guarantor, or any person formed by or surviving the
consolidation or merger,
(1) would have Consolidated Net Worth (immediately after giving
effect to the transaction), equal to or greater than the
Consolidated Net Worth of the Guarantor immediately preceding
the transaction; and
(2) would be permitted by virtue of our Fixed Charge Coverage Ratio
to incur, immediately after giving effect to the transaction,
at last $1.00 of additional Indebtedness under the Fixed
Charged Coverage Ratio described in the covenant described
above under the caption "--Covenants--Incurrence of
Indebtedness and Issuance of Certain Capital Stock."
The indenture provides that in the event of (1) a sale or other disposition
of all or substantially all of the assets of any Guarantor, which sale or other
disposition is otherwise in compliance with the terms of the indenture, by way
of merger, consolidation or otherwise, or (2) a sale or other disposition of all
of the capital stock of any Guarantor, then the Guarantor (in the event of a
sale or other disposition, by way of a merger, consolidation or otherwise, of
all of the capital stock of the Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of the Guarantor) will be automatically and unconditionally
released and relieved of any obligations under its subsidiary guarantee.
For purposes of a guarantee with respect to the notes, each Guarantor's
liability will be that amount from time to time equal to the aggregate liability
of the Guarantor under the guarantee, but shall be limited to the lesser of (a)
the aggregate amount of our obligations under the notes and the indenture or (b)
the amount, if any, which would not have (1) rendered the Guarantor "insolvent"
(as the term is defined in the Federal Bankruptcy Code and in the Debtor and
Creditor Law of the State of New York) or (2) left it with
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unreasonably small capital at the time its guarantee with respect to the notes
was entered into, after giving effect to the incurrence of existing Indebtedness
immediately before the time. However, it shall be a presumption in any
proceeding in which a Guarantor is a party that the amount guaranteed under the
guarantee with respect to the notes is the amount described in clause (a) above
unless any creditor, or representative of creditors of the Guarantor, or debtor
in possession or trustee in bankruptcy of the Guarantor, otherwise proves in a
lawsuit that the aggregate liability of the Guarantor is limited to the amount
described in clause (b). The indenture provides that, in making any
determination as to the solvency or sufficiency of capital of a Guarantor as
described in the previous sentence, the right of the Guarantor to contribution
from other Guarantors and any other rights the Guarantor may have, contractual
or otherwise, shall be taken into account.
REPORTS
Whether required by the rules and regulations of the Securities and
Exchange Commission, as long as any notes are outstanding, we will furnish to
the holders of notes all quarterly and annual financial information that would
be required to be contained in a filing with the Securities and Exchange
Commission on Forms 10-Q and 10-K if we were required to file the forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report thereon by our certified independent accountants. In addition, whether
required by the rules and regulations of the Securities and Exchange Commission,
we will submit a copy of all the information with the Securities and Exchange
Commission for public availability and file the information with the trustee and
make the information available to investors and securities analysts who request
it in writing. In addition, for as long as the notes are outstanding, we will
continue to provide to holders and to prospective purchasers of notes the
information required by Rule 144A(d)(4).
EVENTS OF DEFAULT AND REMEDIES
The indenture provides that each of the following constitutes an event of
default:
(a) default for 30 days in the payment when due of interest or
liquidated damages, if any, on the notes;
(b) default in payment when due of the principal of or premium, if
any, on the notes at maturity, upon redemption or otherwise,
including the failure to make a payment to purchase notes tendered
under a Change of Control offer or an Asset Sale offer);
(c) failure by us or any Restricted Subsidiary to comply with the
covenant described under the caption "--Covenants--Merger,
Consolidation or Sales of Assets";
(d) failure by us or any Restricted Subsidiary for 30 days in the
performance of any other covenant, warranty or agreement in the
indenture or the notes after written notice shall have been given
to us by the trustee or to us and the trustee from holders of at
least 25% in principal amount of the notes then outstanding;
(e) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions to the grace periods)
the principal amount of Non-Recourse Indebtedness of our company
or any of our Restricted Subsidiaries with an aggregate principal
amount in excess of the lesser of (1) 10% of the total assets of
our company and those of our Restricted Subsidiaries measured as
of the end of our most recent fiscal quarter for which internal
financial statements are available immediately before the date on
which the default occurred, determined on a pro forma basis, and
(2) $50 million, and the failure continues for a period of
10 days or more, or the acceleration of the final stated maturity
of any Non-Recourse Indebtedness (which acceleration is not
rescinded, annulled or otherwise cured within 10 days of receipt
by us or the Restricted Subsidiary of notice of the acceleration);
(f) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions to the grace periods)
the principal amount of any Indebtedness (other than Non-Recourse
Indebtedness) of our company or any Restricted Subsidiary, or the
acceleration of the
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final stated maturity of any Indebtedness if the aggregate
principal amount of the Indebtedness, together with the principal
amount of any other Indebtedness in default for failure to pay
principal at final maturity or which has been accelerated, in each
case with respect to which the 10-day period described above has
passed, aggregates $10.0 million or more at any time;
(g) failure by our company or any Restricted Subsidiary to pay final
judgments rendered against them (other than judgment liens without
recourse to any assets or property of our company or any
Restricted Subsidiary other than assets or property securing
Non-Recourse Indebtedness) aggregating in excess of
$10.0 million, which judgments are not paid, discharged or stayed
for a period of 60 days, except for judgments as to which a
reputable insurance company has accepted full liability;
(h) except as permitted by the indenture, any guarantee with respect
to the notes shall be held in a judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor, or any person acting on
behalf of the Guarantor, shall deny or disaffirm its obligations
or shall fail to comply with any obligations under its guarantee;
and
(i) specific events of bankruptcy or insolvency with respect to us,
any Guarantor or any of our subsidiaries that would constitute a
Significant Subsidiary or any group of our subsidiaries that,
taken together, would constitute a Significant Subsidiary.
If any event of default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding notes may
declare all the notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an event of default arising from specific events of
bankruptcy or insolvency, with respect to (1) us, (2) any of our subsidiaries
that would constitute a Significant Subsidiary, (3) any group of our
subsidiaries that, taken together, would constitute a Significant Subsidiary or
(4) any Guarantor, all outstanding notes will become due and payable without
further action or notice. Under specific circumstances, the holders of a
majority in principal amount of the outstanding notes may rescind any
acceleration with respect to the notes and its consequences. Holders of the
notes may not enforce the indenture or the notes except as provided in the
indenture. With some limitations, holders of a majority in principal amount of
the then-outstanding notes may direct the trustee in its exercise of any trust
or power. The trustee may withhold from holders of the notes notice of any
continuing default or event of default, except a default or event of default
relating to the payment of principal or interest, if it determines that
withholding notice is in their interest.
The indenture provides that no holder of a note may pursue a remedy under
the indenture unless:
(a) the holder of a note gives to the trustee written notice of a
continuing event of default or the trustee receives the notice
from us;
(b) the holders of at least 25% in principal amount of the
then-outstanding notes make a written request to the trustee to
pursue a remedy;
(c) the holder of a note or holders of notes offer and, if requested,
provide to the trustee indemnity satisfactory to the trustee
against any loss, liability or expense;
(d) the trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during the 60-day period the holders of a majority in principal
amount of the then-outstanding notes do not give the trustee a
direction inconsistent with the request.
However, this provision does not affect the right of a holder of a note to sue
for enforcement of any overdue payment on the notes.
We are required to deliver to the trustee annually a statement regarding
compliance with the indenture, including with respect to any Restricted Payments
made during that year and the basis upon which the calculations required by the
covenants described under the caption "--Covenants--Restricted Payments" were
computed. We are also required upon becoming aware of any default or event of
default, to deliver to the trustee a statement specifying the default or event
of default.
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NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
None of our directors, officers, employees, incorporators or stockholders,
past, present or future, any successor person or any Guarantor, shall have any
liability for any of our obligations under the notes, any guarantee of the note
or the indenture or for any claim based on the obligations or their creation.
Each holder of notes by accepting a note waives and releases all those
liabilities. The waiver and release are part of the consideration for issuance
of the notes. The waiver and release may not be effective to waive or release
liabilities under the federal securities laws and it is the view of the
Securities and Exchange Commission that a waiver or release is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
and the obligations of any Guarantor discharged with respect to the outstanding
notes ("legal defeasance"), except for:
(a) the rights of holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, and interest on the
notes when the payments are due;
(b) our obligations and those of the Guarantors with respect to the
notes concerning issuing temporary notes, registration of notes,
mutilated, destroyed, lost or stolen notes and the maintenance of
an office or agency for payment and money for security payments
held in trust;
(c) the rights, powers, trusts, duties and immunities of the trustee,
and our obligations and those of the Guarantors in connection with
the trustee; and
(d) the legal defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations and those of any Guarantor released with respect to specific
covenants that are described in the indenture ("covenant defeasance"). After
this release, any omission to comply with the obligations would not constitute a
default or event of default with respect to the notes. In the event covenant
defeasance occurs, some events, but not non-payment, bankruptcy, receivership,
rehabilitation and insolvency events, described above under "--Events of Default
and Remedies" would no longer constitute an Event of Default with respect to the
notes.
In order to exercise either legal defeasance or covenant defeasance,
(a) we must irrevocably deposit with the trustee, for the benefit of
the holders of the notes, cash in U.S. dollars, non-callable
government securities, or a combination of the above, in amounts
that will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of,
premium, if any, and interest on the outstanding notes on the
stated maturity or on the applicable redemption date, as the case
may be;
(b) in the case of legal defeasance, we shall have delivered to the
trustee an opinion of counsel confirming that (1) we has received
from, or there has been published by, the Internal Revenue Service
a ruling or (2) since March 18, 1999, there has been a change in
the applicable federal income tax law, in either case that, and
based thereon the opinion of counsel shall confirm that, the
holders of the outstanding notes will not recognize income, gain
or loss for federal income tax purposes as a result of such legal
defeasance and will have to pay federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if the legal defeasance had not occurred;
(c) in the case of covenant defeasance, we shall have delivered to the
trustee an opinion of counsel confirming that the holders of the
outstanding notes will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant
defeasance and will have to pay federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if the covenant defeasance had not occurred;
(d) no default or event of default shall have occurred and be
continuing on the date of the deposit, other than a default or
event of default resulting from the borrowing of funds applied to
the
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deposit, or insofar as events of default from bankruptcy or
insolvency events are concerned, at anytime in the period ending
on the 123rd day after the date of deposit;
(e) such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any
material agreement or instrument, other than the indenture, to
which we or any of our subsidiaries is a party or by which we or
any of our subsidiaries is bound;
(f) we shall have delivered to the trustee an opinion of counsel that,
as of the date of the opinion, (1) the only rights of holders of
Indebtedness in the trust funds will be the notes and
(2) assuming no intervening bankruptcy by us between the date of
deposit and the 123rd day following the deposit and assuming no
holder of notes is one of our insiders, after the 123rd day
following the deposit, the trust funds will not fall under the
effects of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors rights generally under any
applicable United States or state law;
(g) we shall have delivered to the trustee an officer's certificate
stating that the deposit was not made by us with the intent of
preferring the holders of notes over our other creditors with the
intent of defeating, hindering, delaying or defrauding our
creditors or others; and
(h) we shall have delivered to the trustee an officer's certificate
and an opinion of counsel, each stating that all conditions
precedent provided for relating to such legal defeasance or such
covenant defeasance have been complied with.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect,
except as to surviving rights of registration of transfer or exchange of notes,
as to all outstanding notes when either:
(a) all the notes previously authenticated and delivered, except lost,
stolen or destroyed notes that have been replaced or paid and
notes for whose payment money has previously been deposited in
trust or segregated and held in trust by us and later repaid to us
or discharged from the trust, have been delivered to the trustee
for cancellation; or
(b) (1) all the notes not theretofore delivered to the trustee for
cancellation have become due and payable by their terms or shall
have been called for redemption and we have irrevocably deposited
with the trustee as trust funds in trust for such purpose an
amount of money sufficient to pay and discharge the entire
indebtedness on the notes not previously delivered to the trustee
for cancellation or redemption, for the principal amount, premium
and liquidated damages, if any, and accrued interest to the date
of the deposit; (2) we have paid all other sums payable by us
under the indenture; and (3) we have delivered irrevocable
instructions to the trustee to apply the deposited money toward
the payment of the notes at maturity or on the redemption date, as
the case may be.
In addition, we must deliver an officer's certificate and an opinion of counsel
stating that all conditions precedent to satisfaction and discharge have been
complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes as provided in the indenture. The
registrar (who will initially be the trustee) and the trustee may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents. We may also require a holder to pay any taxes and fees required by
law or permitted by the indenture. We are not required to transfer or exchange
any note selected for redemption. Also, we are not required to transfer or
exchange any note for a period of 15 days before a selection of notes to be
redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs of this
subsection, the indenture or the notes may be amended or supplemented with the
consent of the holders of at least a majority in principal amount of the notes
then outstanding, including consents obtained in connection with a tender offer
or exchange offer for notes. In addition, any existing default or compliance
with any provision of the indenture or the notes may be waived with the consent
of the holders of a majority in principal amount of the then-outstanding notes,
including consent obtained in connection with a tender offer or exchange offer
for notes.
Without the consent of each holder affected, an amendment or waiver may
not, with respect to any notes held by a non-consenting holder of notes:
(a) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any notes or
alter the provisions with respect to the redemption of the notes;
(c) reduce the rate of or change the time for payment of interest on any
note;
(d) waive a default or event of default in the payment of principal of or
premium, if any, or interest on the notes, except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment
default that resulted from the acceleration;
(e) make any note payable in money other than that stated in the notes;
(f) make any change in the provisions of the indenture relating to waivers
of past defaults or the rights of holders of notes to receive payments
of principal of or premium, if any, or interest on the notes;
(g) waive a redemption payment with respect to any note;
(h) make any change in the above amendment and waiver provisions;
(i) modify or change any provision of the indenture or the related
definitions affecting the or ranking of the notes or any guarantee of
the notes in a manner which adversely affects the holders in any
material respect; or
(j) make any change to the covenants described above under the caption
"--Repurchase at the Option of Holders."
Notwithstanding the foregoing, without the consent of any holder of notes,
we and the trustee may amend or supplement the indenture or the notes (a) to
cure any ambiguity, defect or inconsistency, (b) to provide for uncertificated
notes in addition to or in place of certificated notes, (c) to provide for the
assumption of the our obligations to holders of the notes in the case of a
merger, consolidation or sale of assets, (d) to release a Guarantor as provided
in the indenture, (e) to make any change that would provide any additional
rights or benefits to the holders of the notes, including providing for
guarantees with respect to the notes under the covenant described under the
caption "--Subsidiary Guarantees," or that does not adversely affect the legal
rights under the indenture of any holder, or (f) to comply with requirements of
the Securities and Exchange Commission to effect or maintain the qualification
of the indenture under the Trust Indenture Act of 1939.
CONCERNING THE TRUSTEE
The indenture contains limitations on the rights of the trustee, should it
become one of our creditors, to obtain payment of claims in specific cases or to
realize on specific property received in respect of any claim as security or
otherwise. The trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate the conflict
within 90 days, apply to the Securities and Exchange Commission for permission
to continue or resign. The holders of a majority in principal amount of the
then-outstanding notes will have the right to direct the time, method and place
of conducting any proceeding for exercising any remedy available to the trustee,
with some exceptions. The indenture provides that if an event of default occurs,
and is not cured, the trustee will be required, in the exercise of its powers,
to use the
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degree of care of a prudent man in the conduct of his own affairs. As limited by
these provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any holder of notes,
unless the holder shall have offered to the trustee security and indemnity
satisfactory to it against any loss, liability or expense.
DEFINITIONS
We have provided below selected defined terms as used in the indenture.
Please refer to the indenture for a full description of all those terms, as well
as any other capitalized terms used in this description of the notes for which
no definition is provided.
"Acquired Debt" means, with respect to any specified person: (a)
Indebtedness of any other person existing at the time the other person merged
with or into or became a subsidiary of the specified person and
(b) Indebtedness encumbering any asset acquired by the specified person,
including Indebtedness incurred in connection with, or in contemplation of, the
other person merging with or into or becoming a subsidiary of the specified
person.
"Affiliate" of any specified person means any other person directly or
indirectly controlling, controlled by or under direct or indirect common control
with the specified person. For purposes of this definition, "control,"
including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with," as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the person, whether through the
ownership of voting securities, by agreement or otherwise. However, the
beneficial ownership of 10% or more of the voting securities of a person shall
be deemed to be control.
"Asset Sale" means:
(a) the sale, lease, other than operating leases in respect of facilities
which are ancillary to the operation of our Company's or a Restricted
Subsidiary's Hospitality-Related Business properties or assets,
conveyance or other disposition of any of our property or assets or
that of any Restricted Subsidiary, including by way of a sale and
leaseback transaction;
(b) the issuance or sale of Equity Interests of any of our Restricted
Subsidiaries; or
(c) any Event of Loss, other than, with respect to clauses (a), (b) and
(c) above, the following:
(1) the sale or disposition of personal property held for sale in the
ordinary course of business;
(2) the sale or disposal of damaged, worn out or other obsolete
property in the ordinary course of business as long as the
property is no longer necessary for the proper conduct of our
business or the business of a Restricted Subsidiary, as
applicable;
(3) the transfer of assets by us to one of our Restricted Subsidiaries
or by one of our Restricted Subsidiaries to us or to another one
of our Restricted Subsidiaries;
(4) (A) the exchange of one or more lodging facilities and related
assets held by us or one of our Restricted Subsidiaries for one or
more lodging facilities and related assets of any person or
entity; however, if any other assets are received by us or the
Restricted Subsidiary in that exchange, the other consideration
must be in cash or Cash Equivalents and the cash or Cash
Equivalent consideration will be deemed to be cash proceeds of an
Asset Sale for the purposes of calculating "Net Proceeds" and
applying Net Proceeds, if any, as described in the covenant "Asset
Sales," or (B) the issuance of OP Units or Preferred OP Units as
full or partial consideration for the acquisition of lodging
facilities and related assets; however, our board of directors
must have determined that the terms of any exchange or acquisition
are fair and reasonable and that the fair market value of the
assets received by us, as described in an opinion of a qualified
appraiser, are equal to or greater than the fair market value of
the assets exchanged, sold or issued by us or one of our
Restricted Subsidiaries;
(5) any Restricted Payment, permitted under the covenant described
under the caption "--Covenants--Restricted Payments" above;
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(6) the sale, lease, conveyance or other disposition of all or
substantially all of our assets in compliance with the provisions
of the indenture described above under the captions "--Repurchase
at the Option of Holders--Change of Control" and
"--Covenants--Merger, Consolidation or Sale of Assets";
(7) the conversion of or foreclosure on any mortgage or note, but only
if we or one of our Restricted Subsidiaries receives the real
property underlying the mortgage or note; or
(8) any transaction or series of related transactions that would
otherwise be an Asset Sale where the fair market value of the
assets, sold, leased, conveyed or otherwise disposed of was less
than $5.0 million or an Event of Loss or related series of Events
of Loss under which the aggregate value of property or assets
involved in such Event of Loss or Events of Loss is less than
$5.0 million.
"Assumed Indebtedness" means, with respect to any specified person:
(a) Indebtedness of any other person existing at the time the other person
merged with or into or became a subsidiary of the specified person; and
(b) Indebtedness encumbering any asset acquired by the specified person, in
each case excluding Indebtedness incurred in connection with, or in
contemplation of that other person merging with or into or becoming a
subsidiary of, the specified person.
"Capital Lease Obligation" means, at the time any determination of the
obligation is to be made, the amount of the liability in respect of a capital
lease that would at the time be so required to be capitalized on the balance
sheet as provided by GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents of corporate stock, including with respect to partnerships,
partnership interests, whether general or limited, and any other interest or
participation that confers on a person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Cash Equivalents" means:
(a) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality of the U.S.
government having maturities of not more than six months from the date
of acquisition;
(b) (1) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition,
(2) bankers acceptances with maturities not exceeding six months from
the date of acquisition and (3) overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess
of $500 million;
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (a) and
(b) entered into with any financial institution meeting the
qualifications specified in clause (b) above;
(d) commercial paper or commercial paper master notes having a rating of at
least P-2 or the equivalent of that rating by Moody's Investors
Service, Inc. or at least A-2 or the equivalent of that rating by
Standard & Poor's Corporation and in each case maturing within six
months after the date of acquisition;
(e) money market mutual funds that provide daily purchase and redemption
features; and
(f) corporate debt with maturities of not greater than six months and with
a rating of at least A or the equivalent of that rating by Standard &
Poor's Corporation and a rating of at least A2 or the equivalent of
that rating by Moody's Investors Service, Inc.
"Change of Control" means the occurrence of any of the following:
(a) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of our assets to any person
or group, as the term is used in Section 13(d)(3) of the Securities
Exchange Act;
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(b) the adoption of a plan relating to our liquidation or dissolution;
(c) the acquisition by any person or group, as the term is used in
Section 13(d)(3) of the Securities Exchange Act, of a direct or
indirect interest in more than 50% of the ownership or the voting power
of our voting stock by way of purchase, merger or consolidation or
otherwise, other than a creation of a holding company that does not
involve a change in our beneficial ownership due to the transaction;
(d) our merger or consolidation with or into another corporation or merger
of another corporation into us with the effect that immediately after
that transaction our existing stockholders immediately before the
transaction hold less than 50% of the total voting power of all
securities generally entitled to vote in the election of directors,
managers or trustees of the person surviving the merger or
consolidation; or
(e) the first day on which a majority of the members of our board of
directors are not Continuing Directors.
"Consolidated Cash Flow" means, with respect to any person for any period,
the Consolidated Net Income of the person for the period together with:
(a) an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale, to the extent the losses were deducted
in computing Consolidated Net Income; plus
(b) provisions for taxes based on the income or profits of the person for
the period, to the extent the provision for taxes was included in
computing Consolidated Net Income; plus
(c) Consolidated Interest Expense of the person for the period to the
extent the expense was deducted in computing Consolidated Net Income;
plus
(d) Consolidated Depreciation and Amortization Expense of the person for
the period, to the extent deducted in computing Consolidated Net
Income; less
(e) noncash items increasing the Consolidated Net Income for the period in
each case, on a consolidated basis for the person and its Restricted
Subsidiaries, and determined as provided by GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, the depreciation and amortization of and the interest expense of, a
Restricted Subsidiary of the referent person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow (a) only to the extent, and in the same
proportion, that the Net Income of the Restricted Subsidiary was included in
calculating the Consolidated Net Income of that person, (b) only if a
corresponding amount would be permitted at the date of determination to be
dividended to that person by the Restricted Subsidiary without prior
governmental approval, and (c) without direct or indirect restriction under the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders. Any calculation of the Consolidated
Cash Flow of an individual hotel property shall be calculated in a manner
consistent with the foregoing.
"Consolidated Current Liabilities" as of the date of determination means
the aggregate amount of our liabilities and those of our consolidated
subsidiaries which may properly be classified as current liabilities, including
taxes payable as accrued, on a consolidated basis, after eliminating:
(i) all intercompany items between us and any subsidiary; and
(ii) all current maturities of long-term Indebtedness.
"Consolidated Depreciation and Amortization Expense" means, with respect to
any person for any period, the total amount of depreciation and amortization
expense, including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period, and the
total amount of non-cash charges, other than non-cash charges that represent an
accrual or reserve for cash charges in future periods or which involved a cash
expenditure in a prior period, of such person and its Restricted Subsidiaries
for the period on a consolidated basis as determined as provided by GAAP.
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"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, the sum of (a) interest expense, whether paid or
accrued, to the extent the expense was deducted in computing Consolidated Net
Income, including amortization of original issue discount, non-cash interest
payments, the interest component of Capital Lease Obligations, and net payments
(if any) under Hedging Obligations, but excluding amortization of deferred
financing fees, (b) commissions, discounts and other fees and charges paid or
accrued with respect to letters of credit and bankers acceptance financing and
(c) interest for which such person or its Restricted Subsidiary is liable,
whether or not actually paid, under Indebtedness or under a guarantee of
Indebtedness of any other person, in each case, calculated for such Person and
its Restricted Subsidiaries for the period on a consolidated basis as determined
as provided by GAAP.
"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the Net Income of such person and its Restricted Subsidiaries
for the period, on a consolidated basis, determined as provided by GAAP, except
that the following shall be excluded:
(a) the Net Income of any person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting shall be
excluded, whether or not distributed to us or one of our Restricted
Subsidiaries;
(b) the Net Income of any person that is a Restricted Subsidiary and that
is restricted from declaring or paying dividends or other
distributions, directly or indirectly, by operation of the terms of its
charter, any applicable agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation or otherwise shall be included
only to the extent of the amount of dividends or distributions paid to
the referent person or a Restricted Subsidiary;
(c) the Net Income of any person acquired in a pooling-of-interests
transaction for any period before the date of the acquisition shall be
excluded; and
(d) the cumulative effect of changes in accounting principles shall be
excluded.
"Consolidated Net Tangible Assets" as of any date of determination, means
the total amount of assets, less accumulated depreciation and amortization,
allowances for doubtful receivables, other applicable reserves and other similar
items properly deducted in determining net assets, which would appear on a
consolidated balance sheet of our company and our consolidated subsidiaries,
determined on a consolidated basis as provided by GAAP, and after giving effect
to purchase accounting and after deducting therefrom Consolidated Current
Liabilities and, to the extent otherwise included, the amounts of:
(a) minority interests in consolidated subsidiaries held by persons other
than us or a subsidiary;
(b) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by our board of directors;
(c) any revaluation or other write-up in book value of assets after the
date of the Original Indenture from a change in the method of valuation
as provided by GAAP consistently applied;
(d) unamortized debt discount and expenses and other unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names,
copyrights, licenses, organization or developmental expenses and other
intangible items;
(e) treasury stock; and
(f) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of
Capital Stock to the extent the obligation is not reflected in
Consolidated Current Liabilities.
"Consolidated Net Worth" means, with respect to any person, as of any date
of determination, the sum of:
(a) the consolidated equity of the common stockholders of such person and
its consolidated subsidiaries as of the date; plus
(b) the respective amount reported on that person's balance sheet as of the
date with respect to any series of Preferred Stock, other than
Disqualified Stock, that by its terms is not entitled to the
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payment of dividends unless those dividends may be declared and paid
only out of net earnings in respect of the year of the declaration and
payment, but only to the extent of any cash received by such Person
upon issuance of the Preferred Stock; less
(1) all write-ups, other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition of
the business, after the date of the Original Indenture in the book
value of any asset owned by such person or a consolidated
subsidiary of that person,
(2) all Investments as of the date in unconsolidated subsidiaries and
in persons that are not subsidiaries, except, in each case,
Permitted Investments; and
(3) all unamortized debt discount and expense and unamortized deferred
charges as of that date, all of the foregoing determined as
provided by GAAP.
"Continuing Directors" means, as of any date of determination, any member
of our board of directors who:
(a) was a member of our board of directors on the date of the Original
Indenture; or
(b) was nominated for election or elected to the board of directors with
the affirmative vote of at least a majority of the Continuing Directors
who were members of our board at the time of the nomination or
election.
"Designated Senior Debt" means:
(a) Indebtedness under or in respect of our senior credit facility; and
(b) any other Indebtedness constituting Senior Debt which, at the time of
determination, has an aggregate principal amount of at least
$25.0 million and is specifically designated in the instrument
evidencing the Senior Debt as our "Designated Senior Debt."
"Disqualified Stock" means any capital stock, other than OP Units and
Preferred OP Units, which by its terms, or by the terms of any security into
which it is convertible or for which it is exchangeable, or upon the happening
of any event, matures or is mandatorily redeemable, under a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the stock,
in whole or in part, on or before the first anniversary of the date on which the
outstanding notes and exchange notes mature.
"Equity Interests" means capital stock and all warrants, options or other
rights to acquire Capital Stock, but excluding any debt security that is
convertible into, or exchangeable for Capital Stock.
"Event Of Loss" means, with respect to any property or asset, any of the
following: (a) any loss, destruction or damage of the property or asset or
(b) any actual condemnation, seizure or taking by the power of eminent domain or
otherwise of the property or asset, or confiscation of the property or asset or
the requisition of the use of the property or asset.
"Existing Indebtedness" means our Indebtedness and that of our Restricted
Subsidiaries in existence on the date of the Original Indenture after giving
effect to the use of proceeds of the offering of the outstanding notes and
excluding, for this purpose, amounts outstanding under our senior credit
facility as in effect on the date of the Original Indenture.
"Existing Preferred OP Units" means Preferred OP Units issued and
outstanding on the date of the Original Indenture.
"Fixed Charge Coverage Ratio" means with respect to any person for any
period, the ratio of the Consolidated Cash Flow of that person for the period to
the Fixed Charges of such person for the period. If we or any of our Restricted
Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness, other than
revolving credit borrowings that provide working capital in the ordinary course
of business, or issues or redeems Preferred Stock after the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but before
the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated as adjusted for the incurrence, assumption, guarantee
or redemption of Indebtedness, or the issuance or
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redemption of Preferred Stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. For purposes of making the
computation referred to above, acquisitions, dispositions and discontinued
operations, as determined as provided by GAAP, that have been made by us or any
of our Restricted Subsidiaries, including all mergers, consolidations and
dispositions, during the four-quarter reference period or after the reference
period and on or before the Calculation Date, shall be calculated on a pro forma
basis assuming that all the acquisitions, dispositions, discontinued operations,
mergers, consolidations, and the reduction of any associated fixed charge
obligations resulting therefrom, had occurred on the first day of the
four-quarter reference period.
"Fixed Charges" means, with respect to any person for any period, the sum
of:
(a) Consolidated Interest Expense of that person and its Restricted
Subsidiaries for the period, whether paid or accrued, to the extent the
expense was deducted in computing Consolidated Net Income; and
(b) the product of:
(1) all cash dividend or distribution payments on any series of
Preferred Stock of that person or its Restricted Subsidiaries,
other than Preferred Stock owned by that person or its Restricted
Subsidiaries; multiplied by
(2) a fraction, the numerator of which is one and the denominator of
which is one minus the then-current combined federal, state and
local statutory tax rate of that person, expressed as a decimal,
in each case, on a consolidated basis and as provided by GAAP;
however, if the cash dividend or distribution on the Preferred
Stock is deductible for federal tax purposes, then the fraction
shall be equal to one.
"GAAP" means generally accepted accounting principles described in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in other statements by another
entity as have been approved by a significant segment of the accounting
profession, which were in effect on the date of the Original Indenture.
"Guarantor" means a Restricted Subsidiary that becomes a guarantor of the
notes under the terms of the indenture, and its successor, if any.
"Hedging Obligations" means, with respect to any person, the obligations of
that person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect that person against fluctuations in interest
rates or currency exchange rates.
"Hospitality-Related Business" means the lodging business and other
businesses necessary for, incident to, in support of, connected with,
complementary to or arising out of the lodging business, including:
(a) developing, managing, operating, improving or acquiring lodging
facilities, restaurants and other food-service facilities and
convention or meeting facilities, and marketing services related to
these facilities;
(b) acquiring, developing, operating, managing or improving any real estate
taken in foreclosure, or similar settlement, by us or any of our
Restricted Subsidiaries, or any real estate ancillary or connected to
any lodging owned, managed or operated by us or any of our Restricted
Subsidiaries; or
(c) owning and managing mortgages in, or other Indebtedness secured by
Liens on, lodging and real estate related or ancillary to lodging or
"Indebtedness" means, with respect to any person, any indebtedness of that
person, whether or not contingent, (a) in respect of borrowed money, (b)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit, or reimbursement agreements in respect of the above, (c) representing
Capital Lease Obligations or the balance deferred and unpaid of the purchase
price of any property or (d) representing any Hedging Obligations, except any
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness, other than letters of credit and
Hedging
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Obligations, would appear as a liability upon a balance sheet of that person
prepared as provided by GAAP. Indebtedness also includes, to the extent not
otherwise included, the guarantee of any Indebtedness of such person or any
other person.
"Investments" means, with respect to any person, all investments by that
person in other persons, including Affiliates, in the forms of loans (including
guarantees), advances or capital contributions, excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business, purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared as provided by GAAP. If we
or any of our Restricted Subsidiaries sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of ours with the
result that, after giving effect to any sale or disposition, we no longer own,
directly or indirectly, greater than 50% of the outstanding common stock of the
Restricted Subsidiary, we shall be deemed to have made an Investment on the date
of any sale or disposition equal to the fair market value of the common stock of
the Restricted Subsidiary not sold or disposed of.
"Lien" means, with respect to any asset, or income or profits therefrom,
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of the asset, whether or not filed, recorded or otherwise perfected
under applicable law, including any conditional sale or other title retention
agreement, any lease in the nature of a conditional sale or title retention
agreement, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
"Make-Whole Amount" with respect to a note means an amount equal to the
excess, if any, of:
(a) the present value of the remaining interest, premium and principal
payments due on that note as if that note were redeemed on August 15,
2002, computed using a discount rate equal to the Treasury Rate plus
62.5 basis points; over
(b) the outstanding principal amount of that note.
"Make-Whole Price" with respect to a note means the greater of:
(a) the sum of the outstanding principal amount and the Make-Whole Amount
of that note; and
(b) the redemption price of that note on August 15, 2002, determined under
the indenture (104.375% of the principal amount).
"Net Income" means, with respect to any person, the net income (loss) of
that person, determined as provided by GAAP and before any reduction in respect
of Preferred Stock dividends, but excluding, any gain (but not loss), together
with any related provision for taxes on the gain (but not loss) realized in
connection with any Asset Sale, and also excluding any extraordinary gain (but
not loss), together with any related provision for taxes on the extraordinary
gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by us or any of
our Restricted Subsidiaries in respect of any Asset Sale, net of the direct
costs relating to the Asset Sale, including legal, accounting and investment
banking fees and sales commissions; and any relocation expenses incurred as a
result of the sale, taxes paid or payable as a result of the sale, after taking
into account any available tax credits or deductions and any tax sharing
arrangements; amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets the subject of the Asset Sale and any
reserve for adjustment in respect of the sale price of the asset or assets.
"Non-Recourse Indebtedness" means Indebtedness (a) as to which neither we
nor any of our Restricted Subsidiaries (1) provides credit support, other than
in the form of a Lien on an asset serving as security for Non-Recourse
Indebtedness under any undertaking, agreement or instrument that would
constitute Indebtedness, (2) is directly or indirectly liable, other than in the
form of a Lien on an asset serving as security for Non-Recourse Indebtedness, or
(3) constitutes the lender and (b) no default with respect to which, including
any rights that the holders thereof may have to take enforcement action against
an Unrestricted Subsidiary, would permit any holder of any of our other
Indebtedness or that of any of our Restricted Subsidiaries to declare a default
on the other Indebtedness or cause the payment of the Indebtedness to be
accelerated or payable before its stated maturity.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OP Units" means limited partnership interests in MeriStar Hospitality
Operating Partnership, L.P. or any successor operating partnership that require
the issuer of the interests to pay dividends or distributions which are tied to
dividends paid on our common stock and which by their terms may be converted
into, or exercised or redeemed for, cash or our common stock.
"Original Indenture" means the Indenture dated as of August 19, 1997, as
amended by the First Supplemental Indenture, between CapStar Hotel Company, as
our predecessor, and IBJ Whitehall Bank & Trust Company, as trustee.
"Permitted Investments" means any (a) Investments in us, (b) Investments in
any Restricted Subsidiary, (c) such Investments in Cash Equivalents,
(d) Investments by us or any of our Restricted Subsidiaries in a person, if as a
result of such Investment (1) the person becomes one of our Restricted
Subsidiaries, or (2) the person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, us or one of our Restricted Subsidiaries, (e) Investments in
Unrestricted Subsidiaries or Permitted Joint Ventures, but only if the
Investments are in entities solely or principally engaged in Hospitality-Related
Businesses and the aggregate of the Investments does not exceed the greater of
(1) $25.0 million or (2) 5% of Consolidated Net Tangible Assets and
(f) Investments in Unrestricted Subsidiaries formed to acquire the Radisson
Plaza, Lexington, Kentucky, the Embassy Suites Center City, Philadelphia and the
Doubletree Hotel, Austin, in an aggregate amount not to exceed $50.0 million.
"Permitted Joint Venture" means any corporation, partnership, limited
liability company or partnership or other similar entity formed to hold lodging
properties for which we hold a related management contract in which we own less
than a 50.1% interest.
"Permitted Refinancing" means Refinancing Indebtedness or Refinancing
Disqualified Stock, as the case may be, to the extent:
(a) the principal amount of Refinancing Indebtedness or the liquidation
preference amount of Refinancing Disqualified Stock, as the case may
be, does not exceed the principal amount of Indebtedness or the
liquidation preference amount of Disqualified Stock, as the case may
be, so extended, refinanced, renewed, replaced, defeased or refunded,
plus the amount of premiums and reasonable expenses incurred in
connection with the Refinancing;
(b) the Refinancing Indebtedness or Refinancing Disqualified Stock, as the
case may be, is scheduled to mature or is redeemable at the option of
the holder, as the case may be, no earlier than the Indebtedness or
Disqualified Stock, as the case may be, being refinanced;
(c) in the case of Refinancing Indebtedness, the Refinancing Indebtedness
has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(d) in the case of Refinancing Disqualified Stock, the Disqualified Stock
has a Weighted Average Life to Mandatory Redemption equal to or greater
than the Weighted Average Life to Mandatory Redemption of the
Disqualified Stock being extended, refinanced, renewed, replaced,
defeased or refunded;
(e) if the Indebtedness or the Disqualified Stock, as the case may be,
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated or junior in right of payment to the notes, the
Refinancing Indebtedness or Refinancing Disqualified Stock, as the case
may be, is subordinated or junior in right of payment to the notes on
terms at least as favorable to the holders of notes as those contained
in the documentation governing the Indebtedness or the Disqualified
Stock, as the case may be, being extended, refinanced, renewed,
replaced, defeased or refunded; and
(f) the Refinancing Indebtedness or Refinancing Disqualified Stock is
incurred or issued either by us or by a Restricted Subsidiary who is
the obligor on the Indebtedness or Disqualified Stock being extended,
refinanced, renewed, replaced, defeased or refunded.
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"Preferred OP Units" means limited partnership interests in MeriStar
Hospitality Operating Partnership, L.P. or any successor operating partnership
that require the issuer of the units to pay regularly scheduled fixed
distributions on the units, which are not related to dividends on our common
stock, and which by their terms may be converted into, or exercised or redeemed
for, cash or our common stock.
"Preferred Stock" means (a) any Equity Interest with preferential right in
the payment of dividends or distributions or upon liquidation, and (b) any
Disqualified Stock.
"Refinancing Disqualified Stock" means Disqualified Stock issued in
exchange for, or the proceeds of which are used, to extend, refinance, renew,
replace, defease or refund, Disqualified Stock or Indebtedness permitted to be
issued under the Fixed Charge Coverage Ratio test described in the first
paragraph of the covenant described under the caption "--Covenants--Incurrence
of Indebtedness and Issuance of Certain Capital Stock" or Indebtedness referred
to in clauses (c), (e), (g), (i) and (j) of the second paragraph of the
covenant.
"Refinancing Indebtedness" means Indebtedness issued in exchange for, or
the proceeds of which are used to extend, refinance renew, replace, defease or
refund, Indebtedness permitted to be incurred under the Fixed Charge Coverage
Ratio test described in the covenant described under the caption "--Covenants--
Incurrence of Indebtedness and Issuance of Certain Capital Stock" or
Indebtedness referred to in clauses (c), (e), (g), (i) and (j) of the second
paragraph of the covenant described under the caption "--Covenants--Incurrence
of Indebtedness and Issuance of Certain Capital Stock."
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of Designated Senior Debt; however, if, and for so
long as, any Designated Senior Debt lacks a representative, then the
Representative for that Designated Senior Debt shall at all times constitute the
holders of a majority in outstanding principal amount of that Designated Senior
Debt in respect of any Designated Senior Debt.
"Restricted Investments" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a person means any Subsidiary of the referent
person that is not an Unrestricted Subsidiary.
"Senior Debt" means, in the case of us or any Guarantor, the principal of,
premium, if any, and interest, including any interest accruing after the filing
of a petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not the interest is an allowed claim under
applicable law, on any of our Indebtedness, whether outstanding on March 18,
1999 or later created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or under
which the same is outstanding expressly provides that the Indebtedness shall not
be senior in right of payment to the notes. "Senior Debt" shall also include the
principal of, premium, if any, interest, including any interest accruing after
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not the interest is an allowed
claim under applicable law, on, and all other amounts owing in respect of:
(a) all Obligations of every nature of ours under our senior credit
facility, including obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, whether outstanding on March 18, 1999 or later incurred;
and
(b) all Hedging Obligations, including Guarantees of the Hedging
Obligations, whether outstanding on March 18, 1999 or later incurred.
Notwithstanding the foregoing, "Senior Debt" shall not include:
(1) any Indebtedness of ours or any Guarantor to a subsidiary of ours
or any Affiliate of ours or any of that Affiliate's subsidiaries;
(2) Indebtedness to, or guaranteed on behalf of, any shareholder,
director, officer or employee of ours or any subsidiary of ours or
any Guarantor, including amounts owed for compensation;
(3) Indebtedness to trade creditors and other amounts incurred in
connection with obtaining goods, materials or services;
(4) any liability for federal, state, local or other taxes owed or
owing by us or any Guarantor,
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(5) that portion of Indebtedness incurred in violation of the
indenture provisions described under "--Covenants--Incurrence of
Indebtedness and Issuance of Certain Capital Stock"; however, in
the case of this clause (5):
(A) any Indebtedness issued to any person who had no actual
knowledge that the incurrence of the Indebtedness was not
permitted under the indenture and who received on the date of
issuance thereof a certificate from our Chief Financial Officer
that the issuance of the Indebtedness would not violate the
Indenture shall constitute Senior Debt; and
(B) any Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently, except in the case of daylight overdrafts, drawn
against insufficient funds in the ordinary course of business
shall constitute Senior Debt if the Indebtedness is
extinguished within three business days of occurrence;
(6) any Indebtedness which is, by its express terms, junior in right
of payment to any other Indebtedness or that of any Guarantor; and
(7) the Existing Notes issued under the Original Indenture.
For purposes of this definition, with respect to any person referred to in
clause (5) (A) that is a lender to us under our senior credit facility, "actual
knowledge" shall mean only receipt by a lending officer of the Syndication
Agent, defined in our senior credit facility, with significant responsibility
for the Syndication Agent's loans under the credit agreement of written notice
from any of our Responsible Officers (defined in the credit agreement, stating
or indicating through mathematical calculation that the incurrence of additional
Indebtedness under the credit agreement is not permitted under the indenture,
which notice has not subsequently been withdrawn.
"Significant Subsidiary" means any subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
under the Securities Act of 1933, as such Regulation is in effect on the date of
the Original Indenture.
"Treasury Rate" is defined as the yield to maturity at the time of the
computation of United States Treasury securities with a constant maturity, as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15(519), which has become publicly available at least two business days before
the date the redemption notice or, if the Statistical Release is no longer
published, any publicly available source of similar market date, most nearly
equal to the then remaining maturity of the notes assuming redemption of the
notes on August 15, 2002; however, if the Make-Whole Average Life of that note
is not equal to the constant maturity of a United States Treasury security for
which the yields are given, the Treasury Rate shall be obtained by linear
interpolation calculated to the nearest one-twelfth of a year from the weekly
average yields of United States Treasury securities for which the yields are
given, except that if the Make-Whole Average Life of that notes is less than one
year, the weekly average yield on actually traded United State Treasury
securities adjusted to a constant maturity of one year shall be used.
"Make-Whole Average Life" means the number of years, calculated to the nearest
one-twelfth, between the date of redemption and August 15, 2002.
"Unrestricted Subsidiary" means (a) any subsidiary that is, or has been
under the Original Indenture, designated by the board of directors as an
Unrestricted Subsidiary under a board resolution, but only to the extent that
the Subsidiary:
(1) has no Indebtedness other than Non-Recourse Indebtedness;
(2) is not party to any agreement or understanding with us or any of
our Restricted Subsidiaries unless the terms of the agreement or
understanding are no less favorable to us or the Restricted
Subsidiary than those that might be obtained at the same time from
persons who are not our affiliates;
(3) is a person with respect to which neither we nor any of our
Restricted Subsidiaries has any direct or indirect obligation
(A) to subscribe for additional Equity Interests or (B) to
maintain or preserve that person's financial condition or to cause
that person to achieve any specified levels of operating results,
other than under agreements relating to the management of hotels
entered
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into between Restricted Subsidiaries and Unrestricted Subsidiaries
in the ordinary course of the subsidiaries' business, consistent
with past practice; and
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any of our Indebtedness or that of any of our
Restricted Subsidiaries.
Any designation by our board of directors made after March 18, 1999 shall
be evidenced to the trustee by filing with the trustee a certified copy of the
board resolution giving effect to that designation and an officer's certificate
certifying that the designation complied with the foregoing conditions and was
permitted by the covenant described above under the caption
"Covenants--Restricted Payments." If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
indenture and any Indebtedness of that subsidiary shall be deemed to be incurred
by one of our Restricted Subsidiaries as of that date, and, if the Indebtedness
is not permitted to be incurred as of that date under the covenant described
under the caption "--Covenants--Incurrence of Indebtedness and Issuance of
Certain Capital Stock," we shall be in default of the covenant.
Our board of directors may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary, but the designation will be deemed to
be an incurrence of Indebtedness by one of our Restricted Subsidiaries of any
outstanding Indebtedness of the Unrestricted Subsidiary, and the designation
shall only be permitted if (a) the Indebtedness is permitted under the covenant
described under the caption "--Covenants--Incurrence of Indebtedness and
Issuance of Certain Capital Stock," and (b) no default or event of default would
be in existence following the designation.
"Weighted Average Life to Mandatory Redemption" means, when applied to any
Disqualified Stock at any date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (1) the amount of each
then-remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect of the
amount by (2) the number of years, calculated to the nearest one-twelfth, that
will elapse between that date and the making of the payment, by (b) the then-
outstanding liquidation preference amount of the Disqualified Stock.
"Weighted Average Life To Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (1) the amount of each then-remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect of the amount, by (2)
the number of years, calculated to the nearest one twelfth, that will elapse
between that date and the making of the payment, by (b) the then-outstanding
principal amount of the Indebtedness.
BOOK-ENTRY, DELIVERY AND FORM
Except as described below, we will initially issue the exchange notes in
the form of one or more registered exchange notes in global form without
coupons. We will deposit each global note on the date of the closing of the
exchange offer with, or on behalf of, The Depository Trust Company in New York,
New York, and register the exchange notes in the name of The Depository Trust
Company or its nominee, or will leave such notes in the custody of the trustee.
Depository Procedures
We are providing you with the following description of the operations and
procedures of The Depository Trust Company, Euroclear and Cedel solely as a
matter of convenience. These operations and procedures are solely within the
control of the respective settlement systems and are subject to change by them
from time to time. We take no responsibility for these operations and procedures
and urge you to contact the system or their participants directly to discuss
these matters.
The Depository Trust Company has advised us that it is a limited-purpose
trust company created to hold securities for its participating organizations,
and to facilitate the clearance and settlement of transactions in those
securities between direct participants through electronic book-entry changes in
accounts of participants. The direct participants include securities brokers and
dealers, including the initial purchasers, banks, trust
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companies, clearing corporations and certain other organizations, including
Euroclear and Cedel. Access to The Depository Trust Company's system is also
available to other entities that clear through or maintain a direct or indirect,
custodial relationship with a direct participant. The Depository Trust Company
may hold securities beneficially owned by other persons only through the direct
participants or indirect participants and such other persons' ownership interest
and transfer of ownership interest will be recorded only on the records of the
direct participant and/or indirect participant, and not on the records
maintained by The Depository Trust Company.
The Depository Trust Company has also advised us that, pursuant to its
procedures, (a) upon deposit of the global notes, The Depository Trust Company
will credit the accounts of the direct participants with an interest in the
global notes, and (b) The Depository Trust Company will maintain records of the
ownership interests of these direct participants in the global notes and the
transfer of ownership interests by and between direct participants. The
Depository Trust Company will not maintain records of the ownership interests
of, or the transfer of ownership interests by and between, indirect participants
or other owners of beneficial interests in the global notes. Direct and indirect
participants must maintain their own records of ownership interests of, and the
transfer of ownership interests by and between, indirect participants and other
owners of beneficial interests in the global notes.
Investors in the global notes may hold their interests in these notes
directly through The Depository Trust Company if they are direct participants in
The Depository Trust Company or indirectly through organizations, including
Euroclear and Cedel, that are direct participants in The Depository Trust
Company. Euroclear and Cedel will hold interests in the global notes on behalf
of their participants through customers' securities accounts in their respective
names on the books of their respective depositories, which are Morgan Guaranty
Trust Company of New York, Brussels office, as operator of Euroclear, and
Citibank, N.A., as operator of Cedel. All interests in a global note, including
those held through Euroclear or Cedel, may be subject to the procedures and
requirements of The Depository Trust Company. Interests held through Euroclear
or Cedel may also be subject to the procedures and requirements of these
systems.
The laws of some states require that certain persons may take physical
delivery in definitive, certificated form, of securities that they own. This may
limit or curtail the ability to transfer beneficial interests in a global note
to these persons. Because The Depository Trust Company can act only on behalf of
direct participants, which in turn act on behalf of indirect participants and
others, the ability of a person having a beneficial interest in a global note to
pledge this interest to persons or entities that are not direct participants in
The Depository Trust Company, or to otherwise take actions in respect of these
interests, may be affected by the lack of physical certificates evidencing these
interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS OF THE NOTES UNDER THE INDENTURE FOR ANY PURPOSE.
Payments with respect to the principal of, premium, if any, and interest
on, any exchange notes represented by a global note registered in the name of
The Depository Trust Company or its nominee on the applicable record date will
be payable by the trustee to or at the direction of The Depository Trust Company
or its nominee in its capacity as the registered holder of the global note
representing the exchange notes under the indenture. Under the terms of the
indenture, we and the trustee will treat the persons in whose names the notes
are registered, including notes represented by global notes, as the owners
thereof for the purpose of receiving payments and for any and all other purposes
whatsoever. Payments in respect of the principal, premium, liquidated damages,
if any, and interest on global notes registered in the name of The Depository
Trust Company or its nominee will be payable by the trustee to The Depository
Trust Company or its nominee as the registered holder under the indenture.
Consequently, none of us, the trustee or any of our agents, or the trustee's
agents has or will have any responsibility or liability for (a) any aspect of
The Depository Trust Company's records or any direct participant's or indirect
participant's records relating to or payments made on account of beneficial
ownership interests in the global notes or for maintaining, supervising or
reviewing any of The Depository Trust Company's records or any direct or
indirect participant's records relating to the beneficial ownership interests in
any global note or (b) any other matter
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relating to the actions and practices of The Depository Trust Company or any of
its direct or indirect participants.
The Depository Trust Company has advised us that its current practice, upon
receipt of any payment in respect of securities such as the notes, including
principal and interest, is to credit the accounts of the relevant participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in the principal amount of beneficial interest in the
relevant security as shown on the records of The Depository Trust Company,
unless The Depository Trust Company has reason to believe it will not receive
payment on the payment date. Payments by the direct and indirect participants to
the beneficial owners of interests in the global note will be governed by
standing instructions and customary practice and will be the responsibility of
the direct or indirect participants, as the case may be, and will not be the
responsibility of The Depository Trust Company, the trustee or us.
None of us or the trustee will be liable for any delay by The Depository
Trust Company or any direct or indirect participant in identifying the
beneficial owners of the related exchange notes and we and the trustee may
conclusively rely on, and will be protected in relying on, instructions from The
Depository Trust Company for all purposes, including with respect to the
registration and delivery, and the respective principal amounts, of the exchange
notes.
Cross-market transfers between the participants in The Depository Trust
Company, on the one hand, and Euroclear or Cedel participants, on the other
hand, will be effected through The Depository Trust Company in accordance with
The Depository Trust Company's rules on behalf of Euroclear or Cedel, as the
case may be, by its respective depositary. However, these cross market
transactions will require delivery of instructions to Euroclear or Cedel, as the
case may be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines, Brussels time, of such system.
Euroclear or Cedel, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant global note in The Depository Trust Company and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to The Depository Trust Company. Euroclear participants
and Cedel participants may not deliver instructions directly to the depositories
for Euroclear or Cedel.
The Depository Trust Company has advised us that it will take any action
permitted to be taken by a holder of notes only at the direction of one or more
participants to whose account The Depository Trust Company has credited the
interests in the global notes and only in respect of such portion of the
aggregate principal amount of the notes as to which such participant or
participants has or have given such direction. However, if there is an Event of
Default with respect to the notes, The Depository Trust Company reserves the
right to exchange the global notes for legended notes in certificated form, and
to distribute such notes to its participants.
Although The Depository Trust Company, Euroclear and Cedel have agreed to
the foregoing procedures to facilitate transfers of interests in the Regulation
S global notes and in the global notes among participants in The Depository
Trust Company, Euroclear and Cedel, they are under no obligation to perform or
to continue to perform these procedures, and these procedures may be
discontinued at any time. None of us, the trustee or any of our or the trustee's
respective agents will have any responsibility for the performance by The
Depository Trust Company, Euroclear or Cedel or their respective participants of
their respective obligations under the rules and procedures governing their
operations.
Exchange of Book-Entry Notes for Certificated Notes
A global note is exchangeable for definitive notes in registered
certificated form if:
o The Depository Trust Company notifies us that it is unwilling or unable
to continue as depository for the global notes and we fail to appoint a
successor depository within 90 days; or
o The Depository Trust Company ceases to be a clearing agency registered
under the Securities Exchange Act of 1934; or
o we elect to cause the issuance of the certificated notes upon a notice to
the trustee; or
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o a default or event of default under the notes has occurred and is
continuing; or
o such a request is made but only upon prior written notice given to the
trustee by or on behalf of The Depository Trust Company in accordance
with the indenture.
In all cases, certificated notes delivered in exchange for any global note
or beneficial interests in a global note will be registered in the names, and
issued in any approved denominations, requested by or on behalf of the
depositary, in accordance with its customary procedures.
Exchange of Certificated Notes for Book-Entry Notes
Notes issued in certificated form may not be exchanged for beneficial
interests in any global note unless the transferor first delivers to the trustee
a written certificate, in the form provided in the indenture, to the effect that
the transfer will comply with the appropriate transfer restrictions applicable
to the notes.
Same Day Settlement and Payment
The indenture requires that payments in respect of the notes represented by
the global notes, including principal, premium, if any, and interest, be made by
wire transfer of immediately available funds to the accounts specified by the
holder of the global notes. With respect to notes in certificated form, we will
make all payments of principal, premium, if any, and interest on the notes at
our office or agency maintained for such purpose within the city and state of
New York, initially the office of the paying agent maintained for such purpose,
or, at our option, by check mailed to the holders thereof at their respective
addresses set forth in the register of holders of notes. However, we are
required to make all payments of principal, premium, if any, and interest on
notes in certificated form the holders of which have given us wire transfer
instructions, by wire transfer of immediately available funds to the accounts
specified by the holders thereof.
The notes represented by the global notes are expected to be eligible to
trade in The Depository Trust Company's Same-Day Funds Settlement System, and
any permitted secondary market trading activity in such notes will, therefore,
be required by The Depository Trust Company to be settled in immediately
available funds. We expect that secondary trading in any certificated notes will
also be settled in immediately available funds. Transfers between participants
in The Depository Trust Company will be effected in accordance with The
Depository Trust Company's procedures, and will be settled in same day funds,
and transfers between participants in Euroclear and Cedel will be effected in
the ordinary way in accordance with their respective rules and operating
procedures.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a global note from a direct or
indirect participant in The Depository Trust Company will be credited, and any
such crediting will be reported to the relevant Euroclear or Cedel participant,
during the securities settlement processing day, which must be a business day
for Euroclear and Cedel, immediately following the settlement date of The
Depository Trust Company. The Depository Trust Company has advised us that cash
received in Euroclear or Cedel as a result of sales of interests in a global
note by or through a Euroclear or Cedel participant to a participant in The
Depository Trust Company will be received with value on the settlement date of
The Depository Trust Company but will be available in the relevant Euroclear or
Cedel cash account only as of the business day for Euroclear or Cedel following
The Depository Trust Company's settlement date.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following discussion summarizes certain United States federal income
and estate tax considerations that may be relevant to the exchange of
outstanding notes for exchange notes pursuant to the exchange offer and to the
purchase, ownership and disposition of the exchange notes by U.S. and non-U.S.
holders, each as defined below. The following discussion does not purport to be
a full description of all United States federal income and estate tax
considerations that may be relevant to the purchase, holding and disposition of
the exchange notes and does not address any other taxes that might be applicable
to a holder of the exchange notes, such as tax consequences arising under the
tax laws of any state, locality or foreign jurisdiction. In the opinion of Paul,
Weiss, Rifkind, Wharton & Garrison, special United States tax counsel to our
company, the discussion accurately reflects the material United States federal
income tax consequences to U.S. and non-U.S. holders of the consummation of the
exchange offer and the ownership and disposition of the exchange notes. We
cannot assure you that the United States Internal Revenue Service will take a
similar view of these consequences. Further, this discussion does not address
all aspects of federal income and estate taxation that may be relevant to
particular holders of outstanding notes or exchange notes in light of their
personal circumstances and does not deal with persons that are subject to
special tax rules, such as dealers in securities, financial institutions,
insurance companies, tax-exempt entities, persons holding the outstanding notes
or exchange notes as part of a hedging or conversion transaction, a straddle or
a constructive sale and persons whose functional currency is not the United
States dollar. The discussion below assumes that the Notes are held as capital
assets within the meaning of section 1221 of the Internal Revenue Code.
The discussion of the United States federal income and estate tax
considerations below is based on currently existing provisions of the Internal
Revenue Code, the applicable Treasury regulations promulgated and proposed under
the Internal Revenue Code, judicial decisions and administrative
interpretations, all of which are subject to change, possibly on a retroactive
basis. Because individual circumstances may differ, you are strongly urged to
consult your tax advisor with respect to your particular tax situation and the
particular tax effects of any state, local, non-United States or other tax laws
and possible changes in the tax laws.
As used herein, a U.S. holder means a beneficial owner of an exchange note
who is, for United States federal income tax purposes:
o a citizen or resident of the United States;
o a corporation or partnership created or organized in or under the laws of
the United States or of any political subdivision thereof;
o an estate the income of which is subject to United States federal income
taxation regardless of its source; or
o a trust if either (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and one
or more United States persons have the authority to control all
substantial decisions of the trust or (b) the trust has a valid election
in effect under applicable Treasury regulations to be treated as a United
States person.
As used herein, a non-U.S. holder means a beneficial owner of an exchange note
who is not a U.S. holder.
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of the outstanding notes for exchange notes pursuant to the
exchange offer will not be treated as a taxable event to holders. Consequently,
no gain or loss will be realized by a holder upon receipt of an exchange note,
the holding period of the exchange note will include the holding period of the
outstanding note exchanged for the exchange note and the adjusted tax basis of
the exchange note will be the same as the adjusted tax basis, immediately before
the exchange, of the outstanding note exchanged for such exchange note.
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TAX CONSIDERATIONS FOR U.S. HOLDERS
Stated Interest and Original Issue Discount
Each outstanding note was issued with original issue discount in an amount
equal to the excess of the stated redemption price at maturity of the
outstanding note over the issue price of the outstanding note. The stated
redemption price at maturity of an outstanding note generally is equal to its
stated principal amount. The issue price of an outstanding note is the first
price at which a substantial amount of the outstanding notes were sold. For
purposes of determining the issue price of an outstanding note, sales to a bond
house, broker or similar person or organization acting in the capacity of an
underwriter, placement agent or wholesaler to the public were ignored. Original
issue discount on an outstanding note will continue to be included in income by
a U.S. holder of the exchange note issued in exchange for the outstanding note
under the rules summarized in the following paragraph.
A U.S. holder generally will be required to include in gross income the
stated interest on an exchange note at the time that such interest accrues or is
received, in accordance with the U.S. holder's regular method of accounting for
federal income tax purposes. A U.S. holder of an exchange note also will be
required to include original issue discount on an outstanding note in gross
income as it accrues, prior to the receipt of payments attributable to such
income and regardless of the U.S. holder's regular method of accounting for
federal income tax purposes. The amount of original issue discount accruing
during each interest payment period is determined using the constant yield
method of accrual. Under this method, U.S. holders of exchange notes will be
required to include in income increasing amounts of original issue discount in
successive accrual periods.
Sale, Exchange or Retirement of the Exchange Notes
A U.S. holder's tax basis in an exchange note generally will be its cost,
increased by the amount of original issue discount previously taken into income
by the U.S. holder and decreased by any payments that are not payments of stated
interest. A U.S. holder generally will recognize gain or loss on the sale,
exchange or retirement of an exchange note in an amount equal to the difference
between the amount of cash plus the fair market value of any property received,
other than any such amount received in respect of accrued interest (which will
be taxable as such if not previously included in income), and the U.S. holder's
tax basis in the exchange note. Gain or loss recognized on the sale, exchange or
retirement of an exchange note generally will be capital gain or loss. In the
case of a noncorporate U.S. holder, the federal tax rate applicable to capital
gains will depend upon the holder's holding period for the exchange notes, with
a preferential rate available for exchange notes held for more than one year,
and upon the holder's marginal tax rate for ordinary income. The deductibility
or capital losses is subject to limitations.
TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
Generally, payments of principal or interest, which for purposes of this
discussion includes original issue discount, on the exchange notes by us or our
paying agent to a non-U.S. holder will not be subject to U.S. federal income or
income withholding tax, if, in the case of interest:
o such non-U.S. holder does not actually own, and is not deemed to own
under applicable Internal Revenue Code rules, 10% or more of the combined
voting power of all classes of our stock entitled to vote;
o such non-U.S. holder is not, for United States federal income tax
purposes, a controlled foreign corporation related to us either through
actual stock ownership or deemed to be related to us through stock
ownership under applicable Internal Revenue Code rules;
o such non-U.S. holder is not a bank whose receipt of interest is described
in section 881(c)(3)(A) of the Internal Revenue Code; and
o either (a) the non-U.S. holder provides us or our agent with an Internal
Revenue Service form W-8, or a suitable substitute form, signed under
penalties of perjury that includes its name and address and certifies as
to its non-United States status in compliance with applicable law and
Treasury regulations
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or (b) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of
its trade or business holds the exchange note and provides a statement to
us or our agent signed under penalties of perjury in which such
organization, bank or financial institution certifies that such a Form
W-8 or suitable substitute has been received by it from the non-U.S.
holder or from another financial institution acting on behalf of the
non-U.S. holder and furnishes us or our agent with a copy thereof.
If these requirements cannot be met, a non-U.S. holder usually will be
subject to United States federal income withholding tax at a rate of 30%, or
such lower rate provided by an applicable treaty, with respect to payments of
interest, including original issue discount, on the exchange notes.
New Treasury regulations generally effective for payments made after
December 31, 1999 provide alternative methods for satisfying the certification
requirements described above. The Internal Revenue Service recently issued a
notice announcing the intent of the Treasury Department and the Internal Revenue
Service to amend these regulations so that they normally will not apply to
payments made before January 1, 2001. These regulations also will require, in
the case of exchange notes held by a foreign partnership, that the certification
be provided by the partners rather than by the foreign partnership and that the
partnership provide specified information, including a U.S. taxpayer
identification number.
A non-U.S. holder generally will not be subject to United States federal
income or income withholding tax on gain realized on the sale, exchange,
redemption, retirement or other disposition of an exchange note, unless the
non-U.S. holder is an individual who is present in the United States for 183
days or more in the taxable year of the disposition, and other applicable
conditions are met, or the gain is effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States.
Notwithstanding the above, if a non-U.S. holder is engaged in a trade or
business in the United States and if interest, including original issue
discount, on the exchange note or gain realized on the disposition of the
exchange note, is effectively connected with the conduct of the trade or
business, the non-U.S. holder usually will be subject to regular United States
federal income tax on such interest or gain in the same manner as if it were a
U.S. holder, unless an applicable treaty provides otherwise. In addition, if the
non-U.S. holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30%, or a lower rate provided by an applicable treaty, of its
effectively connnected earnings and profits for the taxable year, with specified
adjustments. Even though the effectively connected income is subject to income
tax, and may be subject to the branch profits tax, it generally is not subject
to income withholding if the non-U.S. holder delivers a properly executed
Internal Revenue Service Form 4224, or other form applicable under the new
regulations described above, to the payor.
An exchange note held by an individual non-U.S. holder who at the time of
death is not a United States citizen or resident, as defined for United States
federal estate tax purposes, will not be subject to United States federal estate
taxation as a result of the individual's death unless the individual actually
owns, or is deemed to own under applicable Internal Revenue Code rules, 10% or
more of the combined voting power of all classes of our stock entitled to vote
or the interest on the exchange note is effectively connected with the conduct
by the individual of a trade or business in the United States.
TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS AND NON-U.S. HOLDERS
Information Reporting and Backup Withholding
Certain noncorporate U.S. holders generally will be subject to information
reporting and might be subject to a 31% backup withholding tax with respect to
certain payments on, and the proceeds of disposition of, an exchange note.
Backup withholding will apply only if the U.S. holder:
o fails to furnish its taxpayer identification number which, for an
individual, would be his Social Security number;
o furnishes an incorrect taxpayer identification number;
o is notified by the Internal Revenue Service that it has failed to
properly report payments of interest or dividends; or
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o in some circumstances, fails to certify, under penalties of perjury, that
it has furnished a correct taxpayer identification number and has not
been notified by the Internal Revenue Service that it is subject to
backup withholding for failure to report interest and dividend payments.
Backup withholding and information reporting generally will not apply to
payments made by us or our paying agent on an exchange note to a non-U.S. holder
if the certification described under "Tax Considerations for Non-U.S. Holders"
is provided or the non-U.S. holder otherwise establishes an exemption and the
payor does not have actual knowledge that the holder is a U.S. holder or that
the conditions of any other exemption are not, in fact, satisfied. The payments
of proceeds from the disposition of an exchange note to or through a non-United
States office of a broker, as defined in applicable Treasury regulations, that
is a United States person, a controlled foreign corporation for United States
federal income tax purposes, a foreign person 50% or more of whose gross income
from all sources for certain periods is from activities effectively connected
with the conduct of a United States trade or business or, under the new
regulations described above, a foreign partnership if either (a) more than
50% of the income or capital interests are owned by U.S. holders or (b) such
partnership has certain connections to the United States, will be subject to
information reporting requirements unless such broker has documentary evidence
in its files of the holder's non-U.S. holder status and has no actual knowledge
to the contrary or the non-U.S. holder otherwise establishes an exemption. Under
current Treasury regulations, backup withholding, will not apply to any payment
of the proceeds from the sale of an exchange note made to or through a foreign
office of a broker. However, under the new regulations described above, backup
withholding might apply if the broker has actual knowledge that the payee is a
U.S. holder. Payments of the proceeds from the sale of an exchange note to or
through the United States office of a broker are subject to information
reporting and possible backup withholding unless the holder certifies, under
penalties of perjury, that it is not a U.S. holder and that certain other
conditions are met or otherwise establishes an exemption, provided that the
broker does not have actual knowledge that the holder is a U.S. holder or that
the conditions of any other exemption are not, in fact, satisfied.
Holders of exchange notes should consult their tax advisors regarding the
application of backup withholding in their particular situation, the
availability of an exemption from backup withholding and the procedure for
obtaining such an exemption, if available.
The amount of any backup withholding will be allowed as a credit against
the holder's United States federal income tax liability and may entitle the
holder to a refund if the required information is furnished to the Internal
Revenue Service.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO YOU OF THE EXCHANGE OFFER AND OF PURCHASING, HOLDING AND
DISPOSING OF THE OUTSTANDING NOTES OR THE EXCHANGE NOTES INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-UNITED STATES TAX LAWS AND
ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account under
the exchange offer in exchange for outstanding notes acquired by it through
market making or other trading activities may be deemed to be an underwriter
within the meaning of the Securities Act and, therefore, must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales, offers to resell or other transfers of the exchange notes received by
it in the exchange offer. Accordingly, each broker-dealer must acknowledge that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of these exchange notes. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act. This propectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of exchange notes received in exchange for outstanding
notes where these outstanding notes were acquired through market-making
activities or other trading activities. We have agreed that, starting on the
completion of the exchange offer, and ending on the close of business 180 days
after the completion of the exchange offer, we will be make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any resale.
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We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
under the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of these methods
of resale, at market prices prevailing at the time of resale, at prices related
to these prevailing market prices or negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer
and/or the purchasers of any exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account under the exchange
offer and any broker or dealer that participates in a distribution of these
exchange notes may be deemed to be an underwriter within the meaning of the
Securities Act and any profit of any resale of exchange notes and any
commissions or consessions received by any persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act.
For a period of 180 days after the completion of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer, other than commissions or concessions of any brokers or dealers,
and will indemnify the holders of the notes, including any broker-dealers,
against specific liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York will issue an
opinion about the validity of the exchange notes and an opinion about certain
federal tax matters with respect to the exchange notes.
EXPERTS
The consolidated financial statements and supplementary schedule of our
company and our subsidiaries as of December 31, 1998 and 1997, and for each of
the years in the three-year period ended December 31, 1998, have been
incorporated by reference in this document and the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference in this document, and upon the authority of said firm
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document that we file at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. Please call
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. Reports, proxy statements and other information regarding issuers that
file electronically with the Securities and Exchange Commission, including our
filings, are also available to the public from the Securities and Exchange
Commission's Web site at "http://www.sec.gov."
Our common stock is listed on the New York Stock Exchange and these
reports, proxy statements and other information can also be inspected at the
office of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 covering the exchange notes. This prospectus is a part of
our registration statement of our company. As allowed by the Securities and
Exchange Commission rules, this prospectus does not contain all the information
you can find in the registration statement or the exhibits to the registration
statement.
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THE SECURITIES AND EXCHANGE COMMISSION ALLOWS US TO "INCORPORATE BY
REFERENCE" THE INFORMATION WE FILE WITH THEM, WHICH MEANS THAT WE CAN DISCLOSE
IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT US TO YOU THAT IS NOT
INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS BY REFERRING YOU TO THOSE
DOCUMENTS.
The information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any filing we will make
with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 following the date of this
prospectus and prior to the termination of the exchange offer:
1. Our Annual Report on Form 10-K filed by us for the fiscal year ended
December 31, 1998; and
2. Our Definitive Proxy Statement on Schedule 14A filed by us on April 2,
1999.
YOU MAY REQUEST A COPY OF THESE FILINGS, AT NO COST, BY WRITING OR
TELEPHONING US AT THE FOLLOWING ADDRESS:
JOHN EMERY, CHIEF FINANCIAL OFFICER
MERISTAR HOSPITALITY CORPORATION
1010 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20007
TELEPHONE REQUESTS MAY BE DIRECTED TO (202) 295-1000.
Pursuant to the indenture, we have agreed to provide the trustee and
holders of the outstanding notes and exchange notes with annual, quarterly and
other reports at the times and containing in all material respects the
information specified in Sections 13 and 15(d) of the Securities Exchange Act
and to file such reports with the Securities and Exchange Commission, whether or
not we are subject to such filing requirements.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ABOUT OUR COMPANY THAT DIFFERS FROM OR ADDS TO THE INFORMATION IN
THIS PROSPECTUS OR IN OUR DOCUMENTS OR THE DOCUMENTS THAT WE PUBLICLY FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION. THEREFORE, IF ANYONE DOES GIVE YOU
DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT.
THE INFORMATION CONTAINED IN THIS PROSPECTUS SPEAKS ONLY AS OF ITS DATE
UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
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MERISTAR HOSPITALITY CORPORATION
Exchange offer for $55,000,000
of its 8 3/4% Senior Subordinated Notes due 2007
PROSPECTUS
, 1999
----------------
No person has been authorized to give any information or to make
any representations other than those contained in this prospectus, and,
if given or made, such information or representations must not be relied
upon as having been authorized. This prospectus does not constitute an
offer to sell or the solicitation of an offer to buy any securities
other than the securities to which it relates or an offer to sell or the
solicitation of an offer to buy such securities in
any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has
been no change in the affairs of MeriStar Hospitality Corporation since
the date hereof or that the information contained herein is correct as
of any time subsequent to its date.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Maryland General Corporation Law ("MGCL") permits a Maryland
corporation to include in its charter a provision limiting the liability of its
directors and officers to the corporation and its stockholders for money damages
except for liability resulting from (a) actual receipt of an improper benefit or
profit in money, property or services or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. Our
Charter contains such a provision which eliminates such liability to the maximum
extent permitted by Maryland law.
Our Charter obligates us, to the maximum extent permitted by Maryland law,
to indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to any person (or the estate of any person) who is
or was a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceeding whether or not by or in the
right of our Company, and whether civil, criminal, administrative, investigative
or otherwise, by reason of the fact that such person is or was a director or
officer of our Company, or is or was serving at the request of our Company as a
director, officer, trustee, partner, member, agent or employee of another
corporation, partnership, limited liability company, association, joint venture,
trust or other enterprise. Our Charter also permits us to indemnify and advance
expenses to any person who served a predecessor of our Company in any of the
capacities described above and to any employee or agent of our Company or a
predecessor of our Company.
The Maryland General Corporation Law requires a Maryland corporation
(unless its charter provides otherwise, which our Charter does not) to indemnify
a director or officer who has been successful, on the merits or otherwise, in
the defense of any Maryland proceeding to which he is made a party by reason of
his service in that capacity. The Maryland General Corporation Law permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that (a) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and (i) was committed in
bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation. In addition, the
Maryland General Corporation Law requires us, as a condition to advancing
expenses, to obtain (a) a written affirmation by the director or officer of his
good faith belief that he has met the standard of conduct necessary for
indemnification and (b) a written statement by him or on his behalf to repay the
amount paid or reimbursed by us if it shall ultimately be determined that the
standard of conduct was not met.
We have purchased director and officer liability insurance for the purpose
of providing a source of funds to pay any indemnification described above.
ITEM 21. EXHIBITS
A list of exhibits included as part of this Registration Statement is set
forth in the Exhibit Index which immediately precedes such exhibits and is
hereby incorporated by reference herein.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of a prospectus pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offering therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 20 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question as to whether such indemnification by it is against public policy
as expressed in the act, and will be governed by the final adjudication of such
issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Washington, District of
Columbia, on the 10th day of May, 1999.
MERISTAR HOSPITALITY CORPORATION
By: /s/ Paul W. Whetsell
----------------------------------
Paul W. Whetsell
Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Paul W. Whetsell and Steven D. Jorns and each or either of them, his true and
lawful attorney-in-fact with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement (or any registration statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933)
and to cause the same to be filed, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
granting to said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite or
desirable to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all acts and things that said attorneys-in-fact and agents, or either
of them, or their substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------- -------------------
<S> <C> <C>
/s/ Paul W. Whetsell
- ------------------------------------------ Chairman of the Board, Chief Executive May 10, 1999
Paul W. Whetsell Officer and Director
/s/ Steven D. Jorns Vice Chairman of the Board May 10, 1999
- ------------------------------------------
Steven D. Jorns
/s/ Bruce G. Wiles
- ------------------------------------------ President, Chief Investment Officer May 10, 1999
Bruce G. Wiles and Director
/s/ John Emery
- ------------------------------------------ Chief Financial Officer May 10, 1999
John Emery (Principal Financial and
Accounting Officer)
/s/ Daniel L. Doctoroff
- ------------------------------------------ Director May 10, 1999
Daniel L. Doctoroff
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------- -------------------
<S> <C> <C>
/s/ William S. Janes
- ------------------------------------------ Director May 10, 1999
William S. Janes
/s/ James F. Dannhauser
- ------------------------------------------ Director May 10, 1999
James F. Dannhauser
/s/ Mahmood Khimji
- ------------------------------------------ Director May 10, 1999
Mahmood Khimji
/s/ James R. Worms
- ------------------------------------------ Director May 10, 1999
James R. Worms
/s/ H. Cabot Lodge III
- ------------------------------------------ Director May 10, 1999
H. Cabot Lodge III
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ---------- -------------------------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
3.1 -- Amended and Restated Articles of Incorporation of the Registrant (Articles of Merger
between American General Hospitality Corporation and CapStar Hotel Company)
(incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-3,
File No. 333-66229).
3.2 -- Amended Second Restated By-laws of the Registrant (incorporated by Reference to
Exhibit 3.2 to our Registration Statement on Form S-3, File No. 333-66229).
4.1 -- Form of Share Certificate (incorporated by reference to Exhibit 4.1 to our
Registration Statement on Form S-11, File No. 333-4568).
4.2 -- Indenture, dated as of March 18, 1999, between the Registrant and IBJ Whitehall Bank
& Trust Company, as trustee.
4.3 -- Specimen certificate of outstanding note (included in Exhibit 4.2 as Exhibit A).
4.4 -- Specimen certificate of exchange note.
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to the legality of the Exchange
Notes.
8.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to federal income tax matters.
10.1 -- Purchase Agreement among the Registrant, Lehman Brothers Inc. and Bear, Stearns & Co.
Inc., dated as of March 11, 1999.
10.2 -- Registration Rights Agreement among the Registrant, Lehman Brothers Inc. and Bear,
Stearns & Co. Inc., dated as of March 18, 1999.
12.1 -- Statement Regarding Computation of Ratios.
23.1 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1).
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 8.1).
23.3 -- Consent of KPMG LLP.
24.1 -- Power of Attorney (included on signature page hereto).
25.1 -- Statement of Eligibility of IBJ Whitehall Bank & Trust Company as trustee, on
Form T-1.
99.1 -- Form of Exchange Agency Agreement.
99.2 -- Form of Letter of Transmittal.
99.3 -- Form of Notice of Guaranteed Delivery.
</TABLE>
<PAGE>
Exhibit 4.2
===============================================================================
MERISTAR HOSPITALITY CORPORATION
$55,000,000
SERIES C AND SERIES D
8 3/4% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
Dated as of March 18, 1999
IBJ WHITEHALL BANK & TRUST COMPANY
Trustee
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
DEFINITIONS AND INCORPORATIONBY REFERENCE.........................................................................1
SECTION 1.1 DEFINITIONS........................................................................1
SECTION 1.2 OTHER DEFINITIONS.................................................................15
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.................................16
SECTION 1.4 RULES OF CONSTRUCTION.............................................................17
ARTICLE 2
THE NOTES........................................................................................................17
SECTION 2.1 FORM AND DATING...................................................................17
SECTION 2.2 EXECUTION AND AUTHENTICATION......................................................18
SECTION 2.3 REGISTRAR AND PAYING AGENT........................................................18
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST...............................................19
SECTION 2.5 HOLDERS LISTS.....................................................................19
SECTION 2.6 TRANSFER AND EXCHANGE.............................................................19
SECTION 2.7 REPLACEMENT NOTES.................................................................20
SECTION 2.8 OUTSTANDING NOTES.................................................................20
SECTION 2.9 TREASURY NOTES....................................................................21
SECTION 2.10 TEMPORARY NOTES...................................................................21
SECTION 2.11 CANCELLATION......................................................................21
SECTION 2.12 DEFAULTED INTEREST................................................................22
SECTION 2.13 RECORD DATE.......................................................................22
SECTION 2.14 CUSIP NUMBER......................................................................22
SECTION 2.15 RESTRICTIVE LEGENDS...............................................................22
SECTION 2.16 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.........................................24
SECTION 2.17 SPECIAL TRANSFER PROVISIONS.......................................................25
SECTION 2.18 RANKING...........................................................................26
ARTICLE 3
REDEMPTIONS AND OFFERS TO PURCHASE...............................................................................26
SECTION 3.1 NOTICES TO TRUSTEE................................................................26
SECTION 3.2 SELECTION OF NOTES TO BE REDEEMED OR PURCHASED....................................27
SECTION 3.3 NOTICE OF REDEMPTION..............................................................27
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION....................................................28
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE.......................................................28
</TABLE>
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SECTION 3.6 NOTES REDEEMED IN PART............................................................29
SECTION 3.7 OPTIONAL REDEMPTION...............................................................29
SECTION 3.8 MANDATORY REDEMPTION..............................................................30
SECTION 3.9 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS...............................30
ARTICLE 4
COVENANTS........................................................................................................32
SECTION 4.1 PAYMENT OF NOTES..................................................................32
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY...................................................32
SECTION 4.3 SEC REPORTS.......................................................................33
SECTION 4.4 COMPLIANCE CERTIFICATE............................................................33
SECTION 4.5 TAXES.............................................................................34
SECTION 4.6 STAY, EXTENSION AND USURY LAWS....................................................34
SECTION 4.7 LIMITATION ON RESTRICTED PAYMENTS.................................................34
SECTION 4.8 LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES......................................................................37
SECTION 4.9 LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF CERTAIN CAPITAL STOCK.......38
SECTION 4.10 LIMITATION ON SALE OF ASSETS......................................................40
SECTION 4.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES........................................41
SECTION 4.12 LIMITATION ON LIENS...............................................................42
SECTION 4.13 CORPORATE EXISTENCE...............................................................42
SECTION 4.14 CHANGE OF CONTROL.................................................................42
SECTION 4.15 SUBSIDIARY GUARANTEES.............................................................44
SECTION 4.16 LINE OF BUSINESS..................................................................44
SECTION 4.17 PAYMENTS FOR CONSENT..............................................................44
SECTION 4.18 NO SENIOR SUBORDINATED DEBT.......................................................44
SECTION 4.19 PURCHASES/REDEMPTION OF NOTES UNDER ORIGINAL INDENTURE............................45
ARTICLE 5
SUCCESSORS.......................................................................................................45
SECTION 5.1 WHEN THE COMPANY MAY MERGE, ETC...................................................45
SECTION 5.2 SUCCESSOR SUBSTITUTED.............................................................46
ARTICLE 6
DEFAULTS AND REMEDIES............................................................................................46
SECTION 6.1 EVENTS OF DEFAULT.................................................................46
</TABLE>
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SECTION 6.2 ACCELERATION......................................................................48
SECTION 6.3 OTHER REMEDIES....................................................................49
SECTION 6.4 WAIVER OF PAST DEFAULTS...........................................................49
SECTION 6.5 CONTROL BY MAJORITY...............................................................49
SECTION 6.6 LIMITATION ON SUITS...............................................................49
SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT..............................................50
SECTION 6.8 COLLECTION SUIT BY TRUSTEE........................................................50
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM..................................................50
SECTION 6.10 PRIORITIES........................................................................51
SECTION 6.11 UNDERTAKING FOR COSTS.............................................................51
ARTICLE 7
TRUSTEE..........................................................................................................51
SECTION 7.1 DUTIES OF TRUSTEE.................................................................51
SECTION 7.2 RIGHTS OF TRUSTEE.................................................................52
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE......................................................53
SECTION 7.4 TRUSTEE'S DISCLAIMER..............................................................53
SECTION 7.5 NOTICE OF DEFAULTS................................................................54
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.....................................................54
SECTION 7.7 COMPENSATION AND INDEMNITY........................................................54
SECTION 7.8 REPLACEMENT OF TRUSTEE............................................................55
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC..................................................56
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.....................................................56
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.................................56
ARTICLE 8
DISCHARGE OF INDENTURE...........................................................................................57
SECTION 8.1 DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE NOTES..........................57
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE....................................................58
SECTION 8.3 COVENANT DEFEASANCE...............................................................58
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE........................................59
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS........................................................................60
SECTION 8.6 REPAYMENT TO THE COMPANY..........................................................61
SECTION 8.7 REINSTATEMENT.....................................................................62
ARTICLE 9
AMENDMENTS.......................................................................................................62
</TABLE>
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<S> <C> <C>
SECTION 9.1 WITHOUT CONSENT OF HOLDERS........................................................62
SECTION 9.2 WITH CONSENT OF HOLDERS...........................................................63
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT...............................................64
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.................................................64
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES..................................................65
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC...................................................65
ARTICLE 10
SUBORDINATION....................................................................................................65
SECTION 10.1 AGREEMENT TO SUBORDINATE..........................................................65
SECTION 10.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY..............................................65
SECTION 10.3 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES......................................66
SECTION 10.4 [THIS SECTION INTENTIONALLY OMITTED...............................................67
SECTION 10.5 ACCELERATION OF NOTES.............................................................67
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER...............................................67
SECTION 10.7 NOTICE BY THE COMPANY.............................................................68
SECTION 10.8 SUBROGATION.......................................................................68
SECTION 10.9 RELATIVE RIGHTS...................................................................68
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY......................................69
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE..........................................69
SECTION 10.12 RIGHTS OF TRUSTEE AND PAYING AGENT................................................69
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION.............................................69
SECTION 10.14 AMENDMENTS........................................................................69
ARTICLE 11
SUBSIDIARY GUARANTEES............................................................................................70
SECTION 11.1 SUBSIDIARY GUARANTEES.............................................................70
SECTION 11.2 WHEN A GUARANTOR MAY MERGE, ETC...................................................71
SECTION 11.3 LIMITATION OF GUARANTOR'S LIABILITY...............................................72
SECTION 11.4 RELEASE OF A GUARANTOR............................................................72
ARTICLE 12
MISCELLANEOUS....................................................................................................73
SECTION 12.1 TRUST INDENTURE ACT CONTROLS......................................................73
SECTION 12.2 NOTICES...........................................................................73
SECTION 12.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.......................................74
SECTION 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT................................74
SECTION 12.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.....................................75
SECTION 12.6 RULES BY TRUSTEE AND AGENTS.......................................................75
</TABLE>
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<TABLE>
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<S> <C> <C>
SECTION 12.7 LEGAL HOLIDAYS....................................................................75
SECTION 12.8 RECOURSE AGAINST OTHERS...........................................................75
SECTION 12.9 DUPLICATE ORIGINALS...............................................................76
SECTION 12.10 GOVERNING LAW.....................................................................76
SECTION 12.11 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.....................................76
SECTION 12.12 SUCCESSORS........................................................................76
SECTION 12.13 SEVERABILITY......................................................................76
SECTION 12.14 COUNTERPART ORIGINALS.............................................................76
SECTION 12.15 TABLE OF CONTENTS, HEADINGS, ETC..................................................76
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Supplemental Indenture
Exhibit C Form of Certificate to be Delivered in Connection with Transfers to Non-QIB
accredited Investors
Exhibit D Form of Certificate to be Delivered in Connection with Transfers Pursuant to
Regulation S
</TABLE>
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<PAGE>
INDENTURE dated as of March 18, 1999 between MeriStar
Hospitality Corporation, a Maryland corporation (the "Company"), and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee").
Each of the Company and the Trustee agrees as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 8 3/4% Series C Senior Subordinated Notes due 2007 of the Company (the
"Series C Notes") and the 8 3/4% Series D Senior Subordinated Notes due 2007 of
the Company (the "Series D Notes," and, together with the Series C Notes, the
"Notes").
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1 DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Subsidiary of such specified Person and (ii)
Indebtedness encumbering any asset acquired by such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-Registrar or
agent for service of notices and demands.
"Asset Sale" means (i) the sale, lease (other than operating
leases in respect of facilities which are ancillary to the operation of the
Company's or a Restricted Subsidiary's Hospitality Related Business properties
or assets), conveyance or other disposition of any property or assets of the
Company or any Restricted Subsidiary (including by way of a sale and leaseback
transaction), (ii) the issuance or sale of Equity Interests of any of the
Company's Restricted Subsidiaries or (iii) any Event of Loss, other than, with
respect to clauses (i), (ii) and (iii) above, the following: (1) the sale or
disposition of personal property held for sale in the ordinary course of
business, (2) the sale or disposal of damaged, worn out or other obsolete
property in the ordinary course of business as long as such property is no
longer necessary for the proper conduct of the business of the Company or such
Restricted Subsidiary, as applicable, (3) the transfer of assets by the Company
to a Restricted Subsidiary of the Company or by a Restricted Subsidiary of the
Company to the Company or to another Restricted Subsidiary of the Company, (4)
(A) the exchange of one or more lodging facilities and related assets held by
the Company or a Restricted Subsidiary of the Company for one or more lodging
facilities and related assets of any person or entity, provided, that if any
other assets are received by the Company or such Restricted Subsidiary in such
exchange, such other consideration is in cash or Cash Equivalents; provided,
further, that such cash or
<PAGE>
2
Cash Equivalent consideration shall be deemed to be cash proceeds of an Asset
Sale for the purposes of calculating "Net Proceeds" and applying Net Proceeds,
if any, as described in Section 4.10 hereof, or (B) the issuance of OP Units or
Preferred OP Units as full or partial consideration for the acquisition of
lodging facilities and related assets, provided, that the Board of Directors of
the Company has determined that the terms of any exchange or acquisition are
fair and reasonable and that the fair market value of the assets received by the
Company, as set forth in an opinion of a Qualified Appraiser, are equal to or
greater than the fair market value of the assets exchanged, sold or issued by
the Company or a Restricted Subsidiary of the Company, (5) any Restricted
Payment, permitted under Section 4.7 hereof, (6) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
compliance with the provisions of Section 4.14 and Article V hereof, (7) the
conversion of or foreclosure or any mortgage or note, provided that the Company
or a Restricted Subsidiary receives the real property underlying any such
mortgage or note or (8) any transaction or series of related transactions that
would otherwise be an Asset Sale where the fair market value of the assets,
sold, leased, conveyed or otherwise disposed of was less than $5.0 million or an
Event of Loss or related series of Events of Loss pursuant to which the
aggregate value of property or assets involved in such Event of Loss or Events
of Loss is less than $5.0 million.
"Assumed Indebtedness" means, with respect to any specified
Person: (i) Indebtedness of any other Person existing at the time such other
Person merged with or into or became a Subsidiary of such specified Person and
(ii) Indebtedness encumbering any asset acquired by such specified Person, in
each case excluding Indebtedness incurred in connection with, or in
contemplation of such other Person merging with or into or becoming a Subsidiary
of such specified Person.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee of the Board of Directors.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which banking institutions in New York, New York or the city in which
the Corporate Trust Office is located are authorized or obliged by law or
executive order to close.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participation, rights or other equivalents (however designated) of corporate
stock, including, without limitation, with respect to partnerships, partnership
interests (whether general or limited) and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (ii) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers
acceptances with maturities not
<PAGE>
3
exceeding six months from the date of acquisition and overnight bank deposits,
in each case with any domestic commercial bank having capital and surplus in
excess of $500 million, (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (i)
and (ii) entered into with any financial institution meeting the qualifications
specified in clause (ii) above, (iv) commercial paper or commercial paper master
notes having a rating of at least P-2 or the equivalent thereof by Moody's
Investors Service, Inc. or at least A-2 or the equivalent thereof by Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition, (v) money market mutual funds that provide daily purchase and
redemption features, and (vi) corporate debt with maturities of not greater than
six months and with a rating of at least A or the equivalent thereof by Standard
& Poor's Corporation and a rating of at least A2 or the equivalent thereof by
Moody's Investors Service, Inc.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the Company's assets to any person
or group (as such term is used in Section 13(d)(3) of the Exchange Act), (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the acquisition by any person or group (as such term is used in
Section 13(d)(3) of the Exchange Act) of a direct or indirect interest in more
than 50% of the ownership of the Company or the voting power of the voting stock
of the Company by way of purchase, merger or consolidation or otherwise (other
than a creation of a holding company that does not involve a change in the
beneficial ownership of the Company as a result of such transaction), (iv) the
merger or consolidation of the Company with or into another corporation or the
merger of another corporation into the Company with the effect that immediately
after such transaction the stockholders of the Company immediately prior to such
transaction hold less than 50% of the total voting power of all securities
generally entitled to vote in the election of directors, managers, or trustees
of the Person surviving such merger or consolidation or (v) the first day on
which a majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Company" means MeriStar Hospitality Corporation, a Maryland
corporation, until a successor replaces it in accordance with the applicable
provisions of this Indenture, and thereafter, means such successor.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus: (a)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale, to the extent such losses were deducted in
computing Consolidated Net Income, plus (b) provisions for taxes based on income
or profits of such Person for such period, to the extent such provision for
taxes was included in computing Consolidated Net Income, plus (c) Consolidated
Interest Expense of such Person for such period to the extent such expense was
deducted in computing Consolidated Net Income, plus (d) Consolidated
Depreciation and Amortization Expense of such Person for such period, to the
extent deducted in computing Consolidated Net Income less (e) noncash items
increasing such Consolidated Net Income for such period in each case, on a
consolidated basis for such Person and its Restricted Subsidiaries and
determined in accordance with GAAP. Notwithstanding the foregoing, the provision
for taxes on the income or profits of, the depreciation and amortization of and
the interest expense of, a Restricted Subsidiary of the referent Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only to the
extent
<PAGE>
4
(and in the same proportion) that the Net Income of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and only
if a corresponding amount would be permitted at the date of determination to be
dividended to such Person by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders. Any
calculation of the Consolidated Cash Flow of an individual hotel property shall
be calculated in a manner consistent with the foregoing.
"Consolidated Current Liabilities" as of the date of
determination means the aggregate amount of liabilities of the Company and its
consolidated Subsidiaries which may properly be classified as current
liabilities (including taxes payable as accrued), on a consolidated basis, after
eliminating (i) all intercompany items between the Company and any Subsidiary
and (ii) all current maturities of long-term Indebtedness, all as determined in
accordance with GAAP consistently applied.
"Consolidated Depreciation and Amortization Expense" means,
with respect to any Person for any period, the total amount of depreciation and
amortization expense (including amortization of goodwill and other intangibles
but excluding amortization of prepaid cash expenses that were paid in a prior
period) and the total amount of non-cash charges (other than non-cash charges
that represent an accrual or reserve for cash charges in future periods or which
involved a cash expenditure in a prior period) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis as determined in accordance
with GAAP.
"Consolidated Interest Expense" means, with respect to any
Person for any period, without duplication, the sum of (a) interest expense,
whether paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments, the interest component of Capital Lease Obligations,
and net payments (if any) pursuant to Hedging Obligations, but excluding
amortization of deferred financing fees), (b) commissions, discounts and other
fees and charges paid or accrued with respect to letters of credit and bankers
acceptance financing and (c) interest for which such Person or its Restricted
Subsidiaries is liable, whether or not actually paid, pursuant to Indebtedness
or under a Guarantee of Indebtedness of any other Person, in each case,
calculated for such Person and its Restricted Subsidiaries for such period on a
consolidated basis as determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP, provided, that the following shall be excluded: (i) the
Net Income of any Person that is not a Restricted Subsidiary or that is
accounted for by the equity method of accounting shall be excluded, whether or
not distributed to the Company or one of its Restricted Subsidiaries, (ii) the
Net Income of any Person that is a Restricted Subsidiary and that is restricted
from declaring or paying dividends or other distributions, directly or
indirectly, by operation of the terms of its charter, any applicable agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation or
otherwise shall be included only to the extent of the amount of dividends or
distributions paid to the referent Person or a Restricted Subsidiary, (iii) the
Net Income of any Person
<PAGE>
5
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded and (iv) the cumulative effect of changes
in accounting principles shall be excluded.
"Consolidated Net Tangible Assets" as of any date of
determination, means the total amount of assets (less accumulated depreciation
and amortization, allowances for doubtful receivables, other applicable reserves
and other similar items properly deducted in determining net assets) which would
appear on a consolidated balance sheet of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP, and
after giving effect to purchase accounting and after deducting therefrom
Consolidated Current Liabilities and, to the extent otherwise included, the
amounts of: (i) minority interests in consolidated Subsidiaries held by Persons
other than the Company or a Subsidiary; (ii) excess of cost over fair value of
assets of businesses acquired, as determined in good faith by the Board of
Directors; (iii) any revaluation or other write-up in book value of assets
subsequent to the date of the Original Indenture as a result of a change in the
method of valuation in accordance with GAAP consistently applied; (iv)
unamortized debt discount and expenses and other unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, copyrights, licenses,
organization or developmental expenses and other intangible items; (v) treasury
stock; and (vi) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of Capital Stock
to the extent such obligation is not reflected in Consolidated Current
Liabilities.
"Consolidated Net Worth" means, with respect to any Person, as
of any date of determination, the sum of (i) the consolidated equity of the
common stockholders of such Person and its consolidated Subsidiaries as of such
date plus (ii) the respective amount reported on such Person's balance sheet as
of such date with respect to any series of Preferred Stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such Preferred
Stock, less (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the date of the Original Indenture in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person, (y) all
Investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments) and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of the Original Indenture or (ii) was nominated
for election or elected to such Board of Directors with the affirmative vote of
at least a majority of the Continuing Directors who were members of such Board
at the time of such nomination or election.
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 12.2 or such other address as the Trustee may give
notice to the Company.
<PAGE>
6
"Credit Agreement" means the senior credit facility dated June
30, 1997, entered into between and among CapStar Hotel Company (as predecessor
to the Company) and the lenders party thereto, providing for borrowings and
letters of credit, including any related notes, security documentation,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case as amended, modified, supplemented,
restructured, renewed, restated, refunded, replaced or refinanced or extended,
in each case on a senior basis, from time to time on one or more occasions.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event if Default.
"Designated Senior Debt" means (i) Indebtedness under or in
respect of the Credit Agreement and (ii) any other Indebtedness constituting
Senior Debt which, at the time of determination, has an aggregate principal
amount of at least $25.0 million and is specifically designated in the
instrument evidencing such Senior Debt as "Designated Senior Debt" by the
Company.
"Disqualified Stock" means any Capital Stock (other than OP
Units and Preferred OP Units) which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the first anniversary of the date
on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for Capital Stock).
"Event of Loss" means, with respect to any property or asset
(tangible or intangible, real or personal), any of the following: (A) any loss,
destruction or damage of such property or asset or (B) any actual condemnation,
seizure or taking by the power of eminent domain or otherwise of such property
or asset, or confiscation of such property or asset or the requisition of the
use of such property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means Indebtedness of the Company and
its Restricted Subsidiaries in existence on the date of the Original Indenture
(after giving effect to the use of proceeds of the Notes issued hereunder),
excluding, for this purpose, amounts outstanding under the Credit Agreement as
in effect on the date of the Original Indenture.
"Existing Notes" means the Company's $150.0 million aggregate
principal amount of outstanding 8 3/4% Senior Subordinated Notes due 2007 which
were issued in August 1997 under the Original Indenture.
<PAGE>
7
"Existing Preferred OP Units" means Preferred OP Units issued
and outstanding on the date of the Original Indenture.
"Final Memorandum" means the Company's Offering Memorandum
dated March 11, 1999 pertaining to the offer and sale of $55,000,000 in
aggregate principal amount of Notes, pursuant to applicable exemptions from
registration under the Securities Act.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or
redeems any Indebtedness (other than revolving credit borrowings that provide
working capital in the ordinary course of business) or issues or redeems
Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or redemption
of Indebtedness, or such issuance or redemption of Preferred Stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. For purposes of making the computation referred to above, acquisitions,
dispositions and discontinued operations (as determined in accordance with GAAP)
that have been made by the Company or any of its Restricted Subsidiaries,
including all mergers, consolidations and dispositions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be calculated on a pro forma basis assuming that all such
acquisitions, dispositions, discontinued operations, mergers, consolidations
(and the reduction of any associated fixed charge obligations resulting
therefrom) had occurred on the first day of the four-quarter reference period.
"Fixed Charges" means, with respect to any Person for any
period, the sum of (a) Consolidated Interest Expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income and (b) the
product of (i) all cash dividend or distribution payments on any series of
Preferred Stock of such Person or its Restricted Subsidiaries (other than
Preferred Stock owned by such Person or its Restricted Subsidiaries), times (ii)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP; provided, however, that if the cash dividend on such
Preferred Stock is deductible for federal tax purposes, then the fraction shall
be equal to one.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which were in effect on the date of the Original
Indenture.
<PAGE>
8
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States of
America is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business) or
otherwise incurring, assuming or becoming liable for the payment of any
principal, premium or interest, direct or indirect, in any manner (including,
without limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness or other obligation (including
agreements to keep-well and to purchase assets, goods, securities or services).
"Guarantor" means a Restricted Subsidiary that become a
guarantor of the Notes pursuant to the terms of this Indenture, and its
successor, if any.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"Holder" means the Person in whose name a Note is registered
on the Registrar's books.
"Hospitality-Related Business" means the lodging business and
other businesses necessary for, incident to, in support of, connected with,
complementary to or arising out of the lodging business, including, without
limitation, (i) developing, managing, operating, improving or acquiring lodging
facilities, restaurants and other food-service facilities and convention or
meeting facilities, and marketing services related thereto, (ii) acquiring,
developing, operating, managing or improving any real estate taken in
foreclosure (or similar settlement) by the Company or any of its Restricted
Subsidiaries, or any real estate ancillary or connected to any lodging owned,
managed or operated by the Company or any of its Restricted Subsidiaries, (iii)
owning and managing mortgages in, or other Indebtedness secured by Liens on
lodging and real estate related or ancillary to lodging or (iv) other related
activities thereto.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or representing
Capital Lease Obligations or the balance deferred and unpaid of the purchase
price of any property or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and also includes, to the extent not
otherwise included, the Guarantee of any Indebtedness of such Person or any
other Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
<PAGE>
9
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, the Company no longer owns, directly or indirectly, greater
than 50% of the outstanding Common Stock of such Restricted Subsidiary, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issuance Date" means the date of this Indenture.
"Lien" means, with respect to any asset, or income or profits
therefrom, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" has the meaning assigned to such term in
the Registration Rights Agreements.
"Make-Whole Amount" with respect to a Note means an amount
equal to the excess, if any, of (i) the present value of the remaining interest,
premium and principal payments due on such Note as if such Note were redeemed on
August 15, 2002, computed using a discount rate equal to the Treasury Rate plus
62.5 basis points, over (ii) the outstanding principal amount of such Note.
"Treasury Rate" is defined as the yield to maturity at the time of the
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15(519), which has become publicly available at least two business days prior
to the date of the redemption notice or, if such Statistical Release is no
longer published, any publicly available source of similar market date) most
nearly equal to the then remaining maturity of the Notes assuming redemption of
the Notes on August 15, 2002; provided, however, that if the Make-Whole Average
Life of such Note is not equal to the constant maturity of a United States
Treasury security for which such yields are given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life of such
Notes is less than one year, the weekly average yield on actually traded United
State Treasury securities adjusted to a constant maturity of one year shall be
used. "Make-Whole Average Life" means the number of years (calculated to the
nearest one-twelfth) between the date of redemption and August 15, 2002.
<PAGE>
10
"Make-Whole Price" with respect to a Note means the greater of
(1) the sum of the outstanding principal amount and the Make-Whole Amount of
such Note, and (ii) the redemption price of such Note on August 15, 2002,
determined pursuant to the first paragraph of Section 3.7 hereof (104.375% of
the principal amount).
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with any Asset Sale, and excluding any
extraordinary gain (but not loss), together with any related provision for taxes
on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale,
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions), and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets the subject of such Asset Sale and any reserve for adjustment in respect
of the sale price of such asset or assets.
"Non-Recourse Indebtedness" means Indebtedness (a) as to which
neither the Company nor any of its Restricted Subsidiaries (i) provides credit
support (other than in the form of a Lien on an asset serving as security for
Non-Recourse Indebtedness) pursuant to any undertaking, agreement or instrument
that would constitute Indebtedness, (ii) is directly or indirectly liable (other
than in the form of a Lien on an asset serving as security for Non-Recourse
Indebtedness) or (iii) constitutes the lender and (b) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Notes" means the Notes issued under this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers" means the Chairman of the Board, the President, the
Chief Operating Officer, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer, Controller, Secretary, any Assistant Secretary or any Vice
President of the Company.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board of Directors, the President, the Chief Operating Officer,
or a Vice President and by the Chief Financial officer, the Treasurer, an
Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary of
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11
the Company, as applicable, except with respect to certificates required to be
furnished by the Company to the Trustee pursuant to Section 4.4 hereof, in which
event "Officers' Certificate" means a certificate signed by the principal
executive officer or principal financial officer.
"OP Units" means limited partnership interests in MeriStar
Hospitality Operating Partnership, L.P. or any successor operating partnership
that require the issuer thereof to pay dividends or distributions which are tied
to dividends paid on the Company's common stock and which by their terms may be
converted into, or exercised or redeemed for, cash or the Company's common
stock.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee complying with the
requirements of this Indenture.
"Original Indenture" means the Indenture dated as of August
19, 1997, as amended by the First Supplemental Indenture and the Second
Supplemental Indenture, between CapStar Hotel Company, as predecessor to the
Company, and IBJ Schroder Bank & Trust Company, as trustee.
"Permitted Investments" means any (a) Investments in the
Company, (b) Investments in any Restricted Subsidiary, (c) Investments in Cash
Equivalents, (d) Investments by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary of the Company or (ii) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company, (e) Investments in Unrestricted Subsidiaries or Permitted Joint
Ventures, provided that such Investments are in entities solely or principally
engaged in Hospitality-Related Businesses and that the aggregate of such
Investments does not exceed the greater of (i) $25.0 million or (ii) 5% of
Consolidated Net Tangible Assets and (f) Investments in Unrestricted
Subsidiaries formed to acquire the Radisson Plaza, Lexington, Kentucky, the
Embassy Suites Center City, Philadelphia and the Doubletree Hotel, Austin, in an
aggregate amount not to exceed $50.0 million.
"Permitted Joint Venture" means any corporation, partnership,
limited liability company or partnership or other similar entity formed to hold
lodging properties for which the Company holds a management contract related
thereto in which the Company owns less than a 50.1% interest.
"Permitted Junior Securities" means Equity Interest in the
Company or debt securities that are subordinated to all Senior Debt (and any
debt securities issued in exchange for Senior Debt) to substantially the same
extent as, or to a greater extent than, the Notes are subordinated to Senior
Debt pursuant to Article 10 of this Indenture.
"Permitted Refinancing" means Refinancing Indebtedness or
Refinancing Disqualified Stock, as the case may be, to the extent (a) the
principal amount of Refinancing Indebtedness or the liquidation preference
amount of Refinancing Disqualified Stock, as the case may be, does not exceed
the principal amount of Indebtedness or the liquidation preference amount of
Disqualified Stock, as the case may be, so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of premiums and reasonable
expenses incurred in connection therewith); (b) such Refinancing Indebtedness or
Refinancing Disqualified Stock, as the case may be, is scheduled to mature or is
redeemable at the option
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12
of the holder, as the case may be, no earlier than the Indebtedness or
Disqualified Stock, as the case may be, being refinanced; (c) in the case of
Refinancing Indebtedness, the Refinancing Indebtedness has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (d) in the case of Refinancing Disqualified Stock, the Disqualified
Stock has a Weighted Average Life to Mandatory Redemption equal to or greater
than the Weighted Average Life to Mandatory Redemption of the Disqualified Stock
being extended, refinanced, renewed, replaced, defeased or refunded; (e) if the
Indebtedness or the Disqualified Stock, as the case may be, being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated or junior in
right of payment to the Notes, the Refinancing Indebtedness or Refinancing
Disqualified Stock, as the case may be, is subordinated or junior in right of
payment to the Notes on terms at least as favorable to the holders of Notes as
those contained in the documentation governing the Indebtedness or the
Disqualified Stock, as the case may be, being extended, refinanced, renewed,
replaced, defeased or refunded and (f) such Refinancing Indebtedness or
Refinancing Disqualified Stock is incurred or issued either by the Company or by
a Restricted Subsidiary who is the obligor on the Indebtedness or Disqualified
Stock being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred OP Units" means limited partnership interests in
MeriStar Hospitality Operating Partnership, L.P. or any successor operating
partnership that require the issuer thereof to pay regularly scheduled fixed
distributions thereon, which are not related to dividends on the Company's
common stock, and which by their terms may be converted into, or exercised or
redeemed for, cash or the Company=s common stock.
"Preferred Stock" means (i) any Equity Interest with
preferential right in the payment of dividends or distributions or upon
liquidation, and (ii) any Disqualified Stock.
"Refinancing Disqualified Stock" means Disqualified Stock
issued in exchange for, or the proceeds of which are used, to extend, refinance,
renew, replace, defease or refund Disqualified Stock or Indebtedness permitted
to be issued pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.9 hereof or Indebtedness referred to in clauses
(iii), (v), (vii), (ix) and (x) of the second paragraph of Section 4.9 hereof.
"Refinancing Indebtedness" means Indebtedness issued in
exchange for, or the proceeds of which are used to extend, refinance renew,
replace, defease or refund Indebtedness permitted to be incurred pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.9
hereof or Indebtedness referred to in clauses (c), (e), (g), (i) and (j) of the
second paragraph of Section 4.9 hereof.
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13
"Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of the Issuance Date between the Company
and Lehman Brothers Inc. and Bear, Stearns & Co. Inc. setting forth certain
registration rights with respect to the Notes.
"Representative" means the indenture trustee or other trustee,
agent or representative in respect of Designated Senior Debt, provided, that if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Restricted Investments" means an Investment other than a
Permitted Investment.
"Restricted Security" has the meaning assigned to such term
in Rule 144(a)(3) under the Securities Act.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means, in the case of the Company or any
Guarantor, the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of the
Company, whether outstanding on the Issuance Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Without limiting the generality of the foregoing,
"Senior Debt" shall also include the principal of, premium, if any, interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other amounts owing in respect of, (x) all Obligations of every nature of
the Company under the Credit Agreement, including, without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities, whether outstanding on the
Issuance Date or thereafter incurred, and (y) all Hedging Obligations (including
Guarantees thereof), whether outstanding on the Issuance Date or thereafter
incurred. Notwithstanding the foregoing, "Senior Debt" shall not include (i) any
Indebtedness of the Company or any Guarantor to a Subsidiary of the Company or
any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Subsidiary of the Company or any Subsidiary of
the Company or any Guarantor (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) any liability
for federal, state, local or other taxes owed or owing by the Company or any
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14
Guarantor, (v) that portion of Indebtedness incurred in violation of this
Indenture provisions set forth under Section 4.9 hereof; provided, however, that
in the case of this clause (v), (A) any Indebtedness issued to any person who
had no actual knowledge that the incurrence of such Indebtedness was not
permitted under this Indenture and who received in connection with the issuance
thereof a certificate from the Chief Financial Officer of the Company to the
effect that the issuance of such Indebtedness would not violate this Indenture
shall constitute Senior Debt and (B) any Indebtedness arising from the honoring
by a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business shall constitute Senior
Debt provided that such Indebtedness is extinguished within three business days
of occurrence, (vi) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the Company or any
Guarantor and (vii) the Existing Notes. For purposes of this definition, with
respect to any person referred to in clause (v)(A) that is a lender to the
Company under the Credit Agreement, "actual knowledge" shall mean only receipt
by a lending officer of the Syndication Agent (as defined in the Credit
Agreement) with significant responsibility for the Syndication Agent=s loans
under the Credit Agreement of written notice from a Responsible Officer (as
defined in the Credit Agreement) of the Company stating or indicating through
mathematical calculation that the incurrence of additional Indebtedness under
the Credit Agreement is not permitted under this Indenture, which notice has not
subsequently been withdrawn.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of the Original Indenture.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Trust Officer" means any officer in the Corporate Trust
Office of the Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary that is (or
has been under the Original Indenture) designated by the Board of Directors as
an Unrestricted Subsidiary pursuant to a board resolution, but only to the
extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse
Indebtedness; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted
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15
Subsidiary than those that might be obtained at the same time from Persons who
are not affiliates of the Company; (c) is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results (other than pursuant to agreements
relating to the management of hotels entered into between Restricted
Subsidiaries and Unrestricted Subsidiaries in the ordinary course of such
Subsidiaries' business, consistent with past practice); and (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries. Any such
designation by the Board of Directors made after the Issuance Date shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
board resolution giving effect to such designation and an officer's certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 4.7 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.9
hereof, the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary, provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary, and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.9 hereof and (ii) no Default or Event of Default would be in existence
following such designation.
"Weighted Average Life to Mandatory Redemption" means, when
applied to any Disqualified Stock at any date, the number of years obtained by
dividing (a) the sum of the products obtained by multiplying (x) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof,
by (y) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment, by (b) the then
outstanding liquidation preference amount of such Disqualified Stock.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
SECTION 1.2 OTHER DEFINITIONS.
Defined in
Term Section
---- -------
"Accredited Investor" 2.1
"Affiliate Transaction" 4.11
"Agent Members" 2.16
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16
"Asset Sale Offer" 3.9
"Asset Sale Offer Price" 4.10
"Bankruptcy Law" 6.1
"Blockage Period" 10.3
"Change of Control Offer" 4.14
"Change of Control Payment" 4.14
"Change of Control Payment Date" 4.14
"Computation Period" 4.7
"Covenant Defeasance" 8.3
"Custodian" 6.1
"defeasance trust" 8.4
"Default Notice" 10.3
"Depositary" 2.1
"Event of Default" 7.1
"Excess Proceeds" 4.10
"Global Note" 2.1
"Legal Defeasance" 8.2
"Legal Holiday" 12.7
"Offshore Physical Securities" 2.1
"Paying Agent" 2.4
"Payment Blockage Notice" 10.3
"Private Placement Legend" 2.15
"Public Equity Offering" 3.7
"Redemption Percentages" 3.7
"Registrar" 2.3
"Restricted Payments" 4.7
"Rule 144A" 2.1
"Subsidiary Guarantee" 11.1
"US Physical Securities" 2.1
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
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17
"obligor" on the Notes means the Company, any Guarantor and
any successor obligor.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular;
(e) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
SECTION 2.1 FORM AND DATING.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. Subject to Section 2.7
hereof, the Notes shall be issued at any time, or from time to time, in an
aggregate principal amount not to exceed $55,000,000. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
agreements to which the Company or any Guarantor is subject or usage. Each Note
shall be dated the date of its authentication. The Notes shall be issued
initially in denominations of $1,000 and integral multiples thereof.
Notes offered and sold in reliance on Rule 144A under the
Securities Act ("Rule 144A") and to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("Accredited
Investors") shall be issued initially in the form of one or more permanent
global notes in registered form, in substantially the form set forth in Exhibit
A (the "Global Note"), deposited with the Trustee, as custodian for The
Depository Trust Company (the "Depositary"), duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary,
as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Securities in
registered form in substantially the form set
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18
forth in Exhibit A (the "Offshore Physical Securities"). Additionally, Notes
offered and sold in reliance on any other exemption from registration under the
Securities Act, including pursuant to Rule 144A, other than as described in the
preceding paragraph may be issued, in the form of permanent certificated Notes
in registered form, in substantially the form set forth in Exhibit A (the "U.S.
Physical Securities"). The Offshore Physical Securities and the U.S. Physical
Securities are sometimes collectively herein referred to as the "Physical
Securities".
SECTION 2.2 EXECUTION AND AUTHENTICATION.
An Officer of the Company shall sign the Notes for the Company
by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time the Note is authenticated, the Note shall nevertheless
be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Notes shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed
by two Officers of the Company, authenticate Notes for original issue up to an
aggregate principal amount stated in Section 2.1 hereof. The aggregate principal
amount of Notes outstanding at any time may not exceed the amount set forth
herein, except as provided in Section 2.7.
The Trustee may appoint an authenticating agent to
authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.3 REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes
may be presented for registration of transfer or for exchange (including any
co-registrar, the "Registrar") and (ii) an office or agency where Notes may be
presented for payment (the "Paying Agent"). The Registrar shall keep a register
of the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar. The Company shall enter into an appropriate
agency agreement with any Agent not a party to this Indenture, which shall
incorporate the provisions of the TIA. The agreement shall implement the
provisions of this
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19
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such, and shall be entitled to appropriate compensation in accordance with
Section 7.7 hereof.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Notes.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest or Liquidated Damages (as
defined in the Registration Rights Agreement), if any, on the Notes, and will
notify the Trustee of any default by the Company or Guarantor, if any, in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company) shall
have no further liability for the money delivered to the Trustee. If the Company
or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.
SECTION 2.5 HOLDERS LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven (7) Business Days before each interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders, including the aggregate principal amount thereof, and the Company and
the Guarantors shall otherwise comply with TIA Section 312(a).
SECTION 2.6 TRANSFER AND EXCHANGE.
(a) Where Notes are presented to the Registrar with a request
to register the transfer thereof or exchange them for an equal principal amount
of Notes of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met; provided,
however, that any Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar and the Trustee duly executed by
the Holder thereof or by his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall issue and the Trustee
shall authenticate Notes at the Registrar's request, subject to such rules as
the Trustee may reasonably require.
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(b) The Company and the Registrar shall not be required (i) to
issue, to register the transfer of, or to exchange Notes during a period
beginning at the opening of business on a Business Day fifteen (15) days before
the day of any selection of Notes for redemption or purchase under Section 3.2
and ending at the close of business on the day of selection, (ii) to register
the transfer of or exchange any Note so selected for redemption or purchase in
whole or in part, except the unredeemed or unpurchased portion of any Note being
redeemed or purchased in part or (iii) to register the transfer or exchange of a
Note between the Record Date and the next succeeding Interest Payment Date.
(c) No service charge shall be made for any registration of a
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment by the Holder of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges pursuant to Section 2.10, 3.6 or 9.5).
(d) Prior to due presentment for registration of transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and interest on
such Note and for all other purposes whatsoever, whether or not such Note is
overdue, and neither the Trustee, any Agent, nor the Company shall be affected
by notice to the contrary.
(e) Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interests in such Global Note
may be effected only through a book entry system maintained by the Holder of
such Global Note (or its agent), and that ownership of a beneficial interest in
the Global Note shall be required to be reflected in a book entry.
SECTION 2.7 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or either
of the Company or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by two Officers of the Company,
shall authenticate a replacement Note if an indemnity bond is supplied by the
Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, each Agent and each authenticating agent from
any loss which any of them may suffer if a Note is replaced. The Company and the
Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an additional Obligation of the
Company.
SECTION 2.8 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in interest in a Global Note effected
by the Trustee in accordance with the provision hereof, and those described in
this Section as not outstanding.
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21
If a Note is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.9 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
SECTION 2.9 TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, a Guarantor, if any, or any Affiliate of the Company or a
Guarantor, if any, shall be considered as though not outstanding, except that
for purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes which a Trust Officer knows to
be so owned shall be so considered. The Company agrees to notify the Trustee of
the existence of any Notes owned by the Company, by any Guarantor or by any
Affiliate of the Company or a Guarantor.
SECTION 2.10 TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company and the Trustee consider appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee, upon
receipt of the written order of the Company signed by two Officers of the
Company, shall authenticate definitive Notes in exchange for temporary Notes.
Until such exchange, temporary Notes shall be entitled to the same rights,
benefits and privileges as definitive Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act) unless the Company directs them to be returned to them. The Company may not
issue new Notes to replace Notes that have been redeemed or paid or that have
been delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company unless by a written order, signed by an Officer of the Company, the
Company shall direct that cancelled Notes be returned to them.
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22
SECTION 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at the earliest
practicable date but in all events at least five (5) Business Days prior to the
payment date, in each case at the rate provided in the Notes and in Section 4.1
hereof. The Company shall, with the consent of the Trustee, fix or cause to be
fixed each such special record date and payment date. At least fifteen (15) days
before the special record date, the Company (or the Trustee, in the name of and
at the expense of the Company) shall mail to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
SECTION 2.13 RECORD DATE.
The record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture shall be determined as provided for in TIA
Section 316(c).
SECTION 2.14 CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number, and
if it does so, the Trustee shall use the CUSIP number in notices of redemption
or exchange as a convenience to Holders; provided, that any such notice may
state that no representation is made as to the correctness or accuracy of the
CUSIP number printed in the notice or on the Notes, and that reliance may be
placed only on the other identification numbers printed on the Notes. The
Company will promptly notify the Trustee in writing of any change in the CUSIP
number.
SECTION 2.15 RESTRICTIVE LEGENDS.
Each Global Note and Physical Security that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") unless otherwise agreed by the Company and the Holder thereof:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY
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23
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
Each Global Note shall also bear the following legend on the
face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE
OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY,
OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY, OR
ANY NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
24
SECTION 2.16 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
(a) The Global Note initially shall (i) be registered in the
name of the Depositary or the nominee of such Depositary, (ii) be delivered to
the Trustee as custodian for such Depositary and (iii) bear legends as set forth
in Section 2.15.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depositary, or the Trustee as its custodian, or
under the Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers
in whole, but not in part, to the Depositary, its successors or their respective
nominees. Interest of beneficial owners in the Global Note may be transferred or
exchanged for Physical Securities in accordance with the rules and procedures of
the Depositary and the provisions of Section 2.17. In addition, Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in the Global Note if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Note and a successor depositary is not appointed by the Company within 90 days
of such notice or (ii) an Event of Default has occurred and is continuing and
the Registrar has received a written request from the Depositary to issue
Physical Securities.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b) above, the Registrar shall (if one or more Physical Securities are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Securities of like tenor and amount.
(d) In connection with the transfer of the entire Global Note
to beneficial owners pursuant to paragraph (b) above, the Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depositary in exchange for its beneficial interest in
the Global Note, an equal aggregate principal amount of Physical Securities of
authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) above shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.17, bear the legend regarding transfer restrictions applicable
to the Physical Securities set forth in Section 2.15.
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25
(f) The Holder of the Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.17 SPECIAL TRANSFER PROVISIONS.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after March
18, 2001, or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons),
the proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto or (2) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has delivered to
the Registrar a certificate substantially in the form of Exhibit D
hereto; and
(ii) if the proposed transferor is an Agent Member holding
a beneficial interest in the Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures, (a) the Registrar shall reflect on its books
and records the date and (if the transfer does not involve a transfer
of outstanding Physical Securities) a decrease in the principal amount
of the Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and (b) the
Company shall execute and the Trustee shall authenticate and deliver
one or more Physical Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that the sale has been effected
in compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Notes for its own account or an account with respect
to which it exercises sole investment discretion and that any such
account is a QIB within the meaning of Rule 144A, and it is aware that
the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
<PAGE>
26
(ii) if the proposed transferee is an Agent Member and the
Notes to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to principal
amount of the Physical Securities to be transferred, and the Trustee
shall cancel the Physical Securities so transferred.
(c) Private Placement Legend. Upon the registration of the
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the registration of the transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Registrar shall deliver only Notes
that bear the Private Placement legend unless (i) the circumstance contemplated
by paragraph (a)(i)(x) of this Section 2.17 exists or (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Company and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain for at least two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 hereof or this Section 2.17. The Company shall have the right to
inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
SECTION 2.18 RANKING.
The Notes shall rank pari passu with, and shall not be senior
to, the Existing Notes.
ARTICLE 3
REDEMPTIONS AND OFFERS TO PURCHASE
SECTION 3.1 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 45 days but not more than 90 days before a redemption date (unless a
shorter notice period shall be satisfactory to the Trustee), an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the redemption shall occur, (ii) the redemption date, (iii) the principal amount
of Notes to be redeemed and (iv) the redemption price.
If the Company is required to make an offer to purchase Notes
pursuant to the provisions of Sections 4.10 or 4.14, it shall furnish to the
Trustee, an Officers' Certificate setting forth (i) the
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27
Section of this Indenture pursuant to which the offer to purchase shall occur,
(ii) the offer's terms, (iii) the purchase price, (iv) the principal amount of
the Notes to be purchased and (v) a statement to the effect that (a) the Company
or one of its Restricted Subsidiaries has made an Asset Sale and that the
conditions set forth in Sections 3.9 and 4.10 have been satisfied or (b) a
Change of Control has occurred and the conditions set forth in Section 4.14 have
been satisfied, as applicable.
SECTION 3.2 SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.
In the event that less than all of the Notes are to be
purchased in an Asset Sale Offer or redeemed at any time, the Trustee shall
select the Notes to be redeemed or purchased among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate (and in such manner as complies with applicable legal requirements).
The Company shall give written notice to the Trustee of such requirements of any
securities exchange not less than forty-five (45) nor more than ninety (90) days
prior to the date on which notice of such redemption or purchase is to be given.
In the event a partial redemption is made with the proceeds of a public offering
by the Company of common equity securities, selection of the Notes or portions
thereof for redemption shall be made by the Trustee only on a pro rata basis or
on as nearly a pro rata basis as practicable (subject to procedures of the
Depositary), unless such method is otherwise prohibited. In the event of partial
redemption, other than pro rata, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption. In the event that less than all of the Notes
properly tendered in an Asset Sale Offer are to be purchased, the particular
Notes to be purchased shall be selected promptly upon the expiration of such
Asset Sale Offer.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption or purchase and, in the case of any Note
selected for partial redemption or purchase, the principal amount thereof to be
redeemed or purchased. Notes and portions of them selected shall be in principal
amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes
of a Holder are to be redeemed or purchased, the entire outstanding principal
amount of Notes held by such Holder shall be redeemed or purchased. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.
In the event the Company is required to make an Asset Sale
Offer pursuant to Section 3.9 and Section 4.10 hereof, and the amount of Excess
Proceeds to be applied to such purchase would result in the purchase of a
principal amount of Notes which is not evenly divisible by $1,000, the Trustee
shall promptly refund to the Company the portion of such Excess Proceeds that is
not necessary to purchase the immediately lesser principal amount of Notes that
is so divisible.
SECTION 3.3 NOTICE OF REDEMPTION.
At least thirty (30) days but not more than sixty (60) days
before a redemption date, the Company shall mail, or cause to be mailed, by
first class mail, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address.
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28
The notice shall identify the CUSIP number of the Notes, if
any, and the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note of the same series in principal amount
equal to the unredeemed portion will be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest and Liquidated Damages, if any, on Notes called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.3 hereof, Notes called for redemption become due and payable on the redemption
date at the redemption price. On and after the redemption date, unless the
Company defaults in the payment of the redemption price, interest and Liquidated
Damages, if any, will cease to accrue on the Notes or portions of them called
for redemption and all rights of Holders of such Notes will terminate except for
the right to receive the redemption price. Upon surrender to the Paying Agent,
the Holders of such Notes shall be paid the redemption price plus accrued
interest and Liquidated Damages, if any, to the redemption date, but interest
installments and unpaid Liquidated Damages, if any, whose maturity is on or
prior to the redemption date will be payable to the Holder of record at the
close of business on the relevant record dates referred to in the Notes. A
notice of redemption may not be conditional.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE.
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29
At least one Business Day before the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money in
immediately available funds sufficient to pay the redemption price of and, if
applicable, accrued interest and Liquidated Damages, if any, on all Notes to be
redeemed on that date. The Trustee or the Paying Agent shall promptly, and in
any event within two Business Days after the redemption date, return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of and, if
applicable, accrued interest and Liquidated Damages, if any, on all Notes to be
redeemed.
If the Company complies with the provisions of the preceding
paragraph, interest and Liquidated Damages, if any, on the Notes or the portions
of Notes to be redeemed will cease to accrue on the applicable redemption date,
whether or not such Notes are presented for payment. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest will be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, from the redemption date until such unpaid interest is paid, in each
case at the rate provided in the Notes and in Section 4.1 hereof.
SECTION 3.6 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Note equal in principal amount to the unredeemed portion of
the Note surrendered; provided, however, that no Note of $1,000 or less in
principal amount shall be purchased or redeemed in part.
SECTION 3.7 OPTIONAL REDEMPTION.
Subject to the last paragraph of this Section 3.7, at any time
on or after August 15, 2002, the Notes will be subject to redemption at the
option of the Company, in whole or in part, up on not less than 30 nor more than
60 days notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years indicated below:
Year Percentage
- ---- ----------
2002....................................................104.375%
2003....................................................102.917%
2004....................................................101.458%
2005 and thereafter.....................................100.000%
Notwithstanding the foregoing but subject to the last
paragraph of this Section 3.7, prior to August 15, 2000, the Company may redeem,
on any one or more occasions, with the net cash proceeds of one or more public
offerings of its common equity (a "Public Equity Offering") (within 60 days of
the consummation of any such Public Equity Offering), up to 35% of the aggregate
principal amount of the
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30
Notes issued at a redemption price equal to 108.750% of the principal amount of
such Notes plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the redemption date; provided, however, that at least 65% of the
aggregate principal amount of Notes originally issued remains outstanding
immediately after each such redemption.
In addition but subject to the last paragraph of this Section
3.7, the Company, at its option, at any time prior to August 15, 2002, may
redeem the Notes, in whole or in part (if in part, by lot or by such other
method as the Trustee shall deem fair or appropriate) at the Make-Whole Price,
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date.
No redemption under this Section 3.7 shall be made unless the
Company makes a redemption of the Existing Notes pursuant to Section 3.7 of the
Original Indenture, pro rata among the Notes and the Existing Notes.
SECTION 3.8 MANDATORY REDEMPTION.
Subject to the Company's obligation to make an offer to
purchase Notes pursuant to Section 4.10 and Section 4.14, the Company is not
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
SECTION 3.9 OFFER TO PURCHASE BY APPLICATION OF EXCESS
PROCEEDS.
Within 30 days after the date that Excess Proceeds exceed
$10.0 million and an Asset Sale Offer is required under Section 4.10 hereof, the
Company shall mail or cause the Trustee to mail (in the Company's name and at
its expense and pursuant to an Officers' Certificate) an offer to purchase to
each Holder of Notes pursuant to the terms of this Section 3.9 and to holders of
other Indebtedness (including the Existing Notes) that ranks by its terms pari
passu in right of payment with the Notes and the terms of which contain
substantially similar requirements with respect to the application of net
proceeds from asset sales as are contained herein.
The Asset Sale Offer (as defined in Section 4.10) with respect
to the Notes shall be mailed by the Company (or the Trustee) to Holders of Notes
at their last registered address with a copy to the Trustee and the Paying Agent
and shall set forth (a) notice that an Asset Sale has occurred, that the Company
is making an Asset Sale Offer, pursuant to this Section 3.9, and that each
Holder of Notes then outstanding has the right to require the Company to
repurchase, for cash, such Holder's Notes at the Asset Sale Offer Price, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
payment date; (b) the purchase price per $1,000 of principal amount and the
payment date of the Asset Sale Offer, (c) the maximum amount of Excess Proceeds,
required to be applied to such Asset Sale Offer with respect to the Notes; (d)
that any Notes properly tendered pursuant to the Asset Sale Offer will be
accepted for payment (subject to reduction as provided in this Section 3.9) on
the payment date of the Asset Sale Offer and any Notes not properly tendered
will remain outstanding and continue to accrue interest and Liquidated Damages,
if applicable; (e) that unless the Company defaults in the payment of the Asset
Sale Offer Price, all Notes accepted for payment pursuant to the Asset Sale
Offer shall cease to
<PAGE>
31
accrue interest and Liquidated Damages after the payment date of the Asset Sale
Offer; (f) that Holders electing to have any Notes purchased pursuant to an
Asset Sale Offer will be required to surrender the Notes, with the form entitled
Option of Holder to Elect Purchase on the reverse of the Notes completed, or
transfer by book-entry transfer, to the Company, the Depository or the Paying
Agent specified in the notice at the address specified in the notice prior to
the close of business on the third Business Day preceding the payment date of
the Asset Sale Offer; (g) that Holders will be entitled to withdraw their
tendered Notes and their election to require the Company to purchase the Notes
provided that the Paying Agent receives, not later than the close of business on
the second Business Day preceding the payment date of the Asset Sale Offer, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes tendered for purchase, and a statement
that such Holder is withdrawing such Holder's tendered Notes and such Holder's
election to have such Notes purchased; (h) that, if the aggregate principal
amount of Notes surrendered by Holders exceeds the amount of the Asset Sale
Offer, the Company shall select the Notes to be purchased by lot on a pro rata
basis (with such adjustments as may be deemed appropriate by the Company so that
only Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased or otherwise in accordance with this Indenture); and (i) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer). If the payment date of the Asset Sale Offer
is on or after an interest payment record date and on or before the related
interest payment date, any accrued interest and Liquidated Damages will be paid
to the Person in whose name a Note is registered at the close of business on
such record date, and no additional interest will be payable to Holders who
tender a Note pursuant to the Asset Sale Offer.
The Company shall fix the payment date of the Asset Sale Offer
for such purchase no earlier than 30 but no more than 60 days after the Asset
Sale Offer is mailed as set forth above, except as may otherwise be required by
applicable law.
The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to repurchase Notes
pursuant to this Section 3.9. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section 3.9,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Indenture by
virtue thereof.
On the payment date of the Asset Sale Offer, the Company
shall, to the extent permitted by law, (x) accept for payment Notes or portions
thereof properly tendered pursuant to the Asset Sale Offer, (y) deposit with the
Paying Agent the amount of money, in immediately available funds, equal to the
maximum Excess Proceeds required under Section 4.10 to be applied to such Asset
Sale Offer with respect to such Notes and (z) deliver or cause to be delivered
to the Trustee, Notes so accepted together with an Officers' Certificate stating
the Notes or portions thereof tendered to the Company. If the aggregate purchase
price of all Notes properly tendered exceeds the maximum amount of Excess
Proceeds, required to be applied to such Asset Sale Offer with respect to such
Notes, as applicable, the Notes or portions thereof to be purchased shall be
selected pursuant to Section 3.2 hereof. The Paying Agent shall promptly mail to
each Holder of Notes so accepted for payment a check in an amount equal
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32
to the aggregate purchase price of the Notes purchased by the Company from such
Holder and the Trustee shall promptly authenticate and mail to each Holder a new
Note of the same series equal in principal amount to any unpurchased portion of
any Note surrendered, if any, or return any unpurchased Note to such Holder;
provided, however, that each such new Note shall be in a principal amount of
$1,000 or an integral multiple thereof. The Company shall publicly announce in a
newspaper of national circulation or in a press release provided to a nationally
recognized financial wire service the results of the Asset Sale Offer on the
payment date.
Other than as specifically provided in this Section 3.9, each
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1, 3.2, 3.5 and 3.6 hereof.
ARTICLE 4
COVENANTS
SECTION 4.1 PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest and Liquidated Damages, if any, on the Notes on
the dates and in the manner provided in this Indenture and the Notes. Principal,
premium, if any, and interest and Liquidated Damages, if any, shall be
considered paid on the due date if the Paying Agent, if other than the Company
or a Subsidiary of the Company, holds as of 9:00 a.m. Eastern Time on the due
date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest and Liquidated Damages, if any, then due. Such Paying Agent shall
return to the Company promptly, and in any event, no later than five days
following the date of payment, any money (including accrued interest) that
exceeds such amount of principal, premium, if any, and interest paid on the
Notes. The Company shall pay all Liquidated Damages, if any, in the same manner
and on the same dates as set forth above and in the amounts set forth in the
Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the interest rate then applicable to the
Notes to the extent lawful. In addition, it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages, if any, (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee or Registrar) where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail
<PAGE>
33
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.3.
SECTION 4.3 SEC REPORTS.
(a) The Company shall, whether or not required by the rules
and regulations of the SEC, submit to the SEC for public availability and
provide to the Trustee and the Holders copies of all quarterly and annual
reports and other information, documents and reports specified in Sections 13
and 15(d) of the Exchange Act for so long as the Notes are outstanding.
(b) If the Company or a Guarantor, if any, is required to
furnish annual or quarterly reports to its stockholders pursuant to the Exchange
Act, the Company shall cause such annual report or quarterly or other financial
report furnished to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar.
(c) The Company and the Guarantors, if any, shall deliver all
reports and other documents and information to the Holders under this Section
4.3. The Trustee shall, if requested to by the Company, deliver such reports,
other documents and information to the Holders, but at the sole expense of the
Company.
(d) The Company, for so long as the Notes are outstanding,
will continue to provide to Holders and to prospective purchasers of Notes the
information required by Rule 144A(d)(4).
(e) Notwithstanding anything contrary herein, the Trustee
shall have no duty to review such documents for purposes of determining
compliance with any provision of this Indenture.
SECTION 4.4 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within sixty
(60) days after the end of each fiscal year, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether each of the Company and its
Subsidiaries has kept, observed, performed and fulfilled its obligations under
this Indenture, and further stating, as to each such Officer
<PAGE>
34
signing such certificate, that to the best of his or her knowledge each of the
Company and its Subsidiaries has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action each of the Company and its Subsidiaries is taking or propose to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest or Liquidated Damages, if any, on the Notes are
prohibited (or if such event has occurred, a description of the event and what
action each is taking or proposes to take with respect thereto).
(b) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (i) any Default or Event of Default or (ii) any event of default under any
other mortgage, indenture or instrument which with the passage of time or giving
of notice would be a Default or an Event of Default under Section 6.1 hereof, an
Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
SECTION 4.5 TAXES.
The Company shall, and shall cause each of its Subsidiaries to
pay prior to delinquency, all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
SECTION 4.6 STAY, EXTENSION AND USURY LAWS.
The Company covenants, and the Company shall cause any
Guarantor to covenant (to the extent they may lawfully do so), that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture. The Company (to the extent it may lawfully do so)
hereby expressly waives, and the Company will cause any Guarantor (to the extent
it may lawfully do so) expressly to waive, all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
SECTION 4.7 LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than: (1) dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company; (2) dividends or distributions by a Restricted Subsidiary of the
Company, provided that to the extent that a portion of such dividend or
distribution is paid to a holder of Equity Interests of a Restricted Subsidiary
other than the Company or a Restricted Subsidiary, such portion of such dividend
or distribution is not greater than
<PAGE>
35
such holder's pro rata aggregate common equity interest in such Restricted
Subsidiary; and (3) dividends or distributions payable on Existing Preferred OP
Units and Preferred OP Units issued in compliance with Section 4.09 hereof);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Restricted Subsidiary or other Affiliate of the
Company (other than (A) any Equity Interests owned by the Company or any
Restricted Subsidiary of the Company, (B) any Existing Preferred OP Units and
(C) any Preferred OP Units issued in compliance with Section 4.9 hereof); (iii)
purchase, redeem or otherwise acquire or retire for value any Indebtedness of
the Company or any Restricted Subsidiary that is subordinated or junior in right
of payment, by its terms, to the Notes or any Guarantee thereof prior to the
scheduled final maturity or sinking fund payment dates for payment of principal
and interest in accordance with the original documentation for such subordinated
or junior Indebtedness; or (iv) make any Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Original Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv), (v) and (vi) (X) of the next
succeeding paragraph), is less than the sum, without duplication, of (i) 50% of
the Consolidated Net Income of the Company for the period (taken as one
accounting period) from June 30, 1997 to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit), plus (ii) 100% of the
aggregate net proceeds (including the fair market value of non-cash proceeds as
determined in good faith by the Board of Directors) received by the Company from
the issue or sale, in either case, since the date of the Original Indenture of
either (A) Equity Interests of the Company or of (B) debt securities of the
Company that have been converted or exchanged into such Equity Interests (other
than Equity Interests (or convertible or exchangeable debt securities) sold to a
Restricted Subsidiary of the Company and other than Disqualified Stock or debt
securities that have been converted or exchanged into Disqualified Stock), plus
(iii) in case, after the date of the Original Indenture, any Unrestricted
Subsidiary has been redesignated a Restricted Subsidiary pursuant to the terms
of this Indenture or has been merged, consolidated or amalgamated with or into,
or transfers or conveys assets to, or is liquidated into, the Company or a
Restricted Subsidiary and provided that no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof, the
lesser of (A) the book value (determined in accordance with GAAP) at the date of
such redesignation, combination or transfer of the aggregate Investments made by
the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary (or
of the assets transferred or conveyed, as applicable) and (B) the fair market
value of such Investments in such Unrestricted Subsidiary at the time
<PAGE>
36
of such redesignation, combination or transfer (or of the assets transferred or
conveyed, as applicable), in each case as determined in good faith by the Board
of Directors of the Company, whose determination shall be conclusive and
evidenced by a resolution of such Board and, in each case, after deducting any
Indebtedness associated with the Unrestricted Subsidiary so designated or
combined or with the assets so transferred or conveyed, plus (iv) 100% of any
dividends or interest actually received in cash by the Company or a Restricted
Subsidiary after the date of the Original Indenture from (A) a Restricted
Subsidiary the Net Income of which has been excluded from the computation of
Consolidated Net Income, (B) an Unrestricted Subsidiary, (C) a Person that is
not a Subsidiary or (D) a Person that is accounted for on the equity method plus
(v) $15.0 million.
Notwithstanding the foregoing, the provisions of this Section
4.7 will not prohibit:
(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of this Indenture; (ii)
(X) the redemption, purchase, retirement or other acquisition of any OP
Unit in exchange for Equity Interests of the Company (other than
Disqualified Stock) and (Y) the redemption, purchase, retirement or
other acquisition of any Equity Interests of the Company or a
Restricted Subsidiary (other than OP Units or Preferred OP Units) in
exchange for, or out of the proceeds of, the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of other
Equity Interests of the Company (other than any Disqualified Stock);
provided that in the case of (X) and (Y) the amount of any proceeds
that is utilized for such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph; (iii) the defeasance, redemption, repayment or purchase of
Indebtedness of the Company or any Restricted Subsidiary that is
subordinated or junior in right of payment, by its terms, to the Notes
or any Guarantee thereof in a Permitted Refinancing; (iv) the
defeasance, redemption, repayment or purchase of Indebtedness of the
Company or any Restricted Subsidiary; that is subordinated or junior in
right of payment, by its terms, to the Notes or any Guarantee thereof
with the proceeds of a substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests (other than Disqualified
Stock) of the Company; provided that the amount of any proceeds that is
utilized for such defeasance, redemption, repayment or purchase shall
be excluded from clause (c) (ii) of the preceding paragraph; (v) the
purchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company pursuant to any management equity
subscription agreement or stock option agreement; provided, however,
that the aggregate price paid for all such purchased, redeemed,
acquired or retired Equity Interests shall not exceed $1,000,000 in any
12 month period; and (vi)(X) the making of any Permitted Investment
described in clauses (a), (b), (c), (d) or (f) of the definition
thereof and (Y) the making of any Permitted Investment described in
clause (e) thereof, provided that, in the case of clauses (ii)(Y),
(iii), (iv), (v) and (vi)(Y), no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof.
In determining whether any Restricted Payment is permitted by
this Section 4.7, the Company may allocate or reallocate all or any portion of
such Restricted Payment among the clauses (i) through (vi) of the preceding
paragraph or among such clauses and the first paragraph of this Section 4.7
<PAGE>
37
including clauses (a), (b) and (c), provided that at the time of such allocation
or reallocation, all such Restricted Payments, or allocated portions thereof,
would be permitted under the various provisions of this Section 4.7.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors of
the Company set forth in an Officers' Certificate delivered to the Trustee) on
the date of the Restricted Payment of the asset(s) proposed to be transferred by
the Company or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. Not later than (i) the end of any calendar quarter in which
any Restricted Payment is made or (ii) the making of a Restricted Payment which,
when added to the sum of all previous Restricted Payments made in a calendar
quarter, would cause the aggregate of all Restricted Payments made in such
quarter to exceed $5.0 million, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section 4.7
were computed, which calculations may be based upon the Company's latest
available financial statements.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default
or Event of Default. For purposes of making the determination as to whether such
designation would cause a Default or Event of Default, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this Section 4.7. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greatest of (x) the net book value of such Investments at the time
of such designation, (y) the fair market value of such Investments at the time
of such designation and (z) the original fair market value of such Investments
at the time they were made. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
SECTION 4.8 LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) (i) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (A) on its
Capital Stock or (B) with respect to any other interest or participation in, or
measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (b) make loans or advances or capital
contributions to the Company or any of its Restricted Subsidiaries, or (c) sell,
lease or transfer any of its
<PAGE>
38
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reasons of (i)
Existing Indebtedness as in effect on the date of the Original Indenture, (ii)
the Credit Agreement, provided that the encumbrances or restrictions contained
in such agreement as amended, modified, supplemented, restructured, renewed,
restated, refunded, replaced or refinanced or extended from time to time on one
or more occasions are no more restrictive than those contained in the Credit
Agreement as in effect on the date of the Original Indenture, (iii) the Original
Indenture and the Existing Notes and this Indenture and the Notes, (iv)
applicable law, (v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries or of any
Person that becomes a Restricted Subsidiary as in effect at the time of such
acquisition or such Person becoming a Restricted Subsidiary (except to the
extent such Indebtedness was incurred in connection with or in contemplation of
such acquisition or such Person becoming a Restricted Subsidiary), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that the Consolidated Cash Flow of such Person is
not taken into account (to the extent of such restriction) in determining
whether such acquisition was permitted by the terms of this Indenture, (vi)
restrictions of the nature described in clause (c) above by reason of customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (vii) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in this clause (c) above on the property so
acquired, (viii) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancings
are no more restrictive than those contained in the agreements governing the
Indebtedness or Disqualified Stock being refinanced, or (ix) customary
restrictions in security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements and mortgages.
SECTION 4.9 LIMITATION ON ADDITIONAL INDEBTEDNESS AND
ISSUANCE OF CERTAIN CAPITAL STOCK.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to (collectively, "incur" and correlatively, an "incurrence" of) any
Indebtedness (including Acquired Debt), the Company shall not issue, and shall
not permit any of its Restricted Subsidiaries to issue, any shares of
Disqualified Stock and the Company shall not permit any of its Restricted
Subsidiaries to issue any Preferred Stock; provided, however, that the Company
or any Guarantor may incur Indebtedness or issue shares of Disqualified Stock
and the Restricted Subsidiaries may incur Indebtedness under the Credit
Agreement if the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least 2.0 to
1, determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The foregoing provisions shall not apply to:
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39
(a) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Indebtedness; provided, however, that if any such Indebtedness
ceases to be Non-Recourse Indebtedness of an Unrestricted Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company;
(b) the incurrence by the Company or its Restricted
Subsidiaries of Indebtedness pursuant to the Credit Agreement in an aggregate
principal amount not to exceed $300.0 million at any one time outstanding, minus
any Net Proceeds that have been applied to permanently reduce the outstanding
amount of such Indebtedness pursuant to clause (a) of the second paragraph of
Section 4.10 hereof;
(c) the incurrence by the Company and its Restricted
Subsidiaries of Existing Indebtedness;
(d) the incurrence by the Company or its Restricted
Subsidiaries of Indebtedness under Hedging Obligations that do not increase the
Indebtedness of the Company or the Restricted Subsidiary, as the case may be,
other than as a result of fluctuations in interest or foreign currency exchange
rates provided that such Hedging Obligations are incurred for the purpose of
providing interest rate protection with respect to Indebtedness permitted under
the Indenture or to provide currency exchange protection in connection with
revenues generated in currencies other than U.S. dollars;
(e) the incurrence or the issuance by the Company of
Refinancing Indebtedness or Refinancing Disqualified Stock or the incurrence or
issuance by a Restricted Subsidiary of Refinancing Indebtedness or Refinancing
Disqualified Stock; provided, however, that such Refinancing Indebtedness or
Refinancing Disqualified Stock is a Permitted Refinancing;
(f) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Restricted Subsidiaries; provided, however, that (a) any subsequent
issuance or transfer of Equity Interests that results in any such Indebtedness
being held by a Person other than a Restricted Subsidiary and (b) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary shall be deemed, in each case, to constitute
an incurrence of such Indebtedness by the Company or such Restricted Subsidiary,
as the case may be;
(g) the incurrence of Indebtedness represented by the Notes
and any Guarantee thereof;
(h) the incurrence by the Company or any of its Restricted
Subsidiaries, in the ordinary course of business and consistent with past
practice, of surety, performance or appeal bonds;
(i) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any other
clause of this paragraph) in an aggregate principal amount at any time
outstanding not to exceed $50.0 million;
<PAGE>
40
(j) the incurrence by the Company or any of its Restricted
Subsidiaries of Assumed Indebtedness--provided that, after giving effect to the
incurrence thereof, the Company could incur at lease $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test described in the
preceding paragraph; and
(k) the issuance of Preferred OP Units by the Company or any
of its Restricted Subsidiaries as full or partial consideration for the
acquisition of lodging facilities and related assets, provided that, after
giving effect to the issuance thereof, the Company could incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
described in the preceding paragraph.
SECTION 4.10 LIMITATION ON SALE OF ASSETS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, conduct an Asset Sale, unless (x) the Company (or
the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value of the assets
sold or otherwise disposed of (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) and
(y) at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents; provided,
however, that the principal amount of the following shall be deemed to be cash
for purposes of this provision: (A) any liabilities (as shown on the Company's
or such Restricted Subsidiary's most recent balance sheet or in the notes
thereto), of the Company or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes or any Guarantee thereof) that
are assumed by the transferee of any such assets and (B) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash within 90 days of the closing of such Asset Sale (to the extent of the cash
received). Notwithstanding the foregoing, the restriction in clause (y) above
will not apply with respect to mortgages, other notes receivable or other
securities received by the Company or any Restricted Subsidiary from a
transferee of any assets to the extent such mortgages, other notes receivable or
other securities are Investments permitted to be made by the Company or such
Restricted Subsidiary under Section 4.7 hereof.
Within 365 days of any Asset Sale, the Company or such
Restricted Subsidiary may (a) apply the Net Proceeds from such Asset Sale to
repay any Indebtedness that ranks by its terms senior to the Notes (or any
Guarantee thereof) and, in the case of any Indebtedness under the Credit
Agreement, to effect a permanent reduction in the amount of Indebtedness that
may be incurred pursuant to clause (ii) of the second paragraph of Section 4.9
hereof, or (b) invest the Net Proceeds from such Asset Sale in property or
assets used in a Hospitality-Related Business, provided that the Company or such
Restricted Subsidiary will have complied with this clause (b) if, within 365
days of such Asset Sale, the Company or such Restricted Subsidiary shall have
commenced and not completed or abandoned an investment in compliance with this
clause (b) and shall have segregated such Net Proceeds from the general funds of
the Company and its Subsidiaries for that purpose and such Investment is
substantially completed within 180 days after the first anniversary of such
Asset Sale. Any Net Proceeds from an Asset Sale that are not applied or invested
as provided in the first sentence of this paragraph will be deemed to constitute
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41
"Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an offer, to all Holders of Notes and to holders
of other Indebtedness (including the Existing Notes) that ranks by its terms
pari passu in right of payment with the Notes and the terms of which contain
substantially similar requirements with respect to the application of net
proceeds from asset sales as are contained in this Indenture (an "Asset Sale
Offer") to purchase on a pro rata basis the maximum principal amount of Notes,
that is an integral multiple of $1,000, that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
this Indenture. To the extent that the aggregate amount of Notes and other such
Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds available for purchase
thereof, the Trustee shall select the Notes to be purchased in the manner
described under Section 3.3 hereof. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero. Pending the final
application of any Net Proceeds from an Asset Sale pursuant to this paragraph,
the Company or any Restricted Subsidiary may temporarily reduce Indebtedness of
the Company or a Restricted Subsidiary that ranks by its terms senior to the
Notes or otherwise invest such Net Proceeds in Cash Equivalents.
Any offer to purchase the Notes pursuant to this Section 4.10
shall be made pursuant to the provisions of Section 3.9 hereof. Simultaneously
with the notification of such offer to the Trustee, the Company shall provide
the Trustee with an Officer's is Certificate setting forth the calculations used
in determining the amount of Excess Proceeds to be applied to the purchase of
the Notes. The Company will comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with any offer to purchase and the purchase of Notes as described
above. To the extent that the provisions of any securities laws or regulations
conflict with Section 3.9 and this Section 4.10, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the provisions of Section 3.9 and this Section
4.10 to make an Asset Sale Offer.
SECTION 4.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into any contract, agreement, understanding, loan, advance or Guarantee with, or
for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary on an arm's length basis with an unrelated Person, (b) the
Company delivers to the Trustee (i) with respect to any Affiliate Transaction
involving aggregate payments in excess of $5.0 million, an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
such Affiliate Transaction is approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction involving aggregate payments in excess of $10.0 million
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(other than an Affiliate Transaction involving the acquisition or disposition of
a lodging facility by the Company or a Restricted Subsidiary of the Company), an
opinion as to the fairness to the Company or such Restricted Subsidiary from a
financial point of view issued, at the option of the Company, by an investment
banking firm of national standing or a Qualified Appraiser and (c) the Company
delivers to the Trustee in the case of an Affiliate Transaction involving the
acquisition or disposition of a lodging facility by the Company or a Restricted
Subsidiary of the Company and (x) involving aggregate payments of more than $5.0
million and less than $25.0 million, an appraisal by a Qualified Appraiser to
the effect that the transaction is being undertaken at fair market value or (y)
involving aggregate payments of $25.0 million or more, an opinion as to the
fairness of the transaction to the Company or such Restricted Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that the following shall not be deemed Affiliate
Transactions: (A) any employment, deferred compensation, stock option,
noncompetition, consulting or similar agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary,
(B) transactions between or among the Company and/or its Restricted
Subsidiaries, (C) the incurrence of fees in connection with the provision of
hotel management services, provided that such fees are paid in the ordinary
course of business and are consistent with past practice and (D) Restricted
Payments permitted by Section 4.7 hereof.
SECTION 4.12 LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien that secures obligations under any Indebtedness which
is pari passu with or subordinated to the Notes, unless the Notes are equally
and ratably secured with the obligations so secured or until such time as such
obligations are no longer secured by a Lien.
SECTION 4.13 CORPORATE EXISTENCE.
Subject to Section 4.14 and Article 5 hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence and the corporate existence of each
of its Subsidiaries, in accordance with its respective organizational documents
(as the same may be amended from time to time) and (ii) its (and its
Subsidiaries') rights (charter and statutory), licenses and franchises;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate existence of any of its
Subsidiaries, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.
SECTION 4.14 CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require that the Company purchase all or a portion
of such Holder's Notes pursuant to the offer described below (the "Change of
Control Offer"), at a purchase price in cash equal to 101% of the principal
amount
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43
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the
date of purchase (the "Change of Control Payment").
Prior to the mailing of the notice referred to below, but in
any event within 30 days following any Change of Control, the Company shall (i)
repay in full and terminate all commitments under Indebtedness under the Credit
Agreement and all other Senior Debt the terms of which require repayment upon a
Change of Control or offer to repay in full and terminate all commitments under
all Indebtedness under the Credit Agreement and all other such Senior Debt and
to repay the Indebtedness owed to each lender or holder of Senior Debt which has
accepted such offer or (ii) obtain the requisite consents under the Credit
Agreement and all other Senior Debt to permit the repurchase of the Notes as
provided below. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase Notes
pursuant to the provisions described below, and the Company's failure to comply
with the covenant described in the immediately preceding sentence shall
constitute an Event of Default described in clause (3) and not in clause (2)
under Section 6.1 hereof.
Within 10 days following the date upon which the Change of
Control occurs, the Company must send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer. Such notice shall state, among other things, the
purchase date, which must be no earlier than 30 days nor later than 60 days from
the date such notice is mailed, other than as may be required by law (the
"Change of Control Payment Date"). Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Trustee or Paying Agent, if any, at the address
specified in the notice prior to the close of business on the third business day
prior to the Change of Control Payment Date.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.14, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.14 to make a Change of Control Offer.
On the Change of Control Payment Date, the Company will, to
the extent permitted by law, (x) accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (y) deposit
with the Paying Agent an amount equal to the aggregate Change of Control Payment
in respect of all Notes or portions thereof so tendered and (z) deliver, or
cause to be delivered, to the Trustee for cancellation the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount of
Notes or portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted the Change of Control Payment
for such Notes, and the Trustee shall promptly authenticate and mail to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided, however, that each such new Note shall be
in principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce in a newspaper of national circulation or in a press release
provided to a nationally
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44
recognized financial wire service the results of the Change of Control Offer on
the Change of Control Payment Date.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control made
by the Company and purchased all Notes validly tendered and not withdrawn under
such Change of Control Offer.
SECTION 4.15 SUBSIDIARY GUARANTEES.
Prior to guaranteeing any other Indebtedness of the Company
(other than the Credit Agreement), a Restricted Subsidiary that is also a
Significant Subsidiary must execute and deliver to the Trustee a supplemental
indenture in the form of Exhibit B hereto pursuant to which such Restricted
Subsidiary shall Guarantee, on an unsecured senior subordinated basis, all of
the Obligations of the Company with respect to the Notes together with an
opinion of counsel (which counsel may be an employee of the Company) to the
effect that the supplemental indenture has been duly executed and delivered by
such Restricted Subsidiary and is in compliance in all material respects with
the terms of this Indenture.
The Indebtedness represented by any such Subsidiary Guarantee
(i.e., the payment of Obligations on the Notes) will be subordinated on the same
basis to Senior Debt of the Guarantor as the Notes are subordinated to Senior
Debt of the Company.
SECTION 4.16 LINE OF BUSINESS.
For so long as any Notes are outstanding, the Company shall
not, and shall not permit any of its Restricted Subsidiaries to, engage in any
business or activity other than a Hospitality-Related Business.
SECTION 4.17 PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or agreed to be paid to all Holders of the Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
SECTION 4.18 NO SENIOR SUBORDINATED DEBT.
The Company shall not incur, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is senior in right of payment
to the Notes and subordinate or junior in right of payment to any other
Indebtedness of the Company, and no Guarantor shall incur, issue, assume,
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45
guarantee or otherwise become liable for any Indebtedness that is senior in
right of payment to the Guarantee by such Guarantor of the Notes and subordinate
or junior in right of payment to any other Indebtedness of the Guarantor.
SECTION 4.19 PURCHASES/REDEMPTION OF NOTES UNDER ORIGINAL
INDENTURE.
So long as any Note is outstanding, neither the Company nor
any of its Subsidiaries or Affiliates shall redeem or offer to purchase any of
the Existing Notes unless it is redeeming or offering to purchase the
outstanding Notes on a pro rata basis among the Notes and the Existing Notes and
at the same purchase or redemption price.
ARTICLE 5
SUCCESSORS
SECTION 5.1 WHEN THE COMPANY MAY MERGE, ETC.
The Company shall not consolidate or merge with or into or
wind up into (whether or not the Company is the surviving entity), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions to, another
corporation, Person or entity unless:
(i) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person or to which such
sale, assignment, transfer, lease, conveyance or other disposition will
have been made assumes all the obligations of the Company under the
Notes and this Indenture pursuant to a supplemental indenture;
(iii) at the time of such transaction and immediately after
such transaction after giving pro forma effect thereto, no Default or
Event of Default exists or would exist;
(iv) the Company or any Person formed by or surviving such
consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth (immediately after the transaction) equal
to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, at the time of
such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in the first paragraph of Section 4.9 hereof; and
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46
(v) the Company shall have delivered to the Trustee prior to
the consummation of the proposed transaction an Officers' Certificate
and an Opinion of Counsel to the combined effect that such sale,
assignment, transfer, lease, conveyance or other disposition, and, if
applicable, any supplemental indenture executed in connection
therewith, comply with this Indenture. The Trustee shall be entitled to
conclusively rely upon such Officers' Certificate and Opinion of
Counsel.
SECTION 5.2 SUCCESSOR SUBSTITUTED.
Upon any consolidation, merger, lease, conveyance or transfer
of all or substantially all of the assets of the Company, as the case may be, in
accordance with Section 5.1 hereof, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale, lease,
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Notes with the same effect as if such successor had been named as the Company
herein or therein and thereafter the predecessor corporation shall be relieved
of all further obligations and covenants under this Indenture and the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default
under this Indenture:
(1) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes (whether or not such payment
shall be prohibited by the subordination provisions of this Indenture);
(2) default in payment when due of principal of or premium, if
any, on the Notes at maturity, upon redemption or otherwise (including
the failure to make a payment to purchase Notes tendered pursuant to a
Change of Control Offer or an Assets Sale Offer) (whether or not such
payment shall be prohibited by the subordination provisions of this
Indenture);
(3) failure by the Company or any Restricted Subsidiary to
comply with Section 5.1;
(4) failure by the Company or any Guarantor for 30 days in the
performance of any other covenant, warranty or agreement in this
Indenture or the Notes after written notice shall have been given to
the Company by the Trustee or to the Company and the Trustee from
Holders of at least 25% in principal amount of the Notes then
outstanding;
(5) the failure to pay at final stated maturity (giving effect
to any applicable grace periods and any extensions thereof) the
principal amount of Non-Recourse Indebtedness of the Company or any of
its Restricted Subsidiaries with an aggregate principal amount in
excess of the lesser of (A) 10% of the total assets of the Company and
its Restricted Subsidiaries measured
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as of the end of the Company's most recent fiscal quarter for which
internal financial statements are available immediately preceding the
date on which such default occurred, determined on a pro forma basis
and (B) $50 million, and such failure continues for a period of 10 days
or more, or the acceleration of the final stated maturity of any such
Non-Recourse Indebtedness (which acceleration is not rescinded,
annulled or otherwise cured within 10 days of receipt by the Company or
such Restricted Subsidiary of notice of any such acceleration);
(6) the failure to pay at final stated maturity (giving effect
to any applicable grace periods and any extensions thereof) the
principal amount of any Indebtedness (other than Non-Recourse
Indebtedness) of the Company or any Restricted Subsidiary of the
Company and such failure continues for a period of 10 days or more, or
the acceleration of the final stated maturity of any such Indebtedness
(which acceleration is not rescinded, annulled or otherwise cured
within 10 days of receipt by the Company or such Restricted Subsidiary
of notice of any such acceleration) if the aggregate principal amount
of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, in each case with respect to
which the 10-day period described above has passed, aggregates $10.0
million or more at any time;
(7) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments rendered against them (other than
judgment liens without recourse to any assets or property of the
Company or any of its Restricted Subsidiaries other than assets or
property securing Non-Recourse Indebtedness) aggregating in excess of
$10.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days (other than any judgments as to which a reputable
insurance company has accepted full liability);
(8) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in a judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or
any Guarantor (or its successors or assigns), or any Person acting on
behalf of such Guarantor (or its successors or assigns), shall deny or
disaffirm its obligations or shall fail to comply with any obligations
under its Subsidiary Guarantee;
(9) the Company, any Guarantor or any of the Company's
Subsidiaries that would constitute a Significant Subsidiary or any
group of the Company's Subsidiaries that, taken together, would
constitute a Significant Subsidiary pursuant to or within the meaning
of the Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian
of it or for all or substantially all of its property,
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(d) makes a general assignment for the benefit
of its creditors,
(e) admits in writing its inability to pay its
debts as they become due; and
(10) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief in an involuntary case against
the Company, any Guarantor or any Subsidiary that is a
Significant Subsidiary of the Company or any group of
Subsidiaries that, taken together, would constitute a
Significant Subsidiary of the Company,
(b) appoints a Custodian of the Company, any
Guarantor or any Subsidiary that is a Significant Subsidiary
of the Company or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary of the
Company, or for all or substantially all of the property of
the Company, any Guarantor or any Subsidiary that is a
Significant Subsidiary of the Company, or any group of
Subsidiaries that, taken together, would constitute a
Significant Subsidiary of the Company, or
(c) orders the liquidation of the Company, any
Guarantor or any Subsidiary that is a Significant Subsidiary
of the Company or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary of the
Company,
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Bankruptcy Law" means, title 11, U.S. Code or any
similar federal or state law for the relief of debtors, each as amended from
time to time. The term Custodian means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
SECTION 6.2 ACCELERATION.
If any Event of Default (other than an Event of Default
specified in clauses (9) and (10) of Section 6.1 hereof) occurs and is
continuing, the Trustee by written notice to the Company, or the Holders of at
least 25% in aggregate principal amount of the then outstanding Notes by written
notice to the Company and the Trustee, may declare all Notes to be due and
payable immediately. Upon the effectiveness of such declaration, all amounts due
and payable on the Notes, as determined in the succeeding paragraphs, shall be
due and payable effective immediately. If an Event of Default specified in
clause (9) or (10) of Section 6.1 hereof occurs, all outstanding Notes shall
ipso facto become and be immediately due and payable immediately without further
action or notice on the part of or by the Trustee or any Holder.
In the event that the maturity of the Notes is accelerated
pursuant to this Section 6.2, 100% of the principal amount thereof shall become
due and payable plus premium, if any, and accrued and unpaid interest, if any,
to the date of payment.
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SECTION 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, premium,
if any, or interest on the Notes or to enforce the performance of any provision
of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4 WAIVER OF PAST DEFAULTS.
Subject to Section 9.2 hereof, Holders of a majority in
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may waive an existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the payment of the principal
of, premium, if any, or interest or Liquidated Damages, if any, on any Note held
by a non-consenting Holder. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.5 CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the
then outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, or that the Trustee determines may be
unduly prejudicial to the rights of other Holders or that may involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction.
SECTION 6.6 LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or
the Notes only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from the
Company;
(2) the Holders of at least 25% in aggregate principal amount
of the then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;
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50
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(5) during such 60-day period the Holders of a majority in
aggregate principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest and Liquidated Damages, if any, on the Note, on or after the
respective due dates expressed in the Note, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of the Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company or any Guarantor
for the whole amount of principal, premium, if any, and interest and Liquidated
Damages, if any, remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any other amounts due the Trustee under Section 7.7 hereof) and the Holders
allowed in any judicial proceedings relative to the Company or any Guarantor (or
any other obligor upon the Notes), their creditors or their property and shall
be entitled and empowered to collect, receive and distribute any money or
securities or other property payable or deliverable on any such claims and to
distribute the same, and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any
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51
and all distributions, dividends, money, securities and other properties that
the Holders of the Notes may be entitled to receive in such proceeding whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects or receives any money or securities or
other property pursuant to this Article, it shall pay out the money or
securities or other property in the following order:
First: to the Trustee, its agents and counsel for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest and Liquidated Damages, if any,
ratably, without preference or priority of any kind (including defaulted
interest), according to the amounts due and payable on the Notes for principal,
premium, if any, and interest and Liquidated Damages, if any, respectively;
Third: without duplication, to Holders for any other
obligations owing to the Holders under the Notes or this Indenture; and
Fourth: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
such payment to Holders.
SECTION 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in
aggregate principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE.
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(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(2) Except during the continuance of an Event of Default:
(a) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(3) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) this paragraph does not limit the effect of paragraph
(2) of this Section 7.1;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(4) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (1), (2) and (3) of this Section.
(5) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE.
Subject to TIA Section 315:
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(1) The Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed and
monitored with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(6) Without limiting the provisions of Section 7.1(5), the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of the Holders of a
majority in aggregate principal amount of the then outstanding Notes pursuant to
this Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(7) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties hereunder.
(8) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article
4. In addition, the Trustee shall not be deemed to have knowledge of any Default
or Event of Default except (i) any Event of Default occurring pursuant to
Sections 6.1(1), 6.1(2) or 4.1 or (ii) any Default or Event of Default of which
the Trustee shall have received written notification or obtained actual
knowledge.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company or any Affiliate of the foregoing with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4 TRUSTEE'S DISCLAIMER.
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The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision hereof, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
subject to Section 7.2(8) if it is known by a Trust Officer of the Trustee, the
Trustee shall mail to Holders a notice of the Default or Event of Default within
90 days after it occurs. Except in the case of a Default or Event of Default in
payment of principal or interest on any Note, the Trustee may withhold the
notice if and so long as a Trust Officer in good faith determines that
withholding the notice is in the interests of Holders. The Trustee shall comply
with TIA Section 315(b).
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15,
1999 following the date hereof, the Trustee shall mail to Holders a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to Holders
shall be submitted to the SEC and each stock exchange, if any, on which the
Notes are listed. The Company shall promptly notify the Trustee when the Notes
are listed on or delisted by any stock exchange.
SECTION 7.7 COMPENSATION AND INDEMNITY.
The Company agrees to pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company agrees to reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company agrees to indemnify the Trustee against any and
all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, except as set forth in the next paragraph. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder except to the extent the Company has been
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55
prejudiced thereby. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and, if the
Company or the Trustee shall have been advised by its respective counsel that
representation of the Trustee and the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed), the Company shall
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld. The provisions of this paragraph shall survive the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own gross
negligence or willful misconduct.
The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien on all money or property held or collected by the
Trustee, except that held in trust to pay principal and interest on particular
Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(9) or (10) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time by so notifying the Company
in writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in aggregate principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company. The
Company may remove the Trustee at its discretion or if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
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56
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in aggregate principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Subject to the provision of TIA Section 315(e), if the Trustee
after written request by any Holder who has been a bona fide holder of a Note or
Notes for at least six months fails to comply with Section 7.10, such Holder, on
behalf of himself and others similarly situated, may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.7. Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee powers, shall be subject to supervision or examination by
Federal or state authority and shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee is subject to TIA Section
310(b). The provisions of TIA Section 310 shall apply to the Company as the
obligor of the Notes.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY.
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The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company as the
obligor of the Notes.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1 DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE
NOTES.
(a) The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
with respect to the Notes, elect to have either Section 8.2 or 8.3 hereof be
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article 8.
(b) The Company may terminate its obligations (and the
obligations of any Guarantor in respect of Subsidiary Guarantees) under the
Notes and this Indenture (except those obligations referred to in the
penultimate paragraph of this Section 8.1(b)) if all such Notes thereto
authenticated and delivered (except lost, stolen or destroyed Notes that have
been replaced or paid and Notes for whose payment cash in United States dollars
has theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in Section 8.6, or
discharged from such trust) have been delivered to the Trustee for cancellation
and the Company has paid all sums payable by it hereunder, or if (i) either (x)
pursuant to Article 3, the Company shall have given notice to the Trustee and
mailed a notice of redemption to each Holder of the redemption of all of the
Notes under arrangements satisfactory to the Trustee for the giving of such
notice or (y) all Notes have otherwise become due and payable hereunder, (ii)
the Company shall have irrevocably deposited or caused to be deposited with the
Trustee or a trustee satisfactory to the Trustee, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the Trustee,
as trust funds in trust solely for the benefit of the Holders for that purpose,
cash in United States dollars in such amount as is sufficient without
consideration of reinvestment of such interest, to pay principal of, premium, if
any, interest and Liquidated Damages, if any, on the outstanding Notes to
maturity or redemption; provided that the Trustee shall have been irrevocably
instructed to apply such deposit to the payment of said principal, premium, if
any, interest and Liquidated Damages, if any, with respect to the Notes; and,
provided, further, that from and after the time of deposit, the money deposited
shall not be subject to the rights of holders of Senior Debt pursuant to the
provisions of Article 10; (iii) no Default or Event of Default with respect to
this Indenture or the Notes shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any other
instrument to which the Company or any Guarantor is a party or by which it is
bound; (iv) the Company shall have paid all other sums payable by it hereunder;
and (v) the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent relating
to the satisfaction and discharge of this Indenture have been complied with.
Such Opinion of Counsel shall also state that such satisfaction and discharge
does not
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result in a default under the Credit Agreement (if then in effect) or any other
agreement or instrument then known to such counsel that binds or affects the
Company or any Guarantor.
Notwithstanding the foregoing paragraph, the Company's (and
any Guarantor's) obligations in Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 8.6
and 8.7 shall survive until the Notes are no longer outstanding pursuant to the
last paragraph of Section 2.8. After the Notes are not longer outstanding, the
Company's obligations in Sections 7.7, 8.6 and 8.7 shall survive.
After such delivery or irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
(and the obligations of any Guarantors in respect of Subsidiary Guarantees)
under the Notes and this Indenture except for those surviving obligations
specified above.
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1(a) hereof of the
option applicable to this Section 8.2, the Company and the Guarantors, if any,
shall be deemed to have been discharged from their obligations with respect to
all outstanding Notes and Subsidiary Guarantees, if any, on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be outstanding only for the purposes
of Section 8.5 hereof and the other Sections of this Indenture referred to in
clauses (i) and (ii) of this Section 8.2, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and interest and Liquidated Damages, if any, on such Notes when such
payments are due, solely from amounts deposited with the Trustee, as provided in
Section 8.4 hereof, (ii) the Company's and the Guarantors' obligations with
respect to the Notes under Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.10 and 4.2
hereof, (iii) the rights, powers, trusts, duties, indemnities and immunities of
the Trustee and the Company's obligations in connection therewith and (iv) this
Article 8.
SECTION 8.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1(a) hereof of the
option applicable to this Section 8.3, the Company and the Guarantors, if any,
shall be released from their obligations under the covenants contained in
Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.18, 4.19, 5.1 and
11.2 with respect to the outstanding Notes on and after the date the conditions
set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not outstanding for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed outstanding for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes, the Company and the Guarantors may omit to comply with
and shall have no liability in respect of
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59
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1(e) hereof but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.1 hereof of the option applicable to this Section 8.3, any event described in
Sections 6.1(c) through 6.1(i) hereof shall not constitute Events of Default.
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 8.2 or Section 8.3 hereof to the outstanding Notes:
(a) the Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 hereof who shall agree to comply with the provisions of this
Article 8 applicable to it), in trust (the "defeasance trust"), for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, (a) cash in
United States dollars in an amount, or (b) non-callable Government Securities
which through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before the
due date of any payment, cash in United States dollars in an amount, or (c) a
combination thereof, in such amounts as will be sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge and
which shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest (including defaulted
interest) and Liquidated Damages, if any, on the outstanding Notes and any other
obligations owing to the Holders of the Notes, under the Notes or this Indenture
on the stated maturity or on the applicable redemption date, as the case may be,
of such principal or installment of principal of, premium, if any, interest and
Liquidated Damages, if any, on the outstanding Notes, provided that the Trustee
shall have been irrevocably instructed to apply such money or the proceeds of
such non-callable Government Securities to said payments with respect to the
Notes;
(b) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States (which counsel may be an employee of the Company or any Subsidiary of the
Company) reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the Issuance Date, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same time, as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States (which counsel may be an employee of the
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Company or any Subsidiary of the Company) reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds applied to
such deposit) or, insofar as Section 6.1(h) or 6.1(i) hereof is concerned, at
any time in the period ending on the 123rd day after the date of such deposit
(or greater period of time in which any such deposit of trust funds may remain
subject to bankruptcy or insolvency laws insofar as those apply to the deposit
by the Company) (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) in the case of an election under either Section 8.2 or 8.3
hereof, the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that, as of the date of such opinion, (A) the trust funds will not be
subject to any rights of holders of Indebtedness other than the Notes and (B)
assuming no intervening bankruptcy of the Company between the date of deposit
and the 123rd day following the deposit and assuming no Holder of the Notes is
an insider of the Company, after the 123rd day following the deposit, as of the
date of such opinion, the trust funds will not be subject to avoidance under
Section 547 of the United States Bankruptcy Code (or any successor provision
thereto) and related judicial decisions or any other applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
under any United States or state law;
(g) in the case of an election under either Section 8.2 or 8.3
hereof, the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election under
Section 8.2 or 8.3 hereof was not made by the Company with the intent of
preferring the Holders of Notes over other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel in the United States (which
counsel may be an employee of the Company or any Subsidiary of the Company),
each stating that all conditions precedent provided for relating to either the
Legal Defeasance under Section 8.2 hereof or the Covenant Defeasance under
Section 8.3 hereof (as the case may be) have been complied with as contemplated
by this Section 8.4.
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
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Subject to Section 8.6 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.5, the "Trustee") pursuant to Section 8.1(b) or Section 8.4 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company and the Guarantors, if any, shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or non-callable Government Securities deposited
pursuant to Section 8.1(b) or Section 8.4 hereof or the principal, premium, if
any, and interest received in respect thereof other than any such tax, fee or
other charge which by law is for the account of the Holders of the outstanding
Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any money or non-callable Government Securities held by it as
provided in Section 8.4 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.4(a) hereof), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.6 REPAYMENT TO THE COMPANY.
The Trustee shall promptly pay to the Company after request
therefor any excess money held at such time in excess of amounts required to pay
any of the Company's Obligations then owing with respect to the Notes.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for one year after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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SECTION 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any cash or
non-callable Government Securities in accordance with Section 8.1(b), Section
8.2 or Section 8.3 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations of the Company and
the Guarantors, if any, under this Indenture, the Notes and the Subsidiary
Guarantees, if any, shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.1(b), Section 8.2 or Section 8.3 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.1(b), Section 8.2 or Section 8.3 hereof, as the case
may be; provided, however, that, if the Company or any Guarantor makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company or such Guarantor shall be
subrogated to the rights of the Holders of such Note to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.1 WITHOUT CONSENT OF HOLDERS.
The Company, any Guarantor and the Trustee, as applicable, may
amend or supplement this Indenture, the Notes, and any Subsidiary Guarantee
without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's obligations
to Holders of the Notes under this Indenture or any Guarantor's
obligations under its Subsidiary Guarantee in the case of a merger,
consolidation or sale of assets involving the Company or such
Guarantor, as applicable, pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes (including providing for
Subsidiary Guarantees and any supplemental indenture required pursuant
to Section 4.15 hereof) or that does not adversely affect the legal
rights under this Indenture of any such Holder;
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; and
(f) to release a Guarantor in accordance with Section 11.4
hereof.
Upon the request of the Company and any Restricted Subsidiary,
in its capacity as a Guarantor, accompanied by a resolution of the Board of
Directors of the Company or such Restricted Subsidiary, as applicable,
authorizing the execution of any such amended or supplemental indenture and
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upon receipt by the Trustee of the documents described in Section 9.6 hereof,
the Trustee shall join with the Company and any such Restricted Subsidiary in
the execution of any amended or supplemental indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture which adversely
affects its own rights, duties or immunities under this Indenture, or otherwise.
SECTION 9.2 WITH CONSENT OF HOLDERS.
Except as provided below in this Section 9.2, the Company, any
Guarantor and the Trustee together may amend this Indenture, the Notes and any
Subsidiary Guarantee with the written consent of the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes (including
consents obtained in connection with a purchase of or a tender offer or exchange
offer for Notes).
Upon the request of the Company, accompanied by a resolution
of the Board of Directors of the Company, authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon
receipt by the Trustee of the documents described in Section 9.6 hereof, the
Trustee shall join with the Company and any Guarantor, as the case may be, in
the execution of such supplemental indenture unless such supplemental indenture
adversely affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders of each Note affected thereby a
notice briefly describing the amendment or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver. Subject to
Sections 6.4 and 6.7 hereof, the Holders of a majority in aggregate principal
amount of the Notes then outstanding (including consents obtained in connection
with a purchase of or a tender offer or exchange offer for Notes) may waive any
existing default or compliance in a particular instance by the Company or any
Guarantor with any provision of this Indenture or the Notes. However, without
the consent of each Holder affected, an amendment or waiver under this Section
may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or waive any of the provisions with respect to the redemption of the
Notes;
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(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive a Default or an Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Note;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest or Liquidated
Damages on the Notes;
(g) waive a redemption payment with respect to any Note;
(h) modify or change any provision of this Indenture or the
related definitions affecting the subordination or ranking of the Notes in a
manner which adversely affects the Holders in any material respect;
(i) except pursuant to Article 8 or pursuant to Section 11.4,
release any Guarantor from its obligations under a Subsidiary Guarantee, or
change any such Subsidiary Guarantee in any manner that would adversely affect
the Holders in any material respect; or
(j) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Notes shall be set
forth in an amendment or supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his or her Note if the Trustee receives written notice of revocation before the
date the waiver or amendment becomes effective. An amendment or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
The Company may fix a record date for determining which
Holders must consent to such amendment or waiver. If the Company fixes a record
date, the record date shall be fixed at (i) the later of 30 days prior to the
first solicitation of such consent or the date of the most recent list of
Holders
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furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or
(ii) such other date as the Company shall designate.
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing such amendment or supplemental
indenture, the Trustee shall be entitled to receive, and, subject to Section 7.1
hereof, shall be fully protected in relying upon, an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or supplemental
indenture until the Board of Directors of the Company or any Restricted
Subsidiary in its capacity as a Guarantor, as applicable, approves it.
ARTICLE 10
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article, to the prior
payment in full in cash or Cash Equivalents of all Obligations on Senior Debt
(whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt.
SECTION 10.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
(a) Upon any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors or marshalling of assets of the Company or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to the Company or its property, whether voluntary or involuntary, all
Obligations due upon all Senior Debt shall first be paid in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, before any payment or distribution of any kind or
character is made on account of
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any Obligations on the Notes, or for the acquisition by the Company or any of
its Subsidiaries of any of the Notes for cash or property or otherwise, and
until all Obligations with respect to Senior Debt are paid in full in cash or
Cash Equivalents, any distribution to which the Holders would be entitled shall
be made to the Holders of Senior Debt (except that Holders of the Notes may
receive Permitted Junior Securities and payments made pursuant to Section 8.4 or
Section 8.1(b)).
(b) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, shall be received by any Holder when
such payment or distribution is prohibited by Section 10.2(a), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Debt (pro rata to such holders on the
basis of the respective amount of Senior Debt held by such holders) or their
respective Representatives, or to the trustee under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt then due
remaining unpaid until all such Senior Debt has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(c) The consolidation of the Company with, or the merger of
the Company with or into, another corporation or the liquidation or dissolution
of the Company following the conveyance or transfer of all or substantially all
of its assets, to another corporation upon the terms and conditions provided in
Article 5 hereof and as long as permitted under the terms of the Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article 5 hereof.
SECTION 10.3 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.
If any default occurs and is continuing in the payment when
due whether at maturity, upon any redemption, by declaration or otherwise, of
any principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character shall be made by, or on behalf of, the Company
or any other Person on its behalf with respect to any Obligations on the Notes,
or to acquire any of the Notes for cash or property or otherwise (except that
Holders of Notes may receive Permitted Junior Securities and payments made from
the trust pursuant to Section 8.1(b) or Section 8.4). In addition, if any other
event of default occurs and is continuing with respect to any Designated Senior
Debt, as such event of default is defined in the instrument creating or
evidencing such Designated Senior Debt, permitting the holders of such
Designated Senior Debt then outstanding to accelerate the maturity thereof and
if the Representative for the respective issue of Designated Senior Debt gives
written notice of the event of default to the Trustee (a "Default Notice"),
then, unless and until all events of default have been cured or waived or have
ceased to exist or the Trustee receives notice from the Representative for the
respective issue of Designated Senior Debt terminating the Blockage Period (as
defined below), during the 179 days after the delivery of such Default Notice
(the Blockage Period), neither the Company nor any of its Subsidiaries shall (x)
make any payment of any kind or character with respect to any Obligations on the
Notes (except that Holders of Notes may receive Permitted Junior Securities and
payments made from
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the trust pursuant to Section 8.4 or 8.1(b)) or (y) acquire any of the Notes for
cash or property or otherwise. Notwithstanding anything herein to the contrary,
in no event will a Blockage Period extend beyond 179 days from the date the
payment on the Notes was due and only one such Blockage Period may be commenced
within any 365 consecutive days. No event of default which existed or was
continuing on the date of the commencement of any Blockage Period with respect
to the Designated Senior Debt shall be, or be made, the basis for the
commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 365 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 180 consecutive days (it being acknowledged that any subsequent
action, or any breach of any financial covenants for a period commencing after
the date of commencement of such Blockage Period that, in either case, would
give rise to an event of default pursuant to any provisions under which an event
of default previously existed or was continuing shall constitute a new event of
default for this purpose).
The Trustee shall be entitled to rely on information regarding
amounts then due and owing on the Senior Debt, if any, received from the holders
of Senior Debt (or their Representatives) or, if such information is not
received from such holders or their Representatives, from the Company and only
amounts included in the information provided to the Trustee shall be paid to the
holders of Senior Debt.
Nothing contained in this Article Ten shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.2 or to pursue any rights or
remedies hereunder.
SECTION 10.4 [THIS SECTION INTENTIONALLY OMITTED.]
SECTION 10.5 ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Notes at a time when the Trustee
or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.3 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt (pro rata to
such holders on the basis of the respective amounts of Senior Debt held by such
Holders) or their Representatives under the indenture or other agreement (if
any) pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
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With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.
SECTION 10.7 NOTICE BY THE COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt as provided in this Article.
SECTION 10.8 SUBROGATION.
After all Senior Debt is paid in full and until the Notes are
paid in full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior Debt
that otherwise would have been made to Holders is not, as between the Company
and Holders, a payment by the Company on the Notes.
SECTION 10.9 RELATIVE RIGHTS.
This Article defines the relative rights of Holders and
holders of Senior Debt. Nothing in this Indenture shall:
(a) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(b) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior Debt;
or
(c) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Holders.
If the Company fails because of this Article to pay principal
of or interest or Liquidated Damages, if any, on Notes on the due date, the
failure is still a Default or Event of Default.
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SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12 RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article 10, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.9 hereof at least 30 days before the expiration of the
time to file such claim, any Representative of Designated Senior Debt is hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.14 AMENDMENTS.
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The provisions of this Article 10 shall not be amended or
modified without the written consent of the holders of all Senior Debt.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.1 SUBSIDIARY GUARANTEES.
The Company's Obligations under the Notes and this Indenture
will be jointly and severally guaranteed by any Restricted Subsidiary (a
"Guarantor") which is required to execute and deliver a supplemental indenture
pursuant to Section 4.15 hereof (the "Subsidiary Guarantees"). Subject to the
provisions of this Article 11, any such Guarantor will, jointly and severally,
unconditionally guarantee, on an unsecured senior subordinated basis, to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes or the Obligations of the Company under this
Indenture or the Notes, that: (i) the principal of, premium, if any, and
interest and Liquidated Damages, if any, on the Notes will be paid in full when
due, whether at the maturity or interest payment or mandatory redemption date,
by acceleration, call for redemption, offer to purchase or otherwise, and
interest on the overdue principal of, premium, and interest and Liquidated
Damages, if any, on the Notes and all other Obligations of the Company to the
Holders or the Trustee under this Indenture or the Notes will be promptly paid
in full or performed, all in accordance with the terms of this Indenture and the
Notes; (ii) in case of any extension of time of payment or renewal of any Notes
or any of such other Obligations, they will be paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
maturity, by acceleration or otherwise; and (iii) any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under any Subsidiary Guarantee will be paid. Failing
payment when due of any amount so guaranteed for whatever reason, any Guarantor
will be obligated (subject to any grace periods allowed pursuant to Section 6.1
hereof) to pay the same whether or not such failure to pay has become an Event
of Default which could cause acceleration pursuant to Section 6.2 hereof. An
Event of Default under this Indenture or the Notes shall constitute an event of
default under any Subsidiary Guarantee, and shall entitle the Holders of Notes
to accelerate the Obligations of any Guarantor hereunder in the same manner and
to the same extent as the Obligations of the Company. Any Guarantor will agree
that its Obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of any Guarantor. Any Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of either or both of the Company, protest, notice and all demands
whatsoever and covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of its Obligations under the Notes and this
Indenture. If any Holder or the Trustee is required by any court or otherwise to
return to the Company, any Guarantor or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or any Guarantor
any amount paid by any such entity to the Trustee or such Holder, any Subsidiary
Guarantee to the Notes, to the extent theretofore discharged, shall be
reinstated in full force
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and effect. Any Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holder in respect of any Obligations guaranteed
hereby until payment in full of all Obligations guaranteed hereby. Any Guarantor
will agree that, as between it, on the one hand, and the Holders of Notes and
the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 hereof for the purposes
hereof, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby, and (y) in
the event of any acceleration of such Obligations as provided in Article 6
hereof, such Obligations (whether or not due and payable) shall forthwith become
due and payable by such Guarantor for the purpose of such Subsidiary Guarantee.
A Guarantor shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holder under its Subsidiary Guarantee.
The obligations of each Guarantor under its Subsidiary
Guarantee pursuant to this Article 11 shall be junior and subordinated to the
Senior Debt of such Guarantor on the same basis as the Notes are junior and
subordinated to Senior Debt of the Company. For the purpose of the foregoing
sentence, the Trustee and the Holders of Notes shall have the right to receive
and/or retain payments by any of the Guarantors only at such times as they may
receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 10 hereof. In the event that the Trustee or any
Holder shall have received any Guarantor payment that is prohibited by the
foregoing sentence, such Guarantor payment shall be paid over and delivered
forthwith to the holders of the Senior Debt remaining unpaid, to the extent
necessary to pay in full all Senior Debt.
Each Holder of a Note by its acceptance thereof (a) agrees to
and shall be bound by the provisions of this Section 11.1, (b) authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and (c) appoints the
Trustee its attorney-in-fact for any and all such purposes.
SECTION 11.2 WHEN A GUARANTOR MAY MERGE, ETC.
No Guarantor shall consolidate or merge with or into (whether
or not such Guarantor is the surviving person), another corporation, Person or
entity whether or not affiliated with such Guarantor unless:
(a) the person formed by or surviving any such consolidation
or merger (if other than such Guarantor) assumes all the Obligations of
such Guarantor pursuant to a supplemental indenture in the form of
Exhibit B hereto and under the Notes and this Indenture;
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(c) such Guarantor or any person formed by or surviving any
such consolidation or merger, (A) will have Consolidated Net Worth
(immediately after giving effect to such transaction) equal to or
greater than the Consolidated Net Worth of such Guarantor immediately
preceding the transaction and (B) would be permitted by virtue of the
Company's Fixed Charge
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Coverage Ratio set forth in the first paragraph of Section 4.9 hereof
to incur, immediately after giving effect to such transaction, at least
$1.00 of additional Indebtedness.
The Guarantor shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel, covering clauses (i) and (ii) (in
the case of clause (ii), to such counsel's knowledge), stating that the proposed
transaction and such supplemental indenture comply with this Indenture. The
Trustee shall be entitled to conclusively rely upon such Officers' Certificate
and Opinion of Counsel.
Notwithstanding the foregoing, (A) a Guarantor may consolidate
with or merge with or into the Company; provided, however, that the surviving
corporation (if other than the Company) shall expressly assume by supplemental
indenture complying with the requirements of this Indenture, the due and
punctual payment of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on all of the Notes, and the due and punctual
performance and observance of all the covenants and conditions of this Indenture
to be performed by the Company and (B) a Guarantor may consolidate with or merge
with or into any other Guarantor.
SECTION 11.3 LIMITATION OF GUARANTOR'S LIABILITY.
For purposes of this Article 11 and any Subsidiary Guarantee,
each Guarantor's liability will be that amount from time to time equal to the
aggregate liability of such Guarantor hereunder and thereunder, but shall be
limited to the least of (i) the aggregate amount of the obligations of the
Company under the Notes and this Indenture or (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the federal Bankruptcy Code and in the Debtor and Creditor Law of the State
of New York) or (B) left it with unreasonably small capital at the time its
Subsidiary Guarantee was entered into, after giving effect to the incurrence of
existing Indebtedness immediately prior to such time; provided that, it shall be
a presumption in any lawsuit or other proceeding in which a Guarantor is a party
that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount
set forth in clause (i) above unless any creditor, or representative of
creditors of such guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of the Guarantor is limited to the amount set forth in clause (ii). In making
any determination as to the solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such Guarantor may have,
contractual or otherwise, shall be taken into account.
SECTION 11.4 RELEASE OF A GUARANTOR.
Concurrently with the payment in full of all of the Company's
Obligations under the Notes and this Indenture (other than with respect to any
indemnification obligations), each Guarantor shall be released from and relieved
of its Obligations under this Article 11. In the event of a sale or other
disposition of all of the assets of any Guarantor, which sale or other
disposition is otherwise in compliance with the terms of this Indenture, by way
of merger, consolidation or otherwise, or a sale or other disposition of all of
the capital stock of any Guarantor, then such Guarantor (in the event of a sale
or other disposition, by way of such a merger, consolidation or otherwise, of
all of the capital stock of
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73
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor) will be
automatically and unconditionally released and relieved of any obligations under
its Subsidiary Guarantee. The Trustee shall deliver an appropriate instrument
evidencing any such release under this Section 11.4 upon receipt of a request by
the Company accompanied by an Officers' Certificate and an Opinion of Counsel
certifying as to the compliance with this Section 11.4. The provisions of
Section 11.2 shall not apply to any merger or consolidation pursuant to which a
Guarantor is released from its Obligations under this 11.4.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of TIA Section 318(c), the
imposed duties shall control.
SECTION 12.2 NOTICES.
Any notice or communication by the Company or the Trustee to
the other is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), or sent by
telex, telecopier or overnight air courier guaranteeing next Business Day
delivery, to the other's address:
If to the Company:
MeriStar Hospitality Corporation
1010 Wisconsin Avenue, N.W.
Suite 650
Washington, D.C. 20007
Attention: John Emery, Chief Financial Officer
Telecopier No.: (202) 965-4445
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Richard S. Borisoff, Esq.
Telecopier No.: (212) 373-2523
<PAGE>
74
If to the Trustee:
IBJ Whitehall Bank and Trust Company
1 State Street
New York, NY 10004
Attention: Corporate Trust Department
Telecopier No.: (212) 858-2952
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next Business Day
delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed or given in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
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75
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.5) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
SECTION 12.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to Section 4.4 and TIA Section 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificate of public officials.
SECTION 12.6 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 12.7 LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which
banking institutions in The City of New York are authorized or obligated by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue on such
payment for the intervening period.
SECTION 12.8 RECOURSE AGAINST OTHERS.
No director, officer, partner, employee, agent, manager,
stockholder, incorporator or other Affiliate, as such of the Company or of a
Guarantor, if any, shall have any liability for any obligations of the Company
or any Guarantor under the Notes, or this Indenture or a Subsidiary Guarantee,
if any, or for any claim based upon, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. This waiver and release
<PAGE>
76
are part of the consideration for issuance of the Notes. Such waiver and release
may not be effective to waive or release liabilities under the federal
securities laws.
SECTION 12.9 DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
SECTION 12.10 GOVERNING LAW.
The internal law of the State of New York shall govern and be
used, without reference to its choice of law principles (other than Sec. 5-1401
of the General Obligation Law), to construe this Indenture, the Notes and
Subsidiary Guarantee.
SECTION 12.11 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.12 SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.13 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 12.14 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 12.15 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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77
IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective duly authorized officers as of the date
first written above.
SIGNATURES
MERISTAR HOSPITALITY CORPORATION
By: /s/ John Emery
--------------------------------
Name: John Emery
Title: Chief Financial Officer
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Luis Perez
--------------------------------
Name: Luis Perez
Title: Assistant Vice President
<PAGE>
EXHIBIT A
(Face of Note)
____% [Series C] [Series D] Senior Subordinated Note due 2007
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR THE PURPOSES
OF SECTIONS 1271-1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE
ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY
OF THE NOTES MAY BE OBTAINED BY CONTACTING THE ISSUER'S INVESTOR RELATIONS
DEPARTMENT, TELEPHONE NO. (202) 295-1000.
No. $___________
MERISTAR HOSPITALITY CORPORATION
promises to pay to _____________, or registered assigns, the
principal sum of __________________ Dollars on __________, ____.
Interest Payment Dates: ________ __ and ______ __
Record Dates: ________ __ and ______ __
Dated:
MERISTAR HOSPITALITY CORPORATION
By:
--------------------------------
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the [Global] Notes
referred to in the within-
mentioned Indenture:
IBJ Whitehall Bank & Trust Company,
as Trustee
By:
--------------------------------
Authorized Signatory
A-1
<PAGE>
(Back of Note)
_____% [Series C] [Series D] Senior Subordinated Note due 2007
of
MeriStar Hospitality Corporation
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
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<PAGE>
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST. MeriStar Hospitality Corporation, a Maryland
corporation (the "Company"), promises to pay interest on the principal amount of
this _____% [Series C] [Series D] Senior Subordinated Note due ____ (the "Note")
at the rate and in the manner specified below.
The Company shall pay interest on the principal amount of this
Note in cash at the rate per annum shown above and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually on each ________ __ and ______ __ commencing
________ __, 199_, or if any such day is not a Business Day (as defined in the
Indenture referred to below), on the next succeeding Business Day (each an
"Interest Payment Date").
Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months for the actual number of days elapsed.
Interest shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of the original issuance of this
Note. To the extent lawful, the Company shall pay interest on overdue principal
and premium at the rate of 1% per annum in excess of the then applicable
interest rate on this Note; it shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the same rate to
the extent lawful.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Notes at the close of business on the _________
and _________ next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any, and
interest and Liquidated Damages, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders at their addresses set forth in
the register of Holders; provided that payment by wire transfer of immediately
available funds will be required with respect to principal and premium, if any,
and interest and Liquidated Damages, if any, on all Global Notes and all other
Notes the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Whitehall Bank &
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may
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<PAGE>
change any Paying Agent or Registrar without notice to any Holder. The Company,
any Guarantor or any other of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of March 18, 1999 (the "Indenture") between the Company, as issuer, and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes.
5. OPTIONAL REDEMPTION. Subject to the last paragraph of this
Section 5, on or after ______ __, ____, the Company may redeem all or any
portion of the Notes, at any time upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on ______ __ of the years indicated below:
Year Percentage
- ---- ----------
2002............................................................._______%
2003............................................................._______%
2004............................................................._______%
2005 and thereafter.............................................._______%
Notwithstanding the foregoing, but subject to the last
paragraph of this Section 5, prior to ______ __, 2000, the Company may redeem,
on any one or more occasions, with the net cash proceeds of one or more public
offerings of its common equity (a "Public Equity Offering") (within 60 days of
the consummation of any such Public Equity Offering), up to 35% of the aggregate
principal amount of the Notes originally issued at a redemption price equal to
_______% of the principal amount of such Notes plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the redemption date; provided,
however, that at least 65% of the aggregate principal amount of Notes originally
issued remains outstanding immediately after any such redemption.
In addition but subject to the last paragraph of this Section
5, the Company, at its option, at any time prior to ______ ____, may redeem the
Notes, in whole or in part (if in part, by lot or such other method as the
Trustee shall deem fair or appropriate) at the Make-Whole Price, plus accrued
and unpaid interest and Liquidated Damages, if any, to the date of purchase.
No optional redemption shall be made under this Section 5
unless the Company makes a redemption of the Existing Notes (as defined in the
Indenture) pursuant to the Original Indenture (as defined in the Indenture), pro
rata among the Notes and the Existing Notes.
6. OFFERS TO PURCHASE. Subject to the Company's obligation to
make an offer to purchase Notes in connection with Asset Sales and a Change of
Control (as described in the Indenture), the Company has no mandatory redemption
or sinking fund obligations with respect to the Notes. Notice of any such offer
to purchase will be given as provided in the Indenture. Holders of Notes that
are the subject of an offer to purchase may elect to have such Notes purchased
by completing the form entitled
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<PAGE>
"Option of Holder to Elect Purchase" appearing below and taking certain other
actions, all as set forth in the Indenture.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
8. SUBORDINATION. The Notes and the Subsidiary Guarantees, if
any, are subordinated to Senior Debt, as defined in the Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the Notes and the
Subsidiary Guarantees may be paid. The Company agrees, and each Holder by
accepting a Note and any Subsidiary Guarantee agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 of principal amount. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Company and the Registrar shall not be
required to issue, exchange or register the Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.2 of the Indenture and ending at the close of
business on the day of selection, or to exchange or register any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part, or to exchange or register a Note between a
record date and the next succeeding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing Default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the Notes then outstanding. The Change of
Control and Asset Sale purchase features of the Notes may not be amended or
waived without the consent of at least 66 2/3% in principal amount of the Notes
then outstanding. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to comply with Section 5.1, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes under the Indenture or any
Guarantor's Obligations under its Subsidiary Guarantee in the case of a merger,
consolidation or sale of assets involving the Company or such Guarantor, as
applicable, pursuant to Article 5 or Article 11 of the Indenture, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes (including providing for Subsidiary Guarantees and any supplemental
indenture required pursuant to Section 4.15 of the Indenture) or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA and to release a Guarantor in
accordance with the Indenture.
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<PAGE>
12. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest or Liquidated Damages,
if any, on the Notes (whether or not such payment shall be prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes at maturity, upon redemption
or otherwise (including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or an Assets Sale Offer) (whether or not
such payment shall be prohibited by the subordination provisions of the
Indenture); (iii) failure by the Company or any Restricted Subsidiary to comply
with Section 5.1 of the Indenture; (iv) failure by the Company or any Guarantor
for 60 days in the performance of any other covenant, warranty or agreement in
the Indenture or the Notes after written notice shall have been given to the
Company by the Trustee or to the Company and the Trustee from Holders of at
least 25% in principal amount of the Notes then outstanding; (v) the failure to
pay at final stated maturity (giving effect to any applicable grace periods and
any extensions thereof) the principal amount of Non-Recourse Indebtedness of the
Company or any of its Restricted Subsidiaries with an aggregate principal amount
in excess of the lesser of (A) 10% of the total assets of the Company and its
Restricted Subsidiaries measured as of the end of the Company's most recent
fiscal quarter for which internal financial statements are available immediately
prior to the date on which such default occurred, determined on a pro forma
basis and (B) $50 million, and such failure continues for a period of 10 days or
more, or the acceleration of the final stated maturity of any such Non-Recourse
Indebtedness (which acceleration is not rescinded, annulled or otherwise cured
within 10 days of receipt by the Company or such Restricted Subsidiary of notice
of such acceleration); (vi) the failure to pay at final stated maturity (giving
effect to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company
or any Restricted Subsidiary of the Company and such failure continues for a
period of 10 days or more, or the acceleration of the final stated maturity of
any such Indebtedness (which acceleration is not rescinded, annulled or
otherwise cured within 10 days of receipt by the Company or such Restricted
Subsidiary of notice of any such acceleration) if the aggregate principal amount
of such Indebtedness, together with the principal amount of any other such
Indebtedness, in default for failure to pay principal at final maturity or which
has been accelerated, in each case with respect to which the 10-day period
described above has passed, aggregates $10.0 million or more at any time; (vii)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments rendered against them (other than judgment liens without recourse to
any assets or property of the Company or any of its Restricted Subsidiaries
other than assets or property securing Non-Recourse Indebtedness) aggregating in
excess of $10.0 million, which judgments are not paid, discharged or stayed for
a period of 60 days (other than any judgments as to which a reputable insurance
company has accepted full liability); (viii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in a judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor (or its successors or assigns), or any Person acting on
behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm
its obligations or shall fail to comply with any obligations under its
Subsidiary Guarantee; and (ix) certain events of bankruptcy or insolvency with
respect to the Company, any Guarantor or any of the Company's Subsidiaries that
would constitute a Significant Subsidiary or any group of the Company's
Subsidiaries that, taken together, would constitute a Significant Subsidiary. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes by written notice to
the Company and the Trustee may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any of its Subsidiaries that would constitute a Significant Subsidiary
or any group of its Subsidiaries that, taken together, would constitute a
Significant Subsidiary or any Guarantor, all outstanding Notes will become due
and payable without further action or notice. Under certain circumstances, the
Holders of a majority in principal amount of the outstanding
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<PAGE>
Notes may rescind any acceleration with respect to the Notes and its
consequences. Holders of the Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power.
13. GUARANTEES OF NOTES. Payment of principal, premium, if
any, and interest and Liquidated Damages, if any, (including interest on overdue
principal and overdue interest, if lawful) on the Notes will be unconditionally
guaranteed by the Guarantors, if any, pursuant to, and subject to the terms of,
Article 11 of the Indenture.
14. SECURITY. The Notes will be unsecured obligations of the
Company, ranking subordinate in right of payment to all Senior Debt of the
Company.
15. NO RECOURSE AGAINST OTHERS. No director, officer,
employee, incorporator or stockholder shall have any liability for any
obligations of the Company or any Guarantor under the Notes, any Subsidiary
Guarantee or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder of the Notes by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver and release may not be
effective to waive or release liabilities under the federal securities laws.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. [SERIES C NOTES] REGISTRATION RIGHTS. Pursuant to the
Registration Rights Agreement (as defined in the Indenture), and subject to
certain terms and conditions stated therein, the Company will be obligated to
consummate an Exchange Offer pursuant to which the Holders of the Notes shall
have the right to exchange this Note for Exchange Notes, which have been
registered under the Securities Act, in like principal amount and having terms
identical in all material respect to the Note. In certain circumstances, and
subject to certain terms and conditions, Holders of the Notes shall have the
right to receive liquidated damages if the Company shall have failed to fulfill
its obligations under the Registration Rights Agreement.
A-7
<PAGE>
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
MeriStar Hospitality Corporation
1010 Wisconsin Avenue, N.W.
Suite 650
Washington, D.C. 20007
Attention: John Emery,
Chief Financial Officer
Telecopier No.: (202) 965-4445
A-8
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or
(we) assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: _____________________________
Your Signature: _______________________________
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:* _________________________
- --------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state
the amount you elect to have purchased: $___________
Date: Your Signature:
(Sign exactly as your name appears on
the Note)
Tax Identification No:____________
Signature Guarantee:*/____________
- --------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-10
<PAGE>
Transfer and Exchange
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by SEC of
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) March 18, 2001, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
Check One
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) ___ to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act)
that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which
letter can be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act; or
(6) ___ pursuant to an effective registration statement under the
Securities Act; or
(7) ___ pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: ___________ Signed:_________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:________________________________________
A-11
<PAGE>
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ___________________ Signed:_________________________
NOTICE: To be executed
by an executive officer
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES
The following exchanges of a part of this Global Note for
Certificated Notes have been made:
<TABLE>
<CAPTION>
Amount of decrease Principal Amount
in Amount of increase of this Global Note Signature of
Principal in Principal following such authorized officer
Amount of Amount of this decrease of Trustee or Note
Date of Exchange this Global Note Global Note (or increase) Custodian
- ---------------- ------------------ ----------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A-13
<PAGE>
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE
This "Supplemental Indenture", dated as of ________, between
_________________ (the "Guarantor"), a subsidiary of MeriStar Hospitality
Corporation, a Maryland corporation (the Company), and IBJ Whitehall Bank &
Trust Company, as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company, a Maryland corporation, has heretofore
executed and delivered to the Trustee an indenture (the "Indenture"), dated as
of March 18, 1999, providing for the issuance of up to an aggregate principal
amount of $55,000,000 of _____% Senior Subordinated Notes due ____ (the
"Notes");
WHEREAS, Section 4.15 of the Indenture provides that under
certain circumstances the Company is required to cause the Guarantor to execute
and deliver to the Trustee a supplemental indenture pursuant to which the
Guarantor shall unconditionally guarantee all of the Company's Obligations under
the Notes pursuant to a Guarantee on the terms and conditions set forth herein;
and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee
is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guarantor and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee the Company's
obligations under the Notes on the terms and subject to the conditions set forth
in Article 11 of the Indenture and to be bound by all other applicable
provisions of the Indenture and to be bound by all other applicable provisions
of the Indenture. The obligations of the Guarantor hereunder shall be junior and
subordinated to the Senior Debt of such Guarantor in the manner and to the
extent set forth in Article 11 of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, incorporator, shareholder or agent of the
Guarantor, as such, shall have any liability for any obligations of the Company
or any Guarantor under the Notes, any Guarantees, the Indenture or this
Supplemental Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of the Notes by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver or release may not be
effective to waive or release liabilities under the federal securities laws.
B-1
<PAGE>
4. NEW YORK LAW TO GOVERN. The internal law of the State of
New York shall govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated:____________, ____
[Guarantor]
By: ____________________________
Name:
Title:
IBJ Whitehall Bank & Trust Company,
as Trustee
By: _____________________________
Name:
Title:
B-2
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
IBJ Whitehall Bank & Trust Company
1 State Street
New York, NY 10004
Attention: Corporate Trust Department
Re: MeriStar Hospitality Corporation
_____% Senior Subordinated Notes due ____
Ladies and Gentlemen:
In connection with our proposed purchase of _____% Senior
Subordinated Notes due ____ (the "Notes") of MeriStar Hospitality Corporation
(the "Company"), we confirm that:
1. We have received a copy of the Final Memorandum (the "Final
Memorandum"), dated ______ __, 1999 relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages A-1 and
A-2 of the Final Memorandum and in the section entitled "Notice to Investors" of
the Final Memorandum including the restrictions on duplication and circulation
of the Final Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (as described in the Final Memorandum) and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes prior to the date
which is three years after the original issuance of the Notes, we will do so
only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), (iii)
inside the United States to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to the Trustee (as defined in the Indenture relating to
the Notes), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes, (iv) outside the United
States in accordance with Rule 904 of Regulation S under the Securities Act, (v)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (vi) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
C-1
<PAGE>
4. We are not acquiring the Notes for or on behalf of, and
will not transfer the Notes to, any pension or welfare plan (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Notice to Investors" of the Final Memorandum.
5. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereto to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:___________________________
Name:
C-2
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
IBJ Whitehall Bank & Trust Company
1 State Street
New York, New York
Attention: Corporate Trust Department
Re: MeriStar Hospitality Corporation
(the Company) _____% Senior Subordinated Notes due ____
(the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $____________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
1. the offer of the Notes was not made to a Person in the
United States;
2. either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
3. no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
4. the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
5. we have advised the transferee of the transfer restrictions
applicable to the Notes.
D-1
<PAGE>
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
By:_________________________________
Authorized Signature
D-2
<PAGE>
Exhibit 4.4
FORM OF EXCHANGE NOTE
(Face of Note)
____% [Series C] [Series D] Senior Subordinated Note due 2007
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR THE PURPOSES
OF SECTIONS 1271-1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE
ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY
OF THE NOTES MAY BE OBTAINED BY CONTACTING THE ISSUER=S INVESTOR RELATIONS
DEPARTMENT, TELEPHONE NO. (202) 295-1000.
No. $___________
MERISTAR HOSPITALITY CORPORATION
promises to pay to _____________, or registered assigns, the
principal sum of __________________ Dollars on __________, ____.
Interest Payment Dates: ________ __ and ______ __
Record Dates: ________ __ and ______ __
Dated:
MERISTAR HOSPITALITY CORPORATION
By:
--------------------------------
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the [Global] Notes
referred to in the within-
mentioned Indenture:
IBJ Whitehall Bank & Trust Company,
as Trustee
By:
--------------------------------
Authorized Signatory
A-1
<PAGE>
(Back of Note)
_____% [Series C] [Series D] Senior Subordinated Note due 2007
of
MeriStar Hospitality Corporation
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF A SUCCESSOR DEPOSITARY OR ANY
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
A-2
<PAGE>
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST. MeriStar Hospitality Corporation, a Maryland
corporation (the "Company"), promises to pay interest on the principal amount of
this _____% [Series C] [Series D] Senior Subordinated Note due ____ (the "Note")
at the rate and in the manner specified below.
The Company shall pay interest on the principal amount of this
Note in cash at the rate per annum shown above and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually on each ________ __ and ______ __ commencing
________ __, 199_, or if any such day is not a Business Day (as defined in the
Indenture referred to below), on the next succeeding Business Day (each an
"Interest Payment Date").
Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months for the actual number of days elapsed.
Interest shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of the original issuance of this
Note. To the extent lawful, the Company shall pay interest on overdue principal
and premium at the rate of 1% per annum in excess of the then applicable
interest rate on this Note; it shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the same rate to
the extent lawful.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Notes at the close of business on the _________
and _________ next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any, and
interest and Liquidated Damages, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders at their addresses set forth in
the register of Holders; provided that payment by wire transfer of immediately
available funds will be required with respect to principal and premium, if any,
and interest and Liquidated Damages, if any, on all Global Notes and all other
Notes the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Whitehall Bank &
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may
A-3
<PAGE>
change any Paying Agent or Registrar without notice to any Holder. The Company,
any Guarantor or any other of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of March 18, 1999 (the "Indenture") between the Company, as issuer, and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes.
5. OPTIONAL REDEMPTION. Subject to the last paragraph of this
Section 5, on or after ______ __, ____, the Company may redeem all or any
portion of the Notes, at any time upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on ______ __ of the years indicated below:
Year Percentage
- ---- ----------
2002............................................................._______%
2003............................................................._______%
2004............................................................._______%
2005 and thereafter.............................................._______%
Notwithstanding the foregoing, but subject to the last
paragraph of this Section 5, prior to ______ __, 2000, the Company may redeem,
on any one or more occasions, with the net cash proceeds of one or more public
offerings of its common equity (a "Public Equity Offering") (within 60 days of
the consummation of any such Public Equity Offering), up to 35% of the aggregate
principal amount of the Notes originally issued at a redemption price equal to
_______% of the principal amount of such Notes plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the redemption date; provided,
however, that at least 65% of the aggregate principal amount of Notes originally
issued remains outstanding immediately after any such redemption.
In addition but subject to the last paragraph of this Section
5, the Company, at its option, at any time prior to ______ ____, may redeem the
Notes, in whole or in part (if in part, by lot or such other method as the
Trustee shall deem fair or appropriate) at the Make-Whole Price, plus accrued
and unpaid interest and Liquidated Damages, if any, to the date of purchase.
No optional redemption shall be made under this Section 5
unless the Company makes a redemption of the Existing Notes (as defined in the
Indenture) pursuant to the Original Indenture (as defined in the Indenture), pro
rata among the Notes and the Existing Notes.
6. OFFERS TO PURCHASE. Subject to the Company's obligation to
make an offer to purchase Notes in connection with Asset Sales and a Change of
Control (as described in the Indenture), the Company has no mandatory redemption
or sinking fund obligations with respect to the Notes. Notice of any such offer
to purchase will be given as provided in the Indenture. Holders of Notes that
are the subject of an offer to purchase may elect to have such Notes purchased
by completing the form entitled
A-4
<PAGE>
"Option of Holder to Elect Purchase" appearing below and taking certain other
actions, all as set forth in the Indenture.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
8. SUBORDINATION. The Notes and the Subsidiary Guarantees, if
any, are subordinated to Senior Debt, as defined in the Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the Notes and the
Subsidiary Guarantees may be paid. The Company agrees, and each Holder by
accepting a Note and any Subsidiary Guarantee agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 of principal amount. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Company and the Registrar shall not be
required to issue, exchange or register the Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.2 of the Indenture and ending at the close of
business on the day of selection, or to exchange or register any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part, or to exchange or register a Note between a
record date and the next succeeding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing Default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the Notes then outstanding. The Change of
Control and Asset Sale purchase features of the Notes may not be amended or
waived without the consent of at least 66 2/3% in principal amount of the Notes
then outstanding. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to comply with Section 5.1, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes under the Indenture or any
Guarantor's Obligations under its Subsidiary Guarantee in the case of a merger,
consolidation or sale of assets involving the Company or such Guarantor, as
applicable, pursuant to Article 5 or Article 11 of the Indenture, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes (including providing for Subsidiary Guarantees and any supplemental
indenture required pursuant to Section 4.15 of the Indenture) or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA and to release a Guarantor in
accordance with the Indenture.
A-5
<PAGE>
12. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest or Liquidated Damages,
if any, on the Notes (whether or not such payment shall be prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes at maturity, upon redemption
or otherwise (including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or an Assets Sale Offer) (whether or not
such payment shall be prohibited by the subordination provisions of the
Indenture); (iii) failure by the Company or any Restricted Subsidiary to comply
with Section 5.1 of the Indenture; (iv) failure by the Company or any Guarantor
for 60 days in the performance of any other covenant, warranty or agreement in
the Indenture or the Notes after written notice shall have been given to the
Company by the Trustee or to the Company and the Trustee from Holders of at
least 25% in principal amount of the Notes then outstanding; (v) the failure to
pay at final stated maturity (giving effect to any applicable grace periods and
any extensions thereof) the principal amount of Non-Recourse Indebtedness of the
Company or any of its Restricted Subsidiaries with an aggregate principal amount
in excess of the lesser of (A) 10% of the total assets of the Company and its
Restricted Subsidiaries measured as of the end of the Company's most recent
fiscal quarter for which internal financial statements are available immediately
prior to the date on which such default occurred, determined on a pro forma
basis and (B) $50 million, and such failure continues for a period of 10 days or
more, or the acceleration of the final stated maturity of any such Non-Recourse
Indebtedness (which acceleration is not rescinded, annulled or otherwise cured
within 10 days of receipt by the Company or such Restricted Subsidiary of notice
of such acceleration); (vi) the failure to pay at final stated maturity (giving
effect to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company
or any Restricted Subsidiary of the Company and such failure continues for a
period of 10 days or more, or the acceleration of the final stated maturity of
any such Indebtedness (which acceleration is not rescinded, annulled or
otherwise cured within 10 days of receipt by the Company or such Restricted
Subsidiary of notice of any such acceleration) if the aggregate principal amount
of such Indebtedness, together with the principal amount of any other such
Indebtedness, in default for failure to pay principal at final maturity or which
has been accelerated, in each case with respect to which the 10-day period
described above has passed, aggregates $10.0 million or more at any time; (vii)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments rendered against them (other than judgment liens without recourse to
any assets or property of the Company or any of its Restricted Subsidiaries
other than assets or property securing Non-Recourse Indebtedness) aggregating in
excess of $10.0 million, which judgments are not paid, discharged or stayed for
a period of 60 days (other than any judgments as to which a reputable insurance
company has accepted full liability); (viii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in a judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor (or its successors or assigns), or any Person acting on
behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm
its obligations or shall fail to comply with any obligations under its
Subsidiary Guarantee; and (ix) certain events of bankruptcy or insolvency with
respect to the Company, any Guarantor or any of the Company's Subsidiaries that
would constitute a Significant Subsidiary or any group of the Company's
Subsidiaries that, taken together, would constitute a Significant Subsidiary. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes by written notice to
the Company and the Trustee may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any of its Subsidiaries that would constitute a Significant Subsidiary
or any group of its Subsidiaries that, taken together, would constitute a
Significant Subsidiary or any Guarantor, all outstanding Notes will become due
and payable without further action or notice. Under certain circumstances, the
Holders of a majority in principal amount of the outstanding
A-6
<PAGE>
Notes may rescind any acceleration with respect to the Notes and its
consequences. Holders of the Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power.
13. GUARANTEES OF NOTES. Payment of principal, premium, if
any, and interest and Liquidated Damages, if any, (including interest on overdue
principal and overdue interest, if lawful) on the Notes will be unconditionally
guaranteed by the Guarantors, if any, pursuant to, and subject to the terms of,
Article 11 of the Indenture.
14. SECURITY. The Notes will be unsecured obligations of the
Company, ranking subordinate in right of payment to all Senior Debt of the
Company.
15. NO RECOURSE AGAINST OTHERS. No director, officer,
employee, incorporator or stockholder shall have any liability for any
obligations of the Company or any Guarantor under the Notes, any Subsidiary
Guarantee or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder of the Notes by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver and release may not be
effective to waive or release liabilities under the federal securities laws.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. [SERIES C NOTES] REGISTRATION RIGHTS. Pursuant to the
Registration Rights Agreement (as defined in the Indenture), and subject to
certain terms and conditions stated therein, the Company will be obligated to
consummate an Exchange Offer pursuant to which the Holders of the Notes shall
have the right to exchange this Note for Exchange Notes, which have been
registered under the Securities Act, in like principal amount and having terms
identical in all material respect to the Note. In certain circumstances, and
subject to certain terms and conditions, Holders of the Notes shall have the
right to receive liquidated damages if the Company shall have failed to fulfill
its obligations under the Registration Rights Agreement.
A-7
<PAGE>
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
MeriStar Hospitality Corporation
1010 Wisconsin Avenue, N.W.
Suite 650
Washington, D.C. 20007
Attention: John Emery,
Chief Financial Officer
Telecopier No.: (202) 965-4445
A-8
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or
(we) assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: _____________________________
Your Signature: _______________________________
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:* _________________________
- --------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state
the amount you elect to have purchased: $___________
Date: Your Signature:
(Sign exactly as your name appears on
the Note)
Tax Identification No:____________
Signature Guarantee:*/____________
- --------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES
The following exchanges of a part of this Global Note for
Certificated Notes have been made:
<TABLE>
<CAPTION>
Amount of decrease Principal Amount
in Amount of increase of this Global Note Signature of
Principal in Principal following such authorized officer
Amount of Amount of this decrease of Trustee or Note
Date of Exchange this Global Note Global Note (or increase) Custodian
- ---------------- ------------------ ----------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A-11
<PAGE>
Exhibit 5.1
[Letterhead of Paul, Weiss, Rifkind, Wharton & Garrison]
May __, 1999
MeriStar Hospitality Corporation
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
MeriStar Hospitality Corporation
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
In connection with the referenced Registration Statement on
Form S-4 (the "Registration Statement") filed by MeriStar Hospitality
Corporation, a Maryland corporation (the "Company"), with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations under it, we have been requested to
furnish our opinion as to the legality of the securities being registered under
the Registration Statement. The Registration Statement relates to the
registration under the Act of the Company's 8 3/4% Senior
<PAGE>
MeriStar Hospitality Corporation
2
Subordinated Notes due 2007 (the "Exchange Notes"). The Exchange Notes are to
be offered in exchange for the Company's outstanding 8 3/4% Senior Subordinated
Notes due 2007 (the "Initial Notes"). The Exchange Notes will be issued by the
Company under the terms of the Indenture (the "Indenture"), dated as of March
18, 1999, between the Company and IBJ Whitehall Bank & Trust Company, as
trustee (the "Trustee"). Capitalized terms used in this letter and not
otherwise defined shall have the respective meanings given to those terms in
the Registration Statement.
In connection with this opinion, we have examined originals,
conformed copies or photocopies, certified or otherwise identified to our
satisfaction, of the following documents:
(i) the Registration Statement (including the related
exhibits);
(ii) the Indenture included as Exhibit 4.2 to the
Registration Statement; and
(iii) the proposed form of the Exchange Notes included as
Exhibit 4.4 to the Registration Statement.
In addition, we have examined (i) those corporate records of
the Company as we have considered appropriate, including a copy of the amended
and restated articles of incorporation and second restated by-laws of the
Company, each as amended to date, and copies of minutes and resolutions of the
board of directors of the Company, each certified by an officer of the Company;
and (ii) those other
<PAGE>
MeriStar Hospitality Corporation
3
certificates, agreements and documents as we deemed relevant and necessary as
a basis for the opinions expressed below.
In our examination of the above documents and in rendering
the opinions set forth below, we have assumed, without independent
investigation, (i) the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as certified, photostatic,
reproduced or conformed copies of validly existing agreements or other
documents, the authenticity of all latter documents and the legal capacity of
all individuals who have executed any of the documents which we examined, (ii)
the Exchange Notes will be issued in accordance with the Indenture as described
in the Registration Statement, (iii) the Indenture was duly authorized,
executed and delivered by the Trustee, (iv) the Indenture represents a valid
and binding obligation of the Trustee, (v) the Exchange Notes will be duly
authorized, executed and delivered by the Company and (vi) the Exchange Notes
will be duly authenticated by the Trustee in accordance with the terms of the
Indenture. We have relied (without independent investigation) upon the factual
matters contained in the representations and warranties of the Company made in
the documents and upon certificates of public officials and officers of the
Company.
Based on the foregoing, and subject to the stated
assumptions, exceptions and qualifications, we are of the opinion that:
<PAGE>
MeriStar Hospitality Corporation
4
1. The Indenture represents a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, liquidation, moratorium or other
similar laws affecting the rights and remedies of creditors generally and
except as may be subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
2. When issued, authenticated and delivered in accordance
with the terms of the Indenture, the Exchange Notes will be legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization,
liquidation, moratorium or other similar laws affecting the rights and remedies
of creditors generally and except as may be subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
Our opinions expressed above are limited to the laws of the
State of New York and the Federal laws of the United States. Our opinions are
rendered only with respect to the laws, and the rules, regulations and orders
under them, that are currently in effect. Please be advised that, with respect
to the law of Maryland, we
<PAGE>
MeriStar Hospitality Corporation
5
are relying solely upon the opinion of Ballard Spahr Andrews & Ingersoll, LLP,
dated the date of this letter.
We hereby consent to the use of our name in the Registration
Statement and in the prospectus in the Registration Statement as it appears in
the caption "Legal Matters" and to the use of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose consent is required by the Act or by the
rules and regulations under it.
Very truly yours,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
Exhibit 8.1
(212) 373-3000
May _, 1999
MeriStar Hospitality Corporation
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
Re: MeriStar Hospitality Corporation
$55,000,000 8 3/4% Senior
Subordinated Notes Due 2007
--------------------------------
Dear Sir or Madam:
We have acted as special United States tax counsel for
MeriStar Hospitality Corporation (the "Company") in connection with the offer to
exchange $55,000,000 aggregate principal amount of the Company's 8 3/4% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), which have been registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), for a like aggregate principal amount of outstanding 8 3/4% Senior
Subordinated Notes due 2007 (the "Exchange Offer").
We are giving this opinion in connection with the Registration
Statement on Form S-4, as amended (the "Registration Statement"), relating to
the registration by the Company of the Exchange Notes to be offered in the
Exchange Offer, filed by the Company with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Act and the rules and regulations
of the Commission promulgated thereunder.
In rendering our opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of such
agreements and other documents as we have deemed relevant and
<PAGE>
MeriStar Hospitality Corporation 2
necessary and we have made such investigations of law as we have deemed
appropriate as a basis for the opinion expressed below. In our examination, we
have assumed the authenticity of original documents, the accuracy of copies and
the genuineness of signatures. We understand and assume that (i) each such
agreement represents the valid and binding obligation of the respective parties
thereto, enforceable in accordance with its respective terms and the entire
agreement between the parties with respect to the subject matter thereof, (ii)
the parties to each agreement have complied, and will comply, with all of their
respective covenants, agreements and undertakings contained therein and (iii)
the transactions provided for by each agreement were and will be carried out in
accordance with their terms.
Our opinion is based upon existing United States federal
income and estate tax laws, regulations, administrative pronouncements and
judicial decisions. All such authorities are subject to change, either
prospectively or retroactively, and any such change could affect our opinion.
The opinion set forth herein has no binding effect on the
United States Internal Revenue Service or the courts of the United States. No
assurance can be given that, if the matter were contested, a court would agree
with the opinion set forth herein.
We hereby confirm the opinion set forth under the caption
"Certain United States Federal Tax Considerations" in the Registration
Statement. While such description discusses the material anticipated United
States federal income tax consequences applicable to certain holders of Exchange
Notes, it does not purport to discuss all United States federal income tax
considerations and our opinion is limited to those United States federal income
tax considerations specifically discussed therein.
In giving the foregoing opinion, we express no opinion other
than as to the federal income tax laws of the United States of America.
We are furnishing this letter in our capacity as special
United States tax counsel to the Company. This letter is not to be used,
circulated, quoted or otherwise referred to for any other purpose, except as set
forth below.
We hereby consent to the filing of this opinion as Exhibit 8.1
to the Registration Statement and we further consent to the use of our name
under the MeriStar Hospitality Corporation 3 caption "Certain United States
Federal Tax Considerations" in the Registration Statement. The issuance of such
a consent does not concede that we are an "expert" for purposes of the
Securities Act.
Very truly yours,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
MeriStar Hospitality Corporation 3
Prepared by:_____________________________
Reviewed by:____________________________
Signed by:_______________________________
<PAGE>
Exhibit 10.1
$55,000,000
MERISTAR HOSPITALITY CORPORATION
8 3/4% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
March 11, 1999
Lehman Brothers Inc.
Bear, Stearns &Co. Inc.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
MeriStar Hospitality Corporation, a Maryland corporation (the
"Company"), proposes to sell to you (the "Initial Purchasers") $55,000,000
principal amount of 8 3/4% Senior Subordinated Notes due 2007 (the "Notes"). The
Notes will be issued pursuant to an Indenture to be dated as of March 18, 1999
(the "Indenture"), between the Company and IBJ Schroder Bank & Trust Company, as
trustee (the "Trustee"). This is to confirm the agreement concerning the
purchase of the Notes from the Company by the Initial Purchasers.
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom.
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and
will prepare a final offering memorandum (the "Memorandum") setting forth or
including a description of the terms of the Notes, the terms of the offering, a
description of the Company and any material developments relating to the Company
occurring after the date of the most recent financial statements included
therein.
1. Representations, Warranties and Agreements of the Company. The Company
represents and warrants to, and agrees with the Initial Purchasers that as of
the date hereof:
(a) The Memorandum at the date hereof, does not, and at the Closing
Date, will not, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section
1(a) do not apply to statements or omissions in the Memorandum based upon
information furnished to the Company in writing by or on behalf of the
Initial Purchasers expressly for use therein. Reference herein to the
Memorandum shall be deemed to refer to and include the
<PAGE>
2
1998 Form 10-K and any other document filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which is
incorporated in the Memorandum by reference.
(b) It is not required by applicable law or regulation in connection
with the offer, sale and delivery of the Notes to you in the manner
contemplated by this Agreement to register the Notes under the Securities
Act or to qualify the Indenture in respect of the Notes under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(c) The Company and each of its Significant Subsidiaries (as defined
in Section 14) have been duly organized and are validly existing and in
good standing under the laws of their respective jurisdictions of
organization, are duly qualified to do business and are in good standing in
each jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such qualification,
save where the failure to be so qualified would not reasonably be expected
to have a material adverse effect on the business or property of the
Company and its subsidiaries taken as a whole, and each has all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged.
(d) The Company has an authorized capitalization as set forth in the
1998 Form 10-K, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; all of the issued shares of capital stock, partnership
interests or limited liability membership interests, as the case may, be of
each Significant Subsidiary of the Company have been duly and validly
authorized and issued and (except for partnership interests of general
partners and except to the extent the limited liability company agreements
governing the respective limited liability companies provide otherwise) are
fully paid and non-assessable and (except for partnership interests in
MeriStar Hospitality Operating Partnership, L.P. owned by third parties)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(e) The Indenture has been duly authorized and, when duly executed and
delivered by the proper officers of the Company (assuming due execution and
delivery by the Trustee) and delivered by the Company, will constitute a
valid and legally binding agreement of the Company enforceable against the
Company in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization, liquidation, moratorium or other similar laws affecting the
rights and remedies of creditors generally and except as may be subject to
general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
(f) This Agreement has been duly authorized, executed and delivered by
the Company and the Registration Rights Agreement has been duly authorized
and
<PAGE>
3
will be duly delivered and executed by the Company. Upon due execution
and delivery of the Registration Rights Agreement by the Company, the
Registration Rights Agreement will constitute a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, liquidation,
moratorium or other similar laws affecting the rights and remedies of
creditors generally and except as may be subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and except as rights to indemnity and contribution
thereunder may be limited by applicable law and public policy.
(g) Except where it would not reasonably be expected to have a
material adverse effect on the consolidated financial position,
stockholder's equity, results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, (i) the execution, delivery
and performance of this Agreement, the Registration Rights Agreement, the
Indenture and the Notes, and the consummation by the Company of the
transactions contemplated herein (the "Transactions") will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
of its Significant Subsidiaries is a party or by which the Company or any
of its Significant Subsidiaries is bound or to which any of the properties
or assets of the Company or any of its Significant Subsidiaries is subject,
(ii) nor will such actions result in any violation of the provisions of the
charter or by-laws or the limited partnership agreement or other
constituent document of the Company or any of its Significant Subsidiaries
or any statute or order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, any of its Significant
Subsidiaries or any of their properties or assets; and (iii) except for
such consents, approvals, authorizations, registrations or qualifications
as may be required under applicable state securities laws in connection
with the purchase and distribution of the Notes by the Initial Purchasers,
and except for registration of the Exchange Offer (as defined in the
Registration Rights Agreement) under the Securities Act and applicable
state securities laws, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body
is required for the Transactions.
(h) Neither the Company nor any of its Significant Subsidiaries has
sustained, since the date of the latest financial statements included or
incorporated by reference in the Memorandum, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Memorandum; and, since such date, there has not been
any change in the capital stock or long-term debt of the Company or any of
its Significant Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management financial position, stockholders'
equity or results of operations of the
<PAGE>
4
Company and its subsidiaries taken as a whole, otherwise than as set forth
or contemplated in the Memorandum.
(i) The financial statements (including the related notes and
supporting schedules) included in the Memorandum present fairly the
financial condition and results of operations of the entities purported to
be shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved.
(j) KPMG LLP, who have certified certain financial statements of the
Company, whose report is included in the Memorandum and who have delivered
the initial letter referred to in Section 7(d) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations during the periods covered by the financial statements on which
they reported contained in the Memorandum.
(k) There are no legal or governmental proceedings pending to which
the Company or any of its Significant Subsidiaries is a party or of which
any property or asset of the Company or any of its Significant Subsidiaries
is the subject which, if determined adversely to the Company or any of its
subsidiaries, could be expected to have a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries taken
as a whole; and to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others that is required to be disclosed in the Memorandum which is not so
disclosed.
(l) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be disclosed in the Memorandum which is not so disclosed.
(m) (i) Since the date as of which information is given in the
Memorandum through the date hereof, and except as may otherwise be
disclosed in the Memorandum, the Company has not issued or granted any
securities, other than in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or
more employees, officers, directors or consultants, or in connection with a
dividend reinvestment or stock purchase plan, incurred any liability or
obligation, direct or contingent, other than liabilities and obligations
which were incurred in the ordinary course of business or entered into any
transaction not in the ordinary course of business and (ii) since the date
of the Memorandum the Company has not declared or paid any dividend on its
capital stock.
<PAGE>
5
(n) Neither the Company nor any of its Significant Subsidiaries (i) is
in violation of its charter or by-laws or limited partnership agreement or
other constituent document, (ii) is in default in any material respect, and
no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties or
assets is subject except where it would not reasonably be expected to have
a material adverse effect on the consolidated financial position,
stockholder's equity, results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, or (iii) is in violation in
any material respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its properties or assets may be subject or
has failed to obtain any material license, permit, certificate, franchise
or other governmental authorization or permit necessary to the ownership of
its properties or assets or to the conduct of its business except where it
would not reasonably be expected to have a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries taken
as a whole.
(o) Neither the Company nor any Significant Subsidiary is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder.
(p) Neither the Company nor any of its affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the sale
of the Notes in a manner that would require the registration under the
Securities Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of the
Notes (as those terms are used in Regulation D under the Securities Act),
or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(q) The execution and delivery of the Notes and the Exchange Notes (as
defined in the Memorandum) have been duly authorized by all necessary
corporate action of the Company, and the Notes and the Exchange Notes, when
executed and authenticated in accordance with the provisions of the
Indenture and paid for in accordance with the Purchase Agreement, will
constitute the valid, binding and enforceable obligations of the Company,
entitled to the benefits of the Indenture, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization, liquidation, moratorium or other similar laws
affecting the rights and remedies of creditors generally and except as may
be subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
<PAGE>
6
(r) The Company (including American General Hospitality Corporation as
predecessor to the Company for all periods through the date of the merger
of CapStar Hotel Company into American General Hospitality Corporation but
excluding CapStar Hotel Company for any periods on or prior to the date of
such merger) is organized and has conducted its business and operations for
each of its taxable years ended December 31, 1996, December 31, 1997 and
December 31, 1998 in conformity with the requirements for qualification as
a real estate investment trust (a "REIT") under the Internal Revenue Code
of 1986, as amended (the "Code"), and commencing with its taxable year
ending December 31, 1999, the Company is organized and has conducted its
business and operations in conformity with the requirements for
qualification as a REIT under the Code and its proposed method of operation
will enable it to continue to meet the requirements for taxation as a REIT
under the Code.
2. Purchase of the Notes by the Initial Purchasers. (a) On the basis of
the representations and warranties herein contained, and subject to the terms
and conditions herein set forth, the Company agrees to sell to the several
Initial Purchasers and each of the Initial Purchasers, severally and not
jointly, agrees to purchase from the Company, the respective principal amount of
the Notes set forth opposite such Initial Purchaser's name below at a purchase
price equal to 93.125% of the principal amount of such Notes:
Initial Purchaser Principal Amount of the Notes
----------------- -----------------------------
Lehman Brothers Inc. $49,500,000
Bear, Stearns & Co. Inc. 5,500,000
-----------
Total $55,000,000
===========
(b) The Company shall not be obligated to deliver any of the
Notes, except upon payment for all of the Notes to be purchased as hereinafter
provided.
3. Sale and Resale of the Notes by the Initial Purchasers. (a) You have
advised the Company that you severally, and not jointly, propose to offer the
Notes for resale upon the terms and conditions set forth in this Agreement and
in the Memorandum. Each Initial Purchaser hereby represents and warrants to, and
agrees with, the Company that it (i) is purchasing the Notes pursuant to a
private sale exempt from registration under the Securities Act, (ii) will not
solicit offers for, or offer or sell, the Notes by means of any form of general
solicitation or general advertising or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act, and (iii) will solicit
offers for the Notes only from, and will offer, sell or deliver the Notes, as
part of their initial offering, only to (A) in the case of offers inside the
United States, (1) persons whom such Initial Purchaser reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
Rule 144A under the Securities Act, as such rule may be amended from time to
time ("Rule 144A") or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to such Initial Purchaser that each such
account is a Qualified Institutional Buyer, to whom notice has been
<PAGE>
7
given that such sale or delivery is being made in reliance on Rule 144A or (2)
institutional accredited investors ("Accredited Investors") as defined in Rule
501(a)(1), (2), (3) or (7) under Regulation D who execute letters of
representation in the form included as Appendix A to the Memorandum in private
sales exempt from registration under the Securities Act and (B) in the case of
offers outside the United States, to persons other than U.S. persons (as defined
in Regulation S) in accordance with Rule 903 of Regulation S.
(b) In connection with the transactions described in
subsection (a)(iii)(B) of this Section 3, each Initial Purchaser has offered and
sold the Notes, and will offer and sell the Notes, (i) as part of such Initial
Purchaser's distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering and the Closing Date (the "Restricted
Period"), only in accordance with Rule 903 of Regulation S. Accordingly, each
Initial Purchaser represents and agrees that, with respect to the transactions
described in subsection (a)(iii)(B) of this Section 3, neither it, nor any of
its Affiliates, nor any person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Notes, and that it
and they have complied and will comply with the offering restrictions
requirements of Regulation S. Each Initial Purchaser agrees that, at or prior to
the confirmation of sale of the Notes pursuant to subsection (a)(iii)(B) of this
Section 3, it shall have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from such
Initial Purchaser during the Restricted Period a confirmation or notice to
substantially the following effect:
"THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S.
PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL 40
DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND THE TIME OF
DELIVERY OF THE SECURITIES, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION
S OR RULE 144A UNDER THE SECURITIES ACT. THE TERMS USED ABOVE HAVE THE MEANING
GIVEN TO THEM BY REGULATION S."
(c) (i) You have not offered or sold and, prior to the
completion of the six months from the Closing Date, will not offer or sell any
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) you have complied and will comply
with all applicable provisions of the Financial Services Act 1986 with respect
to anything done by you in relation to the Notes in, from or otherwise involving
the United Kingdom and (iii) you have only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the issuance of the Notes to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investments Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.
<PAGE>
8
4. Delivery of and Payment for the Notes. (a)Payment of the purchase
price for, and delivery of, the Notes shall be made at the offices of Simpson
Thacher & Bartlett, New York, New York or at such other place as shall be agreed
upon by the Company and you, at 9:30 a.m. (New York time), on March 18, 1999 or
at such other time or date as you and the Company shall determine (such date and
time of payment and delivery being herein called the "Closing Date").
(b) On the Closing Date, payment shall be made to the Company in
immediately available funds by wire transfer to such account or accounts as the
Company shall specify prior to the Closing Date or by such means as the parties
hereto shall agree prior to the Closing Date against delivery to you of the
certificates evidencing the Notes. Upon delivery, the Notes shall be registered
in such names and in such denominations as the Initial Purchasers shall request
in writing not less than two full business days prior to the Closing Date. For
the purpose of expediting the checking and packaging of certificates evidencing
the Notes, the Company agrees to make such certificates available for inspection
not later than 2:00 P.M. on the business day at least 24 hours prior to the
Closing Date.
5. Further Agreements of the Company. The Company further agrees:
(a) To furnish to you, without charge, during the period referred
to in paragraph (c) below, as many copies of the Memorandum and any
supplements and amendments thereto as you may reasonably request.
(b) Prior to making any amendment or supplement to the
Memorandum other than by filing documents under the Exchange Act which
are incorporated by reference therein, the Company shall furnish a
copy thereof to the Initial Purchasers and counsel to the Initial
Purchasers and will not effect any such amendment or supplement to
which the Initial Purchasers shall reasonably object by notice to the
Company after a reasonable period to review, which shall not in any
case be longer than three business days after receipt of such copy.
(c) If, at any time prior to completion of the distribution of
the Notes by you to purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel
for you or counsel for the Company, to amend or supplement the
Memorandum in order that the Memorandum will not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in
light of the circumstances existing at the time it is delivered to a
purchaser, or if it is necessary to amend or supplement the Memorandum
to comply with applicable law, to promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or
omission so that the Memorandum, as so amended or supplemented, will
comply with applicable law and to furnish you such number of copies as
you may reasonably request.
(d) So long as the Notes are outstanding and are "Restricted
Securities" within the meaning of Rule 144(a)(3) under the Securities
Act during any period in
<PAGE>
9
which it is not subject to and in compliance with Section 13 or 15(d)
of the Exchange Act, to furnish to holders of the Notes and
prospective purchasers of Notes designated by such holders, upon
request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.
(e) For a period of five years following the date of the
Memorandum, to furnish to the Initial Purchasers copies of all
materials furnished by the Company to its shareholders and all public
reports and all reports and financial statements furnished by the
Company to the principal national securities exchange upon which the
Notes may be listed pursuant to requirements of or agreements with
such exchange or to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder.
(f) Promptly from time to time to take such action as the Initial
Purchasers may reasonably request to qualify the Notes for offering
and sale under the securities laws of such jurisdictions as the
Initial Purchasers may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Notes.
(g) Not to offer, sell, contract to sell or otherwise dispose of
any additional securities of the Company substantially similar to the
Notes or any securities convertible into or exchangeable for or that
represent the right to receive any such similar securities, without
the consent (which consent shall not be unreasonably withheld) of the
Initial Purchasers during the period beginning from the date of this
Agreement and continuing for 180 days following the Closing Date.
(h) To use its best efforts to permit the Notes to be designated
Private Offerings, Resales and Trading through Automated Linkages
Market ("PORTAL") securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market and to permit the Notes
to be eligible for clearance and settlement through The Depository
Trust Company (the "DTC").
(i) Except following the effectiveness of the Registration
Statement (as defined in the Registration Rights Agreement), not to,
and will cause its affiliates not to, solicit any offer to buy or
offer to sell the Notes by means of any form of general solicitation
or general advertising (as those terms are used in Regulation D under
the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(j) Not to, and will cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) in a transaction that
could be integrated with the sale of the Notes in a manner that would
require the registration under the Securities Act of the Notes.
<PAGE>
10
(k) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary of the Company shall become an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(l) Except as otherwise expressly permitted by its articles of
incorporation or by-laws, to continue to conduct its operations in a
manner that will meet the requirements to qualify as a REIT under the
Code and that will not subject it to registration as an "investment
company" under the Investment Company Act.
6. Expenses. The Company agrees to pay the costs incident to the
authorization, issuance, sale and delivery of the Notes and any taxes payable in
that connection; the costs incident to the printing or other production of the
Memorandum and any amendments or supplements thereto; the costs of distributing
the Memorandum and any amendments or supplements thereto; the fees and expenses
of qualifying the Notes under the securities laws of the several jurisdictions,
including the fees and expenses of Simpson Thacher & Bartlett, as provided in
Section 5(f); any fees charged by securities rating services for rating the
Notes; all fees and expenses, if any, incurred in connection with the admission
of such Notes for trading in PORTAL; the fees and expenses of the Trustee; and
all other costs and expenses incident to the performance of the obligations of
the Company.
7. Conditions to the Initial Purchasers' Obligations. The obligations
of the Initial Purchasers hereunder are subject to the accuracy, when made and
on the Closing Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) No Initial Purchaser shall have discovered and disclosed to
the Company on or prior to the Closing Date that the Memorandum or any
amendment or supplement thereto contains any untrue statement of a
fact which, in the opinion of Simpson Thacher & Bartlett, counsel for
the Initial Purchasers, is material or omits to state any fact which,
in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture,
the Notes, the Memorandum, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all respects to counsel for the Initial
Purchasers, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable
them to pass upon such matters.
(c) Paul, Weiss, Rifkind, Wharton & Garrison shall have furnished
to the Initial Purchasers their written opinion, as counsel to the
Company, addressed to the Initial Purchasers and dated the Closing
Date, in form and substance reasonably
<PAGE>
11
satisfactory to the Initial Purchasers, to the effect set forth in
Exhibit A hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request.
(d) You shall have received on the Closing Date a letter, dated
the date hereof and the Closing Date, as the case may be, in form and
substance satisfactory to you, from KPMG LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information, including the financial information contained or
incorporated by reference in the Memorandum as identified by you,
including, without limitation, its written opinion to the effect that
commencing with its taxable year ended December 31, 1996, the Company
has been organized and operated in a manner that has enabled it to
qualify as a REIT under Sections 856 through 860 of the Code, and that
the Company's proposed method of operation will enable it to continue
to so qualify.
(e) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of the Chairman of the Board,
President or a Vice President of the Company and the Treasurer or
Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct in all material
respects as of the Closing Date and the Company has complied with
all its agreements contained herein; and
(ii) They have carefully examined the Memorandum and, in
their opinion (A) the Memorandum, as of its date, did not include
any untrue statement of a material fact and did not omit to state
any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and (B) since the date of the Memorandum no event has
occurred which should have been set forth in a supplement or
amendment to the Memorandum.
(f)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Memorandum any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Memorandum or since such date
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as
a whole, otherwise than as set forth or contemplated in the
Memorandum, the effect of which, in any such case described in clause
(i) or (ii), is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impracticable or inadvisable to
<PAGE>
12
proceed with the offering or the delivery of the Notes on the terms
and in the manner contemplated in the Memorandum.
(g) Subsequent to the execution and delivery of this Agreement no
downgrading shall have occurred in the rating accorded the Notes by
any "nationally recognized statistical rating organization", as that
term is defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations and no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Notes.
(h) The Initial Purchasers shall have received the Registration
Rights Agreement in the form substantially identical to the
Registration Rights Agreement dated August 14, 1997 executed by the
Company.
(i) The Initial Purchasers shall have received from Simpson
Thacher & Bartlett, counsel for the Initial Purchasers, such opinion
or opinions, dated the Closing Date, with respect to such matters as
the Initial Purchasers may reasonably require, and the Company shall
have furnished to such counsel such documents and information as they
may reasonably request for the purpose of enabling them to pass upon
such matters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Initial
Purchaser, its officers and employees and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Notes), to which such Initial
Purchaser, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained (A) in the Preliminary Memorandum, the
Memorandum or in any amendment or supplement thereto, or (B) in any Blue Sky
application or other document prepared or executed by the Company (or based upon
any written information furnished by the Company) specifically for the purpose
of qualifying any or all of the Notes under the securities laws of any state or
other jurisdiction (any such application, document or information being
hereinafter called a "Blue Sky Application"), the omission or alleged omission
to state in the Preliminary Memorandum, the Memorandum or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading or
(iii) any act or failure to act, or any alleged act or failure to act, by any
Initial Purchaser in connection with, or relating in any manner to, the Notes or
the offering contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage,
<PAGE>
13
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the Company shall not be liable in the case of any
matter covered by this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such act or failure to
act undertaken or omitted to be taken by such Initial Purchaser through its
gross negligence or wilful misconduct), and shall reimburse each Initial
Purchaser and each officer, employee and controlling person promptly upon demand
for any legal or other expenses reasonably incurred by that Initial Purchaser,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Preliminary Memorandum, the Memorandum or in any such amendment or
supplement, or in any Blue Sky Application in reliance upon and in conformity
with the written information furnished to the Company by or on behalf of any
Initial Purchaser specifically for inclusion therein and described in Section
8(e) and provided further that as to the Preliminary Memorandum or Memorandum
this indemnity agreement shall not inure to the benefit of any Initial
Purchaser, its officers and employees and each person or controlling person, if
any, that on account of any loss, claim, damage, liability or action arising
from the sale of Notes to any person by that Initial Purchaser if that Initial
Purchaser failed to send or give a copy of the Memorandum, as the same may be
amended or supplemented, to that person, and the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact in the Preliminary Memorandum was corrected in the Memorandum, or
a supplement or amendment thereto, as the case may be. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise have
to any Initial Purchaser or to any officer, employee or controlling person of
that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its directors
and the Trustee, and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company, any such director or officer, or the Trustee or any controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained (A) in the
Preliminary Memorandum, the Memorandum or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or the omission or alleged omission
to state in the Preliminary Memorandum, the Memorandum or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with the written information furnished to the Company or the Trustee
by or on behalf of that Initial Purchaser specifically for inclusion therein and
described in Section 8(e), and shall reimburse the Company and any such director
or officer, or any such Trustee, or controlling person for any legal or other
expenses reasonably incurred by the Company or any such director or officer, or
any such Trustee, or any controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are
<PAGE>
14
incurred. The foregoing indemnity agreement is in addition to any liability
which any Initial Purchaser may otherwise have to the Company or any such
director or officer, or any such Trustee, or any controlling person.
(c) Promptly after receipt by an indemnified party under this Section
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section , notify the indemnifying party in writing of the claim
or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section . If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent
jointly the indemnified party and its respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified party against the
indemnifying party under this Section if, in the reasonable judgment of the
indemnified party, it is advisable for the indemnified party and those officers,
employees and controlling persons to be jointly represented by separate counsel,
and in that event the fees and expenses of such separate counsel shall be paid
by the indemnifying party. It is understood that the indemnifying party shall
not be liable for the fees and expenses of more than one separate firm (in
addition to local counsel in each jurisdiction) for all indemnified parties in
connection with any proceeding or related proceedings. Each indemnified party,
as a condition of the indemnity agreements contained in Sections 8(a) and 8(b),
shall use its best efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in
<PAGE>
15
respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to reflect
the relative benefits received by the Company on the one hand and the Initial
Purchasers on the other from the offering of the Notes or if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Initial Purchasers on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Notes
purchased under this Agreement (before deducting expenses) received by the
Company on the one hand, and the total underwriting commissions received by the
Initial Purchasers with respect to the Notes purchased under this Agreement, on
the other hand, bear to the total gross proceeds from the offering of the Notes
under this Agreement, in each case as set forth in the table on the cover page
of the Memorandum. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Initial Purchasers, on the other hand, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Notes sold and distributed by it were offered to the purchasers exceeds the
amount of any damages which such Initial Purchaser has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute as provided
in this Section 8(d) are several in proportion to their respective purchase
obligations and not joint.
(e) The Initial Purchasers severally confirm that the statements with
respect to the offering of the Notes set forth in the bottom paragraph on the
cover page of, the legend concerning stabilization and over-allotment on the
inside front cover page of, and the sixth, ninth and eleventh paragraphs under
the caption "Plan of Distribution" relating to stabilization and over-allotment
in, the Preliminary Memorandum and the Memorandum are correct and constitute the
only information furnished in writing to the Company by or on behalf of the
Initial Purchasers specifically for inclusion in the Memorandum.
<PAGE>
16
9. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by it by notice given to and received by the Company prior to
delivery of and payment for the Notes if, prior to that time, trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, a banking moratorium shall have
been declared by Federal or New York State authorities, the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial markets
in the United States shall be such) as to make it, in the judgment of the
Initial Purchasers, impracticable or inadvisable to proceed with the offering or
delivery of the Notes on the terms and in the manner contemplated in the
Memorandum.
10. Reimbursement of Initial Purchasers' Expenses. If the sale of Notes
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 7 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by the Initial Purchasers, the Company shall reimburse the Initial
Purchasers for the reasonable fees and expenses of its counsel and for such
other out-of-pocket expenses as shall have been incurred by it in connection
with this Agreement and the proposed purchase of the Notes, and upon demand the
Company shall pay the full amount thereof to the Initial Purchasers.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-528-8822);
(b) if to the Company shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in
the Memorandum, Attention: Chief Financial Officer (Fax:
202-965-4445).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (x) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the officers and
employees of the Initial Purchasers and the person or persons, if any, who
control each Initial Purchaser within
<PAGE>
17
the meaning of Section 15 of the Securities Act and (y) the indemnity agreement
of the Initial Purchasers contained in Section 8(b) of this Agreement shall be
deemed to be for the benefit of directors, officers and employees of the Company
and any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 12, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the Initial Purchasers contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Notes and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
14. Definition of the Terms "Business Day" and "Significant
Subsidiary". For purposes of this Agreement, "business day" means any day on
which the New York Stock Exchange, Inc. is open for trading and "Significant
Subsidiary" has the meaning set forth in Rule 1-02 of Regulation S-X.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
If the foregoing correctly sets forth the agreement between the Company
and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
MERISTAR HOSPITALITY CORPORATION
By: /s/ John Emery
-----------------------
Name: John Emery
Title: Chief Financial Officer
Accepted:
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
By LEHMAN BROTHERS INC.
By: /s/ Robert Redmond
---------------------------
Name: Robert Redmond
Title: Managing Director
<PAGE>
EXHIBIT A
FORM OF OPINION OF
COMPANY COUNSEL TO BE DELIVERED
PURSUANT TO SECTION 7(c)
(i) The Company and MeriStar Hospitality Operating Partnership, L.P.
have been duly formed and are validly existing as corporations or limited
partnerships, as the case may be, in good standing under the laws of their
respective jurisdictions of organization, and have all corporate or partnership,
as the case may be, power and authority necessary to own or hold their
respective properties and conduct the businesses in which they are engaged as
described in the Memorandum;
(ii) The Company has an authorized capitalization as set forth in the
Memorandum, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable;
and all of the issued shares of capital stock or partnership interests, as the
case may be, of MeriStar Hospitality Operating Partnership, L.P. have been duly
and validly authorized and issued and (except for partnership interests of
general partners) are fully paid, non-assessable and (except for partnership
interests in MeriStar Hospitality Operating Partnership, L.P. owned by third
parties) are owned directly or indirectly by the Company, to such counsel's
knowledge free and clear of all liens, encumbrances, or claims;
(iii) To the best of such counsel's knowledge, based solely on a review
of such counsel's internal litigation docket, and other than as set forth in the
Memorandum, there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries is the subject which could reasonably
be expected to have a Material Adverse Effect; and, to the best of such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(iv) The Memorandum and any further amendments or supplements thereto
made by the Company prior to the Closing Date (other than the financial
statements and related schedules and statistical data therein, as to which such
counsel need express no opinion) appear on their face to be responsive in all
material respects to the requirements of the Securities Act and the Rules and
Regulations;
(v) To the best of such counsel's knowledge, there are no contracts or
other documents which are required to be described in the Memorandum which have
not been so described;
(vi) The execution and delivery of the Notes and the Exchange Notes
have been duly authorized by all necessary corporate action of the Company, and
the Notes and the
<PAGE>
A-2
Exchange Notes, when executed and authenticated in accordance with the
provisions of the Indenture and paid for in accordance with the Purchase
Agreement, will constitute the valid, binding and enforceable obligations of the
Company, entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, liquidation, moratorium or other similar laws
affecting the rights and remedies of creditors generally and except as may be
subject to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
(vii) Each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by the Company and
the Registration Rights Agreement constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, liquidation, moratorium or
other similar laws affecting the rights and remedies of creditors generally and
except as may be subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law), and except as rights
to indemnity and contribution thereunder may be limited by applicable law and
public policy, and except that no opinion is expressed as to the enforceability
of the choice of law provision thereof;
(viii) The Indenture has been duly authorized, executed and delivered
by the Company and, assuming due authorization, executing and delivery thereof
by the Trustee, constitutes a valid and legally binding agreement of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, liquidation, moratorium or other similar laws
affecting the rights and remedies of creditors generally and except as may be
subject to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
(ix) The issue and sale of the Notes being delivered on the Closing
Date by the Company, the issue and sale of the Exchange Notes, the compliance by
the Company with all of the provisions of this Agreement, the Registration
Rights Agreement and the Indenture and the consummation of the transactions
contemplated hereby and thereby, will not conflict with or result in a material
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject which breach is reasonably likely to have a Material
Adverse Effect, nor will such actions result in any violation of the provisions
of the charter, by-laws, limited partnership agreement or constituent document
of the Company or any of its Significant Subsidiaries or any statute or any
order, rule or regulation known to such counsel of any court or governmental
agency or body of the United States, the State of New York or established
pursuant to the Delaware Corporation Law having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets; except for the
registration of the Exchange Offer (as defined in the Registration Rights
Agreement) under the Securities Act and for such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in connection with the
purchase and distribution of the Notes by the Initial Purchasers and the
Exchange Offer, no consent approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and
<PAGE>
A-3
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby;
(x) Neither the Company nor any of its subsidiaries is an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended; and
(xi) The statements under the captions "Certain Relationships and
Related Transactions" in the Company's latest proxy statement and "Description
of Notes" in the Memorandum, insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein are accurate in all
material respects.
In rendering such opinion, such counsel may (i) state that
their opinion is limited to matters governed by the Federal laws of the United
States of America, the laws of the State of New York, the Delaware Revised
Uniform Limited Partnership Act and the Maryland Corporation Law and that such
counsel is not admitted in the State of Delaware and that with respect to the
law of Maryland it is relying solely on the opinion of Ballard, Spahr &
Ingersoll. Such counsel shall also have furnished to the Initial Purchasers a
written statement, addressed to the Initial Purchasers and dated such Closing
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that (x) such counsel have participated in the preparation of the
Memorandum, such counsel have participated in conferences with certain officers
of the Company, the independent public accountants of the Company and other
representatives of the Company, at which the contents of the Memorandum and
related matters were discussed, and (y) based on such participation, no facts
have come to the attention of such counsel which lead them to believe that the
Memorandum (except for financial statements, schedules and other statistical
data included therein or omitted therefrom, as to which such counsel need make
no statement), as of the date thereof, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the Memorandum
(except for financial statements, schedules and other statistical data included
therein or omitted therefrom, as to which such counsel need make no statement)
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing statement may be qualified by a statement to the
effect that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Memorandum except
for the statements made in the Memorandum under the caption "Description of
Notes" insofar as such statements concern legal matters.
<PAGE>
Exhibit 10.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 18, 1999
Among
MERISTAR HOSPITALITY CORPORATION
and
LEHMAN BROTHERS INC.
and
BEAR, STEARNS & CO. INC.
as Initial Purchasers
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions..........................................................1
2. Securities Subject to This Agreement.................................3
3. Registered Exchange Offer............................................3
4. Shelf Registration...................................................4
5. Liquidated Damages...................................................5
6. Registration Procedures..............................................6
7. Registration Expenses...............................................13
8. Indemnification and Contribution....................................13
9. Rule 144A...........................................................16
10. Participation in Underwritten Registrations.........................16
11. Selection of Underwriters...........................................16
12. Miscellaneous.......................................................16
<PAGE>
This Registration Rights Agreement (this "Agreement") is made
and entered into as of March 18, 1999, by and among MeriStar Hospitality
Corporation, a Maryland corporation ("the Company"), and Lehman Brothers Inc.
and Bear, Stearns & Co. Inc. (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of March 11, 1999, between the Company and the Initial
Purchasers (the "Purchase Agreement"), which provides for the sale by the
Company to the Initial Purchasers of $55,000,000 principal amount of the
Company's 8.75% Senior Subordinated Notes due 2007 (the "Notes"). Capitalized
terms used but not specifically defined herein have the respective meanings
ascribed thereto in the Purchase Agreement. As an inducement to the Initial
Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to its obligations thereunder, the Company agrees with the Initial
Purchasers, for the benefit of the holders of the Notes (including the Initial
Purchasers) (the "Holders"), as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Broker-Dealer: Any broker or dealer registered under
the Exchange Act.
Closing Date: The date on which the Notes were sold.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be
deemed "Consummated" for purposes of this Agreement upon the occurrence
of (i) the filing and effectiveness under the Securities Act of the
Exchange Offer Registration Statement relating to the Exchange Notes to
be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company of the Exchange Notes in the same aggregate principal amount as
the aggregate principal amount of Transfer Restricted Securities that
were validly tendered by Holders thereof pursuant to the Exchange
Offer.
Damages Payment Date: With respect to the Notes, each
Distribution Date until the earlier of (i) the date on which Liquidated
Damages no longer are payable or (ii) maturity of the Notes.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exchange Notes: The Notes to be issued pursuant to
the Indenture in the Exchange Offer.
Exchange Offer: The registration by the Company under
the Securities Act of the Exchange Notes pursuant to a Registration
Statement pursuant to which the Company offers the Holders of all
outstanding Transfer Restricted Securities the opportunity to exchange
all such outstanding Transfer Restricted Securities held by such
Holders for Exchange Notes in an aggregate amount equal to the
aggregate amount of the Transfer Restricted Securities tendered in such
exchange offer by such Holders.
<PAGE>
2
Exchange Offer Registration Statement: The
Registration Statement relating to the Exchange Offer, including the
Prospectus which forms a part thereof.
Exempt Resales: The transactions in which the Initial
Purchasers propose to sell the Notes to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the
Securities Act, to certain institutional "accredited investors," as
such term is defined in Rule 501(a)(1), (2), (3) and (7) of Regulation
D under the Securities Act ("Accredited Institutions") and to certain
non-U.S. persons.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of March 18, 1999,
between the Company and IBJ Whitehall Bank & Trust Company, as trustee
(the "Trustee"), pursuant to which the Notes are to be issued, as such
Indenture is amended or supplemented from time to time in accordance
with the terms thereof.
Initial Purchasers: As defined in the preamble
hereto.
NASD: National Association of Securities Dealers,
Inc.
Person: An individual, partnership, corporation,
limited liability company, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and
by all other amendments thereto, including post-effective amendments,
and all material incorporated by reference into such Prospectus.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of
the Company relating to (a) an offering of Exchange Notes pursuant to
an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration Statement,
which is filed pursuant to the provisions of this Agreement, in either
case, including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Securities Act: The Securities Act of 1933, as
amended.
Shelf Filing Deadline: As defined in Section 4
hereof.
Shelf Registration Statement: As defined in Section 4
hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb), as amended.
Transfer Restricted Securities: Each Note, until the
earliest to occur of (a) the date on which such Note has been exchanged
by a person other than a Broker-Dealer for Exchange Notes in the
Exchange Offer, (b) following the exchange by a Broker-Dealer in the
Exchange Offer of such
<PAGE>
3
Note for one or more Exchange Notes, the date on which such Exchange
Notes are sold to a purchaser who receives from such Broker-Dealer on
or prior to the date of such sale a copy of the prospectus contained in
the Exchange Offer Registration Statement, (c) the date on which such
Notes have been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (d)
the date on which such Notes are eligible to be distributed to the
public pursuant to Rule 144 under the Securities Act;
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. Securities Subject to This Agreement.
(a) Transfer Restricted Securities. The securities
entitled to the benefits of this Agreement are the Transfer Restricted
Securities.
(b) Holders of Transfer Restricted Securities. A
Person is deemed to be a holder of Transfer Restricted Securities (each, a
"Holder") whenever such Person owns Transfer Restricted Securities.
3. Registered Exchange Offer.
(a) Unless the Exchange Offer shall not be
permissible under applicable law or Commission policy (after the procedures set
forth in Section 6(a) below have been complied with) or one of the events set
forth in Section 4(a)(ii) has occurred the Company shall (i) cause to be filed
with the Commission promptly after the Closing Date, but in no event later than
60 days after the Closing Date, a Registration Statement under the Securities
Act relating to the Exchange Notes and the Exchange Offer, (ii) use its best
efforts to cause such Registration Statement to become effective no later than
120 days after the Closing Date, (iii) in connection with the foregoing, file
(A) all pre-effective amendments to such Registration Statement as may be
necessary in order to cause such Registration Statement to become effective, (B)
if applicable, a post-effective amendment to such Registration Statement
pursuant to Rule 430A under the Securities Act and (C) cause all necessary
filings in connection with the registration and qualification of the Exchange
Notes to be made under the Blue Sky laws of such jurisdictions as are necessary
to permit Consummation of the Exchange Offer, and (iv) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which such Registration Statement was declared
effective by the Commission, Exchange Notes in exchange for all Transfer
Restricted Securities tendered prior thereto in the Exchange Offer. The Exchange
Offer shall be on the appropriate form permitting registration of the Exchange
Notes to be offered in exchange for the Transfer Restricted Securities and to
permit resales of Exchange Notes held by Broker-Dealers as contemplated by
Section 3(c) below. The 60, 120 and 30 business day periods referred to in (i),
(ii) and (iii) of this Section 3(a) shall not include any period during which
the Company is pursuing a Commission ruling pursuant to Section 6(a)(i) below.
(b) The Company shall use its best efforts to cause
the Exchange Offer Registration Statement to be effective continuously and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and
<PAGE>
4
state securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 business days. The Company shall
cause the Exchange Offer to comply in all material respects with all applicable
federal and state securities laws. No securities other than the Exchange Notes
shall be included in the Exchange Offer Registration Statement. The Company
shall use its best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 business days thereafter.
(c) The Company shall indicate in a "Plan of
Distribution" section contained in the Prospectus contained in the Exchange
Offer Registration Statement that any Broker-Dealer who holds Notes that are
Transfer Restricted Securities and that were acquired for its own account as a
result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Company), may exchange
such Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resales of the Exchange Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Exchange Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy announced after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Exchange Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms with the requirements
of this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time, for a period of 180 days from the
date on which the Exchange Offer Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest
version of such Prospectus to Broker-Dealers promptly upon request at any time
during such 180-day period in order to facilitate such resales.
4. Shelf Registration.
(a) Shelf Registration. If (i) the Company is not
required to file an Exchange Offer Registration Statement or to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities that
is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) or an institutional "accredited investor" (as defined in Rule
501(A)(1), (2), (3) or (7) under the Securities Act) shall notify the Company at
least 20 days prior to the Consummation of the Exchange Offer (A) that such
Holder is prohibited by applicable law or Commission policy from participating
in the Exchange Offer, or (B) that such Holder may not resell the Exchange Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder, or
(C) that such Holder is a Broker-Dealer and holds Notes acquired directly from
the Company or one of its affiliates, then the Company shall in lieu of, or in
the event of (ii) above, in addition to effecting the registration of the
Exchange Notes pursuant to the Exchange Offer Registration Statement, use its
best efforts to:
<PAGE>
5
(x) cause to be filed a shelf registration
statement pursuant to Rule 415 under the Securities Act, which may be
an amendment to the Exchange Offer Registration Statement (in either
event, the "Shelf Registration Statement"), on or prior to the earlier
to occur of (1) the 30th day after the date on which the Company
determines that it is not required to file the Exchange Offer
Registration Statement or (2) the 30th day after the date on which the
Company receives notice from a Holder of Transfer Restricted Securities
as contemplated by clause (ii) above (such earlier date being the
"Shelf Filing Deadline"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to
Section 4(b) hereof; and
(y) cause such Shelf Registration Statement
to be declared effective by the Commission on or before the 90th day
after the Shelf Filing Deadline.
The Company shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for resales of Notes by the Holders of Transfer Restricted Securities
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Securities Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period ending on the second anniversary of the Closing Date.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of Transfer
Restricted Securities may include any of its Transfer Restricted Securities in
any Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 20 business days after
receipt of a request therefor, such information as the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have used its best efforts
to provide all such reasonably requested information. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
5. Liquidated Damages
(a) If (a) any of the Registration Statements
required by this Agreement is not filed with the Commission on or prior to the
date specified for such filing in this Agreement, (b) any of such Registration
Statements has not been declared effective by the Commission on or prior to the
date specified for such effectiveness in this Agreement (the "Effectiveness
Target Date"), (c) the Exchange Offer has not been Consummated within 30
business days after the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement or (d) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
within two business days by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (each such event referred to in clauses (a) through (d), a
"Registration Default"), additional cash interest ("Liquidated Damages") shall
accrue to each Holder of the Notes commencing upon the occurrence of such
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Notes held by such Holder. The amount of Liquidated Damages will
increase by an additional $.05 per week per $1,000 principal amount of Notes
with
<PAGE>
6
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $.50 per week per
$1,000 principal amount of Notes. All accrued Liquidated Damages shall be paid
to Holders by the Company in the same manner as interest is made pursuant to the
Indenture. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted Securities, the accrual of Liquidated Damages
with respect to such Transfer Restricted Securities will cease.
All obligations of the Company set forth in the preceding
paragraph that have accrued and are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such Transfer Restricted Security shall have been satisfied in full.
(b) The Company shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which Liquidated Damages are required to be paid (an "Event Date"). Liquidated
Damages shall be paid by depositing Liquidated Damages with the Trustee, in
trust, for the benefit of the Holders of the Notes, on or before the applicable
Interest Payment Date (whether or not any payment other than Liquidated Damages
is payable on such Notes), in immediately available funds in sums sufficient to
pay the Liquidated Damages then due to such Holders. Each obligation to pay
Liquidated Damages shall be deemed to accrue from the applicable date of the
occurrence of the Registration Default.
6. Registration Procedures.
(a) Exchange Offer Registration Statement. In
connection with the Exchange Offer, the Company shall comply with all of the
provisions of Section 6(c) below, shall use its best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel
to the Company there is a question as to whether the Exchange Offer is
permitted by applicable law, the Company hereby agrees to seek a
no-action letter or other favorable decision from the Commission
allowing the Company to Consummate an Exchange Offer for such Notes.
The Company hereby agrees to pursue the issuance of such a decision to
the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission
policy. The Company hereby agrees, however, to (A) participate in
telephonic conferences with the Commission, (B) deliver to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded
that such an Exchange Offer should be permitted and (C) diligently
pursue a resolution (which need not be favorable) by the Commission
staff of such submission.
(ii) As a condition to its participation in
the Exchange Offer pursuant to the terms of this Agreement, each Holder
of Transfer Restricted Securities shall furnish, upon the request of
the Company, prior to the Consummation thereof, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the Company, (B) it is
not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes to be issued in the Exchange Offer
and
<PAGE>
7
(C) it is acquiring the Exchange Notes in its ordinary course of
business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparations for
the Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including Brown & Wood LLP
(available February 7, 1997), and any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Exchange Notes obtained by such Holder in
exchange for Notes acquired by such Holder directly from the Company.
(iii) Prior to the effectiveness of the
Exchange Offer Registration Statement, the Company shall provide a
supplemental letter to the Commission (A) stating that the Company is
registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991),
Brown & Wood LLP (available February 7, 1997) and, if applicable, any
no-action letter obtained pursuant to clause (i) above and (B)
including a representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the Exchange
Notes to be received in the Exchange Offer and that, to the best of the
Company's information and belief, each Holder participating in the
Exchange Offer is acquiring the Exchange Notes in its ordinary course
of business and has no arrangement or understanding with any Person to
participate in the distribution of the Exchange Notes received in the
Exchange Offer.
(b) Shelf Registration Statement. In connection with
the Shelf Registration Statement, the Company shall comply with all the
provisions of Section 6(c) below and shall use its best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible prepare and file
with the Commission a Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.
(c) General Provisions. In connection with any
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Company shall:
(i) use its best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company shall file
promptly an appropriate amendment
<PAGE>
8
to such Registration Statement, in the case of clause (A), correcting
any such misstatement or omission, and, in the case of either clause
(A) or (B), use its best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter;
(ii) prepare and file with the Commission
such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement
effective for the applicable period set forth in Section 3 or 4 hereof,
as applicable, or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act, and to comply fully with the
applicable provisions of Rules 424 and 430A under the Securities Act in
a timely manner; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(iii) in the case of a Shelf Registration,
advise the underwriter(s), if any, and selling Holders promptly and, if
requested by such Persons, to confirm such advice in writing, (A) when
the Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Securities Act or of the suspension by
any state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) in the case of a Shelf Registration,
furnish to each of the selling or exchanging Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least five business days, and the Company will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which selling Holders
of a majority in Liquidation Amount of Transfer Restricted Securities
covered by such Registration Statement or the underwriter(s), if any,
shall reasonably object within five business days after the receipt
thereof. A selling Holder or
<PAGE>
9
underwriter, if any, shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission;
(v) in the case of a Shelf Registration,
promptly prior to the filing of any document that is to be incorporated
by reference into a Registration Statement or Prospectus, provide
copies of such document to the selling Holders and to the
underwriter(s), if any, make the Company's representatives available
for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the
filing thereof as such selling Holders or underwriter(s), if any,
reasonably may request;
(vi) in the case of a Shelf Registration,
make available at reasonable times for inspection by the selling
Holders, any underwriter participating in any disposition pursuant to
such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and
other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, managers and
employees to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vii) in the case of a Shelf Registration,
if requested by any selling Holders or the underwriter(s), if any,
promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the
principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted
Securities covered by the Registration Statement to be rated with the
appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Notes covered thereby or the
underwriter(s), if any;
(ix) in the case of a Shelf Registration,
furnish to each selling Holder and each of the underwriter(s), if any,
without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto,
including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(x) in the case of a Shelf Registration,
deliver to each selling Holder and each of the underwriter(s), if any,
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use
of the Prospectus and any amendment or supplement thereto by each of
the selling Holders and each of the underwriter(s), if any, in
<PAGE>
10
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) in the case of a Shelf Registration,
enter into such agreements (including an underwriting agreement), and
make such representations and warranties, and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such
extent as may be requested by any Purchaser or by any Holder of
Transfer Restricted Securities or underwriter in connection with any
sale or resale pursuant to any Registration Statement contemplated by
this Agreement; and in connection with an Underwritten Registration,
the Company shall:
(A) upon request, furnish to each
selling Holder and each underwriter, if any, in such substance
and scope as they may request and as are customarily made by
issuers to underwriters in primary underwritten offerings,
upon the date of the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated
the date of the effectiveness of the Shelf
Registration Statement, signed by (y) the Chairman of
the Board, its President or a Vice President and (z)
the Chief Financial Officer of the Company,
confirming, as of the date thereof, such matters as
such parties may reasonably request;
(2) an opinion, dated the
date of the effectiveness of the Shelf Registration
Statement, of counsel for the Company, covering such
matters as such parties may reasonably request, and
in any event including a statement to the effect that
such counsel has participated in conferences with
officers and other representatives of the Company,
representatives of the independent public accountants
for the Company, the Initial Purchasers=
representatives and the Initial Purchasers= counsel
in connection with the preparation of such
Registration Statement and the related Prospectus and
have considered the matters required to be stated
therein and the statements contained therein,
although such counsel has not independently verified
the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on
the basis of the foregoing (relying as to materiality
to a large extent upon facts provided to such counsel
by officers and other representatives of the Company
and without independent check or verification), no
facts came to such counsel's attention that caused
such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or that the
Prospectus contained in such Registration Statement
as of its date, contained an untrue statement of a
material fact or omitted to state a material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel
assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and
schedules and other
<PAGE>
11
financial and statistical data included in any
Registration Statement contemplated by this Agreement
or the related Prospectus; and
(3) a customary comfort
letter, dated the date of the effectiveness of the
Shelf Registration Statement, from the Company's
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters to underwriters in connection with
primary underwritten offerings.
(B) set forth in full or
incorporated by reference in the underwriting agreement, if any, the
indemnification provisions and procedures of Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and
certificates as may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into
by the Company pursuant to this clause (xi), if any.
If at any time the representations and warranties of
the Company contemplated in clause (A)(1) above cease to be true and
correct, the Company shall so advise the Initial Purchasers and the
underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
(xii) in the case of a Shelf Registration,
prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may reasonably request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the Shelf Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xiii) in the case of a Shelf Registration,
shall issue, upon the request of any Holder of Notes covered by the
Shelf Registration Statement, Exchange Notes in the same amount as the
Notes surrendered to the Company by such Holder in exchange therefor or
being sold by such Holder; such Exchange Notes to be registered in the
name of such Holder or in the name of the purchaser(s) of such Exchange
Notes, as the case may be; in return, the Notes held by such Holder
shall be surrendered to the Company for cancellation;
(xiv) in the case of a Shelf Registration,
cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and enable such Transfer Restricted Securities
to be in such denominations and registered in such names as the Holders
or the underwriter(s), if any, may request at least two business days
prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
<PAGE>
12
(xv) use its best efforts to cause the
Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xvi) if any fact or event contemplated by
clause (c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to
the purchasers of Transfer Restricted Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(xvii) provide CUSIP numbers for all
Transfer Restricted Securities not later than the effective date of the
Registration Statement and provide certificates for the Transfer
Restricted Securities;
(xviii) cooperate and assist in any filings
required to be made with the NASD and in the performance of any due
diligence investigation by any underwriter (including any "qualified
independent underwriter") that is required to be retained in accordance
with the rules and regulations of the NASD, and use its best efforts to
cause such Registration Statement to become effective and approved by
such governmental agencies or authorities as may be necessary to enable
the Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities; provided, however,
that the Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xix) otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders, as soon as
practicable, a consolidated earnings statement meeting the requirements
of Rule 158 (which need not be audited) for the twelve-month period (A)
commencing at the end of any fiscal quarter in which Transfer
Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified
under the TIA not later than the effective date of the first
Registration Statement required by this Agreement, and, in connection
therewith, cooperate with the Trustee and the Holders of Notes to
effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use its best efforts to cause the Trustee to execute
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner; and
(xxi) provide promptly to each Holder upon
request each document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act.
<PAGE>
13
Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section
6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by
reference in the Prospectus. If so directed by the Company, each Holder
will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities that was
current at the time of receipt of such notice. In the event the Company
shall give any such notice, the time period regarding the effectiveness
of such Registration Statement set forth in Section 3 or 4 hereof, as
applicable, shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xvi) hereof or shall have received the Advice.
7. Registration Expenses.
All expenses incident to the Company's performance of
or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Purchaser or Holder with the NASD (and, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel that may be
required by the rules and regulations of the NASD)); (ii) all fees and expenses
of compliance with federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing certificates for the Exchange
Notes to be issued in the Exchange Offer and printing of Prospectuses), and
associated messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company; (v) all application and filing fees in
connection with listing Notes on a national securities exchange or automated
quotation system; and (vi) all fees and disbursements of independent certified
public accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
8. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement or in
connection with any delivery of a Prospectus contained in an Exchange Offer
Registration Statement by any participating Broker-Dealer or Initial Purchasers,
as applicable, who seeks to sell Exchange Notes, the Company shall indemnify and
hold harmless each Holder of Transfer Restricted Securities included within any
such Shelf Registration Statement and each participating Broker-Dealer or
Initial Purchasers selling Exchange Notes, and each person, if any, who controls
any such person within the meaning of Section 15 of the Securities Act (each, a
"Participant") from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Notes) to which such Participant or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any
<PAGE>
14
untrue statement or alleged untrue statement of a material fact contained in any
such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each Participant
promptly upon demand for any legal or other expenses reasonably incurred by such
Participant in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that (i) the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any such Registration
Statement or any prospectus forming part thereof or in any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Participant specifically for inclusion
therein; and provided further that as to any preliminary Prospectus, the
indemnity agreement contained in this Section 8(a) shall not inure to the
benefit of any such Participant or any controlling person of such Participant on
account of any loss, claim, damage, liability or action arising from the sale of
the Exchange Notes to any person by that Participant if (i) that Participant
failed to send or give a copy of the Prospectus, as the same may be amended or
supplemented, to that person within the time required by the Securities Act and
(ii) the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact in such preliminary
Prospectus was corrected in the Prospectus, unless, in each case, such failure
resulted from non-compliance by the Company with Section 6(c). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Participant or to any controlling person of that
Participant.
(b) Each Participant, severally and not jointly, shall
indemnify and hold harmless the Company, its directors, officers, employees or
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer, employees or agents or controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary Prospectus, Registration Statement or Prospectus or in any amendment
or supplement thereto or (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of that Participant specifically for inclusion
herein, and shall reimburse the Company and any such director, officer,
employees or agents or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer, employees or
agents or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Participant may otherwise have to the Company or any
such director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under
<PAGE>
15
this Section 8. If any such claim or action shall be brought against an
indemnified party, and it shall have notified the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the indemnified party shall have
the right to employ counsel to represent jointly the indemnified party and those
other Participants and its respective officers, employees and controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Participants against the indemnifying party
under this Section 8 if, in the reasonable judgment of the indemnified party it
is advisable for the indemnified party and those Participants, officers,
employees and controlling persons to be jointly represented by separate counsel,
and in that event the fees and expenses of such separate counsel shall be paid
by the indemnifying party. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel). Each indemnified party, as a condition of the indemnity agreements
contained in Section 8, shall use its best efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the Company
on the one hand and the Participants on the other with respect to the statements
or omissions which resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Participants, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Participants agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Participant shall be required to contribute
any amount in excess of the amount by which proceeds received by such
<PAGE>
16
Participant from an offering of the Notes exceeds the amount of any damages
which such Participant has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Participants'
obligations to contribute as provided in this Section 8(d) are several and not
joint.
9. Rule 144A.
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
10. Participation in Underwritten Registrations.
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such underwriting arrangements.
11. Selection of Underwriters.
The Holders of Transfer Restricted Securities covered by the
Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Company; provided,
that such investment bankers and managers must be reasonably satisfactory to the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities included in such offering.
12. Miscellaneous.
(a) Remedies. The Company agrees that monetary
damages (including Liquidated Damages) would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in
any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. The Company will not
on or after the date of this Agreement enter into any agreement with
respect to its securities that is inconsistent with the rights granted
to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The Company has not previously entered into any
agreement granting any registration rights with respect to its
securities to any Person (except pursuant to the Registration Rights
Agreement dated August 14, 1997). The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
<PAGE>
17
(c) Adjustments Affecting the Notes. The Company will
not take any action, or permit any change to occur, with respect to
Notes that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer unless such action or change
is required by applicable law.
(d) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or
consents to or departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted
Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the
Exchange Offer and that does not affect directly or indirectly the
rights of other Holders whose securities are not being tendered
pursuant to such Exchange Offer may be given by the Holders of a
majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier guaranteeing
overnight delivery:
(i) if to a Holder, at the address of such
Holder maintained by the Registrar under the Indenture; and
(ii) if to the Company:
MERISTAR HOSPITALITY CORPORATION
1010 Wisconsin Avenue, N.W.
Suite 650
Washington, DC 20007
Attention: John Emery,
Chief Financial Officer
Facsimile: (202) 965-4445
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Richard S. Borisoff, Esq.
Facsimile: (212) 373-2523
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
<PAGE>
18
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the
same to the Trustee at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns
of each of the parties, including without limitation and without the
need for an express assignment, subsequent Holders of Transfer
Restricted Securities; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(i) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
(j) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.
(k) Entire Agreement. This Agreement together with
the other transaction documents is intended by the parties as a final
expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein with respect to the registration rights
granted by the Company with respect to the Transfer Restricted
Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter.
(l) Required Consents. Whenever the consent or
approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held
by the Company or its affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required
percentage.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
MERISTAR HOSPITALITY CORPORATION
By: /s/ John Emery
--------------------------------
Name: John Emery
Title: Chief Financial Officer
Accepted as of the date thereof
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
By LEHMAN BROTHERS INC.
By: /s/ Robert Redmond
------------------------
Name: Robert Redmond
Title: Managing Director
<PAGE>
EXHIBIT 12.1
MERISTAR HOSPITALITY CORPORATION
STATEMENT REGARDING COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
Year Ended December 31,
-------- -------- -------- -------- --------
1994(1) 1995 1996 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income before minority
interests, income tax expense
and extraordinary items (2) $ -- $ 213 $ 6,988 $ 40,488 $ 69,528
-------- -------- -------- -------- --------
Fixed charges:
Interest expense -- 2,673 12,784 61,512 64,378
Interest capitalized -- 67 461 442 5,182
Amortization of debt expense -- 131 986 920 1,635
Preferred distributions to
minority interests -- -- -- 488 650
Rent deemed as interest -- 16 22 26 11
-------- -------- -------- -------- --------
Total fixed charges -- 2,887 14,253 63,388 71,856
-------- -------- -------- -------- --------
Income before minority interest,
income tax expense, extraordinary
items and fixed charges (excluding
capitalized interest and preferred
distributions to minority interests) -- 3,033 20,780 102,946 135,552
Divided by fixed charges -- 2,887 14,253 63,388 71,856
Ratio of earnings to fixed charges -- 1.05x 1.46x 1.62x 1.89x
(1) Prior to 1995, the Company's predecessor entities had no fixed charges and
therefore the ratio of earnings to fixed charges was not applicable.
(2) This amount is before minority interests since the minority interests
relate to majority-owned subsidiaries that have fixed charges.
</TABLE>
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
IBJ WHITEHALL BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-6022258
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
LUIS PEREZ, ASSISTANT VICE PRESIDENT
IBJ WHITEHALL BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
MeriStar Hospitality Corporation
(Exact name of Registrant as specified in its charter)
Maryland 75-2648837
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1010 Wisconsin Avenue N.W., Suite 640
Washington, DC 20007
(Address of principal executive offices) (Zip code)
8 3/4% Series C Senior Subordinated Notes Due 2007
---------------------
(Title of indenture securities)
<PAGE>
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York
Second District,
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust
powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the trustee.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture.
Explain the nature of any such default.
None
2
<PAGE>
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest
or participation in any other securities, of the obligors
are outstanding, or is trustee for more than one
outstanding series of securities under the indenture,
state whether there has been a default under any such
indenture or series, identify the indenture or series
affected, and explain the nature of any such default.
None
Item 16. List of exhibits.
List below all exhibits filed as part of this statement
of eligibility.
*1. A copy of the Charter of IBJ Whitehall Bank & Trust
Company as amended to date. (See Exhibit 1A to Form T-1,
Securities and Exchange Commission File No 22-18460 and
Exhibit 25.1 to Form T-1, Securities and Exchange
Commission File No. 333-46849).
*2. A copy of the Certificate of Authority of the trustee to
Commence Business (Included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise
corporate trust powers, as amended to date (See Exhibit 4
to Form T-1, Securities and Exchange Commission File No.
22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended
to date (See Exhibit 25.1 to Form T-1, Securities and
Exchange Commission File No. 333-46849).
5. Not Applicable
6. The consent of United States institutional trustee
required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervising or examining authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
3
<PAGE>
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its
directors or officers, the trustee has relied upon information
furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Item 2, the
answer to said Item is based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items
1, 2 and 16 of this form since to the best knowledge of the trustee as
indicated in Item 13, the obligor is not in default under any indenture
under which the applicant is trustee.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, IBJ Whitehall Bank & Trust Company, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility & qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and State
of New York, on the 26th day of April, 1999.
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ Luis Perez
------------------------------
Luis Perez
Assistant Vice President
<PAGE>
Exhibit 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, as amended, in connection with the issuance by MeriStar Hospitality
Corporation, of its 8 3/4% Series C Senior Subordinated Notes Due 2007, we
hereby consent that reports of examinations by Federal, State, Territorial, or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ Luis Perez
------------------------------
Luis Perez
Assistant Vice President
Dated: April 26, 1999
<PAGE>
Exhibit 7
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
of New York, New York
And Foreign and Domestic Subsidiaries
Report as of December 31, 1998
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
------------
ASSETS
------
<S> <C> <C>
1. Cash and balance due from depository institutions:
a. Non-interest-bearing balances and currency and coin ....................................................$ 26,852
b. Interest-bearing balances.................................................................................$ 17,489
2. Securities:
a. Held-to-maturity securities...............................................................................$ -0-
b. Available-for-sale securities.............................................................................$ 207,069
3. Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries and
in IBFs Federal Funds sold and Securities purchased under agreements to resell................................$ 80,389
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income................................................$2,033,599
b. LESS: Allowance for loan and lease losses...............................................$ 62,853
c. LESS: Allocated transfer risk reserve...................................................$ -0-
d. Loans and leases, net of unearned income, allowance, and reserve..........................................$1,970,746
5. Trading assets held in trading accounts.......................................................................$ 848
6. Premises and fixed assets (including capitalized leases)......................................................$ 1,583
7. Other real estate owned.......................................................................................$ -0-
8. Investments in unconsolidated subsidiaries and associated companies...........................................$ -0-
9. Customers' liability to this bank on acceptances outstanding..................................................$ 340
10. Intangible assets.............................................................................................$ 11,840
11. Other assets..................................................................................................$ 66,691
12. TOTAL ASSETS..................................................................................................$2,383,847
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
-----------
<S> <C> <C>
13. Deposits:
a. In domestic offices.......................................................................................$ 804,562
(1) Noninterest-bearing ....................................................................$168,822
(2) Interest-bearing .......................................................................$635,740
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs.............................................$ 885,076
(1) Noninterest-bearing ....................................................................$ 16,554
(2) Interest-bearing .......................................................................$868,522
14. Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal Funds purchased and Securities sold under agreements to repurchase....................................$ 225,000
15. a. Demand notes issued to the U.S. Treasury..................................................................$ 674
b. Trading Liabilities.......................................................................................$ 560
16. Other borrowed money:
a. With a remaining maturity of one year or less.............................................................$ 38,002
b. With a remaining maturity of more than one year...........................................................$ 1,375
c. With a remaining maturity of more than three years........................................................$ 1,550
17. Not applicable.
18. Bank's liability on acceptances executed and outstanding......................................................$ 340
19. Subordinated notes and debentures.............................................................................$ 100,000
20. Other liabilities.............................................................................................$ 74,502
21. TOTAL LIABILITIES.............................................................................................$2,131,641
22. Limited-life preferred stock and related surplus..............................................................$ N/A
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................................................$ -0-
24. Common stock..................................................................................................$ 28,958
25. Surplus (exclude all surplus related to preferred stock)......................................................$ 210,319
26. a. Undivided profits and capital reserves....................................................................$ 11,655
b. Net unrealized gains (losses) on available-for-sale securities............................................$ 1,274
27. Cumulative foreign currency translation adjustments...........................................................$ -0-
28. TOTAL EQUITY CAPITAL..........................................................................................$ 252,206
29. TOTAL LIABILITIES AND EQUITY CAPITAL..........................................................................$2,383,847
</TABLE>
<PAGE>
Exhibit 99.1
EXCHANGE AGENCY AGREEMENT
This Agreement is entered into as of __________________, 1999 between IBJ
Whitehall Bank & Trust Company, a banking corporation organized under the laws
of the State of New York, as Exchange Agent (the "Agent")_____________________ a
corporation organized under the laws of the State of
_______________________________ (the "Company").
The Company proposes to exchange $1,000 principal amount of the Company's _____%
__________ [Notes] due ___, Series B (the "New Notes" or "Exchange Notes") in
exchange (the "Exchange Offer") for an equal aggregate principal amount of the
Company's outstanding _______%______[Notes]due_____, Series A (the "Old Notes")
pursuant to the_________________________ [Agreement] dated as of 1999 and the
accompanying Letter of Transmittal. The Exchange Offer will terminate at 5:00
p.m. New York City Time on , unless extended by the Company in its sole
discretion (the "Expiration Date"). The New Notes are to be issued by the
Company pursuant to the terms of an Indenture dated as of __________________,
1999 (the "Indenture") between the Company and IBJ Whitehall Bank & Trust
Company, as trustee (the "Trustee").
Subject to the provisions hereof, the Company hereby appoints and the Agent
hereby accepts the appointment as Agent for the purposes of receiving, accepting
for delivery and otherwise acting upon tenders of the Old Notes (the
"Certificates") in accordance with the form of Letter of Transmittal attached
hereto (the "L/T") and with the the terms and conditions set forth herein and
under the caption "The Exchange Offer" in the Prospectus.
The Agent has received the following documents in connection with its
appointment:
(1) L/T
(2) a form of Notice of Guaranteed Delivery
(3) the Prospectus
(4)
The Agent is authorized and hereby agrees to act as follows:
(a) to address, and deliver by hand or next day courier, a
complete set of the Exchange Offer Documents to each person
who, prior to the Expiration Date, becomes a registered holder
of Old Notes promptly after such person becomes a registered
holder of Old Notes;
(b) to receive all tenders of Old Notes made pursuant to the
Exchange Offer and stamp the L/T with the day, month and
approximate time of receipt;
<PAGE>
(c) to examine each L/T and Old Notes received to determine that
all requirements necessary to constitute a valid tender have
been met. The Agent shall be entitled to rely on the
electronic messages sent by the Depository Trust Company
("DTC") regarding ATOP delivery of the Notes to the Agent's
account at DTC from the DTC participants listed on the DTC
position listing provided to the Agent;
(d) to take such actions necessary and appropriate to correct any
irregularity or deficiency associated with any tender not in
proper order;
(e) to follow instructions given by______________________________
of the Company, with respect to the waiver of any
irregularities or deficiencies associated with any tender;
(f) to hold all valid tenders subject to further instructions from
_______________________ of the Company;
(g) to render a written report, in the form of Exhibit A attached
hereto, on each business day during the Exchange Offer and
promptly confirm, by telephone, the information contained
therein to _____________ at ____________.
(h) to follow and act upon any written amendments, modifications
or supplements to these instructions (provided such
amendments, or supplements are acceptable to the Agent), any
of which may be given to the Agent by the President, any Vice
President or the Secretary of the Company or such other person
or persons as they shall designate in writing;
(i) to return to the presentors, in accordance with the provisions
of the L/T, any Old Notes that were not received in proper
order and as to which the irregularities or deficiencies were
not cured or waived;
(j) in the event the Exchange Offer is consummated, to deliver
authenticated Exchange Notes to tendering Noteholders, in
accordance with the instructions of such Noteholders specified
in the respective L/T's, as soon as practicable after receipt
thereof;
(k) to determine that all endorsements, guarantees, signatures,
authorities, stock transfer taxes (if any) and such other
requirements are fulfilled in connection with any request for
issuance of the Exchange Notes in a name other than that of
the registered owner of the Old Notes;
(l) to deliver to, or upon the order of, the Company all Old Notes
received under the Exchange Offer, together with any related
assignment forms and other documents; and
2
<PAGE>
(m) subject to the other terms and conditions set forth in this
Agreement to take all other actions customary, reasonable and
necessary in the good faith judgment of the Agent, to effect
the foregoing matters.
The Agent shall:
(a) have no duties or obligations other than those specifically
set forth herein;
(b) not be required to refer to any documents for the performance
of its obligations hereunder other than this Agreement, the
L/T and the documents required to be submitted with the L/T;
other than such documents, the Agent will not be responsible
or liable for any terms, directions or information in the
Prospectus or any other document or agreement unless the Agent
specifically agrees thereto in writing;
(c) not be required to act on the directions of any person,
including the persons named above, unless the Company provides
a corporate resolution to the Agent or other evidence
satisfactory to the Agent of the authority of such person;
(d) not be required to and shall make no representations and have
no responsibilities as to the validity, accuracy, value or
genuineness of (i) the Exchange Offer, (ii) any certificates,
L/T's or documents prepared by the Company in connection with
the Exchange Offer or (iii) any signatures or endorsements,
other than its own;
(e) not be obligated to take any legal action hereunder that
might, in its judgement, involve any expense or liability,
unless it has been furnished with reasonable indemnity by the
Company;
(f) be able to rely on and shall be protected in acting on the
written or oral instructions with respect to any matter
relating to its actions as Agent specifically covered by this
Agreement, of any officer of the Company authorized to give
instructions under paragraph (g) or (h) above;
(g) be able to rely on and shall be protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or
any other document or security delivered to it and believed by
it reasonably and in good faith to be genuine and to have been
signed by the proper party or parties;
(h) not be responsible for or liable in any respect on account of
the identity, authority or rights of any person executing or
delivering or purporting to execute or deliver any document or
property under this Agreement and shall have no responsibility
with respect to the use or application of any property
delivered by it pursuant to the provisions hereof;
3
<PAGE>
(i) be able to consult with counsel satisfactory to it (including
counsel for the Company or staff counsel of the Agent) and the
advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with advice or opinion of such counsel;
(j) not be called on at any time to advise, and shall not advise,
any person delivering an L/T pursuant to the Exchange Offer as
to the value of the consideration to be received;
(k) not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own
gross negligence, willful misconduct or bad faith;
(l) not be bound by any notice or demand, or any waiver or
modification of this Agreement or any of the terms hereof,
unless evidenced by a writing delivered to the Agent signed by
the proper authority or authorities and, if the Agent's duties
or rights are affected, unless the Agent shall give its prior
written consent thereto;
(m) have no duty to enforce any obligation of any person to make
delivery, or to direct or cause any delivery to be made, or to
enforce any obligation of any person to perform any other act;
and
(n) have the right to assume, in the absence of written notice to
the contrary from the proper person or persons, that a fact or
an event by reason of which an action would or might be taken
by the Agent does not exist or has not occurred without
incurring liability for any action taken or omitted, or any
action suffered by the Agent to be taken or omitted, in good
faith or in the exercise of the Agent's best judgement, in
reliance upon such assumption.
The Agent shall be entitled to compensation as set forth in Exhibit B attached
hereto.
The Company covenants and agrees to reimburse the Agent for, indemnify it
against, and hold it harmless from any and all reasonable costs and expenses
(including reasonable fees and expenses of counsel and allocated cost of staff
counsel) that may be paid or incurred or suffered by it or to which it may
become subject without gross negligence, willful misconduct or bad faith on its
part by reason of or as a result of its compliance with the instructions set
forth herein or with any additional or supplemental written or oral instructions
delivered to it pursuant hereto, or which may arise out of or in connection with
the administration and performance of its duties under this Agreement. The
Company agrees to promptly notify the Agent of any extension of the Expiration
Date. The provisions of this paragraph shall survive any termination of this
Agreement.
4
<PAGE>
This Agreement shall be construed and enforced in accordance with the laws of
the State of New York and shall inure to the benefit of, and the obligations
created hereby shall be binding upon, the successors and assigns of the parties
hereto. The parties agree to submit and to the exclusive jurisdiction of the
federal or state courts located in the State of New York, New York County.
Unless otherwise expressly provided herein, all notices, requests, demands and
other communications hereunder shall be in writing, shall be delivered by hand,
facsimile or by First Class Mail, postage prepaid, shall be deemed given when
received and shall be addressed to the Agent and the Company at the respective
addresses listed below or to such other addresses as they shall designate from
time to time in writing, forwarded in like manner.
If to the Agent, to: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Reorganization Operations Dept.
Telephone: (212) 858-2103
Facsimile: (212) 858-2611
with copies to: IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attn: Corporate Finance Trust Services
Telephone: (212) 858-2815
Facsimile: (212) 858-2952
If to the Company, to:
with copies to:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on their behalf by their officers thereunto duly authorized, all as of the day
and year first above written.
5
<PAGE>
IBJ Whitehall Bank & Trust Company
By: _____________________________
Assistant Vice President
( Company Name )
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT A
SAMPLE REPORT
Date:______________________
Report Number: ___________
As of Date:________________
Ladies & Gentlemen:
As Exchange Agent for the Exchange Offer dated _________________, 1999, we
hereby render the following report:
Principal Amount previously received: ________________
Principal Amount received today: ________________
Principal Amount received against Guarantees: ________________
Principal Amount withdrawn today: ________________
Total Principal Amount received to date: ================
RECAP OF PRINCIPAL AMOUNT REPRESENTED BY GUARANTEES
Guarantees previously outstanding: ________________
Guarantees received today: ________________
Guarantees settled today: ________________
Guarantees withdrawn today: ________________
Guarantees outstanding: ________________
Total Principal Amount and Guarantees Outstanding: ================
Very truly yours,
Reorganization Operations Dept.
<PAGE>
EXHIBIT B
COMPENSATION
The Agent for serving as the Exchange Agent pursuant to this Agreement,
shall receive a fee of $2,500, payable upon commencement of the
Exchange Offer, and the Agent's out-of-pocket expenses incurred in
connection with completing its duties pursuant to this Agreement.
144A
<PAGE>
Exhibit 99.2
LETTER OF TRANSMITTAL
MERISTAR HOSPITALITY CORPORATION
Offer to Exchange its
8 3/4% Senior Subordinated Notes due 2007
(the "Exchange Notes")
which have been registered under the Securities Act of 1933,
as amended, for any and all of its outstanding
8 3/4% Senior Subordinated Notes due 2007
(the "Initial Notes")
Pursuant to the Prospectus, dated ________, 1999
- --------------------------------------------------------------------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME ON
________, 1999 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To: IBJ Whitehall Bank & Trust Company, Exchange Agent
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand: By Overnight Delivery:
P.O. Box 84 One State Street One State Street
Bowling Green Station New York, NY 10004 New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Attn: Securities Processing
Attn: Reorganization Window, Subcellar One (SC-1) Window, Subcellar One (SC-1)
Operations Department
</TABLE>
For Information:
Information and Facsimile Confirmation: (212) 858-2103
Facsimile Transmissions: (212) 858-2611 (Eligible Institutions Only)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW.
-----------------------
List below the Initial Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the certificate numbers and principal
amount of Initial Notes should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF INITIAL NOTES (1) (2) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Amount of
Principal Initial Notes
Name(s) and Address(es) of Registered Holder(s) Certificate Amount of Tendered
(Please fill in, if blank) Number(s)* Initial Notes (if less than all)**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Initial Notes.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated _______, 1999 (the "Prospectus"), of MeriStar Hospitality
Corporation, a Maryland corporation (the "Company"), and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer (the
"Exchange Offer") to exchange up to $150,000,000 aggregate principal amount of
its 8 3/4% Senior Subordinated Notes due 2007 (the "Exchange Notes"), for a like
principal amount of the Company's issued and outstanding 8 3/4% Senior
Subordinated Notes due 2007 (collectively, the "Initial Notes").
The undersigned has completed the appropriate boxes above and below and
signed this Letter to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
This Letter is to be used either if certificates of Initial Notes are to be
forwarded herewith or if delivery of Initial Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company, pursuant to the procedures set forth in "The Exchange Offer--Procedures
for Tendering Initial Notes" in the Prospectus. Delivery of this Letter and any
other required documents should be made to the Exchange Agent. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent.
Holders whose Initial Notes are not immediately available or who cannot
deliver their Initial Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Initial
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer--Procedures for Tendering Initial Notes."
See Instruction 1.
|_| CHECK HERE IF INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________ |_| The Depository Trust
Company
Account
Number________________________________________________________________
Transaction Code
Number________________________________________________________________
|_| CHECK HERE IF INITIAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered
Holder(s)_____________________________________________________________
Name of Eligible Institution that Guaranteed Delivery
______________________________________________________________________
If delivered by book-entry transfer:
Account Number
______________________________________________________________________
Date of execution of Notice of Guaranteed
Delivery___________________________________________
<PAGE>
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name: _______________________________________________________________
Address:______________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Initial Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"). The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make the
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Initial Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Initial Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Initial Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Initial Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Company or the Exchange Agent to be necessary or desirable to
complete the sale, assignment and transfer of the Initial Notes tendered hereby.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on the Company's belief, based on interpretations by the staff
of the Securities and Exchange Commission (the "SEC") to third parties in
unrelated transactions, that the Exchange Notes issued in exchange for the
Initial Notes pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof (other than (i) any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchase Notes from the Company to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such Exchange Notes are
acquired in the ordinary course of such holder's business and such holders have
no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes and are not participating in, and do not
intend to participate in, the distribution of such Exchange Notes. The
undersigned acknowledges that any holder of Initial Notes using the Exchange
Offer to participate in a distribution of the Exchange Notes (i) cannot rely on
the position of the staff of the SEC enunciated in its interpretive letter with
respect to Exxon Capital Holdings Corporation (available April 13, 1989), Morgan
Stanley & Co., Inc. (available June 5, 1991) or similar letters and (ii) must
comply with the registration and prospectus requirements of the Securities Act
in connection with a secondary resale transaction.
The undersigned represents that (i) the Exchange Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of such
holder's business, (ii) such holder has no arrangement or understanding with any
person to participate in the distribution of such Exchange Notes and is not
participating in, and do not intend to participate in, the distribution of such
Exchange Notes, and (iii) such holder is not an "affiliate," as defined in Rule
405 under the Securities Act, of the Company or, if such holder is an affiliate,
that such holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Initial Notes that were acquired as a
result of market-making activities or other trading as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make the
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
<PAGE>
The undersigned, if a California resident, hereby further represents
and warrants that the undersigned (or the beneficial owner of the Initial Notes
tendered hereby, if not the undersigned) (i) is a bank, savings and loan
association, trust company, insurance company, investment company registered
under the Investment Company Act of 1940, pension or profit-sharing trust (other
than a pension or profit-sharing trust of the Company, a self-employed
individual retirement plan, or individual retirement account) or a corporation
which has a net worth on a consolidated basis according to its most recent
audited financial statement of not less than $14,000,000, and (ii) is acquiring
the Exchange Notes for its own account for investment purposes (or for the
account of the beneficial owner of such Exchange Notes for investment purposes).
All authority conferred or agreed to be conferred in this Letter and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in the instructions
contained in this Letter.
The undersigned understands that tenders of the Initial Notes pursuant
to any one of the procedures described under "The Exchange Offer--Procedures for
Tendering Initial Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth
in the Prospectus under "The Exchange Offer--Certain Conditions to the Exchange
Offer," the Company may not be required to accept for exchange any of the
Initial Notes tendered. Initial Notes not accepted for exchange or withdrawn
will be returned to the undersigned at the address set forth below unless
otherwise indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the Exchange Notes (and, if applicable,
substitute certificates representing Initial Notes for any Initial Notes not
exchanged) in the name of the undersigned. Similarly, unless otherwise indicated
under the box entitled "Special Delivery Instructions" below, please deliver the
Exchange Notes (and, if applicable, substitute certificates representing Initial
Notes for any Initial Notes not exchanged) to the undersigned at the address
shown above in the box entitled "Description of Initial Notes."
THE BOOK-ENTRY TRANSFER FACILITY, AS THE HOLDER OF RECORD OF CERTAIN
INITIAL NOTES, HAS GRANTED AUTHORITY TO BOOK-ENTRY TRANSFER FACILITY
PARTICIPANTS WHOSE NAMES APPEAR ON A SECURITY POSITION LISTING WITH RESPECT TO
SUCH INITIAL NOTES AS OF THE DATE OF TENDER OF SUCH INITIAL NOTES TO EXECUTE AND
DELIVER THE LETTER OF TRANSMITTAL AS IF THEY WERE THE HOLDERS OF RECORD.
ACCORDINGLY, FOR PURPOSES OF THIS LETTER OF TRANSMITTAL, THE TERM "HOLDER" SHALL
BE DEEMED TO INCLUDE SUCH BOOK-ENTRY TRANSFER FACILITY PARTICIPANTS.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF INITIAL
NOTES" ABOVE AND SIGNING THIS LETTER AND DELIVERING SUCH NOTES AND THIS LETTER
TO THE EXCHANGE AGENT, WILL BE DEEMED TO HAVE TENDERED THE INITIAL NOTES AS SET
FORTH IN SUCH BOX ABOVE.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9)
Dated:
_______________________________________________________________________________
X _____________________________________________________________________________
_______________________________________________________________________________
X _____________________________________________________________________________
_______________________________________________________________________________
Signature(s) of Owner(s)/or Authorized Signatory Date
Area Code and Telephone
Number________________________________________________________________
If a holder is tendering any Initial Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Initial Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s):
_______________________________________________________________________________
(Please Type or Print)
Capacity:______________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:
_______________________________________________________________________________
(Authorized Signature)
_______________________________________________________________________________
(Title)
_______________________________________________________________________________
(Name of Firm)
Dated:_________________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Exchange Notes are to be issued
in the name of and sent to someone other than the person or persons whose
signature(s) appear on this Letter above.
Issue: Exchange Notes to:
Name(s): ____________________________________________
(Please Type or Print)
____________________________________________
(Please Type or Print)
Address: ____________________________________________
____________________________________________
(Zip Code)
Social Security Number:______________________________
(Complete Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Exchange Notes are to be sent to
someone other than the person or persons whose signature(s) appear(s) on this
Letter above or to such person or persons at an address other than shown in the
box entitled "Description of Initial Notes" on this Letter above.
Mail: Exchange Notes to:
Name(s): ____________________________________________
(Please Type or Print)
____________________________________________
(Please Type or Print)
Address: ____________________________________________
____________________________________________
(Zip Code)
- --------------------------------------------------------------------------------
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATE(S) FOR INITIAL NOTES
OR A CONFIRMATION OF BOOK-ENTRY TRANSFER OF SUCH INITIAL NOTES AND ALL OTHER
REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of this Letter and Initial Notes; Guaranteed Delivery Procedure.
This Letter is to be used to forward, and must accompany, all
certificates representing Initial Notes tendered pursuant to the Exchange Offer.
Certificates representing the Initial Notes in proper form for transfer (or a
confirmation of book-entry transfer of such Initial Notes into the Exchange
Agent's account at the book-entry transfer facility) must be received by the
Exchange Agent at its address set forth herein on or before the Expiration Date.
The method of delivery of this Letter, the Initial Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If such delivery is by mail, it is recommended that registered
mail properly insured, with return receipt requested, be used. In all cases,
sufficient time should be allowed to permit timely delivery.
If a holder desires to tender Initial Notes and time will not permit
such holder's Letter of Transmittal, Initial Notes (or a confirmation of
book-entry transfer of Initial Notes into the Exchange Agent's account at the
book-entry transfer facility) or other required documents to reach the Exchange
Agent on or before the Expiration Date, such holder's tender may be effected if:
(a) such tender is made by or through an Eligible Institution
(as defined below);
(b) on or prior to the Expiration Date, the Exchange Agent has
received a telegram, facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight courier) or
letter from such Eligible Institution setting forth the name and
address of the holder of such Initial Notes tendered, the names in
which the Initial Notes are registered, and if possible, the
certificate numbers of the Initial Notes to be tendered and stating
that the tender is being made thereby and guaranteeing that, within
three business days after the Expiration Date, a duly executed Letter
of Transmittal, or facsimile thereof, together with the Initial Notes
in proper form for transfer (or a confirmation of book entry transfer
of such Initial Notes into the Exchange Agent's account at the
book-entry transfer facility), and any other documents required by this
Letter and the instructions hereto, will be deposited by such Eligible
Institution with the Exchange Agent; and
(c) this Letter, or a facsimile hereof, and Initial Notes in
proper form for transfer (or a confirmation of book-entry transfer of
such Initial Notes into the Exchange Agent's account at the book-entry
transfer facility) and all other required documents are received by the
Exchange Agent within three business days after the Expiration Date.
Unless Initial Notes being tendered by the above-described method are
deposited within the time period set forth above (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documentation),
the Company, at its option, may reject the tender. Copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the purposes
described above are available from the Exchange Agent.
See "The Exchange Offer--Procedures for Tendering Initial Notes" in the
Prospectus.
2. Withdrawals.
Any holder who has tendered Initial Notes may withdraw the tender by
delivering written notice of withdrawal (which may be sent by telegram,
facsimile (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier)) to the Exchange Agent prior to the Expiration
Date. For a
<PAGE>
withdrawal to be effective, a written notice of withdrawal must be received by
the Exchange Agent at its address set forth herein. Any such notice of
withdrawal must (i) specify the name of the person having tendered the Initial
Notes to be withdrawn (the "Depositor"), (ii) identify the Initial Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such Initial Notes), (iii) be timely received and signed by the holder in the
same manner as the original signature on the Letter by which such Initial Notes
were tendered or as otherwise set forth in Instruction 3 below (including any
required signature guarantees), or be accompanied by documents of transfer
sufficient to have the Trustee (as defined in the Prospectus) register the
transfer of such Initial Notes pursuant to the terms of the Indenture into the
name of the person withdrawing the tender and (iv) specify the name in which any
such Initial Notes are to be registered, if different from that of the
Depositor. If Initial Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn Initial Notes or otherwise comply with the book-entry transfer
facility's procedures. See "The Exchange Offer--Withdrawal Rights" in the
Prospectus.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered holder of the Initial Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Initial Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Initial Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
The signatures on this Letter or a notice of withdrawal, as the case
may be, must be guaranteed unless the Initial Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Initial Notes
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in this Letter or (ii) for the account of an
Eligible Institution. In the event that the signatures in this Letter or a
notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantees must be by a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., a clearing agency, an insured credit union, a savings association
or by a commercial bank or trust company having an office or correspondent in
the United States (collectively, "Eligible Institutions"). If Initial Notes are
registered in the name of a person other than the signer of this Letter, the
Initial Notes surrendered for exchange must be endorsed by, or be accompanied by
a written instrument or instruments of transfer or exchange, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
4. Special Issuance and Delivery Instructions.
Tendering holders of Initial Notes should indicate in the applicable
box the name and address to which Exchange Notes issued pursuant to the Exchange
Offer are to be issued or sent, if different from the name or address of the
person signing this Letter. In the case of issuance in a different name, the
employer identification or social security number of the person named must also
be indicated. If no such instructions are given, any Exchange Notes will be
issued in the name of, and delivered to, the name or address of the person
signing this Letter and any Initial Notes not accepted for exchange will be
returned to the name or address of the person signing this Letter.
<PAGE>
5. Backup Federal Income Tax Withholding and Substitute Form W-9.
Under the federal income tax laws, payments that may be made by the
Company on account of Exchange Notes issued pursuant to the Exchange Offer may
be subject to backup withholding at the rate of 31%. In order to avoid such
backup withholding, each tendering holder should complete and sign the
Substitute Form W-9 included in this Letter and either (a) provide the correct
taxpayer identification number ("TIN") and certify, under penalties of perjury,
that the TIN provided is correct and that (i) the holder has not been notified
by the Internal Revenue Service (the "IRS") that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the IRS has notified the holder that the holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Company (or
the Paying Agent under the Indenture governing the Exchange Notes) shall retain
31% of payments made to the tendering holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent or the Company with his or her TIN within sixty (60) days after
the date of the Substitute Form W-9, the Company (or the Paying Agent) shall
remit such amounts retained during the sixty (60) day period to the holder and
no further amounts shall be retained or withheld from payments made to the
holder thereafter. If, however, the holder has not provided the Exchange Agent
or the Company with his or her TIN within such sixty (60) day period, the
Company (or the Paying Agent) shall remit such previously retained amounts to
the IRS as backup withholding. In general, if a holder is an individual, the
taxpayer identification number is the Social Security number of such individual.
If the Exchange Agent or the Company is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by the
IRS. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Exchange Agent. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if Initial Notes are
registered in more than one name), consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Initial Notes to be deemed invalidly tendered, but may require the Company (or
the Paying Agent) to withhold 31% of the amount of any payments made on account
of the Exchange Notes. Backup withholding is not an additional federal income
tax. Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Initial Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes and/or substitute Initial Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Initial Notes tendered hereby, or if tendered
Initial Notes are registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any reason other than
the transfer of Initial Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Initial Notes specified in this Letter.
<PAGE>
7. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or
all conditions enumerated in the Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Initial Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Initial Notes
for exchange.
Neither the Company nor any other person is obligated to give notice of
defects or irregularities in any tender, nor shall any of them incur any
liability for failure to give any such notice.
9. Inadequate Space.
If the space provided herein is inadequate, the aggregate principal
amount of Initial Notes being tendered and the certificate number or numbers (if
available) should be listed on a separate schedule attached hereto and
separately signed by all parties required to sign this Letter.
10. Mutilated, Lost, Stolen or Destroyed Initial Notes.
If any certificate has been lost, mutilated, destroyed or stolen, the
holder should promptly contact the Exchange Agent at the address and telephone
number indicated above for further instructions. The holder will then be
instructed as to the steps that must be taken to replace the certificates(s).
This Letter of Transmittal and related documents cannot be processed until the
Initial Notes have been replaced.
11. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent at the address and telephone number indicated above.
<PAGE>
<TABLE>
<CAPTION>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
- ------------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: MERISTAR HOSPITALITY CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE Part I--Taxpayer Identification Number
Form W-9 ---------------------------------
Enter your taxpayer identification number in the Social Security Number
Department of the Treasury appropriate box. For most individuals, this is your
Internal Revenue Service social security number. If you do not have a
number, see how to obtain a "TIN" in the enclosed OR
Guidelines.
Payer's Request for ----------------------------------
Taxpayer Identification NOTE: If the account is in more than one name, Employer Identification Number
Number ("TIN") see the chart on page 2 of the enclosed Guidelines
and Certification to determine what number to give.
------------------------------------------------------------------------------------------------
Part II--For Payees Exempt From Backup Withholding (see enclosed Guidelines)
------------------------------------------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or the IRS has notified me that I am no
longer subject to backup withholding.
--------------------------------------------------------------------------------------
SIGNATURE_______________________________________ DATE____________________
- ------------------------------------------------------------------------------------------------------------------------------------
Certification Guidelines--You must cross out item (2) of the above certification if you have been notified by the IRS that you are
subject to backup withholding because of underreporting of interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (2).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me, and that I mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31 percent of all
payments made to me on account of the Exchange Notes shall be retained until I
provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within sixty (60) days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31 percent of all reportable payments made to me thereafter will be withheld
and remitted to the Internal Revenue Service until I provide a Taxpayer
Identification Number.
SIGNATURE___________________________________ DATE__________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE EXCHANGE NOTES.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
8 3/4% Senior Subordinated Notes due 2007
in Exchange for New
8 3/4% Senior Subordinated Notes due 2007
Registered Under the Securities Act of 1993, as amended
of
MERISTAR HOSPITALITY CORPORATION
Registered holders of outstanding 8 3/4% Senior Subordinated Notes due
2007 (the "Initial Notes") who wish to tender their Initial Notes in exchange
for a like principal amount of new 8 3/4% Senior Subordinated Notes due 2007
(the "Exchange Notes") and whose Initial Notes are not immediately available or
who cannot deliver their Initial Notes and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to IBJ Schroder Bank & Trust
Company (the "Exchange Agent") prior to the Expiration Date, may use this Notice
of Guaranteed Delivery. This Notice of Guaranteed Delivery may be delivered by
hand or sent by facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight courier) or letter to the Exchange
Agent. See "The Exchange Offer--Procedures for Tendering Initial Notes" in this
Prospectus.
The Exchange Agent for the Exchange Offer is:
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand: By Overnight Delivery:
IBJ Whitehall Bank and IBJ Whitehall Bank and IBJ Whitehall Bank and
Trust Company Trust Company Trust Company
P.O. Box 84 One State Street One State Street
Bowling Green Station New York, NY 10004 New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Attn: Securities Processing
Attn: Reorganization Window, Subcellar One (SC-1) Window, Subcellar One (SC-1)
Operations Department
</TABLE>
For Information, call:
Information and Facsimile
Confirmation: (212) 858-2103
Facsimile: (212) 858-2611 (Eligible Institutions Only)
DELIVERY OF THIS NOTE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN THE PROSPECTUS), SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER
OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
Ladies and Gentleman:
The undersigned hereby tenders the principal amount of Initial Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated ________, 1999 of MeriStar Hospitality Corporation (the
"Prospectus"), receipt of which is hereby acknowledged.
<PAGE>
2
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
Name and address of registered holder as
it appears on the 8 3/4% Senior Certificate Aggregate Principal
Subordinated Notes due 2007 ("Initial Number(s) of Principal Amount Amount of
Notes") Initial Notes Represented by Initial Notes
(Please Print) Tendered Initial Notes* Tendered
<S> <C> <C> <C>
---------------------------------- -------------- -------------- -------------
---------------------------------- -------------- -------------- -------------
---------------------------------- -------------- -------------- -------------
---------------------------------- -------------- -------------- -------------
</TABLE>
If Initial Notes will be delivered by book-entry transfer to The Depositary
Trust Company, provide account number.
Account Number _______________
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Initial Notes, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of
Transmittal within three New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.
Name of Firm:____________________________ _________________________________
(Authorized Signature)
Address:_________________________________ Title:___________________________
_________________________________________ Name:____________________________
(Zip Code) (Please type or print)
Area Code and Telephone Number: Date:____________________________
______________________________________
NOTE: DO NOT SEND INITIAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY.
INITIAL NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
- --------
*Must be in denominations of $1,000 and any integral multiple thereof.
<PAGE>
3
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X __________________________ ____________
X __________________________ ____________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: _________________________
Must be signed by the holder(s) of Initial Notes as their name(s) appear(s)
on certificates for Initial Notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below:
Please print name(s) and address(es)
Name(s): __________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Capacity: __________________________________________________________________
Address(es): __________________________________________________________________
__________________________________________________________________
__________________________________________________________________
