<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995.
OR
/ / TRANSITION PERIOD REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO ________________
COMMISSION FILE NUMBER: 1-7790
------------------------
LA QUINTA INNS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS #74-1724417
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
WESTON CENTRE
112 E. PECAN STREET
P.O. BOX 2636
SAN ANTONIO, TEXAS 78299-2636
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (210) 302-6000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. YES /X/ NO / /
------------------------
Number of shares of Common Stock, $.10 par value outstanding at March 31, 1995:
46,836,089
------------------------
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- --------------------------------------------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LA QUINTA INNS, INC.
COMBINED CONDENSED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................. $ 3,053 $ 2,589
Receivables (net of allowance of $343 and $441):
Trade................................................................... 11,519 10,185
Other................................................................... 1,481 2,363
Supplies.................................................................. 6,872 7,474
Prepaid expenses.......................................................... 2,646 1,202
Deferred income taxes..................................................... 7,223 7,223
--------------- ------------------
Total current assets.................................................. 32,794 31,036
--------------- ------------------
Notes receivable, excluding current installments (net of allowance of $2,593
and $3,351)................................................................ 6,629 7,320
--------------- ------------------
Investments................................................................. 3,242 2,647
--------------- ------------------
Properties held for sale, at estimated net realizable value................. 2,664 2,664
--------------- ------------------
Land held for future development, at cost................................... 1,324 1,324
--------------- ------------------
Property and equipment, at cost, substantially all pledged:
Buildings................................................................. 774,524 767,665
Furniture, fixtures and equipment......................................... 126,348 124,336
Land and leasehold improvements........................................... 152,568 150,311
--------------- ------------------
Total property and equipment.......................................... 1,053,440 1,042,312
Less accumulated depreciation and amortization............................ 262,016 252,372
--------------- ------------------
Net property and equipment............................................ 791,424 789,940
--------------- ------------------
Deferred charges and other assets, at cost less applicable amortization..... 10,633 10,850
--------------- ------------------
Total assets.......................................................... $ 848,710 $ 845,781
--------------- ------------------
--------------- ------------------
</TABLE>
See accompanying notes to combined condensed financial statements.
2
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
COMBINED CONDENSED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
(unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long term debt (note 3)........................... $ 15,023 $ 39,976
Accounts payable:
Trade................................................................... 11,318 10,292
Other................................................................... 5,110 6,386
Income taxes............................................................ 6,685 3,641
Accrued expenses:
Payroll and employee benefits........................................... 20,662 21,238
Interest................................................................ 5,946 3,023
Property taxes.......................................................... 5,808 8,387
Other................................................................... 1,277 1,125
--------------- ----------
Total current liabilities............................................. 71,829 94,068
--------------- ----------
Long term debt, excluding current installments (note 3)..................... 455,503 448,258
--------------- ----------
Deferred income taxes, pension and other.................................... 20,592 22,125
--------------- ----------
Partners' capital........................................................... 96,220 92,099
--------------- ----------
Shareholders' equity:
Common stock ($.10 par value; 100,000,000 shares
authorized, 49,198,092 and 48,758,528 shares issued)..................... 4,920 4,876
Additional paid-in capital................................................ 74,164 68,759
Retained earnings......................................................... 144,309 134,409
Minimum pension liability................................................. (1,474) (1,474)
--------------- ----------
221,919 206,570
Less treasury stock, at cost (2,362,003 and 2,361,366 shares)............. 17,353 17,339
--------------- ----------
Total shareholders' equity.............................................. 204,566 189,231
--------------- ----------
Total liabilities and shareholders' equity.............................. $ 848,710 $ 845,781
--------------- ----------
--------------- ----------
</TABLE>
See accompanying notes to combined condensed financial statements.
3
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------------
1995 1994
--------------- ------------------
<S> <C> <C>
Revenues:
Inn....................................................................... $ 94,723 $ 76,038
Restaurant rental and other............................................... 1,965 1,819
Management services....................................................... 47 386
--------------- --------
Total revenues.......................................................... 96,735 78,243
--------------- --------
Operating costs and expenses:
Direct.................................................................... 49,352 44,665
Corporate................................................................. 4,510 4,828
Depreciation, amortization and fixed asset retirements.................... 10,181 8,473
--------------- --------
Total operating costs and expenses...................................... 64,043 57,966
--------------- --------
Operating income........................................................ 32,692 20,277
--------------- --------
Other (income) expense:
Interest income........................................................... (280) (437)
Interest on long term debt................................................ 10,544 9,152
Partners' equity in earnings and losses................................... 4,428 2,471
Loss on property transactions............................................. -- 6
--------------- --------
Earnings before income taxes............................................ 18,000 9,085
Income taxes................................................................ 6,930 3,543
--------------- --------
Net earnings............................................................ $ 11,070 $ 5,542
--------------- --------
--------------- --------
Net earnings per common and common equivalent share..................... $ .23 $ .11
--------------- --------
--------------- --------
Weighted average number of common and common equivalent shares outstanding
(note 2)................................................................... 49,086 48,227
--------------- --------
--------------- --------
</TABLE>
See accompanying notes to combined condensed financial statements.
4
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
-----------------------------------
1995 1994
--------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings.............................................................. $ 11,070 $ 5,542
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization of property and equipment and fixed asset
retirements............................................................ 10,181 8,473
Partners' equity in earnings and losses................................. 4,428 2,471
Loss on property transactions........................................... -- 6
Changes in operating assets and liabilities:
Receivables........................................................... (785) (2,048)
Income taxes.......................................................... 6,192 1,474
Supplies and prepaid expenses......................................... (1,101) (389)
Accounts payable and accrued expenses................................. 384 (2,730)
Deferred charges and other assets..................................... 65 298
Deferred credits and other............................................ 561 (1,760)
--------------- ----------
Net cash provided by operating activities........................... 30,995 11,337
--------------- ----------
Cash flows from investing activities:
Capital expenditures other than acquisitions.......................... (7,601) (31,467)
Proceeds from property transactions................................... 4 389
Purchase and conversion of inns....................................... (7,553) --
Purchase of partners' equity interests................................ -- (9,322)
Decrease in notes receivable and other investments.................... 437 388
--------------- ----------
Net cash used by investing activities............................... (14,713) (40,012)
--------------- ----------
Cash flows from financing activities:
Proceeds from secured line of credit and long term borrowings......... 122,150 212,102
Principal payments on secured line of credit and long term
borrowings........................................................... (138,778) (191,079)
Capital distributions to partners..................................... (307) (78)
Dividends to shareholders............................................. (1,170) (7)
Purchases of treasury stock........................................... (102) --
Net proceeds from stock transactions.................................. 2,389 253
--------------- ----------
Net cash (used) provided by financing activities.................... (15,818) 21,191
--------------- ----------
Increase (decrease) in cash and cash equivalents............................ 464 (7,484)
Cash and cash equivalents at beginning of period............................ 2,589 23,848
--------------- ----------
Cash and cash equivalents at end of period.................................. $ 3,053 $ 16,364
--------------- ----------
--------------- ----------
Supplemental disclosure of cash flow information:
Interest paid............................................................... $ 7,679 $ 6,851
--------------- ----------
--------------- ----------
Income tax paid............................................................. $ 344 $ 23
--------------- ----------
--------------- ----------
Income tax refunds.......................................................... $ (51) $ (12)
--------------- ----------
--------------- ----------
</TABLE>
See accompanying notes to combined condensed financial statements.
5
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------------
1995 1994
--------------- ---------------------
<S> <C> <C>
Supplemental Schedule of Non-Cash Investing and Financing Activities
Tax benefit from stock options exercised.................................... $ 3,148 $ 292
------- -----
------- -----
</TABLE>
See accompanying notes to combined condensed financial statements.
6
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS (continued)
LA QUINTA INNS, INC.
NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(1) Basis of Presentation
The accompanying unaudited combined condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, which are necessary for a fair presentation of financial
position and results of operations have been made. The combined condensed
financial statements should be read in conjunction with the combined financial
statements and notes thereto included in the December 31, 1994 Annual Report on
Form 10-K.
(2) Earnings per Common and Common Equivalent Share
The Board of Directors authorized three-for-two stock splits effective in
March 1994 and October 1994. Earnings per share, the weighted average number of
shares outstanding, shareholders' equity and the following information have been
adjusted to give effect to each of these distributions. Fully diluted earnings
per share is not materially different than primary earnings per share.
The weighted average number of common and common equivalent shares used in
the computation of earnings per share are as follows:
<TABLE>
<CAPTION>
Three months ended March 31
-----------------------------------
1995 1994
--------------- ------------------
<S> <C> <C>
Weighted average common shares issued................... 49,071,665 48,167,046
Effect of treasury stock................................ (2,362,003) (2,546,657)
Dilutive effect of stock options........................ 2,376,092 2,606,429
--------------- ------------------
Weighted average number of common and common
equivalent shares.................................... 49,085,754 48,226,818
--------------- ------------------
--------------- ------------------
</TABLE>
(3) Long Term Debt
On April 21, 1995, the company completed negotiations to amend its existing
credit facilities. The amended credit facilities provide the company with a
$75,000,000 Secured Line of Credit and a $141,500,000 Secured Term Credit
Facility. Borrowings under the Secured Line of Credit will mature May 31, 1999.
Borrowings under the Secured Term Credit Facility require semi-annual principal
payments commencing May 30, 1997 through May 30, 2002. Borrowings under each of
these credit facilities bear interest at either LIBOR, the prime rate or
certificate of deposit rate, plus an applicable margin, as defined in the
related credit agreements. Currently, borrowings bear interest at either LIBOR
plus 3/4%, the prime rate or the certificate of deposit rate plus 7/8%.
The applicable margin is determined quarterly based upon predetermined
levels of indebtedness to cash flows as defined in the related credit
agreements. The company pays a commitment fee of 0.25% per annum on the daily
average unused portion of the credit facilities.
On April 21, 1995, the $35,000,000 Unsecured Line of Credit among La Quinta
Development Partners, L.P. (the "Development Partnership") and participating
banks was amended. The Development Partnership also completed negotiations for a
$30,000,000, 364-day Unsecured Line of Credit with participating banks. The
Unsecured Line of Credit and 364-day Unsecured Line of Credit bear interest at
either LIBOR, the prime rate or certificate of deposit rate, plus the
Development Partnership's applicable margin, as defined in the related credit
agreements. As of April 21, 1995, borrowings under both Unsecured Lines of
Credit bear interest at either LIBOR plus 5/8%, the prime rate or the
certificate of deposit rate plus 3/4%. The Development Partnership's applicable
margin is determined quarterly based upon predetermined levels of the
Partnerships indebtedness to cash flows, as defined in the related credit
agreements. The Unsecured Line of Credit and 364-day Unsecured Line of Credit
mature May 31, 1997 and April 20, 1996, respectively. The Development
Partnership pays a commitment fee of 0.20% and 0.15% per annum on the daily
unused portion of the Unsecured Line of Credit and the 364-Day Unsecured Line
of Credit, respectively.
7
<PAGE>
At March 31, 1995, the company had $57,650,000 available on its existing
credit facilities including the Unsecured Line of Credit in the Development
Partnership.
As a result of the amendments discussed above, annual maturities for the
four years subsequent to December 31, 1995 are as follows:
<TABLE>
<S> <C>
(in thousands)
1996.............................................................. $ 15,996
1997.............................................................. 55,374
1998.............................................................. 42,774
1999.............................................................. 87,513
</TABLE>
(4) Contingencies
In September 1993, a former officer of the company filed suit against the
company and certain of its directors and their affiliate companies (the "La
Quinta Defendants"). The suit alleges breach of an employment agreement,
misrepresentation, wrongful termination, self-dealing, breach of fiduciary duty,
usurpation of corporate opportunity and tortious interference with contractual
relations. Compensatory damages of $2,500,000 and exemplary damages of
$5,000,000 are sought in the action. The Court has pending before it the La
Quinta Defendants' motion for summary judgment. The parties subsequently filed a
required, joint Pre-Trial Order, in which the plaintiff has conceded a number of
his claims. Currently, no trial date has been set for this action. The company
intends to vigorously defend itself against this suit.
The company is also party to various lawsuits and claims generally
incidental to its business. The ultimate disposition of these and the above
discussed matter are not expected to have a material adverse effect on the
company's financial position or results of operations.
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
In keeping with our growth plan for 1995, we acquired two existing
lodging facilities during January 1995 and began renovating and converting
them to the La Quinta brand.
During the second quarter of 1994, we purchased the limited partners'
interests in one of our combined unincorporated joint ventures which owned one
inn. On July 1, 1994, we purchased nine inns which we managed (the "Managed
Inns") and were previously held in two unincorporated joint ventures with CIGNA
Investments, Inc. ("CIGNA"). We have continued to operate these properties as La
Quinta inns. Also during 1994, we acquired six additional existing lodging
facilities. One of these inns was closed for renovations and re-opened during
the second quarter of 1995.
During 1994, we entered into four development and management agreements with
four separate Mexican investor groups (the "Development Accord") for the purpose
of developing 22 La Quinta inns in 15 cities in Mexico. The economic conditions
in Mexico have resulted in a delay of the start of construction of La Quinta
inns under the Development Accord. We anticipate the construction of the first
La Quinta inn under the Development Accord will begin when economic conditions
in Mexico stabilize. Further development in Mexico will occur through similar
arrangements with Mexican investors.
The following table describes the composition of inns in the La Quinta chain
at:
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
----------------------------------- -----------------------------------
La Quinta La Quinta
Equivalent Equivalent
Inns Rooms Rooms(1) Inns Rooms Rooms(1)
----- --------- ----------- ----- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Owned 100%........................................... 178 22,507 22,507 176 22,296 22,296
Owned 40-67%......................................... 49 6,675 2,803 49 6,675 2,803
--- ------ ------ --- ------ ------
Total company owned and operated..................... 227 29,182 25,310 225 28,971 25,099
Under development.................................... 1 100 40 1 100 40
Licensed inns........................................ 2 268 -- 2 268 --
--- ------ ------ --- ------ ------
230 29,550 25,350 228 29,339 25,139
--- ------ ------- --- ------ ------
--- ------ ------- --- ------ ------
8
<PAGE>
<FN>
- ------------------------
(1) Represents the company's proportionate ownership in system rooms.
</TABLE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1995
Inn revenues grew to $94,723,000 during the first quarter of 1995, a 24.6%
increase over 1994. The growth resulted primarily from an improvement in revenue
per available room ("REVPAR") of 15.1% from the first quarter of the prior year.
The improvement was driven by a 3.5 percentage point rise in occupancy and a
9.2% increase in average room rate. The increases in occupancy and rate are due,
in part, to our completion of the reimaging program during the second quarter of
1994. Additionally, our number of available rooms increased due to the
acquisitions of two inns in January 1995, CIGNA in July 1994 and five operating
inns during the last half of 1994.
The increase in total direct expenses period over period is mainly
associated with the increase in inn revenues. However, direct expenses per
occupied room decreased to $27.34 during the first quarter of 1995 from $28.18
during the first quarter of 1994. The improvement in cost per occupied room was
primarily due to efficiencies we achieved in labor costs, repairs and
maintenance and utilities.
Corporate expenses decreased 6.6% to $4,510,000 during the first quarter of
1995. Corporate expenses per available room also decreased to $1.72 per
available room from $1.91 per available room (including Managed Inns). These
decreases are a result of our efforts to control fixed costs, while we execute
our growth plan, in order to increase operating profit.
Interest expense increased 15.2% to $10,544,000 during the first quarter of
1995 primarily due to the increase in the outstanding balances on our credit
facilities attributable to the acquisitions of CIGNA and eight existing lodging
facilities.
Depreciation, amortization and fixed asset retirements increased 20.2%
during the first quarter of 1995 over the corresponding period of 1994. This is
due primarily to the increase in fixed assets resulting from the acquisition of
inns and the reimaging program. Depreciation, amortization and fixed asset
retirements also include retirements associated with our refurbishment program
and other capital improvements.
As a result of the above, operating income increased 61.2% to $32,692,000
during the first quarter of 1995. Additionally, operating margins were up 7.9
percentage points.
Our effective tax rate for the quarter ended March 31, 1995 was 38.5%,
compared with 39.0% for 1994. The rate decrease reflects a reduction of
estimated state income tax expense.
ANALYSIS OF CASH FLOWS
Cash from operations totaled $30,995,000 for the first three months of 1995,
an increase of over 100% from the corresponding period in 1994. The increase is
primarily a result of increases in our revenue and operating margins.
Cash used by investing activities declined to $14,713,000 during the first
quarter of 1995, a decrease of 63.2% over the first quarter of 1994. The 1994
capital expenditures include expenditures related to our reimaging program and
the purchase of the remaining Units of La Quinta Motor Inns Limited Partnership.
The 1995 capital expenditures include the purchase of two inns in January 1995.
Payments on our credit facilities, dividends to shareholders and a reduction
in the proceeds received on our credit facilities and long term borrowings
contributed to the increase in cash used by financing activities.
As of March 31, 1995, we had $57,650,000 available on our existing credit
facilities including the Unsecured Line of Credit in the Development
Partnership.
9
<PAGE>
On April 21, 1995, we completed negotiations to amend our existing credit
facilities as described in note 3 to combined condensed financial statements.
As of April 21, 1995, $90,600,000 was available on our amended credit facilities
including the credit facilities in the Development Partnership.
EBITDA increased to $42,873,000 during the first quarter of 1995, an
increase of 49.1% over the 1994 comparable period. EBITDA, as used above, is
defined by our debt covenants as earnings before net interest expense, income
taxes, depreciation, amortization and fixed asset retirements, partners' equity
in earnings and losses and loss on property transactions. We believe this
definition of EBITDA provides a meaningful measure of our ability to service our
debt.
Capital expenditures planned by La Quinta for 1995 focus on acquisition and
conversion of existing inns and construction of inns in markets where existing
inns for acquisition and conversion are not readily available. We believe that
funds on hand, internally generated future cash flows and funds available on our
credit facilities will be sufficient to meet all our capital requirements, as
well as our operating expenses and debt service requirements. From time to time,
we will continue to evaluate the necessity of other financing alternatives.
10
<PAGE>
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors
La Quinta Inns, Inc.:
We have reviewed the combined condensed balance sheet of La Quinta Inns,
Inc. as of March 31, 1995, and the related combined condensed statements of
operations and cash flows for the three-month periods ended March 31, 1995 and
1994. These combined condensed financial statements are the responsibility of
the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the combined condensed financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the combined balance sheet of La Quinta Inns, Inc. as of December 31,
1994 and the related combined statements of operations, shareholders' equity,
and cash flows for the year then ended (not presented herein); and in our report
dated January 23, 1995, we expressed an unqualified opinion on those combined
financial statements. In our opinion, the information set forth in the
accompanying combined condensed balance sheet as of December 31, 1994, is fairly
stated, in all material respects, in relation to the combined balance sheet from
which it has been derived.
KPMG Peat Marwick LLP
San Antonio, Texas
April 21, 1995
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Actions for negligence or other tort claims occur routinely as an ordinary
incident to the company's business. Several lawsuits are pending against the
company which have arisen in the ordinary course of the business, but none of
these proceedings involves a claim for damages (in excess of applicable excess
umbrella insurance coverages) involving more than 10% of current assets of the
company (also see note 4 to combined condensed financial statements). The
company does not anticipate any amounts which it may be required to pay as a
result of an adverse determination of such legal proceedings, individually or in
the aggregate, or any other relief granted by reason thereof, will have a
material adverse effect on the company's financial position or results of
operations.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
A list of all exhibits filed or included as part of this Quarterly
Report on Form 10-Q is as follows:
<TABLE>
<CAPTION>
Exhibits By Reference Descriptions
<S> <C> <C>
10(a) Filed Herewith Fourth Amended and Restated Master Covenant
Agreement dated April 21, 1995.
10(b) Filed Herewith Second Amendment to Amended and Restated Credit
Agreement dated April 21, 1995.
15 Filed Herewith Letter from KPMG Peat Marwick LLP dated May 11, 1995
27 Filed Herewith Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
No Current Reports on Form 8-K have been filed during the period for which
this Quarterly Report on Form 10-Q is filed.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LA QUINTA INNS, INC.
(Registrant)
<TABLE>
<S> <C>
May 15, 1995 By:/S/ WILLIAM C. HAMMETT, JR.
-------------------------------------
William C. Hammett, Jr.
Senior Vice President - Accounting
and Administration
May 15, 1995 By:/S/ IRENE C. PRIMERA
-------------------------------------
Irene C. Primera
Vice President - Controller
</TABLE>
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibits By Reference Descriptions Page
<S> <C> <C> <C>
10(a) Filed Herewith Fourth Amended and Restated Master Covenant
Agreement dated April 21, 1995.
10(b) Filed Herewith Second Amendment to Amended and Restated Credit
Agreement dated April 21, 1995.
15 Filed Herewith Letter from KPMG Peat Marwick LLP dated May 11, 1995
27 Filed Herewith Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10(a)
==============================================================================
FOURTH AMENDED AND RESTATED
MASTER COVENANT AGREEMENT
Dated as of
April 21, 1995
among
LA QUINTA INNS, INC.
and
THE BANKS LISTED HEREIN
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Parties 1
Section 2. Background 1
Section 3. Definitions 1
Section 4. Business Covenants of La Quinta 11
4.1 MAINTENANCE OF PROPERTY, INSURANCE, ACCOUNTING PRACTICES,
CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . . . 11
4.2 INSPECTION OF PROPERTIES AND BOOKS . . . . . . . . . . . . . 11
4.3 RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . 12
4.4 MERGER AND SALE OF ASSETS. . . . . . . . . . . . . . . . . . 12
4.5 SENIOR DEBT TO CAPITALIZATION RATIO. . . . . . . . . . . . . 13
4.6 CONTINGENT LIABILITIES . . . . . . . . . . . . . . . . . . . 13
4.7 INCURRENCE AND RETENTION OF DEBT . . . . . . . . . . . . . . 13
4.8 INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 14
4.9 NOTICE OF LITIGATION . . . . . . . . . . . . . . . . . . . . 14
4.10 TOTAL DEBT RATIO . . . . . . . . . . . . . . . . . . . . . . 14
4.11 CASH FLOW RATIO. . . . . . . . . . . . . . . . . . . . . . . 14
4.12 SENIOR DEBT RATIO. . . . . . . . . . . . . . . . . . . . . . 14
4.13 OPERATING LEASES . . . . . . . . . . . . . . . . . . . . . . 15
4.14 LAND HELD FOR DEVELOPMENT AND LAND HELD FOR SALE . . . . . . 15
4.15 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.16 ACCOUNTING CHANGES . . . . . . . . . . . . . . . . . . . . . 15
4.17 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT DOCUMENTS. . 15
4.18 LEASE-BACKS. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . 16
4.20 ERISA COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . 17
4.21 BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.22 DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.23 BANK DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.24 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . 17
4.25 DEBT OF INVESTMENTS, LQ-I AND LQ-II. . . . . . . . . . . . . 18
4.26 LIENS OF INVESTMENTS, LQ-I AND LQ-II . . . . . . . . . . . . 18
Section 5. Information as to La Quinta 18
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS BY LA QUINTA. . . . . 18
5.2 OFFICER'S CERTIFICATE. . . . . . . . . . . . . . . . . . . . 20
Section 6. Default 21
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Section 7. Miscellaneous 21
7.1 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 AMENDMENT, WAIVER, CONSENTS AND APPROVALS. . . . . . . . . . 23
7.3 NOTICE OF DEFAULT ON BANK DEBT . . . . . . . . . . . . . . . 23
7.4 CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 PAYMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . . 23
7.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 BINDING UPON SUCCESSORS. . . . . . . . . . . . . . . . . . . 23
7.8 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . 24
7.9 TERMINATION AND EFFECTIVENESS OF THIS AGREEMENT. . . . . . . 24
7.10 ADJUSTMENT OF PERCENTAGES. . . . . . . . . . . . . . . . . . 24
7.11 EXCEPTIONS TO COVENANTS. . . . . . . . . . . . . . . . . . . 24
7.12 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . 24
7.13 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.14 ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . 25
Exhibit A: Bank Debt
Exhibit B: Existing Investments
Exhibit C: Subsidiaries and Unincorporated Ventures Investments
Exhibit D: Existing Liens
Exhibit E: Guarantees and Contingent Obligations
Exhibit F: Confidentiality Agreement
Exhibit G: Significant Investments
Exhibit H: Investment Policy - Previously filed as an exhibit to
exhibit 10(x) to the Registrant's Registration Statement
on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.
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FOURTH AMENDED AND RESTATED
LA QUINTA INNS, INC.
MASTER COVENANT AGREEMENT
SECTION 1. PARTIES.
This Fourth Amended and Restated Master Covenant Agreement
("Agreement") is by and among La Quinta Inns, Inc., a Texas corporation ("La
Quinta"), NationsBank of Texas, N.A., The Frost National Bank, First
Interstate Bank of Texas, N.A., Citicorp USA, Inc., Texas Commerce Bank
National Association, Bank of Scotland, Bank of America Illinois, Bank One,
Texas, N.A., and U.S. Bank of Washington, National Association, and the other
banks from time to time a party hereto pursuant to Section 7.13
(individually, a "Bank", collectively, the "Banks").
SECTION 2. BACKGROUND.
La Quinta and certain of the Banks are parties to a Third Amended and
Restated Master Covenant Agreement, dated as of January 25, 1994 (said
Third Amended and Restated Master Covenant Agreement, as amended, the
"Prior Master Covenant Agreement"), the effect of which is to incorporate
the definitions, provisions and covenants set forth therein into certain
credit facilities that La Quinta has with certain of the Banks.
La Quinta and the Banks desire to enter into this Agreement in order
to amend certain terms of, and restate in its entirety, the Prior Master
Covenant Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, La Quinta and the Banks agree as
follows:
SECTION 3. DEFINITIONS.
For purposes hereof, the terms defined in this Section 3 shall have
the following meanings, and the singular shall include the plural, and vice
versa, unless otherwise specifically required by the context (capitalized
terms used herein and not otherwise defined herein shall have the meaning
given to such terms in the Credit Agreement hereinafter defined):
"AFFILIATE" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person or (ii) any other Person that owns or controls 10% or
more of any class of equity securities of that Person or any of its
Affiliates. For purposes of this definition, "CONTROL" (including with
correlative meanings, the terms "CONTROLLING," "CONTROLLED BY," and UNDER
COMMON CONTROL WITH"), as applied to any Persons, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of that Person, whether through the ownership
of voting securities or by contract or otherwise.
<PAGE>
"AGREEMENT DATE" means the date of this Agreement.
"AUTHORIZED OFFICER" means any of the following officers of La Quinta:
President, Senior Vice President-Accounting & Administration, Senior Vice
President-Finance, Vice President & General Counsel or Vice President-
Treasurer.
"BANK DEBT" means (i) all obligations, indebtedness and liabilities,
direct, contingent or otherwise (including through participations), whether
funded or unfunded, of La Quinta to any Bank listed on EXHIBIT A attached
hereto and made a part hereof (or any Assignee a party hereto pursuant to
Section 7.13), arising under and otherwise in connection with the loans
and/or credit facilities briefly described in EXHIBIT A, as modified to
indicate (a) adjustments of percentages (and related amounts) from time to
time as provided for in Sections 5.1(A)(2), 5.1(B)(3), 7.10 and 7.13 hereof
and (b) up to an additional $40,000,000 in aggregate principal amount of
unsecured Debt owed by La Quinta to one or more Banks, and (ii) all
interest accruing on all or any part thereof and attorneys' fees incurred
in the enforcement or the collection of all or any part thereof.
"CAPITAL LEASES" mean all capital leases and subleases, as defined in
the Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13, dated November 1976, as amended.
"CAPITAL STOCK" means, with respect to any Person, any capital stock,
partnership or joint venture interests of such Person and shares,
interests, participations or other ownership interests (however designated)
of any Person and any rights (other than debt securities convertible into
corporate stock), warrants or options to purchase any of the foregoing.
"COMBINED" includes, with respect to financial statements and the
calculations of the covenants herein and the definitions related thereto,
the combined accounts of La Quinta and its Subsidiaries and Unincorporated
Ventures which are included in La Quinta's Annual Report to Shareholders
and in La Quinta's Form 10-K filed with the S.E.C. (the "COMBINED FINANCIAL
STATEMENTS").
"CREDIT AGREEMENT" means that certain Amended and Restated Credit
Agreement, dated as of January 25, 1994, among La Quinta, the lenders a
party thereto and NationsBank of Texas, N.A., as Administrative Lender, as
amended, supplemented, modified or restated from time to time.
"CURRENT MATURITIES" means, with respect to any Person, the principal
portion payable by such Person on Long Term Debt during the twelve-month
period immediately succeeding the date of determination.
"DEBT" of any Person means, at any date, without duplication, all
obligations, contingent or otherwise, (i) of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (ii) of such Person
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evidenced by bonds, debentures, notes or other similar instruments, (iii)
representing the balance deferred and unpaid of the purchase price of any
property or services (other than accounts payable or other obligations
arising in the ordinary course of business), if and to the extent any of the
foregoing described in clauses (i), (ii) and (iii) would appear as a
liability on the balance sheet of such Person, (iv) of such Person in respect
of bankers' acceptances, letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), (v) of such Person under
Capital Leases, (vi) all liabilities secured by a Lien on any asset of such
Person to the extent of the value of such asset, whether or not such
liability is an obligation of such Person, (vii) all liability of others
guaranteed by such Person (but only to the extent of such guarantees), (viii)
to the extent not otherwise included, obligations of such Person under
currency risk-hedging agreements and Interest Rate Agreements, (ix) the
liquidation preference and any mandatory redemption payment obligations
(without duplication) of such Person's Subsidiaries in respect of preferred
stock issued by any such Subsidiary, (x) in the case of such Person, the
liquidation preference and any mandatory redemption payment obligations
(without duplication) in respect of Disqualified Capital Stock and (xi) in
the case of such Person, unfunded vested benefits under any Plan.
"DEFAULT" means any default with respect to any Bank Debt which would
permit the acceleration of such Bank Debt, whether or not there has been
satisfied any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further condition,
event or act.
"DISQUALIFIED CAPITAL STOCK" means with respect to any Person any
series or class of Capital Stock of such Person which is or may be required
to be redeemed, in whole or in part, or may be put to such Person or any of
its Subsidiaries, in whole or in part, at the option of the holder thereof,
on or prior to the final maturity of the Senior Subordinated Notes, or is
or may be convertible or exchangeable into or exercisable for such Capital
Stock on or prior to the final maturity of the Senior Subordinated Notes;
PROVIDED, that Capital Stock will not be deemed to be Disqualified Capital
Stock if it may only be so redeemed or put solely in consideration of
Qualified Capital Stock.
"DOMESTIC SUBSIDIARY" means any Subsidiary of La Quinta organized
under the laws of any state within the United States.
"EBITDA" means, for any period, determined in accordance with GAAP
with respect to La Quinta, its Subsidiaries and Unincorporated Ventures,
the sum of (i) Operating Income, plus (ii) nonrecurring, non-cash charges
which decrease Operating Income, plus (iii) depreciation, amortization and
non-cash fixed asset retirements, minus (iv) nonrecurring credits which are
included in Operating Income.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means any default with respect to any Bank Debt
which would permit the acceleration of such Bank Debt, provided there has
been satisfied any requirement in
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connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act.
"EXISTING INVESTMENTS" means those Investments described on EXHIBIT B
hereto.
"FOREIGN SUBSIDIARY" means any Subsidiary which is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles , set forth in
the Opinions of the Accounting Principles Board of the American Institute
of Certified Public Accountants and/or in statements of the Financial
Accounting Standards Board, which are applicable in the circumstances as of
the date in question and which shall be applied by the independent
accounting firm which certifies La Quinta's Combined Financial Statements
and Parent Company financial statements, and the requisite that such
principles be applied on a consistent basis shall mean that the accounting
principles observed in a current period are comparable in all material
respects to those applied in a preceding period, other than as a result of
changes required by modifications to GAAP. Unless otherwise indicated
herein, all accounting terms will be defined according to GAAP.
Notwithstanding the foregoing, all determinations and computations with
respect to financial covenants and ratios provided for in this Agreement
shall be made in accordance with GAAP as in effect on the date hereof.
"INTEREST EXPENSE" of any Person means, for any period, the aggregate
interest expense in respect of Debt (including amortization of original
issue discount and non-cash interest payments or accruals, and dividends on
Disqualified Capital Stock, but excluding amortization of Debt issuance
costs) of such Person and all commissions, discounts, other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and costs associated with currency and Interest Rate Agreements,
all in accordance with GAAP; PROVIDED, that interest expense attributable
to that portion of the Debt of another Person that is a direct or indirect,
contingent or primary, recourse obligation of such Person subsequent to the
Agreement Date shall be added thereto.
"INTEREST RATE AGREEMENTS" means any obligation of any Person under
interest rate exchange, collar, cap, swap or similar agreements providing
interest rate protection.
"INVESTMENT" means, in one or a series of related transactions, any
direct or indirect acquisition of all or substantially all assets of any
Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, capital stock or other securities of any other
Person, or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution or
transfer of property, assets or value to, or investment in, any other
Person, including, without limitation the incurrence or sufferance of Debt
or the purchase of accounts receivable by any other Person that are not
current assets or do not arise in the ordinary course of business.
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"INVESTMENTS" shall mean La Quinta Investments, Inc., a Delaware
corporation and wholly-owned Subsidiary of La Quinta.
"INVESTMENT POLICY" shall mean that certain Amended and Restated La
Quinta Inns, Inc. Statement of Investment Policy as of October 1989 in
effect on the date of this Agreement as set forth as EXHIBIT H hereto.
"LAND HELD FOR DEVELOPMENT" means that certain land of La Quinta, its
Subsidiaries and Unincorporated Ventures which is held for the future
development of inns and related facilities and which is identified on the
Combined Financial Statements as "Land Held for Development."
"LAND HELD FOR SALE" means that certain land of La Quinta, its
Subsidiaries and Unincorporated Ventures which is held for sale and which
is identified on the Combined Financial Statements as "Land Held for Sale."
"LIEN" means, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest,
title retention agreement, levy, execution, seizure, attachment,
garnishment or other encumbrance of any kind in respect of such property,
whether or not choate, vested or perfected.
"LONG TERM DEBT" means any obligation which is due one year or more
from the date of creation thereof which under GAAP is shown as a liability,
plus (without duplication) amounts equal to the aggregate net rentals
(after making allowances for any interest, taxes or other expenses included
therein) payable more than one year from the date of creation thereof under
Capital Leases.
"LQ-I" shall mean LQ-INVESTMENTS I, a Texas general partnership
between La Quinta and Investments.
"LQ-II" shall mean LQ-INVESTMENTS II, a Texas general partnership
between La Quinta and Investments.
"MAINTENANCE CAPITAL EXPENDITURES" means an amount equal to the
product of room revenues (as disclosed in La Quinta's Form 10-K and 8-Q) of
La Quinta, its Subsidiaries and Unincorporated Ventures multiplied by 5%,
calculated for the four consecutive fiscal quarters immediately preceding
the date of such determination.
"MATERIAL ADVERSE EFFECT" shall have the meaning given to such term in
the Credit Agreement.
"MATERIAL AMOUNT" shall have the meaning given to such term in the
Credit Agreement.
"NET CASH PROCEEDS" means the aggregate amount of cash received by La
Quinta in respect of (i) any sale, lease or other disposition of an asset,
less the sum of (a) all fees,
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commissions and other expenses incurred in connection with such sale,
including the amount (estimated in good faith by La Quinta) of income,
franchise, sales and other applicable taxes required to be paid by La Quinta
in connection with such sale and (b) the aggregate amount of cash so received
which is used to retire any existing Debt of La Quinta which is required to
be repaid in connection with such sale, and (ii) any payments received in
respect of any notes receivable listed on EXHIBIT B hereto.
"NET INCOME" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, as determined in accordance
with GAAP.
"NET INTEREST EXPENSE" means, with respect to any Person for any
period, the sum of (i) Interest Expense of such Persons for such period
minus (ii) interest income of such Person for such period.
"NET WORTH" means an amount equal to the sum of (a) the Capital Stock
and additional paid-in-capital plus retained earnings (or minus accumulated
deficit) of La Quinta and its Subsidiaries and (b) Partners' Capital, less
(i) treasury stock and (ii) amounts attributable to the extent included,
(1) to any write-up in book value of assets resulting from a revaluation
thereof subsequent to December 31, 1992, and (2) to Disqualified Capital
Stock, all in accordance with GAAP.
"OFFICER'S CERTIFICATE" means a certificate signed in the name of La
Quinta by an Authorized Officer.
"OPERATING INCOME" means, with respect to any Person for any period,
the operating income (loss) of such Person, as determined in accordance
with GAAP.
"OPERATING LEASE" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting
Standards No. 13, dated November, 1976 or otherwise in accordance with
GAAP.
"PARENT COMPANY" includes, with respect to financial statements and
the calculations of the covenants herein and the definitions related
thereto, the uncombined, consolidated financial statements of La Quinta and
its Subsidiaries, including equity method investments, as defined by GAAP,
in Unincorporated Ventures, and designated "La Quinta Inns, Inc. (Parent
Company and Wholly-Owned Subsidiaries)" on La Quinta's audit report.
"PARTNERS' CAPITAL" means the equity in the net assets of
Unincorporated Ventures of all the partners or venturers (other than La
Quinta or a Subsidiary) of such Unincorporated Ventures, or minority
interest holders, as determined in accordance with GAAP.
"PERMITTED COLLATERAL LIENS" shall mean only those Liens described in
clauses (i), (ii), (iii), (iv), (v), (ix), (x), (xi) and (xii) of the
definition of "Permitted Liens".
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"PERMITTED INVESTMENT" means Investments in (i) wholly-owned Domestic
Subsidiaries (a) that are subject to the provisions of this Agreement,
(b) that concurrently therewith unconditionally guarantee the performance
of La Quinta's obligations under the Bank Debt and (c) that concurrently
deliver to the Banks (1) an opinion acceptable to the Banks with respect to
the validity and enforceability of such guarantee and (2) such other
documents, such as corporate resolutions, certificates of incumbency, by-
laws and articles of incorporation, as the Banks shall reasonably require,
(ii) Investments in any Person other than a wholly-owned Subsidiary in any
one or a series of related transactions with a fair market value not in
excess of $15,000,000 in the aggregate for all Investments in all such
Persons, (iii) Investments for the purpose of satisfying La Quinta's or any
Subsidiary's guarantee obligations with respect to the Debt of any Person
in which La Quinta or any Subsidiary owned any interest and which
obligation was in existence as of the Agreement Date, provided, that any
such Investment pursuant to this clause (iii) shall be deducted from the
amount described in clause (ii) of Section 4.3 hereof; (iv) Investments in
Subsidiaries and Unincorporated Ventures made in the ordinary course of
business, consistent with past practices for the purpose of providing for
the day to day operating requirements of such Subsidiary or Unincorporated
Venture, PROVIDED, that such Investments shall (a) not be used for
acquisition or conversion of any inns and (b) be evidenced by a note or
other evidence of indebtedness and (c) not at any time exceed $10,000,000
in aggregate principal amount, (v) Investments permitted by Sections II.B.,
II.C. (provided that, notwithstanding Section II.C.3. of the Investment
Policy, Banks shall be required to have at least $150,000,000 in capital
and surplus), II.E. and II.H. of the Investment Policy, (vi) loans or
advances to employees as compensation for services in the ordinary course
of business not in excess of $2,000,000 aggregate principal amount,
(vii) Investments in the ordinary course of business, consistent with past
practice, in La Quinta Inns' National Advertising Fund, (viii) Existing
Investments, (ix) Investments in Capital Stock of Subsidiaries and
Unincorporated Ventures listed on EXHIBIT C hereto for the purpose of
acquiring no less than 100% of the capital stock or partnership interests,
as appropriate, of such Subsidiaries and Unincorporated Ventures,
(x) Investments in notes payable to La Quinta as a result of the sale of
inns in an aggregate principal amount not in excess of $10,000,000,
provided that La Quinta shall obtain and continue to hold a perfected first
Lien (subject to Permitted Liens) in such inns, (xi) Investments in wholly-
owned Foreign Subsidiaries (a) that are subject to the provisions of this
Agreement and (b) not to exceed in aggregate amount $1,000,000 for all
Investments in all Foreign Subsidiaries, and (xii) Investments in any
Person (other than a Foreign Subsidiary) if at the time of such Investment
La Quinta (a) designates such Investment as being pursuant to this
clause (xii) and (b) could make a Restricted Payment pursuant to
Section 4.3 hereof and the Investment is not in excess of the amount La
Quinta could then pay as a Restricted Payment. For purposes of the
calculation of the amount of any Investments permitted hereunder,
Investments will be calculated at all times at the amount of the original
Investment with no reduction for write-offs or write-downs. No Investment
which is a Permitted Investment other than pursuant to clause (ii) of the
definition of "Permitted Investments" shall reduce the amount of
Investments permitted pursuant to such clause (ii).
"PERMITTED LIENS" shall mean, as applied to any Person:
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(i) any Lien in favor of any Bank or a trustee on its behalf to
secure the Bank Debt;
(ii) (a) Liens on real estate for real estate taxes not yet
delinquent, (b) Liens created by lease agreements to secure the payments of
rental amounts and other sums not yet due thereunder, (c) Liens on
leasehold interests created by the lessor in favor of any mortgagee of the
leased premises, and (d) Liens for taxes, assessments, governmental
charges, levies or claims that are being diligently contested in good faith
by appropriate proceedings and for which adequate reserves shall have been
set aside on such Person's books, but only so long as no foreclosure,
restraint, sale or similar proceedings have been commenced with respect
thereto;
(iii) Liens of carriers, warehousemen, mechanics, laborers and
materialmen and other similar Liens incurred in the ordinary course of
business for sums not yet due or being contested in good faith, if such
reserve or appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
(iv) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or similar legislation;
(v) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person;
(vi) Liens created to secure the purchase price of fixed assets
acquired by such Person, which is incurred solely for the purpose of
financing the acquisition of such assets and incurred at the time of
acquisition, so long as each such Lien shall at all times be confined
solely to the asset or assets so acquired (and proceeds thereof), and
refinancings thereof so long as any such Lien remains solely on the asset
or assets acquired and the amount of Debt related thereto is not increased;
(vii) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay
of execution upon any such appeal or proceeding for review shall have been
secured, provided that (a) such Person shall have established adequate
reserves for such judgments or awards, (b) such judgments or awards shall
be fully insured and the insurer shall not have denied coverage, or
(c) such judgments or awards shall have been bonded to the satisfaction of
the Banks;
(viii) Any Liens existing on the Agreement Date which are described
on EXHIBIT D hereto, and Liens resulting from the refinancing of the
related Debt, provided that the Debt secured thereby shall not be increased
and the Liens shall not cover additional assets of the Borrower;
(ix) any obligations or duties, affecting any property, to any
municipality or public authority with respect to any franchise, grant,
license or permit which do not materially impair the use of any material
property for the purposes for which such property is held by such Person;
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(x) zoning laws or ordinances and municipal regulations which do not
materially impair the use of any material property for the purposes for
which such property is held by such Person;
(xi) Liens, minor irregularities in or deficiencies of title on any
property which do not materially impair the use of any material property
for the purposes for which such property is held by such Person; and
(xii) Liens otherwise permitted or contemplated by the Loan Papers.
"PERSON" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, and a
government or any department, tribunal, agency or political subdivision
thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's
functions under ERISA.
"PLAN" means any plan subject to Title IV of ERISA and maintained by
La Quinta or any Subsidiary, or any such plan to which La Quinta or any
Subsidiary or any Unincorporated Venture is required to contribute on
behalf of all or any of its employees; PROVIDED, HOWEVER, "Plan" shall not
include those agreements with former employees described on Schedule 7 of
the Credit Agreement, the obligations pursuant to which do not exceed
$450,000 in aggregate amount.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of La Quinta that is
not Disqualified Capital Stock.
"REPORTABLE EVENT" shall have the meaning specified in Title IV of
ERISA.
"RESTRICTED PAYMENT" means, with respect to La Quinta, (i) any
dividend or other distribution on shares of Capital Stock of La Quinta,
(ii) any payment (including, without limitation, the setting aside of
assets or the deposit of funds therefor) on account of the purchase,
redemption or other acquisition or retirement for value of (y) any shares
of Capital Stock of La Quinta or (z) any option, warrant or other right to
acquire shares of such Capital Stock, (iii) any payment or prepayment of
principal, premium or penalty on any Subordinated Debt or any defeasance,
redemption, repurchase or other acquisition or retirement for value, in
whole or in part, of any Subordinated Debt of La Quinta (including, without
limitation, the setting aside of assets or the deposit of funds therefor),
(iv) any prepayment of interest on any Subordinated Debt, and (v) a
Permitted Investment pursuant to clause (xii) of the definition of
"Permitted Investments"; provided, however, that the term "Restricted
Payment" does not include (i) any dividend, distribution or other payment
on shares of Capital Stock of La Quinta solely in shares of Qualified
Capital Stock, or (ii) any defeasance, redemption, repurchase or other
acquisition or retirement for value, in whole or in part, of any
Subordinated Debt of La Quinta payable solely in shares of Qualified
Capital Stock or Subordinated Debt of La Quinta.
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"S.E.C." means the United States Securities and Exchange Commission.
"SENIOR DEBT" means Total Debt of La Quinta, its Subsidiaries and
Unincorporated Ventures, as appropriate, other than (i) Subordinated Debt
and (ii) the aggregate face amount of Bond Letters of Credit outstanding.
"SENIOR DEBT TO CAPITALIZATION RATIO" means, at any time, determined
in accordance with GAAP with respect to La Quinta, its Subsidiaries and
Unincorporated Ventures, the ratio of (i) Senior Debt to (ii) the sum of
(a) Senior Debt, plus (b) Subordinated Debt, plus (c) Net Worth.
"SENIOR SUBORDINATED NOTE" shall have the meaning given to such term
in the Credit Agreement.
"SIGNIFICANT INVESTMENTS" means those investments of La Quinta in the
joint ventures or partnerships set forth on EXHIBIT G hereto.
"SUBORDINATED DEBT" means any debt, obligation or liability (whether
primary, contingent or otherwise) of La Quinta, a Subsidiary or an
Unincorporated Venture which by its terms is subordinate in right of
payment to the Bank Debt, provided that the Banks approve the terms thereof
prior to or at the time of the issuance thereof.
"SUBSIDIARY" with respect to any Person, means (a) a corporation at
least a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by such Person and one or more Subsidiaries of such
Person or by one or more Subsidiaries of such Person or (b) a partnership,
joint venture or similar entity in which 100% of the ownership, capital or
interest profits is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person.
"SUBSIDIARY GUARANTY" shall have the meaning given to such term in the
Credit Agreement.
"TOTAL DEBT" means, with respect to any Person, the sum, without
duplication, of (a) all Debt of such Person minus (b) all Debt of such
Person of the type described in (1) clauses (vi) and (vii) of the
definition of "Debt" herein which are set forth in EXHIBIT E hereto and
(2) clauses (viii) and (ix) of the definition of "Debt" herein.
"TRIBUNAL" means any state, commonwealth, federal, foreign
territorial, or other court or governmental department, commission, board,
bureau, agency or instrumentality.
"UNINCORPORATED VENTURE" means those Persons designated as
"Unincorporated Ventures" on EXHIBIT C hereto.
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SECTION 4. BUSINESS COVENANTS OF LA QUINTA.
4.1 MAINTENANCE OF PROPERTY, INSURANCE, ACCOUNTING PRACTICES,
CORPORATE EXISTENCE. La Quinta covenants and agrees to, and will cause
each Subsidiary and Unincorporated Venture to:
(A) Maintain its material property in good condition and make all
necessary renewals, replacements, additions, betterments and improvements
thereto, consistent with sound business practice and as is customary in the
case of corporations or other entities of established reputation engaged in
the same or a similar business and similarly situated;
(B) Maintain, with financially sound and reputable insurers, or
through its own program of self-insurance, insurance with respect to its
material properties and business against such casualties and contingencies,
of such types, and in such amounts as is customary in the case of
corporations or other entities of established reputation engaged in the
same or a similar business and similarly situated;
(C) Keep books of record and accounts in which entries will be made
of all of its business transactions, and will reflect in it financial
statements adequate accruals and appropriations to reserves, all in
accordance with GAAP;
(D) Do or cause to be done all things necessary to preserve and keep
in full force and effect its material rights;
(E) Do or cause to be done all things necessary to preserve and keep
in full force and effect its existence (except as may be specifically
permitted by this Agreement); and
(F) Cause to be paid and discharged (i) all lawful taxes assessments
and governmental charges imposed from the income or profits of La Quinta,
its Subsidiaries and Unincorporated Ventures or upon any property belonging
to La Quinta, any Subsidiary or any Unincorporated Venture and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become
a Lien upon the property of La Quinta or any of its Subsidiaries; or
Unincorporated Ventures; PROVIDED, HOWEVER, that La Quinta, its
Subsidiaries and Unincorporated Ventures shall not be required to cause to
be paid or discharged any such tax assessment, charge or claim so long as
the amount, applicability or validity thereof shall be contested in good
faith by appropriate proceedings, and adequate book reserves shall have
been established to the extent required by GAAP with respect thereto.
4.2 INSPECTION OF PROPERTIES AND BOOKS. La Quinta covenants and
agrees that it will permit, and will cause each Subsidiary and
Unincorporated Venture to permit, any Bank, upon (i) reasonable request, if
such request is prior to the occurrence of a Default or an Event of Default
or (ii) request, if such request is after the occurrence of a Default or an
Event of Default, to any Authorized Officer, to visit and inspect any of
the properties of, to examine the
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books of account and records of La Quinta, any Subsidiary or Unincorporated
Venture and to take extracts therefrom and to discuss the affairs, finances
or accounts of La Quinta, any Subsidiary or Unincorporated Venture, and to be
advised as to the same by the officers of La Quinta, at all such times during
normal business hours, in such detail and through such agents and
representatives as such Bank may reasonably desire.
4.3 RESTRICTED PAYMENTS. La Quinta covenants and agrees that it will
not, directly or indirectly, make any Restricted Payment, if, after giving
effect thereto on a pro forma basis, (i) a breach of any covenant hereunder
(or event or condition that, after notice or lapse of time or both, would
result in a breach of any covenant hereunder) would occur and be
continuing, or (ii) the aggregate amount of all Restricted Payments made by
La Quinta, including such proposed Restricted Payment (if not made in cash,
then the fair market value of any property used therefor, as determined in
good faith by the Board of Directors), from and after the Agreement Date,
shall exceed the sum of (a) $15,000,000 plus (b) an amount equal to the sum
of (1) 50% of Net Income of La Quinta and its Subsidiaries on a Combined
Basis accrued from January 1, 1994 to and including the last day of the
first fiscal quarter ended immediately prior to the date of each
calculation (or, in the event Net Income is deficit, then minus 100% of
such deficit), minus 100% of the amount of any write-downs, write-offs,
other negative evaluations and other negative extraordinary charges not
otherwise reflected in Net Income during such period, minus (2) the
aggregate amount of Permitted Investments made pursuant to clause (xi) of
the definition of Permitted Investments, plus (3) the aggregate Net Cash
Proceeds received by La Quinta during each fiscal year from the issuance or
sale during such same fiscal year (other than to a Subsidiary or an
Unincorporated Venture) of its Qualified Capital Stock from and after the
Agreement Date.
4.4 MERGER AND SALE OF ASSETS.
(A) La Quinta covenants and agrees that it will not, and will cause
each Subsidiary and Unincorporated Venture to not, directly or indirectly
sell, transfer or otherwise dispose of any of its assets (whether now owned
or hereafter acquired, and including any interest in a joint venture or
partnership) except (i) sales of inventory or equipment in the ordinary
course of business, (ii) sales or disposition of assets (including the sale
or disposition of any ownership interest in a joint venture or partnership
but excluding the sale of inns otherwise permitted to be sold or disposed
of pursuant to clause (iii) immediately succeeding), during any fiscal year
in an aggregate amount for La Quinta, its Subsidiaries and Unincorporated
Ventures combined not to exceed $10,000,000 (determined at the greater of
book or fair market value), (iii) for La Quinta, its Subsidiaries and
Unincorporated Ventures combined, sales of no more than six (6) inns during
each fiscal year, (iv) sales or dispositions by La Quinta, its Subsidiaries
or Unincorporated Ventures of assets (including interests in partnerships
and joint ventures) pursuant to buy-sell rights contained in written
agreements in existence on the date of this Agreement in respect of any
Significant Investments, and (v) Existing Investments; and
(B) La Quinta covenants and agrees that it will not, and will cause
each Subsidiary and Unincorporated Venture to not, merge into or
consolidate with any other Person; provided,
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however, if after giving effect to any such merger or consolidation, (i) the
business of La Quinta or any Subsidiary or Unincorporated Venture, as
appropriate, will not be materially changed and (ii) La Quinta or any
Subsidiary or Unincorporated Venture, as appropriate, will not be in default
in respect of any of the covenants contained in any material agreement,
including, without limitation, this Agreement, to which La Quinta or any
Subsidiary or Unincorporated Venture is a party or by which its property may
be bound,
(1) Any corporation, partnership or joint venture may merge or
consolidate with La Quinta, provided that La Quinta shall be the
continuing and surviving corporation,
(2) Any Subsidiary may merge with or consolidate with any
corporation, partnership or joint venture, provided that, unless such
merger or consolidation shall be with La Quinta, such Subsidiary shall be
the continuing and surviving corporation, and
(3) Any Unincorporated Venture may merge with or consolidate
with any corporation, partnership or joint venture, provided that, unless
such merger or consolidation shall be with La Quinta or a Subsidiary, such
Unincorporated Venture shall be the continuing and surviving person.
4.5 SENIOR DEBT TO CAPITALIZATION RATIO. La Quinta covenants and
agrees that the Senior Debt to Capitalization Ratio shall not be greater
than (i) 0.525 to 1 at the end of the fiscal quarters ending June 30, 1995
and September 30, 1995 and (ii) .50 to 1 at the end of any fiscal quarter
thereafter.
4.6 CONTINGENT LIABILITIES. La Quinta covenants and agrees that it
will not, and will cause each Subsidiary and Unincorporated Venture to not,
guarantee, endorse, contingently agree to purchase, or otherwise become
liable, directly or indirectly, upon the obligation of or in connection
with the earnings, the assets, the stock, or the dividends of any other
Person (other than La Quinta or any Subsidiary), including obligations of
La Quinta, each Subsidiary and Unincorporated Venture arising solely by
virtue of any of them being a general partner or venturer of any
Unincorporated Venture, except (i) the obligations in respect of the
written agreements described in Section 4.4(iv) hereof, (ii) the guarantees
and other contingent obligations set forth on EXHIBIT E hereto,
(iii) endorsements in the ordinary course of business of negotiable
instruments for deposit or collection, (iv) guarantees of loans to any
employee; PROVIDED, THAT any such guaranty of an employee loan shall not
exceed the amount of $100,000 per employee, and the amount of such
guaranties of employee loans, together with the amount of Investments
permitted pursuant to clause (vi) of the definition of "Permitted
Investments," shall not exceed, in the aggregate, more than $2,000,000, and
(v) guarantees and contingent obligations incurred after the date of this
Agreement not to exceed $1,000,000 in aggregate principal amount.
4.7 INCURRENCE AND RETENTION OF DEBT. La Quinta covenants and agrees
that it will not, and will cause each Subsidiary and Unincorporated Venture
to not, incur, create, assume,
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or suffer to exist any Debt (other than Debt existing on the Agreement Date)
unless, immediately prior to, and after the incurrence of, such Debt, La
Quinta, its Subsidiaries and Unincorporated Ventures are and will be in
compliance with all covenants hereunder.
4.8 INVESTMENTS. La Quinta will not, and will cause each Subsidiary
and Unincorporated Venture to not, make or permit to remain any Investment
other than a Permitted Investment.
4.9 NOTICE OF LITIGATION. La Quinta covenants and agrees that it
will, and will cause each Subsidiary and Unincorporated Venture to,
promptly give notice in writing to its Banks (i) of any litigation to which
La Quinta, any Subsidiary or Unincorporated Venture becomes a party, if
(A) the amount in controversy exceeds $500,000 and (B) La Quinta's
insurance carrier does not acknowledge coverage with respect to such
litigation, and (ii) of all proceedings before any governmental or
regulatory agencies (A) affecting or potentially affecting the business or
property of La Quinta, any Subsidiary or Unincorporated Venture in an
amount in excess of $500,000 or (B) materially affecting the ability of La
Quinta, any Subsidiary or Unincorporated Venture to perform their
respective covenants and obligations hereunder or under any Bank Debt.
4.10 TOTAL DEBT RATIO. La Quinta covenants and agrees that it will
not allow the ratio of (i) Total Debt to (ii) EBITDA, in each case for the
four consecutive fiscal quarters immediately preceding the date of
determination, to be greater than 4.25 to 1 at the end of any fiscal
quarter. For purposes of this Section 4.10, with respect to assets not
owned at all times during the four consecutive quarters immediately
preceding the date of determination of EBITDA, there shall be (i) included
in EBITDA (without duplication) the EBITDA of any assets acquired during
any such four consecutive fiscal quarters immediately preceding the date of
determination and (ii) excluded from EBITDA the EBITDA of any asset
disposed of during any such four consecutive fiscal quarters immediately
preceding the date of determination.
4.11 CASH FLOW RATIO. La Quinta covenants and agrees that it will not
allow the ratio of (i) (a) EBITDA, plus (b) lease expense pursuant to
Operating Leases, minus (c) Maintenance Capital Expenditures to
(ii) (a) Net Interest, plus (b) lease expense pursuant to Operating Leases,
plus (c) Current Maturities, in each case other than Current Maturities
(which, with respect to Current Maturities, shall be for the four
consecutive fiscal quarters immediately succeeding the date of
determination) for the four consecutive fiscal quarters immediately
preceding the date of determination, to be less than 1.50 to 1 at the end
of any fiscal quarter.
4.12 SENIOR DEBT RATIO. La Quinta covenants and agrees that it will
not allow the ratio of (i) Senior Debt to (ii) EBITDA, in each case for the
four consecutive fiscal quarters immediately preceding the date of
determination, to be greater than 3.0 to 1 at the end of any fiscal
quarter. For purposes of this Section 4.12, with respect to assets not
owned at all times during the four consecutive quarters immediately
preceding the date of determination of EBITDA, there shall be (i) included
in EBITDA (without duplication) the EBITDA of any assets acquired during
any such four consecutive fiscal quarters immediately preceding the date of
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determination and (ii) excluded from EBITDA the EBITDA of any asset
disposed of during any such four consecutive fiscal quarters immediately
preceding the date of determination.
4.13 OPERATING LEASES. La Quinta covenants and agrees that it will
not, make or accrue, and will not permit any of its Subsidiaries or
Unincorporated Ventures to make or accrue, directly or indirectly, payments
with respect to Operating Leases in the aggregate in any one fiscal year in
excess of $10,000,000.
4.14 LAND HELD FOR DEVELOPMENT AND LAND HELD FOR SALE. La Quinta
covenants and agrees that it will not allow Land Held for Development and
Land Held for Sale to exceed $10,000,000 in the aggregate at any time,
calculated at all times (i) with respect to Land Held for Development and
Land Held for Sale as of the date hereof, at current book value as of the
date hereof with no reduction for write-downs, write-offs or losses in
disposition after the date hereof, and (ii) with respect to Land Held for
Development and Land Held for Sale which is acquired after the date hereof,
at original cost with no reduction for write-downs, write-offs or losses in
disposition.
4.15 LIENS. La Quinta covenants and agrees that it will not create,
assume or suffer to exist, or permit any Subsidiary or Unincorporated
Venture to create, assume or suffer to exist, any Lien on any asset now
owned or hereafter acquired by it except Permitted Liens.
4.16 ACCOUNTING CHANGES. La Quinta covenants and agrees that it will
not, and will not permit an of its Subsidiaries or Unincorporated Ventures
to, make any change in its accounting treatment or financial reporting
practices, except as permitted or required by GAAP in effect from time to
time. La Quinta will not change its fiscal year or the calculation of its
fiscal quarter ends.
4.17 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT DOCUMENTS. La
Quinta covenants and agrees that it will not, and it will not permit any
Subsidiary or Unincorporated Venture to, directly or indirectly, amend,
modify, supplement, waive compliance with, or assent to noncompliance with,
any term, provision or condition of any of the documents governing or
evidencing the Subordinated Debt, which (i) the Banks deem material
(including, without limitation, relating to events of default, acceleration
rights, interest rates, tenor, maturity date, subordination, covenants,
prohibition against amending any documents related to the Bank Debt and
definitions with respect thereto (including, without limitation, the
definition of "Senior Debt")) or (ii) places any further restrictions on La
Quinta, its Subsidiaries or Unincorporated Ventures or increases the
obligations of La Quinta, its Subsidiaries or Unincorporated Ventures
thereunder or confers on the holders thereof any additional rights.
4.18 LEASE-BACKS. La Quinta covenants and agrees that it will not,
and will not permit any Subsidiary or Unincorporated Venture to, enter into
any arrangements, directly or indirectly, with any Person, whereby La
Quinta, any Subsidiary or Unincorporated Venture shall sell or transfer any
property, whether now owned or hereafter acquired, used or useful in its
business, in connection with the rental or lease of the property so sold or
transferred.
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4.19 ENVIRONMENTAL MATTERS.
(a) La Quinta covenants and agrees that it will not, and will not
permit any of its Subsidiaries or Unincorporated Ventures to, use,
generate, manufacture, produce, store, release, discharge or dispose of on,
under or about any real property owned or leased by La Quinta or any of its
Subsidiaries or Unincorporated Ventures (such owned or leased real
property, the "PROPERTY"), or transport to or from the Property, any
Hazardous Substance (as defined below), or (to the extent within La
Quinta's or such Subsidiary's or Unincorporated Venture's control) permit
any other Person to do so, where such could reasonably be expected to have
a Material Adverse Effect.
(b) La Quinta shall keep and maintain and shall cause each Subsidiary
and Unincorporated Venture to keep and maintain, the Property in compliance
with any Environmental Law (as defined below) where the failure to do so
could reasonably be expected to have a Material Adverse Effect.
(c) In the event that any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any
kind or nature (the "REMEDIAL WORK") with respect to the Property is
required to be performed by La Quinta or any of its Subsidiaries or
Unincorporated Ventures under any applicable local, state or federal law or
regulation, any judicial order, or by any governmental entity because of,
or in connection with, the current or future presence, suspected presence,
release or suspected release of a Hazardous Substance in or into the air,
soil, groundwater or surface water at, on, under or within the Property (or
any portion thereof), La Quinta or such Subsidiary or Unincorporated
Venture shall within thirty (30) days after written demand for performance
thereof by the Banks (or such shorter period of time as may be required
under any applicable law, regulation, order or agreement), commence and
thereafter diligently prosecute to completion, all such Remedial Work.
(d) La Quinta will defend, indemnify and hold harmless the Banks, and
their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Law
applicable to the operations of La Quinta or any Subsidiary or
Unincorporated Venture or the Property, or any orders, requirements or
demands of Tribunal related thereto, including, without limitation,
attorneys' and consultants' fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor. This indemnity
shall continue in full force and effect regardless of the termination of
this Agreement.
(e) As used herein, (i) "ENVIRONMENTAL LAW" means any federal, state
or local law, statute, ordinance, or regulation now or hereafter in effect
pertaining to health, industrial hygiene, or the environmental conditions
on, under or about the Property, and (ii) the term "HAZARDOUS SUBSTANCE"
means those substances included within the definitions of "HAZARDOUS
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SUBSTANCES", "HAZARDOUS MATERIALS", "TOXIC SUBSTANCES", or "SOLID WASTE"
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sections 9601 ET SEQ., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 ET SEQ. and the
Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 ET SEQ., and in
the regulations promulgated pursuant to said laws, and such other
substances, materials and wastes which are or become regulated under
applicable local, state or federal law, or which are classified as
hazardous or toxic under federal, state, or local laws or regulations.
4.20 ERISA COMPLIANCE. La Quinta covenants and agrees that it shall,
and shall cause each Subsidiary and Unincorporated Venture to (i) at all
times, make prompt payment of all contributions required under all Plans
and required to meet the minimum funding standard set forth in ERISA with
respect to its Plans, (ii) after the discovery by an Authorized Officer,
notify Banks immediately of any fact, including, but not limited to, any
Reportable Event arising in connection with any of its Plans, which might
constitute grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan, together with a statement, if requested by any Bank,
as to the reason therefor and the action, if any, proposed to be taken with
respect thereto, and (iii) not permit any Plan to be subject to any
involuntary termination proceedings.
4.21 BUSINESS. La Quinta covenants and agrees that it will not, and
will not permit any Subsidiary or Unincorporated Venture to, engage in,
directly or through other Persons, any business other than the businesses
now carried on and other businesses directly related thereto.
4.22 DEBT. La Quinta covenants and agrees that it will not, and will
cause each Subsidiary and Unincorporated Venture to not, (i) default,
beyond any notice, grace or cure period, in any payment equal to or
exceeding the aggregate amount of $1,000,000 of principal of or interest on
any Debt with respect to which recourse may be made against La Quinta or
any Subsidiary or Unincorporated Venture beyond any period of grace
provided with respect thereto, or (ii) default, beyond any notice, grace or
cure period, in the performance of any other agreement, term, covenant or
condition contained in any agreement or instrument under or by which any
such Debt, the unpaid principal amount of which then equals or exceeds
$1,000,000 is created, evidenced or secured if the effect of such default
is to cause such Debt to become due before its stated maturity.
4.23 BANK DEBT. La Quinta covenants and agrees that it will not, and
will cause each Subsidiary to not, (i) default in any payment of principal
of or interest on any Bank Debt beyond any grace period with respect
thereto, or (ii) default, beyond any notice, grace or cure period, in the
performance of any other covenant or agreement contained in any Bank Debt
or made by La Quinta under or in connection with any Bank Debt, if the
effect of such default is to cause such Bank Debt to become due before its
stated maturity.
24 TRANSACTIONS WITH AFFILIATES. La Quinta covenants and agrees
that it will not, and will not permit any Subsidiary or Unincorporated
Venture to, directly or indirectly, enter into any transaction (including,
but not limited to, the sale or exchange of property or the rendering
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of service) with any of its Affiliates, other than in the ordinary course of
business and upon fair and reasonable terms no less favorable than La
Quinta or any Subsidiary or Unincorporated Venture could obtain or could
become entitled to in an arm's-length transaction with a Person which was
not an Affiliate.
4.25 DEBT OF INVESTMENTS, LQ-I AND LQ-II. La Quinta covenants and
agrees that it will not permit Investments, LQ-I or LQ-II to create, incur,
assume, become or be liable in any manner in respect of, or suffer to
exist, any Debt, except (i) trade payables incurred and paid in the
ordinary course of business, and (ii) contingent liabilities resulting from
the endorsement of negotiable instruments for collection in the ordinary
course of business.
4.26 LIENS OF INVESTMENTS, LQ-I AND LQ-II. La Quinta covenants and
agrees that it will not permit Investments, LQ-I or LQ-II, to create or
suffer to exist any Lien upon any of its assets, except (i) Tax,
mechanics', materialmen's, warehousemen's, laborer's and landlord and other
similar Liens relating to amounts that are not yet due and payable, or that
are being contested in good faith by appropriate proceeding, for which
adequate reserves have been established, and (ii) Liens incurred in the
ordinary course of business in connection with worker's compensation,
unemployment insurance or similar legislation. La Quinta covenants and
agrees that it shall not, and shall not permit Investments, LQ-I or LQ-II
to, hereafter agree with any Person (other than Administrative Lender) not
to grant a Lien on any of its assets or not to permit the pledge any of its
equity interest.
SECTION 5. INFORMATION AS TO LA QUINTA.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS BY LA QUINTA. La Quinta
will deliver to each Bank which has Bank Debt:
(A) As soon as practicable after the end of each of the first
three quarterly fiscal periods in each fiscal year of La Quinta,
and in any event within 45 days thereafter, duplicate copies of
(1) Combined balance sheets, statements of earnings,
shareholders' equity and cash flows for the portion of the
fiscal year ending with such quarter; all in reasonable
detail and accompanied by an Officer's Certificate
certifying that the aforementioned financial statements
present fairly the financial position of La Quinta (Combined
Company) at the end of such quarter and the results of
operations and the changes in financial position for the
portion of the fiscal year ending with such quarter,
determined in accordance with GAAP;
(2) An Officer's Certificate certifying to the amount of Bank
Debt outstanding at the end of the fiscal quarter identified on
an EXHIBIT A attached thereto, which for the purpose of this
Agreement shall become EXHIBIT A hereto; and
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(3) An Officer's Certificate (with calculations and a new
EXHIBIT E attached thereto) certifying (i) as to any increases
or reductions in interest in the Significant Investments, and
(ii) compliance with Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.10,
4.11, 4.12, 4.13 and 4.14.
(B) As soon as practicable after the end of each fiscal year of
La Quinta, and in any event within 120 days thereafter, duplicate
copies of:
(1) Combined balance sheets, statements of earnings,
shareholders' equity and cash flows of La Quinta for such
year; all in reasonable detail, prepared on a basis
consistent with the financial statements delivered to all
Banks in prior periods and accompanied by an unqualified
opinion and report of KPMG Peat Marwick, or other
independent certified accountants of recognized standing
selected by La Quinta and reasonably consented to by Banks,
which report shall state that no default under this
Agreement and no condition or event which after notice or
lapse of time or both would constitute a default under this
Agreement has come to the knowledge of such accountants or,
if such is not the case, the details of such default or such
condition or event;
(2) Operating statements for such year and the
preceding two years with respect to all properties pledged
to any Bank to secure Bank Debt;
(3) An Officer's Certificate certifying to the amount of Bank
Debt outstanding at the last day of such year identified on an
EXHIBIT A attached thereto, which for the purpose of this
Agreement shall become EXHIBIT A hereto; and
(4) An Officer's Certificate (with calculations and a new
EXHIBIT E attached thereto) certifying (i) as to any increases
or reductions in interest in the Significant Investments, and
(ii) compliance with Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.10,
4.11, 4.12, 4.13 and 4.14.
(C) As soon as practicable after La Quinta or any Subsidiary
files with the S.E.C. any of the following documents and in any
event within 10 days thereafter, a copy of:
(1) Any final Registration Statement filed for the
registration of any securities under the Securities Act of
1933, as amended (except a Registration Statement on Form S-
8 for the registration of stock to be issued in connection
with any Stock Plan);
(2) Each Annual and Periodic Report filed under
Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended;
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(3) Each definitive Proxy Statement filed pursuant to
the Securities Exchange Act of 1934, as amended; and
together with any other document filed with the S.E.C. or
the New York Stock Exchange, Inc., as may be requested by any
Bank.
(D) Upon request by any Bank, copies of the following:
(1) Each annual report/return, as well as all
schedules and attachments required to be filed with the
Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the regulations promulgated
thereunder, in connection with each of its Plans for each
Plan year; and
(2) Such additional information concerning any of its
Plans as may be reasonably requested.
(E) Notice to each Bank which has Bank Debt that any warranty or
representation made by La Quinta contained in any instrument or
document delivered pursuant to the Bank Debt shall have been
incorrect in any material respect when made not later than one
business day after the discovery or awareness thereof by an
Authorized Officer.
(F) Promptly, notice to each Bank which has Bank Debt of the
breach of any covenant contained in Section 4.22 hereof.
(G) With reasonable promptness, such other data and information
as from time to time may be reasonably requested by any Bank.
(H) Notwithstanding anything in this Section 5.1 to the
contrary, (i) if the terms of any Subordinated Debt of La Quinta
requires delivery of Parent Company financial statements and
(ii) any Bank shall request delivery of Parent Company financial
statements, La Quinta shall also deliver to such Bank the
financial statements required to be delivered pursuant to
(1) Section 5.1(A) on a Parent Company basis within 60 days after
the end of the first three quarterly fiscal periods of La Quinta
and (2) Section 5.1(B) on a Parent Company basis within 120 days
after the end of each fiscal year of La Quinta.
5.2 OFFICER'S CERTIFICATE. Each set of financial statements
delivered pursuant to Subsection 5.1 (A) and (B) shall be accompanied by an
Officer's Certificate stating whether there exists on the date of such
certificate any condition or event which then constitutes, or which after
notice or lapse of time or both, would constitute, a breach of any covenant
herein, and if any such condition or event then exists, specifying the
nature and period of existence thereof and the action La Quinta is taking
or proposes to take with respect thereto.
-20-
<PAGE>
SECTION 6. DEFAULT.
La Quinta hereby covenants, acknowledges and agrees that the failure
of La Quinta, any Subsidiary or Unincorporated Venture to perform or
observe (i) any covenant contained in Sections 4.3, 4.4, 4.5, 4.6, 4.7,
4.8, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.22, 4.23 or
4.24, 4.25 or 4.26 of this Agreement or (ii) any covenant contained in
Sections 4.1, 4.2, 4.9, 4.19, 4.20 or 4.21 failure to perform or observe
any such covenant has become known to an Authorized Officer or (B) written
notice thereof shall have been given by any Bank to La Quinta or (iii) any
other covenant contained in this Agreement to be performed or observed by
it and such failure continues for a period of 30 days after any Bank has
given written notice specifying such failure to La Quinta, shall be deemed,
subject to the waiver provisions of Section 7.2 hereof, to be a default or
event of default (however designated) under any Bank Debt, notwithstanding
the specific enumeration of the specific defaults or events of default with
respect to such Bank Debt, and any Bank may perform all rights and remedies
granted such Bank under the Bank Debt owing to such as if a default or
event of default specifically enumerated in such Bank Debt had occurred.
La Quinta further acknowledges and agrees that the covenants set forth in
this Agreement and the effect of the failure to perform such covenants as
set forth in this Section 6 shall be deemed to be incorporated by reference
in such Bank Debt, MUTATIS MUTANDIS. The grace periods provided for in
this Section 6 are in lieu of and not in addition to any grace periods
provided with respect to any Bank Debt.
SECTION 7. MISCELLANEOUS.
7.1 NOTICE. All notices, requests, consents and demands shall be in
writing and shall be delivered by hand or overnight courier service, mailed
or sent by telecopy, to the respective addresses specified below, or, as to
any party, to such other address as may be designated by it in written
notice to all other parties. All notices, requests, consents and demands
hereunder shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by telecopy, or if
mailed, on the earlier of actual receipt or three (3) days after being
mailed by certified mail, return receipt requested, postage prepaid,
addressed as aforesaid.
La Quinta Inns, Inc.
112 East Pecan Street
San Antonio, Texas 78205
Attention: Vice President - Treasurer
with a copy to:
La Quinta Inns, Inc.
112 East Pecan Street
San Antonio, Texas 78205
Attention: Office of General Counsel
-21-
<PAGE>
The Frost National Bank
100 West Houston Street
San Antonio, TX 78205
Attention: Suzanne Houser
Texas Commerce Bank National Association
1020 NE Loop 410
P.0. Box 47531 78265
San Antonio TX 78209
Attention: Dan M. Danelo
NationsBank of Texas, N.A.
NationsBank Plaza
901 Main Street, 67th Floor
Dallas, TX 75202
Attention: Douglas E. Hutt
First Interstate Bank of Texas, N.A.
700 N. St. Mary's
San Antonio, TX 78205
Attention: Charles T. Bridgeman
Citicorp USA, Inc.
2001 Ross Avenue
1400 Trammel Crow Center
Dallas, TX 75201
Attention: Shafique Janmohamed
Bank of Scotland
2660 Citicorp Center
Houston, Texas 77002
Attention: Janna Blanter
Bank of America Illinois
333 Clay Street, Suite 4550
Houston, Texas 77002
Attention: W. Thomas Barnett
Bank One, Texas, N.A.
1717 Main Street, 4th Floor
Dallas, Texas 75201
Attention: Alan Miller
-22-
<PAGE>
U.S. Bank of Washington, National Association
555 Southwest Oak Street, Suite 400
Portland, Oregon 97204
Attention: Blake R. Howells
7.2 AMENDMENT, WAIVER, CONSENTS AND APPROVALS. This Agreement may be
amended, and the observance of any provision of this Agreement may be
waived and consent or approval to any action described in this Agreement
may be granted, only with the written consent of La Quinta and Banks
holding in aggregate at least 66-2/3% in principal amount of the Bank Debt
as of the last day of the month preceding the month in which such written
amendment, waiver, approval or consent is requested; provided, however,
that no such amendment, waiver, approval or consent, without the written
consent of all of the Banks, shall (i) change this Section 7.2 or
(ii) waive, modify or otherwise affect compliance with Section 4.23 hereof.
All Banks shall receive in writing the request for any waivers,
modifications, amendments, approvals or consents of any of the provisions
hereof.
7.3 NOTICE OF DEFAULT ON BANK DEBT. Each Bank agrees to give prompt
notice to each other Bank of (i) any default in the payment of principal of
or interest on any Bank Debt beyond any period of grace with respect
thereto, (ii) any default in the performance of any other agreement, term,
covenant or condition contained in any Bank Debt beyond any period of grace
provided with respect thereto and (iii) any default in the performance of
any covenant of La Quinta set forth in this Agreement. Each Bank agrees to
simultaneously deliver to each other Bank a copy of any notice delivered to
La Quinta pursuant to Section 6 hereof. Each Bank shall use its best
efforts to deliver the notices provided for in this Section 7.3; however,
no Bank shall have any liability to any other Bank for failing to comply
with this Section 7.3.
7.4 CONFLICTS. In the event of any conflict between the terms of
this Agreement and the terms of any Bank Debt with respect to the subject
matter contained herein, the terms and provisions of this Agreement shall
control and prevail.
7.5 PAYMENT OF EXPENSES. La Quinta will pay all reasonable expenses
of the Banks, including, without limitation, the reasonable fees, expenses
and disbursement of counsel, incurred in connection with the transactions
contemplated by this Agreement.
7.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas and the laws of the
United States.
7.7 BINDING UPON SUCCESSORS. This Agreement shall be binding upon La
Quinta so long as any Bank Debt is outstanding, and each of the Banks and
their respective successors and assigns, and shall inure to the benefit of
La Quinta and the Banks and successors and assigns of the Banks, except
that La Quinta shall not have the right to assign any of its rights or
obligations hereunder without the written consent of all the Banks.
-23-
<PAGE>
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, but in making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart. It is
not necessary that each Bank execute the same counterpart, so long as
counterparts are executed by La Quinta and each Bank.
7.9 TERMINATION AND EFFECTIVENESS OF THIS AGREEMENT. This Agreement
shall remain in full force and effect so long as there is any Bank Debt
outstanding. At such time as there is no longer any Bank Debt outstanding,
this Agreement shall terminate and be of no further force and effect. This
Agreement shall be effective upon the execution hereof by the Banks
required to amend the Prior Master Covenant Agreement pursuant to
Section 7.2 thereof.
7.10 ADJUSTMENT OF PERCENTAGES. The percentages of each Bank set
forth on EXHIBIT A hereto shall be automatically adjusted subsequent to the
date of this Agreement as a result of (i) any payment or prepayment of any
Bank Debt, (ii) any renewals, extensions, or refinancings of Bank Debt
among the Banks, (iii) participations in Bank Debt sold by one Bank to
another Bank or any purchase or assumption of Bank Debt between or among
Banks, (iv) assignments of Bank Debt pursuant to Section 7.13 hereof or
(v) any additional unsecured Debt incurred by La Quinta to one or more
Banks not to exceed $40,000,000 in aggregate principal amount; otherwise,
there shall be no adjustments to the percentages set forth on EXHIBIT A.
Further, except as set forth in Section 7.13 hereof, no other Person may
become a party to this Agreement without the prior written consent of the
Banks.
7.11 EXCEPTIONS TO COVENANTS. La Quinta shall not be deemed to be
permitted to take any action or fail to take any action which is permitted
as an exception to any of the covenants contained herein or which is within
the permissible limits of any of the covenants contained herein if such
action or omission would result in the breach of any other covenant
contained herein.
7.12 CONFIDENTIALITY. Each Bank agrees (on behalf of itself and each
of its affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential, in accordance with
customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices, any non-public
information supplied to it by La Quinta pursuant to this Agreement which is
identified by La Quinta as being confidential at the time the same is
delivered to the Banks, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute,
rule, regulation or judicial process, (ii) to counsel for any of the Banks,
(iii) to bank examiners, auditors or accountants of any Bank, (iv) any
other Bank, (v) in connection with any litigation to which any one or more
of the Banks is a party, provided, further, that unless specifically
prohibited by applicable laws or court order, each Bank agrees, prior to
disclosure thereof, to notify La Quinta of any request for disclosure of
any such non-public information (x) by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of La Quinta or any Subsidiary or
Unincorporated Venture or (y) pursuant to legal process, or (vi) to any
participant (or prospective participant) of any Bank Debt so long
-24-
<PAGE>
as such participant (or prospective participant) first executes and delivers
to the respective Bank an agreement (a "CONFIDENTIALITY AGREEMENT") in
substantially the form of EXHIBIT F hereto; and provided finally that in no
event shall any Bank be obligated or required to return any materials
furnished by the Company. The obligations of each Bank under this Section
7.12 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of any Bank Debt initially signed and
delivered by such Bank to La Quinta prior to the date hereof.
7.13 ASSIGNMENT. Each Bank may assign to one or more financial
institutions or funds organized under the laws of the United States, or any
state thereof, or under the laws of any other country that is a member of
the Organization for Economic Cooperation and Development, or a political
subdivision of any such country, which is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its
business (each, an "Assignee") its rights and obligations under the Bank
Debt owned by such Bank and its rights under this Agreement subject, to the
extent applicable, to the terms and provisions of Section 9.6 of the Credit
Agreement. Upon the effectiveness of such assignment, (i) the assignee
Bank shall be party hereto and, to the extent that rights hereunder have
been assigned to it, have the rights of a Bank hereunder and (ii) the
assigning Bank shall, to the extent that rights hereunder have been
assigned by it, relinquish such rights under this Agreement.
7.14 ACCOUNTING TERMS. All accounting terms used herein and not
otherwise defined herein shall be construed in accordance with GAAP, and
all financial computations and determinations shall be made on a Combined
basis.
=========================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
=========================================================================
-25-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of April 21, 1995
LA QUINTA INNS, INC.
By: /s/ DEWEY W. CHAMBERS
--------------------------------
Dewey W. Chambers, Vice
President-Treasurer
The following Subsidiaries of La Quinta
hereby acknowledge and agree to the covenants
and restrictions set forth herein by signing
below:
LA QUINTA REALTY CORP.
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LA QUINTA PLAZA, INC.
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LA QUINTA FINANCIAL CORPORATION
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
-26-
<PAGE>
LA QUINTA INVESTMENTS, INC.
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LQI ACQUISITION CORPORATION
By:
--------------------------------
Its:
-------------------------------
LQM OPERATING PARTNERS, L.P.
By: La Quinta Realty Corp., its General Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LA QUINTA MOTOR INNS, LIMITED PARTNERSHIP
By: La Quinta Realty Corp., its General Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
-27-
<PAGE>
LA QUINTA INVESTMENTS, INC.
By:
--------------------------------
John F. Schmutz, Vice President
LQI ACQUISITION CORPORATION
By: /s/ ROLAND B. BLISS
--------------------------------
Its: Roland B. Bliss, President & Treasurer
-------------------------------
LQM OPERATING PARTNERS, L.P.
By: La Quinta Realty Corp., its General Partner
By:
--------------------------------
John F. Schmutz, Vice President
LA QUINTA MOTOR INNS, LIMITED PARTNERSHIP
By: La Quinta Realty Corp., its General Partner
By:
--------------------------------
John F. Schmutz, Vice President
-27-
<PAGE>
LQM OPERATING PARTNERS, L.P.
By: La Quinta Realty Corp., its General Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LQ-BIG APPLE JOINT VENTURE
By: La Quinta Inns, Inc., its Partner
By: /s/ DEWEY W. CHAMBERS
--------------------------------
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc., its Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LQ-LNL LIMITED PARTNERSHIP
By: La Quinta Inns, Inc., its Managing General Partner
By: /s/ DEWEY W. CHAMBERS
--------------------------------
Dewey W. Chambers,
Vice President-Treasurer
-28-
<PAGE>
LQ-EAST IRVINE JOINT VENTURE
By: La Quinta Inns, Inc., its Partner
By: /s/ DEWEY W. CHAMBERS
--------------------------------
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc., its Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LQ-INVESTMENTS I
By: La Quinta Inns, Inc., its Managing General Partner
By: /s/ DEWEY W. CHAMBERS
--------------------------------
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc., a General Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
-29-
<PAGE>
LQ-INVESTMENTS II
By: La Quinta Inns, Inc., its Managing General Partner
By: /s/ DEWEY W. CHAMBERS
--------------------------------
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc., a General Partner
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LA QUINTA INNS OF LUBBOCK, INC.
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
LA QUINTA INNS OF PUERTO RICO, INC.
By: /s/ JOHN F. SCHMUTZ
--------------------------------
John F. Schmutz, Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ DOUGLAS E. HUTT
--------------------------------
Douglas E. Hutt
Senior Vice President
-30-
<PAGE>
THE FROST NATIONAL BANK
By: /s/ Suzanne Houser
--------------------------------
Its: Vice President
--------------------------------
-31-
<PAGE>
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Charles T. Bridgeman
--------------------------------
Its: Vice President
--------------------------------
-32-
<PAGE>
CITICORP USA, INC.
By: /s/ BARBARA A. COHEN
--------------------------------
Barbara A. Cohen
Its: Vice President
-33-
<PAGE>
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ DAN M. DANELO
--------------------------------
Dan M. Danelo
Its: Sr. Vice President
-34-
<PAGE>
BANK OF SCOTLAND
By: /s/ ELIZABETH WILSON
--------------------------------
Elizabeth Wilson
Its: Vice President and Branch Manager
-35-
<PAGE>
BANK OF AMERICA ILLINOIS
By: /s/ W. THOMAS BARNETT
--------------------------------
W. Thomas Barnett
Its: Vice President
-36-
<PAGE>
BANK ONE, TEXAS, N.A.
By: /s/ Alan L. Miller
--------------------------------
Its: Vice President
-37-
<PAGE>
U.S. BANK OF WASHINGTON, NATIONAL
ASSOCIATION
By: /s/ BLAKE R. HOWELLS
--------------------------------
Blake R. Howells
Its: Vice President
-38-
<PAGE>
EXHIBIT A
LA QUINTA INNS, INC.
MASTER COVENANT AGREEMENT
SCHEDULE OF BANK DEBT
MARCH 31, 1995
DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
FIRST NATIONS TEXAS CITIBANK BANK OF BANK CONTINENTAL U.S. BANK OF
INTERSTATE BANK COMMERCE FROST CITICORP SCOTLAND ONE BANK WASHINGTON TOTAL
---------- ---- -------- ----- ------- -------- --- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRE-EXISTING CREDIT
FACILITIES
IRB Bonds
578 North Little Rock,
AR $ 888 $ 888
579 Gretna, LA 1,580 1,580
580 New Orleans
(Veterans), LA 1,298 1,298
592 Monroe, LA 1,360 1,360
721 New Orleans
(Bullard), LA 1,929 1,929
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
TOTAL PRE-EXISTING
CREDIT FACILITIES $ 7,055 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 7,055
======= ======= ======= ======= ======= ======= ======= ======= ======= ========
CURRENT CREDIT
FACILITIES
LETTERS OF CREDIT
557 Aurora, CO $ 190 $ 696 $ 292 $ 292 $ 571 $ 292 $ 254 $ 292 $ 190 $ 3,069
561 Kalamazoo, MI 139 508 213 213 417 213 185 213 139 2,240
562 Schaumburg, IL 248 908 381 381 745 381 331 381 248 4,005
563 Texarkana, TX 168 612 257 257 503 257 223 257 168 2,700
565 Savannah, GA 181 661 277 277 543 277 241 277 181 2,916
568 Bossier City, LA 41 151 63 63 124 63 55 63 41 665
569 Eagle Pass, TX 151 552 232 232 453 232 201 232 151 2,434
570 San Bernardino, CA 401 1,467 615 615 1,204 615 535 615 401 6,470
574 Baton Rouge, LA 186 679 285 285 557 285 247 285 186 2,992
576 Nacogdoches, TX 163 595 250 250 488 250 217 250 163 2,624
583 Virginia Beach 181 661 277 277 543 277 241 277 181 2,916
584 Oakbrook Terrace, IL 222 812 341 341 666 341 296 341 222 3,580
588 Sulphur 183 669 281 281 549 281 244 281 183 2,951
596 El Paso, TX 119 435 182 182 357 182 159 182 119 1,918
625 Stockton, CA 222 812 341 341 666 341 296 341 222 3,580
633 Hampton, VA 236 865 363 363 709 363 315 363 236 3,812
634 Elk Grove, IL 236 865 363 363 709 363 315 363 236 3,812
636 Wheatridge, CO 152 557 234 234 457 234 203 234 152 2,455
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
TOTAL LETTERS OF CREDIT $ 3,420 $12,504 $ 5,244 $ 5,244 $10,259 $ 5,244 $ 4,560 $ 5,244 $ 3,420 $ 55,139
======= ======= ======= ======= ======= ======= ======= ======= ======= ========
REVOLVING CREDIT
COMMITMENT $ 2,791 $10,205 $ 4,280 $ 4,280 $ 8,373 $ 4,280 $ 3,721 $ 4,280 $ 2,791 $ 45,000
TERM LOAN COMMITMENT 11,412 41,727 17,499 17,499 34,237 17,499 15,216 17,499 11,412 184,000
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
TOTAL CURRENT CREDIT
FACILITIES $14,203 $51,932 $21,779 $21,779 $42,610 $21,779 $18,937 $21,779 $14,203 $229,000
======= ======= ======= ======= ======= ======= ======= ======= ======= ========
GRAND TOTAL $24,678 $64,436 $27,023 $27,023 $52,869 $27,023 $23,497 $27,023 $17,623 $291,194
======= ======= ======= ======= ======= ======= ======= ======= ======= ========
</TABLE>
<PAGE>
EXHIBIT B
LA QUINTA INNS, INC.
EXISTING INVESTMENTS
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
AMOUNT
-------
(DOLLARS IN THOUSANDS)
<S> <C>
INVESTMENTS; AT COST:
State of Israel Bonds $ 140
Hotel Industry Switch 75
------
TOTAL $ 215
------
------
LAND HELD FOR FUTURE DEVELOPMENT; AT CURRENT VALUE:
Bexar County $1,324
------
------
LAND HELD FOR SALE; AT CURRENT VALUE:
Ft. Worth $ 365
Maitland 603
Mesquite 337
Greensboro 344
St. Louis 397
Ft. Lauderdale 618
------
TOTAL $2,664
------
------
</TABLE>
<PAGE>
EXHIBIT B
LA QUINTA INNS, INC.
EXISTING INVESTMENTS
FEBRUARY 28, 1995
(CON'T)
NOTES RECEIVABLE:
LA QUINTA INNS, INC. COMBINED
<TABLE>
<CAPTION>
DEBTOR CREDITOR AMOUNT COLLATERAL
------ --------- ------ -----------
<S> <C> <C> <C>
James Hu/S.A. Main Ave Motel, Ltd. San Antonio Main Ave., Ltd. $2,411,892 First lien on real estate
Jai Ambay, Inc. La Quinta Inns, Inc. 736,230 First lien on real estate
Willow Tree #4 La Quinta Inns, Inc. 929,058 Third lien on real estate
Jer-Wei Inc. La Quinta Inns, Inc. 1,659,506 First lien on real estate
Katy Hospitality Co. La Quinta Inns, Inc. 2,081,658 First lien on real estate
Great Southeastern Restaurants, Inc. La Qunita Inns, Inc. 195,000 Unsecured
Great Southeastern Restaurants, Inc. La Quinta Development Partners, L.P. 65,000 Unsecured
Great Southeastern Restaurants, Inc. LQM Operating Partners, L.P. 80,000 Unsecured
Ranjit Hans--Ishmer-Amar Holdings La Quinta Inns, Inc. 11,201 Unsecured
THISCO La Quinta Inns, Inc. 70,000 Unsecured
Miscellaneous debtors La Quinta Inns, Inc. 559,128 Unsecured
Sportsplex of America/SportsAmerica La Quinta Inns, Inc. 399,465 Unsecured
Wytex La Quinta Inns, Inc. 232,006 Unsecured
Shoney's La Quinta Development Partners, L.P. 102,445 Unsecured
I 20 South Collins, Ltd. La Qunita Inns, Inc. 275,000 First lien on real estate
H & W Moline Restaurant, Inc. La Qunita Inns, Inc. 25,657 Unsecured
Wytex La Quinta Development Partners, L.P. 39,954 Unsecured
Wytex LQM Operating Partners, L.P. 59,804 Unsecured
Anthony Koutsoukos La Quinta Inns, Inc. 5,000 Unsecured
-----------
$9,938,004
============
</TABLE>
<PAGE>
EXHIBIT C
LA QUINTA INNS, INC.
SUBSIDIARIES & UNINCORPORATED
VENTURE INVESTMENTS
MARCH 31, 1995
<TABLE>
<CAPTION>
LQ
DATE OF INITIAL NUMBER OF OWNERSHIP
NAME AGREEMENT INNS %
----- --------------- --------- ----------
<S> <C> <C> <C>
La Quinta-Houston I.H. 10, Ltd. 1972 1 50
La Quinta-San Antonio South Joint Venture 1969 1 50
La Quinta Austin Motor Hotel, Ltd. 1970 1 66.667
La Quinta-Dallas Central Expressway, Ltd. 1970 1 64.81
LQ Motor Inn Venture-Austin No. 530 1975 1 50
La Quinta-Wichita, Kansas, No. 532, Ltd. 1976 1 50
LQ-Baton Rouge Joint Venture 1982 1 100
LQ-West Bank Joint Venture 1982 1 60
LQ-Denver Peoria St., LTD 1972 1 100
La Quinta Development Partners, L.P. 1990 43 40
San Antonio Main Avenue Motel, Ltd. 1967 N/A 66.67
LQ-LNL Joint Venture 1981 2 100
LQ Investments I 1987 4 100
LQ Investments II 1987 5 100
La Quinta Realty Corporation 1986 N/A 100
La Quinta Financial Corporation 1983 N/A 100
La Quinta Plaza, Inc. 1987 N/A 100
La Quinta Investments, Inc. 1993 N/A 100
LQI Acquisition Corporation 1993 N/A 100
LQM Operating Partners, L.P. 1986 N/A 100
LQ-Big Apple Joint Venture 1993 3 100
LQ-East Irvine Joint Venture 1985 1 100
La Quinta Motor Inns Limited Partnership 1986 31 100
La Quinta Inns of Lubbock, Inc. 1995 1 100
La Quinta Inns of Puerto Rico, Inc. 1994 N/A 100
---
TOTAL 99
===
</TABLE>
<PAGE>
EXHIBIT D
EXISTING LIENS
LA QUINTA INNS, INC. AND UNINCORPORATED JOINT VENTURES
MARCH 31, 1995
<TABLE>
<CAPTION>
PROPERTY
OWNERSHIP NO. LOCATION BALANCE DESCRIPTION
- --------------------------- --- ------------------------ ------------ -----------
<S> <C> <C> <C> <C>
La Quinta Inns, Inc. 518 Denver-South $ 525,469 Mortgage
La Quinta Inns, Inc. 519 Dallas-D/FW-Irving 194,621 Mortgage
La Quinta Inns, Inc. 520 Denver-Airport 391,265 Mortgage
La Quinta Investments, Inc. 523 San Antonio-Lackland 2,784,485 Mortgage
La Quinta Inns, Inc. 524 Dallas-Regal Row 2,665,931 Mortgage
La Quinta - Wichita, Kansas 532 Wichita-Town East Square 406,797 Mortgage
No. 532, LTD.
La Quinta Inns, Inc. 534 Indianapolis-Airport 1,538,090 Mortgage
La Quinta Inns, Inc. 549 Columbus-Fort Benning 952,884 Mortgage
La Quinta Inns, Inc. 559 Nashville-South 1,582,416 Mortgage
La Quinta Inns, Inc. 560 Lexington 896,768 Mortgage
La Quinta Inns, Inc. 575 Memphis-Airport 1,344,918 Mortgage
La Quinta Inns, Inc. 599 Houston-La Porte 1,190,000 IRB
La Quinta Inns, Inc. 626 Birmingham 1,135,000 IRB
La Quinta Inns, Inc. 627 Pittsburgh-International 1,385,000 IRB
Airport
La Quinta Inns, Inc. 628 Albuquerque-North 2,762,751 Mortgage
La Quinta Inns, Inc. 629 Charlotte-Airport 2,564,280 Mortgage
La Quinta Inns, Inc. 630 Colorado Springs 2,054,361 Mortgage
La Quinta Inns, Inc. 637 Jacksonville-North 279,146 Mortgage
La Quinta Inns, Inc. 637 Jacksonville-North 1,353,162 Mortgage
La Quinta Inns, Inc. 637 Jacksonville-North 456,121 Mortgage
La Quinta Inns, Inc. 639 Amarillo-Medical Center 2,186,218 Mortgage
La Quinta Inns, Inc. 643 San Diego-Vista 2,586,513 Mortgage
La Quinta Inns, Inc. 645 Atlanta-Peachtree Industrial 176,974 Mortgage
La Quinta Inns, Inc. 645 Atlanta-Peachtree Industrial 2,143,772 Mortgage
La Quinta Inns, Inc. 646 Bakersfield 3,079,183 Mortgage
La Quinta Inns, Inc. 658 Deerfield Beach 2,709,680 Mortgage
La Quinta Inns, Inc. 688 Tampa-Clearwater Airport 3,706,841 Mortgage
La Quinta Inns, Inc. 803 Salt Lake City-Midvale 2,048,954 Mortgage
La Quinta Development 4541 Orange County-Costa Mesa 3,436,128 Mortgage
Partners, L.P.
La Quinta Development 4545 Reno-Airport 975,000 Mortgage
Partners. L.P.
La Quinta Development 4564 Tuscaloosa 1,452,499 Mortgage
Partners. L.P.
La Quinta Development 4566 Phoenix-Tempe Sky 1,257,469 Mortgage
Partners. L.P. Harbor Airport
La Quinta Development 4640 San Antonio-Toepperwein 2,309,387 Mortgage
Partners. L.P.
La Quinta Development 4642 Orlando-Airport 2,524,929 Mortgage
Partners. L.P.
La Quinta Inns, Inc. 9050 Prudential Note 14,018,353 Mortgage
La Quinta Inns, Inc. 9050 Prudential Note 1,059,205 Mortgage
La Quinta Inns, Inc. 9050 Prudential Note 28,058,135 Mortgage
-----------
Total 100,192,705
-----------
-----------
</TABLE>
<PAGE>
EXHIBIT E
LA QUINTA INNS, INC.
GUARANTEES AND CONTINGENT OBLIGATIONS
MARCH 31, 1995
<TABLE>
<CAPTION>
LONG TERM DEBT
WITH RECOURSE
PARTNERSHIP OR ENTITY TO LA QUINTA
- --------------------- --------------
<S> <C>
La Quinta-Wichita Kansas, No. 532, Ltd. $ 406,797
LQ-West Bank Joint Venture 1,579,835
La Quinta Development Partners, L.P.:
- - La Quinta Inns, Inc. Guarantees 11,955,413
- - La Quinta Inns, Inc. General Partner Obligations 3,500,000
-----------
$17,442,045
===========
</TABLE>
<PAGE>
EXHIBIT F
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and Address
of Prospective Participant]
Re: Fourth Amended and Restated Master Covenant Agreement dated as of
April 21, 1995, between La Quinta Inns, Inc. ("La Quinta"), and
the banks named therein (the "Banks").
Dear ______________:
As a Bank party to the above-referenced Amended and Restated Master
Covenant Agreement (the "COVENANT AGREEMENT"), we have agreed with La Quinta
("LA QUINTA") pursuant to Section 7.12 of the Covenant Agreement to use
reasonable precautions to keep confidential, except as otherwise provided
therein, all non-public information identified by La Quinta as being
confidential at the time the same is delivered to us pursuant to the Covenant
Agreement.
As provided in said Section 7.12, we are permitted to provide you, as a
prospective holder of a participation in the Bank Debt (as defined in the
Covenant Agreement), with certain of such non-public information subject to
the execution and delivery by you, prior to receiving such non-public
information, of a Confidentiality Agreement in this form. Such information
will not be made available to you until your execution and return to us of
this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf of
yourself and each of your affiliates, directors, officers, employees and
representatives) that (A) such information will not be used by you except in
connection with the proposed participation mentioned above and (B) you shall
use reasonable precautions, in accordance with your customary procedures for
handling confidential information and in accordance with safe and sound
banking practices, to keep such information confidential, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
your counsel or to counsel for any of the Banks, (iii) to bank examiners,
auditors or accountants of any Bank, (iv) to any other Bank, (v) in
connection with any litigation to which you or any one or more of the Banks
are a party; provided, further, that, unless specifically prohibited by
applicable law or court order, you agree, prior to disclosure thereof, to
notify La Quinta of any request for disclosure of any such non-public
information (x) by any governmental agency or representative thereof (other
than any such request in connection with an examination of your financial
condition by such governmental agency) or (y) pursuant to legal process; and
provided,
<PAGE>
[Date]
Page 2
finally, that in no event shall you be obligated to return any materials
furnished to you pursuant to this Confidentiality Agreement.
Would you please indicate your agreement to the foregoing by signing at
the place provided below the enclosed copy of this Confidentiality Agreement.
Very truly yours,
___________________________
By:________________________
Title:_____________________
THE FOREGOING IS AGREED TO AS
OF THE DATE OF THIS LETTER.
[INSERT NAME OF PROSPECTIVE PARTICIPANT]
By:___________________________
Title:________________________
<PAGE>
EXHIBIT G
LA QUINTA INNS, INC.
SIGNIFICANT INVESTMENTS
<TABLE>
<CAPTION>
STATE OF
INCORPORATION PERCENTAGE OF
NAME OR ORGANIZATION OWNERSHIP
---- --------------- -------------
<S> <C> <C>
La Quinta-Houston I.H. 10, Ltd. Texas 50
La Quinta-San Antonio-South Joint Venture Texas 50
La Quinta Austin Motor Hotel, Ltd. Texas 66.67
La Quinta-Dallas Central Expressway, Ltd. Texas 64.81
LQ Motor Inn Venture-Austin No. 530* Texas 50
La Quinta-Wichita, Kansas, No. 532, Ltd. Texas 50
LQ-West Bank Joint Venture* Texas 60
La Quinta Development Partners, L.P.* Delaware 40
*Indicates Joint Venture Agreements with a buy/sell provision.
</TABLE>
<PAGE>
EXHIBIT 10(b)
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amendment to Amended and Restated Credit Agreement (this
"SECOND AMENDMENT"), dated as of April 21, 1995, is made by and among La
Quinta Inns, Inc., a Texas corporation ("LA QUINTA"), NationsBank of Texas,
N.A., as Administrative Lender ("ADMINISTRATIVE LENDER"), Citicorp USA, Inc.,
The Frost National Bank, Texas Commerce Bank National Association, Bank of
Scotland, Bank of America Illinois, successor by merger with Continental
Bank, Bank One, Texas, N.A., First Interstate Bank of Texas, N.A. and U.S.
Bank of Washington, National Association (singly, a "LENDER", and
collectively, the "LENDERS").
BACKGROUND.
A. La Quinta, Administrative Lender and Lenders entered into the
Amended and Restated Credit Agreement, dated as of January 25, 1994, as
amended by that certain First Amendment to Amended and Restated Credit
Agreement, dated as of June 30, 1994 (said Amended and Restated Credit
Agreement, as amended, the "CREDIT AGREEMENT"; capitalized terms used herein
and not otherwise defined herein shall have the same meaning given to them in
the Agreement).
B. La Quinta has requested that Lenders, among other things, (i)
increase the Revolving Credit Commitment and decrease and modify the Term
Loan Commitment, (ii) revise the pricing of the Revolving Credit Advances and
the Term Loan Advances, and (iii) extend the Revolving Credit Maturity Date
and the Term Loan Maturity Date.
C. Administrative Lender, Lenders and La Quinta desire to amend the
Agreement.
AGREEMENT.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
La Quinta, Administrative Lender and Lenders agree as follows:
1. AMENDMENTS.
The Credit Agreement is amended as follows:
1.1 SECTION 1.1 of the Credit Agreement is amended by deleting the
following definitions therefrom:
<PAGE>
"Adjusted EBITDA", "AEtna", "AEtna Advance", "Applicable Revolving
Margin", "Applicable Term Margin", "EBIT", "Maintenance Capital
Expenditures", "Net Cash Distributions", and "Parent Company".
1.2 SECTION 1.1 of the Credit Agreement is hereby amended by adding the
definition of "ADJUSTMENT DATE" thereto in proper alphabetical order to read
as follows:
"'ADJUSTMENT DATE' means, for purposes of the Applicable Margin,
the commitment fees payable pursuant to Section 2.4(a) hereof and the
Letter of Credit fees payable pursuant to Sections 2.16(f)(i) and
2.16(f)(ii) hereof, (i) when the Applicable Margin and such fees are
based on the Leverage Ratio, the date of receipt by the Administrative
Lender of the financial statements required to be delivered pursuant
to Section 5.1(A) or 5.1(B), as applicable, of the Master Covenant
Agreement which results in a change in the Applicable Margin and
(ii) when the Applicable Margin and such fees are based on the Index
Debt Rating, the effective date of any issuance of, or change in, the
Index Debt Rating which results in a change in the Applicable Margin."
1.3 The definition of "AMORTIZATION DATE" is amended by deleting
"November 30, 1994" and substituting, IN LIEU thereof, "May 30, 1997".
1.4 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "APPLICABLE MARGIN" thereto in proper alphabetical order to
read as follows:
"APPLICABLE MARGIN" shall mean the following per annum percentages,
applicable in the following situations:
<TABLE>
<CAPTION>
PRIME RATE LIBOR CD
APPLICABILITY BASIS BASIS BASIS
------------- ----------- ------- ------
<S> <C> <C> <C>
(a) INITIAL PRICING PERIOD. 0.00 0.875 1.00
(b) SUBSEQUENT PRICING PERIOD.
CATEGORY 1 - The Leverage Ratio is not less 0.00 1.00 1.12
than 3.75 to 1
CATEGORY 2 - The Leverage Ratio is less 0.00 0.875 1.00
than 3.75 to 1 but not less than 3.25 to 1
CATEGORY 3 - The Leverage Ratio is 0.00 0.75 0.875
less than 3.25 to 1 but not less than
2.75 to 1 or the Index Debt Rating is
any two of the following: BBB- by S&P,
BBB- by ARA or Baa3 by Moody's
-2-
<PAGE>
CATEGORY 4 - The Leverage Ratio is less 0.00 0.625 0.75
than 2.75 to 1 but not less than 2.0 to 1
or the Index Debt Rating is any two of
the following: BBB by S&P, BBB by ARA or
Baa2 by Moody's
CATEGORY 5 - The Leverage Ratio is less 0.00 .50 0.625
than 2.00 to 1 or the Index Debt Rating
is any two of the following: BBB+ or
better by S&P, BBB+ or better by ARA or
Baa1 or better by Moody's
</TABLE>
The Applicable Margin payable by the Borrower on the Advances
outstanding hereunder shall be adjusted on each Adjustment Date if determined
based on the (i) Leverage Ratio, according to the performance of the Borrower
for the most recent fiscal quarter or (ii) the Index Debt Rating, according
to the most recent determination of the Index Debt Rating. For purposes of
the foregoing, (a) if the Index Debt Rating and the Leverage Ratio are in
different categories, the Applicable Margin shall be determined on whichever
of the Index Debt Rating or the Leverage Ratio falls within the superior (or
numerically higher) category, (b) if the Applicable Margin is determined
based on the Leverage Ratio and the financial statements of the Borrower
setting forth the Leverage Ratio are not received by the Administrative
Lender by the date required pursuant to Section 5.1(A) or 5.1(B), as
applicable, of the Master Covenant Agreement, the Applicable Margin shall be
determined as if the Leverage Ratio is not less than 3.75 to 1, (c) if the
Index Debt Rating established by ARA shall fall within a different category
than Moody's or S&P, the Applicable Margin shall be determined by reference
to Moody's or S&P and (d) if the Index Debt Rating established by Moody's and
S&P shall fall within different categories, the Applicable Margin shall be
determined by reference to the superior (or numerically higher) category, but
not to exceed two rating levels higher than the other rating agency. If the
rating system of Moody's, S&P or ARA shall change prior to the Term Loan
Maturity Date, the Borrower and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition to reflect such
changed rating system."
1.5 SECTION 1.1 of the Credit Agreement is hereby amended by adding the
definition of "ARA" thereto in proper alphabetical order to read as follows:
"'ARA' means a nationally recognized rating agency approved in
writing by the Determining Lenders which shall have a rating system
identical to S&P."
1.6 The definition of "BOND LETTER OF CREDIT COMMITMENT" is amended by
deleting "$56,844,995.21" and substituting, IN LIEU thereof, "$52,187,838.56".
-3-
<PAGE>
1.7 The definition of "CD BASIS" is deleted and the following definition
is inserted IN LIEU thereof:
"'CD BASIS' shall mean, with respect to each CD Advance for each
Interest Period, a rate per annum equal to the lesser of (a) the Highest
Lawful Rate and (b) the sum of the following: (i) the CD Base Rate
divided by 1.00 minus the CD Reserve Requirement, plus (ii) the Assessment
Rate, plus (iii) the Applicable Margin."
1.8 The definition of "DEBT" is amended by deleting the last sentence
thereof.
1.9 The definition of "EDITDA" is deleted and the following definition
is inserted IN LIEU thereof:
"'EBITDA' shall mean, for any period, determined in accordance
with GAAP on a Combined basis, the sum of (a) Operating Income, plus
(b) nonrecurring, non-cash charges which decrease Operating Income, plus
(c) depreciation, amortization and non-cash fixed asset retirements,
minus (d) nonrecurring credits which are included in Operating Income."
1.10 The definition of "GUARANTY AGREEMENTS" is deleted and the following
definition is inserted IN LIEU thereof:
"'GUARANTY AGREEMENTS' shall mean the LQM Guaranty, the LQ-Big Apple
Guaranty, the LQ-LNL Guaranty, the LQ-East Irvine Guaranty, the Subsidiary
Guaranty, the LQ-I Guaranty, the LQ-II Guaranty, the LQ-Lubbock Guaranty
and the LQ-Puerto Rico Guaranty".
1.11 SECTION 1.1 of the Credit Agreement is amended by adding the
definitions of "INDEX DEBT" and "INDEX DEBT RATING" thereto in proper
alphabetical order to read as follows:
"'Index Debt Rating' shall mean the rating applicable to the
Borrower's senior, unsecured, non-credit-enhanced long term indebtedness
for borrowed money ("INDEX DEBT") or the implied rating established by
Moody's, S&P or ARA as if the Borrower had outstanding Index Debt."
1.12 The definition of "INITIAL PRICING PERIOD" is deleted and the
following definition is inserted IN LIEU thereof:
"'INITIAL PRICING PERIOD' shall mean that period from April 21, 1995
to and including the Rate Adjustment Date."
1.13 The definition of "LEVERAGE RATIO" is deleted and the following
definition is inserted IN LIEU thereof:
-4-
<PAGE>
"'LEVERAGE RATIO' shall mean, for any date of determination, the
ratio of (i) Total Debt as of the fiscal quarter immediately preceding
the date of determination to (ii) EBITDA, in each case for the four
consecutive fiscal quarters preceding the date of determination. For
purposes of calculation of EBITDA, there shall be (i) included in EBITDA
(without duplication) the EBITDA of any assets acquired during any such
four fiscal quarters and (ii) excluded from EBITDA the EBITDA of any
asset disposed during any of such four fiscal quarters."
1.14 The definition of "LIBOR BASIS" is amended by deleting the first
sentence thereof and substituting, IN LIEU thereof, the following:
"'LIBOR BASIS' shall mean with respect to each LIBOR Advance for
each Interest Period, a rate per annum equal to the lesser of (a) the
Highest Lawful Rate or (b) the sum of the LIBOR Rate plus the Applicable
Margin."
1.15 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "LQ-I GUARANTY" thereto in proper alphabetical order to read
as follows:
"'LQ-I GUARANTY' shall mean the Guaranty executed by LQ-INVESTMENTS
I, a Texas general partnership, guaranteeing payment and performance of
the Obligations, substantially in the form of EXHIBIT O hereto, as
amended, modified, supplemented or restated from time to time."
1.16 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "LQ-II GUARANTY" thereto in proper alphabetical order to read
as follows:
"'LQ-II GUARANTY' shall mean the Guaranty executed by LQ-
INVESTMENTS II, a Texas general partnership, guaranteeing payment and
performance of the Obligations, substantially in the form of EXHIBIT P
hereto, as amended, modified, supplemented or restated from time to time."
1.17 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "LQ-LUBBOCK GUARANTY" thereto in proper alphabetical order to
read as follows:
"'LQ-LUBBOCK GUARANTY' shall mean the Guaranty executed by La Quinta
Inns of Lubbock, Inc., a Texas corporation, guaranteeing payment and
performance of the Obligations, substantially in the form of EXHIBIT Q
hereto, as amended, modified, supplemented or restated from time to time."
1.18 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "LQ-PUERTO RICO GUARANTY" thereto in proper alphabetical order
to read as follows:
"'LQ-PUERTO RICO GUARANTY' shall mean the Guaranty executed by La
Quinta Inns of Puerto Rico, Inc., a Delaware corporation, guaranteeing
payment and performance of
-5-
<PAGE>
the Obligations, substantially in the form of EXHIBIT R hereto, as
amended, modified, supplemented or restated from time to time.
1.19 The definition of "MATERIAL AMOUNT" is deleted and the following
definition is inserted IN LIEU thereof:
"'MATERIAL AMOUNT' shall mean, as of the determination thereof,
an amount equal to the greater of (a) $1,000,000 or (b) the lesser of
(i) $3,000,000 or (ii) 1% of the consolidated revenues of the Borrower
and its Subsidiaries on a Combined basis for the fiscal year preceding
the date of determination."
1.20 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "MOODY'S" thereto in proper alphabetical order to read as
follows:
"'MOODY'S' shall mean Moody's Investors Service, Inc."
1.21 The definition of "QUARTERLY DATE" is amended by deleting
"February 28, 1994" and substituting, IN LIEU thereof, "May 31, 1995."
1.22 The definition of "RATE ADJUSTMENT DATE" is amended by deleting
"June 30, 1994" and substituting, IN LIEU thereof, "March 31, 1995."
1.23 The definition of "REVOLVING CREDIT COMMITMENT" is amended by
deleting "$45,000,000" and substituting, IN LIEU thereof, "$75,000,000".
1.24 The definition of "REVOLVING CREDIT MATURITY DATE" is amended by
deleting "May 30, 1997" and substituting, IN LIEU thereof, "May 31, 1999."
1.25 SECTION 1.1 of the Credit Agreement is amended by adding the
definition of "S&P" thereto in proper alphabetical order to read as follows:
"'S&P' shall mean Standard & Poor's Ratings Group, a Division of
McGraw-Hill, Inc., a New York corporation."
1.26 The definition of "SUBSIDIARY GUARANTY" is deleted and the following
definition is substituted IN LIEU thereof:
"'SUBSIDIARY GUARANTY' shall mean the Guaranty executed by each
Significant Subsidiary (other than LQM, LQ-Big Apple Joint Venture, LQ-
LNL Limited Partnership, LQ-INVESTMENTS, I, a Texas general partnership,
and LQ-INVESTMENTS, II, a Texas general partnership, La Quinta Inns of
Lubbock, Inc., a Texas corporation, and La Quinta Inns of Puerto Rico,
Inc., a Delaware corporation) guaranteeing payment and performance of
the Obligations, substantially in the form of EXHIBIT D hereto, as such
agreement may be amended, modified, supplemented or restated from time
to time."
-6-
<PAGE>
1.27 The definition of "TERM LOAN COMMITMENT" is amended by deleting
"$184,000,000" and substituting, IN LIEU thereof, "$141,500,000".
1.28 The definition of "TERM LOAN MATURITY DATE" is amended by deleting
"May 31, 2000" and substituting, IN LIEU thereof, "May 31, 2002."
1.29 The definition of "TOTAL COMMITMENT" is amended by deleting
"$285,844,955.21" and substituting, IN LIEU thereof, "$268,687,838.56."
1.30 The definition of "TOTAL DEBT" is deleted and the following
definition is substituted IN LIEU thereof:
"'TOTAL DEBT' shall mean, as of any date of determination, the
sum (without duplication) of (a) all Debt of the Borrower and its
Subsidiaries, minus (b) all Debt of the Borrower and its Subsidiaries of
the type described in (i) clauses (f) and (g) of the definition of "DEBT"
herein which are set forth in EXHIBIT E to the Master Covenant Agreement
and (ii) clauses (h) and (k) of the definition of "DEBT" herein."
1.31 SECTION 2.4(a) is deleted and the following is substituted IN
LIEU thereof:
"(a) COMMITMENT FEE. Subject to Section 9.9 hereof, the Borrower
agrees to pay to the Administrative Lender, for the ratable account of
the Lenders, a commitment fee on the daily average unused portion of
the Revolving Credit Commitment at the following per annum percentages,
applicable in the following situations:
<TABLE>
<CAPTION>
APPLICABILITY PERCENTAGE
-------------- -----------
<S> <C>
(a) INITIAL PRICING PERIOD 0.250
(b) SUBSEQUENT PRICING PERIOD
CATEGORY 1 - The Leverage Ratio is not less 0.250
than 2.75 to 1
CATEGORY 2 - The Leverage Ratio is less than 0.200
2.75 to 1 but not less than 2.0 to 1 or the
Index Debt Rating is any two of the following:
BBB by S&P, BBB by ARA or Baa2 by Moody's
CATEGORY 3 - The Leverage Ratio is less than 0.1875
2.00 to 1 or the Index Debt Rating is any two
of the following: BBB+ or better by S&P, BBB+
or better by ARA or Baa1 or better by Moody's
</TABLE>
-7-
<PAGE>
Such fee shall be payable (i) in arrears on each Quarterly Date and on
the Revolving Credit Maturity Date, fully earned when due and, subject
to Section 9.9 hereof, nonrefundable when paid and (ii) computed on the
basis of a year of 365 or 366 days, as applicable, for the actual number
of days elapsed. For purposes of the foregoing, (a) outstanding Letters
of Credit from time to time will reduce the unused portion of the
Revolving Credit Commitment, (b) if the Index Debt Rating and the Leverage
Ratio are in different categories, the commitment fee shall be determined
on whichever of the Index Debt Rating or the Leverage Ratio falls within
the superior (or numerically higher) category, (c) if the commitment fee
is determined based on the Leverage Ratio and the financial statements of
the Borrower setting the Leverage Ratio are not received by the
Administrative Lender by the date required pursuant to Section 5.1(A)
or 5.1(B), as applicable, of the Master Covenant Agreement, the commitment
fee shall be determined as if the Leverage Ratio is not less than 2.75
to 1, (d) if the Index Debt Rating established by ARA shall fall within a
different category than Moody's or S&P, the commitment fee shall be
determined by reference to Moody's or S&P, (e) if the Index Debt Rating
established by Moody's and S&P shall fall within different categories,
the commitment fee shall be determined by reference to the superior (or
numerically higher) category, but not to exceed two rating levels higher
than the other rating agency and (f) such fee shall be adjusted on each
Adjustment Date if determined based on the (i) Leverage Ratio, according
to the performance of the Borrower for the most recent fiscal quarter
or (ii) the Index Debt Rating, according to the most recent determination
of the Index Debt Rating. If the rating system of Moody's, S&P or ARA
shall change prior to the Revolving Credit Maturity Date, the Borrower
and the Lenders shall negotiate in good faith to amend the references to
specific ratings to reflect such changed rating system.
1.32 SECTION 2.6(c) is amended by deleting the table set forth therein
and substituting, in lieu thereof, the following:
<TABLE>
<CAPTION>
DATE AMOUNT
----- -------
<S> <C>
May, 1997 $12,500,000
November, 1997 $12,500,000
May, 1998 $12,500,000
November, 1998 $12,500,000
May, 1999 $12,500,000
November, 1999 $12,500,000
May, 2000 $12,500,000
November, 2000 $12,500,000
May, 2001 $12,500,000
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C>>
November, 2001 $12,500,000
May, 2002 $16,500,000
</TABLE>
1.33 SECTION 2.16(f)(i) is amended by deleting the table therefrom and
substituting, in lieu thereof, the following:
<TABLE>
<CAPTION>
APPLICABILITY PERCENTAGE
-------------- -----------
<S> <C>
(A) INITIAL PRICING PERIOD 0.875
(B) SUBSEQUENT PRICING PERIOD
CATEGORY 1 - The Leverage Ratio is not less than 1.00
3.75 to 1
CATEGORY 2 - The Leverage Ratio is less than 3.75 0.875
to 1 but not less than 3.25 to 1
CATEGORY 3 - The Leverage Ratio is less than 3.25 0.75
to 1 but not less than 2.75 to 1 or the Index Debt
Rating is any two of the following: BBB- by S&P,
BBB- by ARA or Baa3 by Moody's
CATEGORY 4 - The Leverage Ratio is less than 2.75 0.625
to 1 but not less than 2.00 to 1 or the Index Debt
Rating is any two of the following: BBB by S&P, BBB
by ARA or Baa2 by Moody's
CATEGORY 5 - The Leverage Ratio is less than 2.00 0.50
to 1 or the Index Debt Rating is any two of the
following: BBB+ or better by S&P, BBB+ or better
by ARA or Baa1 or better by Moody's
</TABLE>
1.34 SECTION 2.16(f)ii) is amended by deleting the table and
substituting, in lieu thereof, the following:
<TABLE>
<CAPTION>
APPLICABILITY PERCENTAGE
------------- -----------
<S> <C>
(A) INITIAL PRICING PERIOD 0.4375
(B) SUBSEQUENT PRICING PERIOD
CATEGORY 1 - The Leverage Ratio is not less than 0.50
3.75 to 1
CATEGORY 2 - The Leverage Ratio is less than 3.75 0.4375
to 1 but not less than 3.25 to 1
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CATEGORY 3 - The Leverage Ratio is less than 0.375
3.25 to 1 but not less than 2.75 to 1 or the
Index Debt Rating is any two of the following:
BBB- by S&P, BBB- by ARA or Baa3 by Moody's
CATEGORY 4 - The Leverage Ratio is less than 0.3125
2.75 to 1 but not less than 2.00 to 1 or the
Index Debt Rating is any two of the following:
BBB by S&P, BBB by ARA or Baa2 by Moody's
CATEGORY 5 - The Leverage Ratio is less than 0.25
2.00 to 1 or the Index Debt Rating is any two of
the following: BBB+ or better by S&P, BBB+ or
better by ARA or Baa1 or better by Moody's
</TABLE>
1.35 SECTION 2.16(f)(iii) is deleted and the following is inserted in
lieu thereof:
"(iii) ADJUSTMENT OF LETTER OF CREDIT FEE. The fee payable in respect
of the Letters of Credit shall be adjusted on each Adjustment Date
if determined based on the (i) Leverage Ratio, on a quarterly
basis according to the performance of the Borrower for the most
recent fiscal quarter or (ii) the Index Debt Rating, according to
the most recent determination of the Index Debt Rating. For
purposes of the foregoing, (a) if the Index Debt Rating and the
Leverage Ratio are in different categories, the commitment fee
shall be determined on whichever of the Index Debt Rating or the
Leverage Ratio falls within the superior (or numerically higher)
category, (b) if the Letter of Credit fee is determined based on
the Leverage Ratio and the financial statements of the Borrower
setting forth the Leverage Ratio are not received by the
Administrative Lender by the date required pursuant to Section
5.1(A) or 5.1(B), as applicable, of the Master Covenant Agreement,
the Letter of Credit fee shall be determined as if the Leverage
Ratio is not less than 3.75 to 1, (c) if the Index Debt Rating
established by ARA shall fall within a different category than
Moody's or S&P, the Letter of Credit fee shall be determined by
reference to Moody's or S&P, and (d) if the Index Debt Rating
established by Moody's and S&P shall fall within different
categories, the Letter of Credit fee shall be determined by
reference to the superior (or numerically higher) category, but
not to exceed two rating levels higher than the other rating
agency. If the rating system of Moody's, S&P or ARA shall change
prior to the Revolving Credit Maturity Date, the Borrower and the
Lenders shall negotiate in good faith to amend the references to
specific ratings to reflect such changed rating system."
1.36 SECTION 3.3 is deleted.
1.37 SECTION 4.1(i) is amended by deleting "December 31, 1992" wherever
it appears and substituting, IN LIEU thereof, "December 31, 1994".
-10-
<PAGE>
1.38 SECTION 4.1(k) is amended by deleting "$7,600,000" and
substituting, IN LIEU thereof, "$10,000,000".
1.39 SCHEDULE 3 to the Credit Agreement is amended to be in the form
of SCHEDULE 3 attached to this Second Amendment.
1.40 SCHEDULE 6 to the Credit Agreement is amended to be in the form
of SCHEDULE 6 attached to this Second Amendment.
1.41 SCHEDULE 8 to the Credit Agreement is amended to be in the form
of SCHEDULE 8 attached to this Second Amendment.
1.42 EXHIBITS O, P, Q AND R are added to the Credit Agreement to be in
the form of EXHIBITS O, P, Q AND R attached to this Second Amendment
2. EVENT OF DEFAULT. La Quinta acknowledges and agrees that the failure to
comply with the requirements of clause (i) of the definition of
"PERMITTED INVESTMENT" set forth in the Master Covenant Agreement with respect
to La Quinta's investment in LQ-Baton Rouge Joint Venture and LQ-Denver
Peoria St., LTD by June 30, 1995 shall be an Event of Default under the
Credit Agreement with the same force and effect as if fully set forth in the
Credit Agreement.
3. REPRESENTATIONS AND WARRANTIES. La Quinta represents and warrants to
Lenders that, as of the date hereof and after giving effect to the amendments
provided in SECTION 1:
a. La Quinta and its Subsidiaries are in compliance with all of
the terms, provisions and covenants of the Agreement;
b. the representations and warranties contained in the Agreement
(after giving effect to this Second Amendment) are true and correct on
and as of the date hereof and as though made on and as of such dates;
c. no event has occurred and is continuing which constitutes a
Default or an Event of Default;
d. La Quinta and each Subsidiary, as appropriate, has full power
and authority to execute and deliver this Second Amendment, the Revolving
Credit Notes and the Term Loan Notes referred to in Section 3(b) of this
Second Amendment, and all other documents and agreements executed in
connection with this Second Amendment (collectively, the "Amendment Loan
Papers") and this Second Amendment and the Agreement, as amended hereby,
constitute the legal, valid and binding obligation of La Quinta or each
Subsidiary, as appropriate, enforceable in accordance with their terms,
except as enforceability may be limited by debtor relief laws and except
as rights to indemnity may be limited by federal or state securities
laws; and
-11-
<PAGE>
e. no authorization, approval, consent or other action by, notice
to, or filing with, any Person, is required for the execution, delivery
or performance by La Quinta or any Subsidiary, as appropriate, of this
Second Amendment or the other Amendment Loan Papers.
4. CONDITIONS OF EFFECTIVENESS. The amendments provided for in SECTION 1
of this Second Amendment shall be effective as of April 21, 1995, upon the
receipt by Administrative Lender or Lender or the occurrence or existence of
each of the following, as appropriate:
(a) a certificate of an officer acceptable to Lenders of La Quinta,
and including (i) any amendments to its articles of incorporation since
January 25, 1994, (ii) any amendments to its bylaws since January 25,
1994, (iii) a copy of the resolutions authorizing it to execute, deliver
and perform the Loan Papers to which it is a party, and (iv) a copy of a
certificate of good standing and a certificate of existence for its state
of incorporation;
(b) a certificate of an officer acceptable to Lender of La Quinta
Puerto Rico, Inc., a Delaware corporation ("LQ-PUERTO RICO"), certifying
as to the incumbency of the officers signing the Loan Papers to which it
is a party, and including (i) its articles of incorporation, certified by
the Secretary of State of Delaware, (ii) its bylaws, (iii) a copy of the
resolutions authorizing it to execute, deliver and perform the Loan Papers
to which it is a party, and (iv) a copy of a certificate of good standing
and a certificate of existence for its state of incorporation;
(c) a duly executed Revolving Credit Note and Term Loan Note,
payable to the order of each Lender and in an amount equal to its
Specified Percentage of the Revolving Credit Commitment and the Term
Loan Commitment, respectively, as hereby amended;
(d) receipt by Administrative Lender (and subject to Section 9.9 of
the Agreement), for the ratable account of Lenders, an amendment fee equal
to 0.125% of the Total Commitment;
(e) opinions of counsel to La Quinta and its Subsidiaries addressed
to Administrative Lender and Lenders and in form and substance
satisfactory to Administrative Lender and Lenders, dated the Effective
Date, and covering such matters incident to the transactions contemplated
hereby as the Administrative Lender or Special Counsel may reasonably
request and opinions of local counsel in states other than Texas in
which Facilities are located in form and substance satisfactory to
Administrative Lender regarding the amendments to the Deeds of Trust;
(f) reimbursement for the Administrative Lender for Special
Counsel's reasonable fees and expenses rendered through the date of
this Second Amendment;
-12-
<PAGE>
(g) evidence that all corporate or other proceedings of La Quinta
and Subsidiaries taken in connection with the transactions contemplated
by this Second Amendment and the other Loan Papers shall be reasonably
satisfactory in form and substance to Administrative Lender, Lenders and
Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which Administrative Lender, Special Counsel
or any Lender may reasonably request in connection with such transactions;
(h) the duly executed amendments to the Deeds of Trust, in form and
substance satisfactory to Administrative Lender;
(i) the duly executed Fourth Amended and Restated Master Covenant
Agreement;
(j) a certificate of an officer acceptable to Administrative Lender
and Lenders, in form and substance satisfactory to the Administrative
Lender and Lenders, certifying that the execution, delivery and
performance by the Obligors of this Second Amendment and related documents
will not violate or result in a default in respect of any of the terms of
the Senior Subordinated Notes;
(k) the representations and warranties set forth in Section 3 of
this Second Amendment shall be true and correct;
(l) receipt by Administrative Lender of all amounts due under the
letter dated April 21, 1995 between Administrative Lender and La Quinta;
(m) duly executed LQ-Puerto Rico Guaranty; and
(n) Administrative Lender and Lenders shall have received, in form
and substance satisfactory to Administrative Lender and Lenders, such
other documents, certificates, and instruments as Lenders shall require.
5. REFERENCE TO THE AGREEMENT.
5.1 Upon the effectiveness of this Second Amendment, each reference
in the Agreement to "this Agreement", "hereunder", "herein", or words of
like import shall mean and be a reference to the Agreement, as affected
and amended hereby.
5.2 The Agreement, as amended by the amendments referred to above,
shall remain in full force and effect and are hereby ratified and
confirmed.
6. GUARANTOR ACKNOWLEDGEMENT. Each of the Guarantors signing below
acknowledge and agree that its obligations and liabilities under its Guaranty
Agreement and each other Loan Paper executed by each such Guarantor and any
liens or security interests granted thereunder (i) are
-13-
<PAGE>
not released, diminished or impaired in any manner by this Second Amendment
or any of the provisions contemplated herein and (ii) cover, among other
things, the Revolving Credit Commitment and the Term Loan Commitment, and as
modified pursuant to the terms of this Second Amendment.
7. AMENDMENT TO REIMBURSEMENT AGREEMENTS. Each of the Lenders acknowledge
and agree to the terms of the Amendment to Reimbursement Agreements in the
form of ANNEX A attached to this Second Amendment.
8. COSTS, EXPENSES AND TAXES. La Quinta shall pay within five days after
demand all costs and expenses of Administrative Lender and Lenders in
connection with the preparation, reproduction, execution and delivery of this
Second Amendment and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of-pocket expenses of
counsel for Administrative Lender and Lenders with respect thereto and with
respect to advising Administrative Lender and Lenders as to their rights and
responsibilities under the Agreement, as hereby amended).
9. EXECUTION IN COUNTERPARTS. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and
the same instrument.
10. GOVERNING LAW; BINDING EFFECT. This Second Amendment shall be governed
by and construed in accordance with the laws of the State of Texas and be
binding upon La Quinta, Administrative Lender and Lenders and their
respective successors and assigns.
11. HEADINGS. Section headings in this Second Amendment are included herein
for convenience of reference only and shall not constitute part of this
Second Amendment for any other purpose.
12. FINAL AGREEMENT. THE AGREEMENT, AS EFFECTED BY THE AMENDMENTS CONTAINED
IN THIS SECOND AMENDMENT, TOGETHER WITH EACH OTHER LOAN PAPER, REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
============================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
=============================================
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the date first above written.
LA QUINTA INNS, INC.
By: /s/ DEWEY W. CHAMBERS
___________________________________
Dewey W. Chambers, Vice President-
Treasurer
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
By: /s/ DOUGLAS E. HUTT
____________________________________
Douglas E. Hutt, Senior Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A.
By: /s/DOUGLAS E. HUTT
_____________________________________
Douglas E. Hutt, Senior Vice President
CITICORP USA, INC.
By:______________________________________
______________, ______________________
(Print Name) (Print Title)
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the date first above written.
LA QUINTA INNS, INC.
By:
___________________________________
Dewey W. Chambers, Vice President-
Treasurer
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
By:
____________________________________
Douglas E. Hutt, Senior Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
_____________________________________
Douglas E. Hutt, Senior Vice President
CITICORP USA, INC.
By: /s/ BARBARA COHEN
______________________________________
Barbara Cohen Vice Presdient
______________, ______________________
(Print Name) (Print Title)
-15-
<PAGE>
THE FROST NATIONAL BANK
By: /s/ SUZANNE HOUSER
______________________________________
Suzanne Houser Vice President
______________, ______________________
(Print Name) (Print Title)
-16-
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: /s/ DAN M. DANELO
______________________________________
Dan M. Danelo Sr. Vice President
______________, ______________________
(Print Name) (Print Title)
-17-
<PAGE>
BANK OF SCOTLAND
By: /s/ ELIZABETH WILSON
______________________________________
Elizabeth Wilson Vice President and
Branch Manager
______________, ______________________
(Print Name) (Print Title)
-18-
<PAGE>
BANK OF AMERICA ILLINOIS
By: /s/ W. THOMAS BARNETT
______________________________________
W. Thomas Barnett Vice President
_________________, ___________________
(Print Name) (Print Title)
-19-
<PAGE>
BANK ONE, TEXAS, N.A.
By: /s/ ALAN L. MILLER
______________________________________
Alan L. Miller Vice President
_______________, _____________________
(Print Name) (Print Title)
-20-
<PAGE>
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ CHARLES T. BRIDGMAN
______________________________________
Charles T. Bridgman Vice President
___________________, _________________
(Print Name) (Print Title)
-21-
<PAGE>
U.S. BANK OF WASHINGTON,
NATIONAL ASSOCIATION
By: /s/ BLAKE R. HOWELLS
_____________________________________
Blake R. Howells Vice President
________________, ___________________
(Print Name) (Print Title)
-22-
<PAGE>
ACKNOWLEDGED AND AGREED:
LA QUINTA REALTY CORP.
By: /s/ JOHN F. SCHMUTZ
______________________________________
John F. Schmutz, Vice President
LA QUINTA PLAZA, INC.
By: /s/ JOHN F. SCHMUTZ
______________________________________
John F. Schmutz, Vice President
LA QUINTA FINANCIAL CORPORATION
By: /s/ JOHN F. SCHMUTZ
______________________________________
John F. Schmutz, Vice President
LA QUINTA INVESTMENTS, INC.
By: /s/ JOHN F. SCHMUTZ
______________________________________
John F. Schmutz, Vice President
LQI ACQUISITION CORPORATION
By:______________________________________
______________, ______________________
(Print Name) (Print Title)
-23-
<PAGE>
<PAGE>
ACKNOWLEDGED AND AGREED:
LA QUINTA REALTY CORP.
By:
______________________________________
John F. Schmutz, Vice President
LA QUINTA PLAZA, INC.
By:
______________________________________
John F. Schmutz, Vice President
LA QUINTA FINANCIAL CORPORATION
By:
______________________________________
John F. Schmutz, Vice President
LA QUINTA INVESTMENTS, INC.
By:
______________________________________
John F. Schmutz, Vice President
LQI ACQUISITION CORPORATION
By: /s/ ROLAND B. BLISS
______________________________________
Roland B. Bliss President & Treasurer
______________, ______________________
(Print Name) (Print Title)
-23-
<PAGE>
LA QUINTA MOTOR INNS LIMITED
PARTNERSHIP
By: La Quinta Realty Corp., its General
Partner
By: /s/ JOHN F. SCHMUTZ
_________________________________
John F. Schmutz, Vice President
LQM OPERATING PARTNERS, L.P.
By: La Quinta Realty Corp., its General
Partner
By: /s/ JOHN F. SCHMUTZ
_________________________________
John F. Schmutz, Vice President
LQ-BIG APPLE JOINT VENTURE
By: La Quinta Inns, Inc., its Partner
By: /s/ DEWEY W. CHAMBERS
_________________________________
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc.,
its Partner
By: /s/ JOHN F. SCHMUTZ
_________________________________
John F. Schmutz, Vice President
-24-
<PAGE>
LQ-LNL LIMITED PARTNERSHIP
By: La Quinta Inns, Inc., its Managing
General Partner
By: /s/ DEWEY W. CHAMBERS
_________________________________
Dewey W. Chambers,
Vice President-Treasurer
LQ-EAST IRVINE JOINT VENTURE
By: La Quinta Inns, Inc., its Partner
By: /s/ DEWEY W. CHAMBERS
_________________________________
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc.,
its Partner
By: /s/ JOHN F. SCHMUTZ
_________________________________
John F. Schmutz, Vice President
-25-
<PAGE>
LQ-INVESTMENTS I
By: La Quinta Inns, Inc., its Managing
General Partner
By: /s/ DEWEY W. CHAMBERS
_________________________________
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc.,
a General Partner
By: /s/ JOHN F. SCHMUTZ
_________________________________
John F. Schmutz, Vice President
LQ-INVESTMENTS II
By: La Quinta Inns, Inc., its Managing
General Partner
By: /s/ DEWEY W. CHAMBERS
_________________________________
Dewey W. Chambers,
Vice President-Treasurer
By: La Quinta Investments, Inc.,
a General Partner
By: /s/ JOHN F. SCHMUTZ
_________________________________
John F. Schmutz, Vice President
-26-
<PAGE>
LA QUINTA INNS OF LUBBOCK, INC.
By: /s/ JOHN F. SCHMUTZ
______________________________________
John F. Schmutz, Vice President
LA QUINTA INNS OF PUERTO RICO, INC.
By: /s/ JOHN F. SCHMUTZ
______________________________________
John F. Schmutz, Vice President
-27-
<PAGE>
SCHEDULE 3
LA QUINTA INNS, INC.
SUBSIDIARIES AND UNINCORPORATED VENTURES
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
OR PERCENTAGE OF
NAME ORGANIZATION OWNERSHIP
---- ------------- -------------
<S> <C> <C>
La Quinta Realty Corp. Texas 100
La Quinta Plaza, Inc. Texas 100
La Quinta Financial Corporation Texas 100
La Quinta Investments, Inc. Delaware 100
LQI Acquisition Corporation Delaware 100
LQM Operating Partners, L.P. Delaware 100
LQ-Big Apple Joint Venture Delaware 100
LQ-East Irvine Joint Venture California 100
La Quinta-Houston I.H. 10, Ltd. Texas 50
La Quinta San Antonio-South Joint Venture Texas 50
La Quinta Austin Motor Hotel, Ltd. Texas 66.67
La Quinta-Dallas Central Expressway, Ltd. Texas 64.81
LQ Motor Inn Venture-Austin No. 530* Texas 50
La Quinta-Wichita, Kansas, No. 532, Ltd. Texas 50
LQ-Baton Rouge Joint Venture* Texas 100
LQ-West Bank Joint Venture* Texas 60
LQ-Denver Peoria St., LTD Texas 100
San Antonio Main Avenue Motel, Ltd. Texas 66.67
LQ-LNL Joint Venture Texas 100
LQ Investments I* Texas 100
LQ Investments II* Texas 100
La Quinta Development Partners, L.P.* Delaware 40
La Quinta Inns of Lubbock, Inc. Texas 100
La Quinta Inns of Puerto Rico, Inc. Delaware 100
*Indicates Joint Venture Agreements with a buy/sell provision.
</TABLE>
<PAGE>
SCHEDULE 6
LA QUINTA INNS, INC.
UNINCORPORATED VENTURES TO BE PURCHASED
La Quinta-Houston I.H. 10, Ltd.
La Quinta-San Antonio South Joint Venture
La Quinta Austin Motor Hotel, Ltd.
La Quinta-Dallas Central Expressway, Ltd.
LQ Motor Inn Venture-Austin No. 530
La Quinta-Wichita, Kansas, No. 532, Ltd.
LQ-West Bank Joint Venture
La Quinta Development Partners, L.P.
San Antonio Main Avenue Motel, Ltd.
<PAGE>
SCHEDULE 8
LA QUINTA INNS, INC.
INSOLVENT UNINCORPORATED VENTURES
None
<PAGE>
ANNEX A
AMENDMENT TO REIMBURSEMENT AGREEMENTS
THIS AMENDMENT to REIMBURSEMENT AGREEMENTS (this "Amendment"), dated as of
April 21, 1995, is entered into among NationsBank of Texas, N.A. ("Lender"),
La Quinta Inns, Inc. (formerly known as La Quinta Motor Inns, Inc.), a Texas
corporation ("LQMI"), LQ-Baton Rouge Joint Venture, a Texas joint venture
("LQBR"), and La Quinta Development Partners, L.P., a Delaware limited
partnership ("LQDP").
BACKGROUND
1. LQMI and Lender heretofore entered into the following Reimbursement
Agreements:
a. Reimbursement Agreement, dated as of June 1, 1991, between LQMI and
Lender pursuant to which Lender issued a certain irrevocable letter of
credit in the original stated amount of $4,925,344, in favor of The
First National Bank of Chicago in its capacity as Trustee (the
"Trustee") for the benefit of the holders of the Village of Schaumburg,
Cook and DuPage Counties, Illinois Industrial Development Revenue
Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series 1991;
b. Reimbursement Agreement, dated as of June 1, 1991, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $3,631,355, in favor
of the Trustee for the benefit of the holders of the Savannah Economic
Development Authority Revenue Refunding Bonds (La Quinta Motor Inns,
Inc. Project) Series 1991;
c. Reimbursement Agreement, dated as of July 1, 1991, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $3,314,250, in favor of the
Trustee for the benefit of the holders of the Texarkana, Texas
Industrial Development Corporation Industrial Development Revenue
Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series 1991;
d. Reimbursement Agreement, dated as of July 1, 1991, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $2,802,792, in favor of the
Trustee for the benefit of the holders of the Economic Development
Corporation of the City of Kalamazoo Economic Development Revenue
Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series 1991;
<PAGE>
e. Reimbursement Agreement, dated as of September 1, 1991, between LQMI
and Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $2,301,562.50, in
favor of the Trustee for the benefit of the holders of the Industrial
Development Board of the Parish of Bossier, Louisiana, Inc. Refunding
Revenue Bonds (La Quinta Motor Inns, Inc. Project) Series 1991;
f. Reimbursement Agreement, dated as of November 1, 1991, between LQMI
and Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $2,587,979,17, in
favor of the Trustee for the benefit of the holders of the City of El
Paso Industrial Development Authority, Incorporated Industrial
Development Revenue Refunding Bonds (La Quinta Motor Inns, Inc.
Project) Series 1991;
g. Reimbursement Agreement, dated as of November 1, 1991, between LQMI
and Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $3,099,437.55, in
favor of the Trustee for the benefit of the holders of the Maverick
County Industrial Development Corporation Industrial Development
Revenue Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series
1991;
h. Reimbursement Agreement, dated as of November 1, 1991, between LQMI
and Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $3,263,104.17, in
favor of the Trustee for the benefit of the holders of the Wheat Ridge,
Colorado Industrial Development Revenue Refunding Bonds (La Quinta
Motor Inns, Inc. Project) Series 1991;
i. Reimbursement Agreement, dated as of December 1, 1991, between LQMI
and Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $3,687,614.58, in
favor of the Trustee for the benefit of the holders of the City of
Aurora Industrial Development Revenue Refunding Bonds (La Quinta Motor
Inns, Inc. Project) Series 1991;
j. Reimbursement Agreement, dated as of January 1, 1992, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $6,822,854.17, in favor of
the Trustee for the benefit of the holders of the City of San
Bernardino, California Industrial Development Revenue Refunding Bonds
(La Quinta Motor Inns, Inc. Project) Series 1992;
k. Reimbursement Agreement, dated as of June 1, 1992, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $4,531,655, in favor of the
Trustee for the benefit of the holders of the Peninsula Ports Authority
of Virginia Floating Rate Monthly
-2-
<PAGE>
Demand Industrial Development Revenue Bonds, Series 1984 (La Quinta
Motor Inns, Inc. Project);
l. Reimbursement Agreement, dated as of June 1, 1992, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $4,531,655, in favor of the
Trustee for the benefit of the holders of the Village of Elk Grove
Village, Cook and DuPage Counties, Illinois Floating Rate Monthly
Demand Industrial Development Revenue Bonds, Series 1984 (La Quinta
Motor Inns, Inc. Project);
m. Reimbursement Agreement, dated as of November 1, 1992, between LQMI
and Lender pursuant to which Lender has issued a certain irrevocable
letter of credit in the original stated amount of $2,828,364.58, in
favor of the Trustee for the benefit of the holders of the Nacogdoches
Industrial Development Authority, Inc. Industrial Development Revenue
Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series 1992.
n. Reimbursement Agreement, dated as of May 1, 1993, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $4,091,666.67 in favor of
the Trustee for the benefit of the holders of the City of Oakbrook
Terrace, Illinois Industrial Development Revenue Refunding Bonds (La
Quinta Motor Inns, Inc. Project) Series 1993; and
o. Reimbursement Agreement, dated as of October 1, 1993, between LQMI and
Lender pursuant to which Lender has issued a certain irrevocable letter
of credit in the original stated amount of $3,068,750.00 in favor of
the Trustee for the benefit of the holders of the City of Virginia Beach
Development Authority Industrial Development Revenue Refunding Bonds
(La Quinta Inns, Inc. Project) Series 1993.
(each, as previously amended, modified, supplemented or restated from time
to time, a "LQMI Reimbursement Agreement" and collectively the "LQMI
Reimbursement Agreements").
2. LQBR and Lender heretofore entered into that certain Reimbursement
Agreement, dated as of June 1, 1992, pursuant to which Lender has issued a
certain irrevocable letter of credit in the original stated amount of
$3,554,635.42, in favor of the Trustee for the benefit of the holders of the
Industrial Development Board of the Parish of East Baton Rouge, Louisiana,
Inc. Industrial Development Revenue Refunding Bonds (La Quinta Motor Inns,
Inc. Project) Series 1992 (as previously amended, the "LQBR Reimbursement
Agreement").
3. LQDP, LQMI and Lender heretofore entered into that certain
Reimbursement Agreement, dated as of May 1, 1993, pursuant to which Lender
has issued a certain irrevocable letter of credit in the original stated
amount of $4,296,250 in favor of the Trustee for the benefit
-3-
<PAGE>
of the holders of the City of Stockton, California Industrial Development
Revenue Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series 1993 (as
previously amended, the "LQDP Reimbursement Agreement").
4. The LQMI Reimbursement Agreements, the LQBR Reimbursement Agreement
and the LQDP Reimbursement Agreement are collectively the "Reimbursement
Agreements" and each a "Reimbursement Agreement".
5. The Reimbursement Agreements were amended by that certain Amendment to
Reimbursement Agreements dated as of January 25, 1994.
6. LQMI and Lender desire to further amend the LQMI Reimbursement
Agreements, LQBR and Lender desire to further amend the LQBR Reimbursement
Agreement, and LQDP, LQMI and Lender desire to further amend the LQDP
Reimbursement Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
LQMI, LQBR, LQDP, and Lender covenant and agree as follows:
1. AMENDMENTS.
a. Section 1 of each Reimbursement Agreement is hereby amended by adding
the following definitions:
"'ADJUSTMENT DATE' shall have the meaning given thereto in the
Credit Agreement."
"'ARA' shall have the meaning given thereto in the Credit Agreement."
"'INDEX DEBT RATING' shall have the meaning given thereto in the
Credit Agreement"
"'INITIAL PRICING PERIOD' shall have the meaning given thereto in the
Credit Agreement."
"'MOODY'S' shall have the meaning given thereto in the Credit
Agreement."
"'S&P' shall have the meaning given thereto in the Credit Agreement."
"'SUBSEQUENT PRICING PERIOD' shall have the meaning given thereto in
the Credit Agreement."
-4-
<PAGE>
b. The definition of "APPLICABLE MARGIN" set forth in each Reimbursement
Agreement is hereby amended to read as follows:
"'APPLICABLE MARGIN' means the following per annum percentages,
applicable in the following situations:
<TABLE>
<CAPTION>
PRIME RATE LIBOR CD
APPLICABILITY BASIS BASIS BASIS
------------- ---------- ----- -----
<S> <C> <C> <C>
(a) INITIAL PRICING PERIOD. 0.00 0.875 1.00
(b) SUBSEQUENT PRICING PERIOD.
CATEGORY 1 - The Leverage Ratio is not 0.00 1.00 1.125
less than 3.75 to 1
CATEGORY 2 - The Leverage Ratio is less 0.00 0.875 1.00
than 3.75 to 1 but not less than 3.25
to 1
CATEGORY 3 - The Leverage Ratio is less 0.00 0.75 0.875
than 3.25 to 1 but not less than 2.75
to 1 or the Index Debt Rating is any
two of the following: BBB- by S&P,
BBB- by ARA or Baa3 by Moody's
CATEGORY 4 - The Leverage Ratio is less 0.00 0.625 0.75
than 2.75 to 1 but not less than 2.0
to 1 or the Index Debt Rating is any
two of the following: BBB by S&P, BBB
by ARA or Baa2 by Moody's
CATEGORY 5 - The Leverage Ratio is less 0.00 .50 0.625
than 2.00 to 1 or the Index Debt Rating
is any two of the following: BBB+ or
better by S&P, BBB+ or better by ARA or
Baa1 or better by Moody's
</TABLE>
The Applicable Margin payable by the Company on the outstanding draws
under the Letter of Credit which are Tender Drafts shall be adjusted on
each Adjustment Date if determined based on the (i) Leverage Ratio,
according to the performance of the Company for the most recent fiscal
quarter or (ii) the Index Debt Rating, according to the most recent
determination of the Index Debt Rating. For purposes of the foregoing, (a) if
the Index Debt Rating and the Leverage Ratio are in different categories, the
Applicable Margin shall be determined on whichever of the Index Debt Rating
or the Leverage Ratio falls within the superior (or numerically higher)
category, (b) if the Applicable Margin is determined based on the Leverage
Ratio and the financial statements of the Borrower setting forth the Leverage
Ratio are not received by the Bank
-5-
<PAGE>
by the date required pursuant to Section 5.1(A) or 5.1(B), as applicable,
of the Master Covenant Agreement, the Applicable Margin shall be determined
as if the Leverage Ratio is not less than 3.75 to 1, (c) if the Index Debt
Rating established by ARA shall fall within a different category than Moody's
or S&P, the Applicable Margin shall be determined by reference to Moody's
or S&P and (d) if the Index Debt Rating established by Moody's and S&P shall
fall within different categories, the Applicable Margin shall be determined
by reference to the superior (or numerically higher) category, but not to
exceed two rating levels higher than the other rating agency. If the rating
system of Moody's, S&P or ARA shall change prior to the Termination Date, the
Company and the Bank shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed rating system."
c. Section 3 of each Reimbursement Agreement is hereby amended by deleting
said section and substituting the following in lieu thereof:
"Section 3. TERM OF THE LETTER OF CREDIT. The term of the Letter of
Credit shall, subject to earlier termination in accordance with its terms,
end on May 31, 2002; PROVIDED, that the Letter of Credit may, subject to
earlier termination in accordance with its terms, (i) commencing May 31,
2000, be extended at the written request of LQMI for an additional period of
one year beyond the then existing term of the Letter of Credit if the Bank
shall have given a Notice of Extension prior to May 31, 2000 and (ii)
thereafter be extended at the written request of LQMI for successive
additional periods of one year each beyond the then existing term of the
Letter of Credit if the Bank shall have given a Notice of Extension prior to
May 31 of each year thereafter. The Bank may determine to extend the term of
the Letter of Credit in its sole discretion, and no course of dealing or
other circumstances shall require the Bank to extend the Letter of Credit."
d. Section 4(a) of each Reimbursement Agreement is hereby amended by
deleting said section and substituting the following in lieu thereof:
"(a) LETTER OF CREDIT FEES. Subject to Section 16(g) hereof, the
Company hereby agrees to pay to the Bank (i) a letter of credit fee for the
period from and including April 21, 1995 until the Termination Date, computed
on a daily basis at the following per annum percentages, applicable in the
following situations:
<TABLE>
<CAPTION>
APPLICABILITY PERCENTAGE
------------- ----------
<S> <C>
(A) INITIAL PRICING PERIOD 0.875
(B) SUBSEQUENT PRICING PERIOD
CATEGORY 1 - The Leverage Ratio is not less than 3.75 to 1 1.00
CATEGORY 2 - The Leverage Ratio is less than 3.75 to 1 but 0.875
not less than 3.25 to 1
-6-
<PAGE>
CATEGORY 3 - The Leverage Ratio is less than 3.25 to 1 but 0.75
not less than 2.75 to 1 or the Index Debt Rating is any two
of the following: BBB- by S&P, BBB- by ARA or Baa3 by Moody's
CATEGORY 4 - The Leverage Ratio is less than 2.75 to 1 but 0.625
not less than 2.00 to 1 or the Index Debt Rating is any two
of the following: BBB by S&P, BBB by ARA or Baa2 by Moody's
CATEGORY 5 - The Leverage Ratio is less than 2.00 to 1 or 0.50
the Index Debt Rating is any two of the following:
BBB+ or better by S&P, BBB+ or better by ARA or Baa1 or
better by Moody's
</TABLE>
calculated as a percentage of the amount from time to time available to be
drawn under the Letter of Credit and (ii) an issuance and fronting fee
equal to 0.10% of the amount from time to time available to be drawn under
the Letter of Credit. Amounts payable under this Section 4(a) shall be
calculated on each calendar quarter and payable quarterly in arrears, based
on a 365 or 365-day year, as appropriate, in immediately available funds,
on the 15th day following the end of each calendar quarter. The fee payable
in respect of the Letter of Credit shall be adjusted on each Adjustment
Date if determined based on the (i) Leverage Ratio, on a quarterly basis
according to the performance of the Company for the most recent fiscal
quarter or (ii) the Index Debt Rating, according to the most recent
determination of the Index Debt Rating. For purposes of the foregoing,
(a) if the Index Debt Rating and the Leverage Ratio are in different
categories, the Applicable Margin shall be determined on whichever of the
Index Debt Rating or the Leverage Ratio falls within the superior (or
numerically higher) category, (b) if the Letter of Credit fee is determined
based on the Leverage Ratio and the financial statements of the Company
setting forth the Leverage Ratio are not received by the Bank by the date
required pursuant to Section 5.1(A) or 5.1(B), as applicable, of the
Master Covenant Agreement, the Letter of Credit fee shall be determined
as if the Leverage Ratio is not less than 3.75 to 1, (c) if the Index Debt
Rating established by ARA shall fall within a different category than
Moody's or S&P, the Letter of Credit fee shall be determined by reference
to Moody's or S&P, and (d) if the Index Debt Rating established by Moody's
and S&P shall fall within different categories, the Letter of Credit fee
shall be determined by reference to the superior (or numerically higher)
category, but not to exceed two rating levels higher than the other rating
agency. If the rating system of Moody's, S&P or ARA shall change prior to
the Termination Date, the Company and Bank shall negotiate in good faith
to amend the references to specific ratings to reflect such changed rating
system."
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, LQMI, LQBR AND LQDP each represents
-7-
<PAGE>
and warrants that, as of the date hereof and after giving effect to the
amendments contemplated by the foregoing Section 1:
a. the representations and warranties contained in the LQMI Reimbursement
Agreements, the LQBR Reimbursement Agreement and the LQDP Reimbursement
Agreement are true and correct on and as of the date hereof as though made on
and as of such date;
b. no event has occurred and is continuing which constitutes a Default or
an Event of Default;
c. each LQMI, LQBR and LQDP has full power and authority to execute and
deliver this Amendment, this Amendment and the LQMI Reimbursement Agreements,
as amended hereby, constitute the legal, valid and binding obligations of
LQMI, and this Amendment and the LQBR Reimbursement Agreement, as amended
hereby, constitute the legal, valid and binding obligations of LQBR, each
enforceable in accordance with their respective terms, and this Amendment and
the LQDP Reimbursement Agreement, as amended hereby, constitute the legal,
valid and binding obligations of LQMI and LQDP, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;
d. the financial statements of LQMI, LQBR and LQDP for the fiscal year
ending December 31, 1994, are true and correct, fairly represent the
financial condition of LQMI, LQBR and LQDP as at such date and have been
prepared in accordance with GAAP applied on a basis consistent with prior
periods; and there has been no material adverse change in the financial
condition of LQMI or LQBR from that represented in such financial statements;
and
e. no authorization, approval, consent, or other action by, notice to, or
filing with, any governmental authority or other Person, is required for the
execution, delivery or performance by LQMI, LQBR or LQDP of this Amendment.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall be effective as of
April 21, 1995, subject to the following:
(i) Lender shall have executed a counterpart of this Amendment;
(ii) Lender shall have received counterparts of this Amendment
executed by LQMI, LQBR and LQDP;
(iii) Lender shall have received, in form and substance satisfactory
to Lender and its counsel, such other documents, certificates
and instruments as Lender shall require; and
-8-
<PAGE>
(iv) Lender shall have received a fully-executed copy of the Second
Amendment to Credit Agreement, dated as of April 21, 1995, among
LQMI, the lenders party thereto, and NationsBank of Texas, N.A.,
as Administrative Lender.
4. GUARANTOR'S ACKNOWLEDGMENT. By signing below, LQMI agrees that its
obligations under the Guaranty Agreement between LQMI and the Trustee, dated
as of June 1, 1992, with respect to the Industrial Development Board of the
Parish of East Baton Rouge, Louisiana, Inc. Industrial Development Revenue
Refunding Bonds (La Quinta Motor Inns, Inc. Project) Series 1992 are not
released, modified, impaired or affected in any manner by this Amendment.
5. REFERENCE TO THE REIMBURSEMENT AGREEMENTS.
a. Upon the effectiveness of this Amendment, each reference in each
Reimbursement Agreement to "this Agreement", "hereunder", "herein", or words
of like import shall mean and be a reference to such Reimbursement Agreement,
as affected and amended hereby.
b. The Reimbursement Agreements, as amended by the amendments referred to
above, shall remain in full force and effect and are hereby ratified and
confirmed.
6. COSTS, EXPENSES AND TAXES. LQMI, LQBR and LQDP jointly and severally
agree to pay on demand all costs and expenses of Lender in connection with
the preparation, reproduction, execution and delivery of this Amendment and
the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for Lender with respect
thereto and with respect to advising Lender as to its rights and
responsibilties under the Reimbursement Agreements, as hereby amended).
7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and
the same instrument.
8. GOVERNING LAW; BINDING EFFECT. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and shall be
binding upon LQMI, LQBR, and Lender and their respective successors and
assigns.
9. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
10. FINAL AGREEMENT. THE REIMBURSEMENT AGREEMENTS AS AMENDED, TOGETHER
WITH THE OTHER RELATED DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES REGARDING THE SUBJECT
-9-
<PAGE>
MATTER THEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
==============================================================================
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-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
NATIONSBANK OF TEXAS, N.A.
By: /s/ Douglas E. Hutt
___________________________________________
Douglas E. Hutt, Senior Vice President
LA QUINTA INNS, INC.
By: /s/ Dewey W. Chambers
___________________________________________
Dewey W. Chambers, Vice President-Treasurer
L-Q BATON ROUGE JOINT VENTURE
By: La Quinta Inns, Inc., its general partner
By: /s/ Dewey W. Chambers
______________________________________
Dewey W. Chambers
Vice President-Treasurer
LA QUINTA DEVELOPMENT PARTNERS, L.P.
By: La Quinta Inns, Inc., its general partner
By: /s/ Michael A. Depatie
______________________________________
Michael A. Depatie
Senior Vice President-Finance
-11-
<PAGE>
EXHIBIT O
GUARANTY
This Guaranty, dated as of July 1, 1994 (this "GUARANTY"), is made by LQ
CIGNA I, a Texas general partnership ("GUARANTOR") to be known as
LQ-INVESTMENTS I.
BACKGROUND.
1. La Quinta Inns, Inc., a Texas corporation ("COMPANY"), NationsBank
of Texas, N.A., as Administrative Lender ("ADMINISTRATIVE LENDER") on behalf
of NationsBank of Texas, N.A. and each other lender, and each other lender
(singly, a "LENDER" and collectively, the "LENDERS") have entered into the
Amended and Restated Credit Agreement, dated as of January 25, 1994 (as
hereafter amended or otherwise modified from time to time, the "CREDIT
AGREEMENT"). The capitalized terms not otherwise defined herein have the
meanings specified in the Credit Agreement.
2. Pursuant to the Credit Agreement, Company may, subject to the terms
of the Credit Agreement and the other Loan Papers, request that Lenders make
Advances and issue, or participate in the issuance of, Letters of Credit and
Bond Letters of Credit.
3. It is a condition precedent to the obligation of Lenders to make
such Advances and issue, or participate in the issuance of, Letters of
Credit and Bond Letters of Credit that Guarantor guarantee repayment thereof
upon the terms and conditions set forth herein.
4. The Board of Directors of La Quinta Investments, Inc., a Delaware
corporation and a general partner of Guarantor, and the Board of Directors of
La Quinta Inns, Inc., a Texas corporation and the managing general partner of
Guarantor, have each determined that the execution, delivery, and performance
of this Guaranty is necessary and convenient to the conduct, promotion, and
attainment of Guarantor's business.
5. Guarantor desires to induce Lender to make such Advances and issue,
or participate in the issuance of, Letters of Credit and Bond Letters of
Credit, which may reasonably be expected to benefit, directly or indirectly,
Guarantor.
AGREEMENT.
Now, therefore, in consideration of the premises and in order to induce
Lenders to make Advances and issue, or participate in the issuance of,
Letters of Credit and Bond Letters of Credit under the Credit Agreement,
Guarantor agrees as follows:
1. GUARANTY.
(a) Guarantor unconditionally and irrevocably guarantees the
punctual payment of, and promises to pay, when due, whether at stated
maturity, by mandatory prepayment, by acceleration or otherwise, all
obligations, indebtedness and liabilities, and
<PAGE>
all rearrangements, renewals and extensions of all or any part thereof, of
Company or any other Obligor now or hereafter arising from, by virtue of
or pursuant to the Credit Agreement, the Notes, any other Loan Paper, and
any and all renewals and extensions thereof, or any part thereof, or
future amendments thereto, whether for principal, interest (including,
without limitation, interest, fees and other charges that would accrue
or become owing both prior to and subsequent to and but for the
commencement of any proceeding against or with respect to Company or any
other Obligor under any chapter of the Bankruptcy Code of 1978, 11 U.S.C.
Section 101 ET SEQ. whether or not a claim is allowed for the same in any
such proceeding), premium, fees, commissions, expenses or otherwise (such
obligations being the "OBLIGATION"), and agrees to pay any and all
reasonable expenses (including reasonable counsel fees and expenses)
incurred in enforcement or collection of all or any part thereof, whether
such obligations, indebtedness and liabilities are direct, indirect,
fixed, contingent, joint, several or joint and several, and any rights
under this Guaranty.
(b) Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of Guarantor hereunder shall be limited
to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all
other liabilities of Guarantor, contingent or otherwise, that are relevant
under the Fraudulent Transfer Laws (specifically excluding, however, any
liabilities of Guarantor in respect of intercompany indebtedness to
Company, other Affiliates of Company or other Obligors to the extent that
such indebtedness would be discharged in an amount equal to the amount
paid by Guarantor hereunder) and after giving effect as assets, subject
to PARAGRAPH 4(a) hereof, to the value (as determined under the applicable
provisions of Fraudulent Transfer Laws) of any rights to subrogation or
contribution of Guarantor pursuant to (i) Applicable Law or (ii) any
agreement providing for an equitable allocation among Guarantor and other
Obligors of obligations arising under guaranties by such parties.
2. GUARANTY ABSOLUTE. Guarantor guarantees that the Obligation will
be paid strictly in accordance with the terms of the Credit Agreement, the
Notes, and the other Loan Papers, regardless of any Applicable Law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of Administrative Lender or any Lender with
respect thereto; PROVIDED, HOWEVER, nothing contained in this Guaranty shall
require Guarantor to make any payment under this Guaranty in violation of any
Applicable Law, regulation or order now or hereafter in effect. The
obligations and liabilities of Guarantor hereunder are independent of the
obligations of Company under the Credit Agreement and of the obligations of
each other Obligor under each other Loan Paper and any Applicable Law. The
liability of Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
-2-
<PAGE>
(a) the taking or accepting of any other security or guaranty for
any or all of the Obligation;
(b) any increase, reduction or payment in full at any time or from
time to time of any part of the Obligation, including any reduction or
termination of the Commitments;
(c) any lack of validity or enforceability of the Credit Agreement,
the Notes, or any other Loan Paper or other agreement or instrument
relating thereto, including but not limited by the unenforceability of
all or any part of the Obligation by reason of the fact that (i) the
Obligation, and/or the interest paid or payable with respect thereto,
exceeds the amount permitted by Applicable Law, (ii) the act of creating
the Obligation, or any part thereof, is ULTRA VIRES, (iii) the officers
creating same acted in excess of their authority, or (iv) for any other
reason;
(d) any lack of corporate, partnership or other power of Company
or any other Obligor;
(e) any Debtor Relief Law involving Company, Guarantor or any other
Obligor;
(f) any renewal, compromise, extension, acceleration or other
change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligation; any adjustment, indulgence, forbearance,
or compromise that may be granted or given by any Lender or Administrative
Lender to Company or any other Obligor; or any other modification,
amendment, or waiver of or any consent to departure from the Credit
Agreement, the Notes, or any other Loan Paper or other agreement or
instrument relating thereto without notification of Guarantor (the right
to such notification being herein specifically waived by Guarantor);
(g) any exchange, release, sale, subordination, or non-perfection
of any collateral or Lien thereon or any lack of validity or
enforceability or change in priority, destruction, reduction, or loss
or impairment of value of any collateral or Lien thereon;
(h) any release or amendment or waiver of or consent to departure
from any other guaranty for all or any of the Obligation;
(i) the failure by any Lender or Administrative Lender to make any
demand upon or to bring any legal, equitable, or other action against
Company or any other Person (including without limitation any other
Obligor), or the failure or delay by any Lender or Administrative Lender
to, or the manner in which any Lender or Administrative Lender shall,
proceed to exhaust rights against any direct or indirect security for the
Obligation;
-3-
<PAGE>
(j) the existence of any claim, defense, set-off, or other rights
which Company or Guarantor may have at any time against Company, any
Lender, Administrative Lender or any Obligor, or any other Person,
whether in connection with this Guaranty, the Loan Papers, the
transactions contemplated thereby, or any other transaction;
(k) any failure of any Lender or Administrative Lender to notify
Guarantor of any renewal, extension, or assignment of the Obligation or
any part thereof, or the release of any security, or of any other action
taken or refrained from being taken by any Lender or Administrative
Lender, it being understood that Lenders and Administrative Lender shall
not be required to give Guarantor any notice of any kind under any
circumstances whatsoever with respect to or in connection with the
Obligation;
(l) any payment by Company to any Lender or Administrative Lender
is held to constitute a preference under any Debtor Relief Law or if for
any other reason any Lender or Administrative Lender is required to
refund such payment or pay the amount thereof to another Person; or
(m) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Company, Guarantor or any other
Obligor, including without limitation any defense by reason of any
disability or other defense of Company, or the cessation from any cause
whatsoever of the liability of Company, or any claim that Guarantor's
obligations hereunder exceed or are more burdensome than those of Company
or any other Obligor.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligation is rescinded or
must otherwise be returned by any Lender or any other Person upon the
insolvency, bankruptcy or reorganization of Company, any other Obligor or
otherwise, all as though such payment had not been made.
3. WAIVER. To the extent not prohibited by Applicable Law, Guarantor
hereby waives: (a) promptness, protest, diligence, presentments, acceptance,
performance, demands for performance, notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this Guaranty and
notices of the existence, creation or incurrence of new or additional
indebtedness, and any of the events described in SECTION 2 and of any other
occurrence or matter with respect to any of the Obligation, this Guaranty or
any of the other Loan Papers; (b) any requirement that Administrative Lender
or any Lender protect, secure, perfect, or insure any Lien or security
interest or any property subject thereto or exhaust any right or take any
action against Company or any other Person or any collateral or pursue any
other remedy in Administrative Lender's or any Lender's power whatsoever; (c)
any right to assert against Administrative Lender or any Lender as a
counterclaim, set-off or cross-claim, any counterclaim, set-off or claim
which it may now or hereafter have against Administrative Lender, any Lender,
Company or other Obligor; (d) any right to seek or enforce any remedy or
right that Administrative Lender or any Lender now has or may hereafter have
against
-4-
<PAGE>
Company, any other Obligor or any other Person (to the extent permitted by
Applicable Law); (e) any right to participate in any collateral or any right
benefiting Administrative Lender or Lenders in respect of the Obligation; and
(f) any right by which it might be entitled to require suit on an accrued
right of action in respect of any of the Obligation or require suit against
Company or any other Person, whether arising pursuant to Section 34.02 of the
Texas Business and Commerce Code, as amended, Section 17.001 of the Texas
Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of
Civil Procedure, as amended, or otherwise.
4. SUBROGATION AND SUBORDINATION.
(a) Notwithstanding any reference to subrogation contained herein to the
contrary, Guarantor hereby irrevocably waives any claim or other rights which
it may have or hereafter acquire against Company or any other Obligor that
arise from the existence, payment, performance or enforcement of Guarantor's
obligations under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of any Lender or Administrative
Lender against Company or any other Obligor or any collateral which any
Lender or Administrative Lender now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statutes or
common law, including without limitation, the right to take or receive from
Company or any other Obligor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account
of such claim or other rights. If any amount shall be paid to Guarantor in
violation of the preceding sentence and the Obligation shall not have been
paid in full, such amount shall be deemed to have been paid to Guarantor for
the benefit of, and held in trust for the benefit of, Lenders, and shall
forthwith be paid to Administrative Lender to be credited and applied upon
the Obligation, whether matured or unmatured, in accordance with the terms of
the Credit Agreement. Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by the Credit
Agreement and that the waiver set forth in this PARAGRAPH 4(a) is knowingly
made in contemplation of such benefits.
(b) If Guarantor becomes the holder of any indebtedness payable by
Company or any other Obligor, Guarantor hereby subordinates all indebtedness
owing to it from Company and each other Obligor to all indebtedness of
Company and each other Obligor to Lenders and Administrative Lender, and
agrees that upon the occurrence and continuance of a Default or an Event of
Default, it shall not accept any payment on the same until final payment in
full of the obligations of Company under the Credit Agreement, the Notes and
all other Loan Papers, and shall in no circumstance whatsoever attempt to
set-off or reduce any obligations hereunder because of such indebtedness. If
any amount shall nevertheless be paid to Guarantor by Company or any other
Obligor prior to payment in full of the Obligation, such amount shall be held
in trust for the benefit of Lenders and Administrative Lender and shall
forthwith be paid to Administrative Lender to be credited and applied to the
Obligation, whether matured or unmatured.
-5-
<PAGE>
5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants that all representations and warranties as they apply to Guarantor
only set forth in ARTICLE 4 of the Credit Agreement (each of which is hereby
incorporated by reference) are true and correct.
6. COVENANTS. Guarantor hereby expressly assumes, confirms, and
agrees to perform, observe, and be bound by all conditions and covenants set
forth in the Credit Agreement, to the extent applicable to it, as if it were
a signatory thereto. Guarantor further covenants and agrees (a) punctually
and properly to perform all of Guarantor's covenants and duties under all
other Loan Papers; (b) from time to time promptly to furnish Administrative
Lender with any information or writings which Administrative Lender may
request concerning this Guaranty; and (c) promptly to notify Administrative
Lender of any claim, action, or proceeding affecting this Guaranty.
7. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by
Guarantor, Administrative Lender, and, either all Lenders or Determining
Lenders, as appropriate, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8. ADDRESSES FOR NOTICES. Unless otherwise provided herein, all
notices, requests, consents and demands shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopy to
the respective addresses specified herein, or, as to any party, to such other
addresses as may be designated by it in written notice to all other parties.
All notices, requests, consents and demands hereunder shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy, or if mailed, effective on the earlier of actual
receipt or three days after being mailed by certified mail, return receipt
requested, postage prepaid, addressed as aforesaid.
9. NO WAIVER; REMEDIES. No failure on the part of Administrative
Lender or any Lender to exercise, and no delay in exercising, any right
hereunder or under any of the Loan Papers shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder or under any
of the Loan Papers preclude any other or further exercise thereof or the
exercise of any other right. Neither Administrative Lender nor any Lender
shall be required to (a) prosecute collection or seek to enforce or resort to
any remedies against Company, any other Obligor or any other Person, (b) join
Company, any other Obligor or any other Person in any action in which
Administrative Lender or any Lender prosecutes collection or seeks to enforce
or resort to any remedies against Company, any other Obligor or any other
Person liable on any of the Obligation, or (c) seek to enforce or resort to
any remedies with respect to any Liens granted to (or benefiting, directly or
indirectly) Administrative Lender or any Lender by Company, any other Obligor
or any other Person. Neither Administrative Lender nor any Lender shall have
any obligation to protect, secure or insure any of the Liens or the
properties or interests in properties subject thereto. The remedies herein
provided are cumulative and not exclusive of any remedies provided by
Applicable Law.
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<PAGE>
10. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, each Lender and Administrative Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted
by Law, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or Administrative Lender to or for the credit
or the account of Guarantor against any and all of the obligations of
Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Lender or Administrative Lender shall have made any
demand under this Guaranty. Each Lender and Administrative Lender agrees
promptly to notify Guarantor after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application or provide a defense to Guarantor's obligations under
this Guaranty. The rights of each Lender and Administrative Lender under
this SECTION 10 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender and
Administrative Lender may have.
11. LIENS. To the extent not prohibited by Applicable Law, Guarantor
agrees that Administrative Lender or any Lender, in its discretion, without
notice or demand and without affecting either the liability of Guarantor,
Company or any other Obligor, or any security interest or other Lien, may
foreclose any deed of trust or mortgage or similar Lien covering interests in
real or personal property, and the interests in real or personal property
secured thereby, by nonjudicial sale. Guarantor waives any defense to the
recovery by Administrative Lender or any Lender hereunder against Company,
Guarantor or any collateral of any deficiency after a nonjudicial sale and
Guarantor expressly waives any defense or benefits that may be derived from
Chapter 34 of the Texas Business and Commerce Code, Section 51.003 of the
Texas Property Code, or any similar statute in effect in any other
jurisdiction. Without limiting the foregoing, Guarantor waives, to the
extent not prohibited by Applicable Law, any defense arising out of any such
nonjudicial sale even though such sale operates to impair or extinguish any
right of reimbursement or subrogation or any other right or remedy of
Guarantor against Company or any other Person or any Collateral or any other
collateral. Guarantor agrees that Guarantor is liable, subject to the
limitations of SECTION 1 hereof, for any part of the Obligation remaining
unpaid after any foreclosure.
12. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is an
irrevocable continuing guaranty of payment and shall (a) remain in full force
and effect until final payment in full (after the Term Loan Maturity Date) of
the Obligation and all other amounts payable under this Guaranty, (b) be
binding upon Guarantor, its successors and assigns, and (c) inure to the
benefit of and be enforceable by Lender and Administrative Lender and their
successors, transferees and assigns. Without limiting the generality of the
foregoing CLAUSE (C), to the extent permitted by the Credit Agreement, each
Lender may assign or otherwise transfer its rights under the Credit
Agreement, the Notes or any of the Loan Papers or any interest therein to any
other Person, and such other Person shall thereupon become vested with all
the rights or any interest therein, as appropriate, in respect thereof
granted to such Lender herein or otherwise.
13. INFORMATION. Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from Company and each other Obligor
such information concerning
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Company's and each Obligor's financial condition or business operations as
Guarantor may require, and that neither Administrative Lender nor any Lender
has any duty at any time to disclose to Guarantor any information relating to
the business operations or financial conditions of Company or any Obligor.
14. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, GUARANTOR AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH. THIS GUARANTY IS PERFORMABLE IN DALLAS COUNTY, TEXAS.
15. WAIVER OF JURY TRIAL. GUARANTOR, ADMINISTRATIVE LENDER, AND
LENDERS HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY
OF THE LOAN PAPERS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO LENDER ENTERING INTO THE CREDIT AGREEMENT.
16. RATABLE BENEFIT. This Guaranty is for the ratable benefit of
Lenders and Administrative Lender, each of which shall share any proceeds of
this Guaranty pursuant to the terms of the Credit Agreement.
17. GUARANTOR INSOLVENCY. Should Guarantor become insolvent, fail to
pay its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject of any proceeding provided for by any Debtor Relief Law
(other than as a creditor or claimant) that could suspend or otherwise
adversely affect the rights of any Lender or Administrative Lender granted
hereunder, then, the obligations of Guarantor under this Guaranty shall be,
as between Guarantor and such Lender and Administrative Lender, a
fully-matured, due, and payable obligation of Guarantor to such Lender and
Administrative Lender (without regard to whether Company or any other Obligor
is then in default under the Credit Agreement or any other Loan Paper or
whether any part of the Obligation is then due and owing by Company or any
other Obligor to such Lender or Administrative Lender), payable in full by
Guarantor to such Lender or Administrative Lender upon demand, which shall be
the estimated amount owing in respect of the contingent claim created
hereunder.
18. ENTIRE AGREEMENT. THIS GUARANTY, TOGETHER WITH THE OTHER LOAN
PAPERS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES
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<PAGE>
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
LQ CIGNA I
(To be known as LQ-INVESTMENTS I)
By: La Quinta Inns, Inc.,
its Managing General Partner
Address for Guarantor:
112 East Pecan
San Antonio, Texas 78205 By:____________________________________
__________________, ________________
(Print Name) (Print Title)
By: La Quinta Investments, Inc.,
a General Partner
By:____________________________________
__________________, ________________
(Print Name) (Print Title)
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EXHIBIT P
GUARANTY
This Guaranty, dated as of July 1, 1994 (this "GUARANTY"), is made by
LQ CIGNA II, a Texas general partnership ("GUARANTOR") to be known as LQ-
INVESTMENTS II.
BACKGROUND.
1. La Quinta Inns, Inc., a Texas corporation ("COMPANY"),
NationsBank of Texas, N.A., as Administrative Lender ("ADMINISTRATIVE
LENDER") on behalf of NationsBank of Texas, N.A. and each other lender, and
each other lender (singly, a "LENDER" and collectively, the "LENDERS") have
entered into the Amended and Restated Credit Agreement, dated as of
January 25, 1994 (as hereafter amended or otherwise modified from time to
time, the "CREDIT AGREEMENT"). The capitalized terms not otherwise defined
herein have the meanings specified in the Credit Agreement.
2. Pursuant to the Credit Agreement, Company may, subject to the
terms of the Credit Agreement and the other Loan Papers, request that
Lenders make Advances and issue, or participate in the issuance of, Letters
of Credit and Bond Letters of Credit.
3. It is a condition precedent to the obligation of Lenders to make
such Advances and issue, or participate in the issuance of, Letters of
Credit and Bond Letters of Credit that Guarantor guarantee repayment
thereof upon the terms and conditions set forth herein.
4. The Board of Directors of La Quinta Investments, Inc., a Delaware
corporation and a general partner of Guarantor, and the Board of Directors
of La Quinta Inns, Inc., a Texas corporation and the managing general
partner of Guarantor, have each determined that the execution, delivery,
and performance of this Guaranty is necessary and convenient to the
conduct, promotion, and attainment of Guarantor's business.
5. Guarantor desires to induce Lender to make such Advances and
issue, or participate in the issuance of, Letters of Credit and Bond
Letters of Credit, which may reasonably be expected to benefit, directly or
indirectly, Guarantor.
AGREEMENT.
Now, therefore, in consideration of the premises and in order to
induce Lenders to make Advances and issue, or participate in the issuance
of, Letters of Credit and Bond Letters of Credit under the Credit
Agreement, Guarantor agrees as follows:
1. GUARANTY.
(a) Guarantor unconditionally and irrevocably guarantees the
punctual payment of, and promises to pay, when due, whether at stated
maturity, by mandatory prepayment, by acceleration or otherwise, all
obligations, indebtedness and liabilities, and
<PAGE>
all rearrangements, renewals and extensions of all or any part thereof, of
Company or any other Obligor now or hereafter arising from, by virtue of or
pursuant to the Credit Agreement, the Notes, any other Loan Paper, and any
and all renewals and extensions thereof, or any part thereof, or future
amendments thereto, whether for principal, interest (including, without
limitation, interest, fees and other charges that would accrue or become
owing both prior to and subsequent to and but for the commencement of any
proceeding against or with respect to Company or any other Obligor under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 ET SEQ.
whether or not a claim is allowed for the same in any such proceeding),
premium, fees, commissions, expenses or otherwise (such obligations being
the
"OBLIGATION"), and agrees to pay any and all reasonable expenses (including
reasonable counsel fees and expenses) incurred in enforcement or collection
of all or any part thereof, whether such obligations, indebtedness and
liabilities are direct, indirect, fixed, contingent, joint, several or
joint and several, and any rights under this Guaranty.
(b) Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all
other liabilities of Guarantor, contingent or otherwise, that are relevant
under the Fraudulent Transfer Laws (specifically excluding, however, any
liabilities of Guarantor in respect of intercompany indebtedness to
Company, other Affiliates of Company or other Obligors to the extent that
such indebtedness would be discharged in an amount equal to the amount paid
by Guarantor hereunder) and after giving effect as assets, subject to
PARAGRAPH 4(A) hereof, to the value (as determined under the applicable
provisions of Fraudulent Transfer Laws) of any rights to subrogation or
contribution of Guarantor pursuant to (i) Applicable Law or (ii) any
agreement providing for an equitable allocation among Guarantor and other
Obligors of obligations arising under guaranties by such parties.
2. GUARANTY ABSOLUTE. Guarantor guarantees that the Obligation will be
paid strictly in accordance with the terms of the Credit Agreement, the
Notes, and the other Loan Papers, regardless of any Applicable Law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Administrative Lender or any
Lender with respect thereto; PROVIDED, HOWEVER, nothing contained in this
Guaranty shall require Guarantor to make any payment under this Guaranty in
violation of any Applicable Law, regulation or order now or hereafter in
effect. The obligations and liabilities of Guarantor hereunder are
independent of the obligations of Company under the Credit Agreement and of
the obligations of each other Obligor under each other Loan Paper and any
Applicable Law. The liability of Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
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(a) the taking or accepting of any other security or guaranty
for any or all of the Obligation;
(b) any increase, reduction or payment in full at any time or
from time to time of any part of the Obligation, including any
reduction or termination of the Commitments;
(c) any lack of validity or enforceability of the Credit
Agreement, the Notes, or any other Loan Paper or other agreement or
instrument relating thereto, including but not limited by the
unenforceability of all or any part of the Obligation by reason of the fact
that (i) the Obligation, and/or the interest paid or payable with respect
thereto, exceeds the amount permitted by Applicable Law, (ii) the act of
creating the Obligation, or any part thereof, is ULTRA VIRES, (iii) the
officers creating same acted in excess of their authority, or (iv) for any
other reason;
(d) any lack of corporate, partnership or other power of Company
or any other Obligor;
(e) any Debtor Relief Law involving Company, Guarantor or any
other Obligor;
(f) any renewal, compromise, extension, acceleration or other
change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligation; any adjustment, indulgence,
forbearance, or compromise that may be granted or given by any Lender
or Administrative Lender to Company or any other Obligor; or any other
modification, amendment, or waiver of or any consent to departure from
the Credit Agreement, the Notes, or any other Loan Paper or other
agreement or instrument relating thereto without notification of
Guarantor (the right to such notification being herein specifically
waived by Guarantor);
(g) any exchange, release, sale, subordination, or
non-perfection of any collateral or Lien thereon or any lack of
validity or enforceability or change in priority, destruction,
reduction, or loss or impairment of value of any collateral or Lien
thereon;
(h) any release or amendment or waiver of or consent to
departure from any other guaranty for all or any of the Obligation;
(i) the failure by any Lender or Administrative Lender to make
any demand upon or to bring any legal, equitable, or other action
against Company or any other Person (including without limitation any
other Obligor), or the failure or delay by any Lender or
Administrative Lender to, or the manner in which any Lender or
Administrative Lender shall, proceed to exhaust rights against any
direct or indirect security for the Obligation;
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<PAGE>
(j) the existence of any claim, defense, set-off, or other
rights which Company or Guarantor may have at any time against
Company, any Lender, Administrative Lender or any Obligor, or any
other Person, whether in connection with this Guaranty, the Loan
Papers, the transactions contemplated thereby, or any other
transaction;
(k) any failure of any Lender or Administrative Lender to notify
Guarantor of any renewal, extension, or assignment of the Obligation
or any part thereof, or the release of any security, or of any other
action taken or refrained from being taken by any Lender or
Administrative Lender, it being understood that Lenders and
Administrative Lender shall not be required to give Guarantor any
notice of any kind under any circumstances whatsoever with respect to
or in connection with the Obligation;
(l) any payment by Company to any Lender or Administrative
Lender is held to constitute a preference under any Debtor Relief Law
or if for any other reason any Lender or Administrative Lender is
required to refund such payment or pay the amount thereof to another
Person; or
(m) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Company, Guarantor or any
other Obligor, including without limitation any defense by reason of
any disability or other defense of Company, or the cessation from any
cause whatsoever of the liability of Company, or any claim that
Guarantor's obligations hereunder exceed or are more burdensome than
those of Company or any other Obligor.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligation is rescinded or
must otherwise be returned by any Lender or any other Person upon the
insolvency, bankruptcy or reorganization of Company, any other Obligor or
otherwise, all as though such payment had not been made.
3. WAIVER. To the extent not prohibited by Applicable Law,
Guarantor hereby waives: (a) promptness, protest, diligence, presentments,
acceptance, performance, demands for performance, notices of
nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and notices of the existence, creation or
incurrence of new or additional indebtedness, and any of the events
described in SECTION 2 and of any other occurrence or matter with respect
to any of the Obligation, this Guaranty or any of the other Loan Papers;
(b) any requirement that Administrative Lender or any Lender protect,
secure, perfect, or insure any Lien or security interest or any property
subject thereto or exhaust any right or take any action against Company or
any other Person or any collateral or pursue any other remedy in
Administrative Lender's or any Lender's power whatsoever; (c) any right to
assert against Administrative Lender or any Lender as a counterclaim,
set-off or cross-claim, any counterclaim, set-off or claim which it may now
or hereafter have against Administrative Lender, any Lender, Company or
other Obligor; (d) any right to seek or enforce any remedy or right that
Administrative Lender or any Lender now has or may hereafter have against
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<PAGE>
Company, any other Obligor or any other Person (to the extent permitted by
Applicable Law); (e) any right to participate in any collateral or any
right benefiting Administrative Lender or Lenders in respect of the
Obligation; and (f) any right by which it might be entitled to require suit
on an accrued right of action in respect of any of the Obligation or
require suit against Company or any other Person, whether arising pursuant
to Section 34.02 of the Texas Business and Commerce Code, as amended,
Section 17.001 of the Texas Civil Practice and Remedies Code, as amended,
Rule 31 of the Texas Rules of Civil Procedure, as amended, or otherwise.
4. SUBROGATION AND SUBORDINATION.
(a) Notwithstanding any reference to subrogation contained herein to
the contrary, Guarantor hereby irrevocably waives any claim or other rights
which it may have or hereafter acquire against Company or any other Obligor
that arise from the existence, payment, performance or enforcement of
Guarantor's obligations under this Guaranty, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of any
Lender or Administrative Lender against Company or any other Obligor or any
collateral which any Lender or Administrative Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or
under contract, statutes or common law, including without limitation, the
right to take or receive from Company or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any
amount shall be paid to Guarantor in violation of the preceding sentence
and the Obligation shall not have been paid in full, such amount shall be
deemed to have been paid to Guarantor for the benefit of, and held in trust
for the benefit of, Lenders, and shall forthwith be paid to Administrative
Lender to be credited and applied upon the Obligation, whether matured or
unmatured, in accordance with the terms of the Credit Agreement. Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the
waiver set forth in this PARAGRAPH 4(A) is knowingly made in contemplation
of such benefits.
(b) If Guarantor becomes the holder of any indebtedness payable by
Company or any other Obligor, Guarantor hereby subordinates all
indebtedness owing to it from Company and each other Obligor to all
indebtedness of Company and each other Obligor to Lenders and
Administrative Lender, and agrees that upon the occurrence and continuance
of a Default or an Event of Default, it shall not accept any payment on the
same until final payment in full of the obligations of Company under the
Credit Agreement, the Notes and all other Loan Papers, and shall in no
circumstance whatsoever attempt to set-off or reduce any obligations
hereunder because of such indebtedness. If any amount shall nevertheless
be paid to Guarantor by Company or any other Obligor prior to payment in
full of the Obligation, such amount shall be held in trust for the benefit
of Lenders and Administrative Lender and shall forthwith be paid to
Administrative Lender to be credited and applied to the Obligation, whether
matured or unmatured.
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5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants that all representations and warranties as they apply to Guarantor
only set forth in ARTICLE 4 of the Credit Agreement (each of which is
hereby incorporated by reference) are true and correct.
6. COVENANTS. Guarantor hereby expressly assumes, confirms, and
agrees to perform, observe, and be bound by all conditions and covenants
set forth in the Credit Agreement, to the extent applicable to it, as if it
were a signatory thereto. Guarantor further covenants and agrees (a)
punctually and properly to perform all of Guarantor's covenants and duties
under all other Loan Papers; (b) from time to time promptly to furnish
Administrative Lender with any information or writings which Administrative
Lender may request concerning this Guaranty; and (c) promptly to notify
Administrative Lender of any claim, action, or proceeding affecting this
Guaranty.
7. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by
Guarantor, Administrative Lender, and, either all Lenders or Determining
Lenders, as appropriate, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8. ADDRESSES FOR NOTICES. Unless otherwise provided herein, all
notices, requests, consents and demands shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopy
to the respective addresses specified herein, or, as to any party, to such
other addresses as may be designated by it in written notice to all other
parties. All notices, requests, consents and demands hereunder shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telecopy, or if mailed, effective on
the earlier of actual receipt or three days after being mailed by certified
mail, return receipt requested, postage prepaid, addressed as aforesaid.
9. NO WAIVER; REMEDIES. No failure on the part of Administrative
Lender or any Lender to exercise, and no delay in exercising, any right
hereunder or under any of the Loan Papers shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder or
under any of the Loan Papers preclude any other or further exercise thereof
or the exercise of any other right. Neither Administrative Lender nor any
Lender shall be required to (a) prosecute collection or seek to enforce or
resort to any remedies against Company, any other Obligor or any other
Person, (b) join Company, any other Obligor or any other Person in any
action in which Administrative Lender or any Lender prosecutes collection
or seeks to enforce or resort to any remedies against Company, any other
Obligor or any other Person liable on any of the Obligation, or (c) seek to
enforce or resort to any remedies with respect to any Liens granted to (or
benefiting, directly or indirectly) Administrative Lender or any Lender by
Company, any other Obligor or any other Person. Neither Administrative
Lender nor any Lender shall have any obligation to protect, secure or
insure any of the Liens or the properties or interests in properties
subject thereto. The remedies herein provided are cumulative and not
exclusive of any remedies provided by Applicable Law.
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<PAGE>
10. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, each Lender and Administrative Lender is hereby
authorized at any time and from time to time, to the fullest extent
permitted by Law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender or Administrative Lender to
or for the credit or the account of Guarantor against any and all of the
obligations of Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not such Lender or Administrative Lender shall
have made any demand under this Guaranty. Each Lender and Administrative
Lender agrees promptly to notify Guarantor after any such set-off and
application, provided that the failure to give such notice shall not affect
the validity of such set-off and application or provide a defense to
Guarantor's obligations under this Guaranty. The rights of each Lender and
Administrative Lender under this SECTION 10 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
such Lender and Administrative Lender may have.
11. LIENS. To the extent not prohibited by Applicable Law, Guarantor
agrees that Administrative Lender or any Lender, in its discretion, without
notice or demand and without affecting either the liability of Guarantor,
Company or any other Obligor, or any security interest or other Lien, may
foreclose any deed of trust or mortgage or similar Lien covering interests
in real or personal property, and the interests in real or personal
property secured thereby, by nonjudicial sale. Guarantor waives any
defense to the recovery by Administrative Lender or any Lender hereunder
against Company, Guarantor or any collateral of any deficiency after a
nonjudicial sale and Guarantor expressly waives any defense or benefits
that may be derived from Chapter 34 of the Texas Business and Commerce
Code, Section 51.003 of the Texas Property Code, or any similar statute in
effect in any other jurisdiction. Without limiting the foregoing,
Guarantor waives, to the extent not prohibited by Applicable Law, any
defense arising out of any such nonjudicial sale even though such sale
operates to impair or extinguish any right of reimbursement or subrogation
or any other right or remedy of Guarantor against Company or any other
Person or any Collateral or any other collateral. Guarantor agrees that
Guarantor is liable, subject to the limitations of SECTION 1 hereof, for
any part of the Obligation remaining unpaid after any foreclosure.
12. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is an
irrevocable continuing guaranty of payment and shall (a) remain in full
force and effect until final payment in full (after the Term Loan Maturity
Date) of the Obligation and all other amounts payable under this Guaranty,
(b) be binding upon Guarantor, its successors and assigns, and (c) inure to
the benefit of and be enforceable by Lender and Administrative Lender and
their successors, transferees and assigns. Without limiting the generality
of the foregoing CLAUSE (C), to the extent permitted by the Credit
Agreement, each Lender may assign or otherwise transfer its rights under
the Credit Agreement, the Notes or any of the Loan Papers or any interest
therein to any other Person, and such other Person shall thereupon become
vested with all the rights or any interest therein, as appropriate, in
respect thereof granted to such Lender herein or otherwise.
13. INFORMATION. Guarantor acknowledges and agrees that it shall
have the sole responsibility for obtaining from Company and each other
Obligor such information concerning
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Company's and each Obligor's financial condition or business operations as
Guarantor may require, and that neither Administrative Lender nor any Lender
has any duty at any time to disclose to Guarantor any information relating to
the business operations or financial conditions of Company or any Obligor.
14. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. WITHOUT EXCLUDING ANY
OTHER JURISDICTION, GUARANTOR AGREES THAT THE STATE AND FEDERAL COURTS OF
TEXAS LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH. THIS GUARANTY IS PERFORMABLE IN DALLAS COUNTY, TEXAS.
15. WAIVER OF JURY TRIAL. GUARANTOR, ADMINISTRATIVE LENDER, AND
LENDERS HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS GUARANTY OR
ANY OF THE LOAN PAPERS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO LENDER ENTERING INTO THE CREDIT
AGREEMENT.
16. RATABLE BENEFIT. This Guaranty is for the ratable benefit of
Lenders and Administrative Lender, each of which shall share any proceeds
of this Guaranty pursuant to the terms of the Credit Agreement.
17. GUARANTOR INSOLVENCY. Should Guarantor become insolvent, fail to
pay its debts generally as they become due, voluntarily seek, consent to,
or acquiesce in the benefits of any Debtor Relief Law or become a party to
or be made the subject of any proceeding provided for by any Debtor Relief
Law (other than as a creditor or claimant) that could suspend or otherwise
adversely affect the rights of any Lender or Administrative Lender granted
hereunder, then, the obligations of Guarantor under this Guaranty shall be,
as between Guarantor and such Lender and Administrative Lender, a fully-
matured, due, and payable obligation of Guarantor to such Lender and
Administrative Lender (without regard to whether Company or any other
Obligor is then in default under the Credit Agreement or any other Loan
Paper or whether any part of the Obligation is then due and owing by
Company or any other Obligor to such Lender or Administrative Lender),
payable in full by Guarantor to such Lender or Administrative Lender upon
demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
18. ENTIRE AGREEMENT. THIS GUARANTY, TOGETHER WITH THE OTHER LOAN
PAPERS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES
-8-
<PAGE>
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
LQ CIGNA II
(To be known as LQ-INVESTMENTS II)
By: La Quinta Inns, Inc.,
its Managing General Partner
Address for Guarantor:
112 East Pecan
San Antonio, Texas 78205 By: ___________________________________
________________, ________________
(Print Name) (Print Title)
By: La Quinta Investments, Inc.,
a General Partner
By: ___________________________________
________________, ________________
(Print Name) (Print Title)
-9-
<PAGE>
EXHIBIT Q
GUARANTY
This Guaranty, dated as of January 17, 1995 (this "GUARANTY"), is made
by LA QUINTA INNS OF LUBBOCK, INC., a Texas corporation ("GUARANTOR").
BACKGROUND.
1. La Quinta Inns, Inc., a Texas corporation ("COMPANY"), NationsBank
of Texas, N.A., as Administrative Lender ("ADMINISTRATIVE LENDER") on behalf
of NationsBank of Texas, N.A. and each other lender, and each other lender
(singly, a "LENDER" and collectively, the "LENDERS") have entered into the
Amended and Restated Credit Agreement, dated as of January 25, 1994 (as
hereafter amended or otherwise modified from time to time, the "CREDIT
AGREEMENT"). The capitalized terms not otherwise defined herein have the
meanings specified in the Credit Agreement.
2. Pursuant to the Credit Agreement, Company may, subject to the terms
of the Credit Agreement and the other Loan Papers, request that Lenders make
Advances and issue, or participate in the issuance of, Letters of Credit and
Bond Letters of Credit.
3. It is a condition precedent to the obligation of Lenders to make
such Advances and issue, or participate in the issuance of, Letters of Credit
and Bond Letters of Credit that Guarantor guarantee repayment thereof upon
the terms and conditions set forth herein.
4. The Board of Directors of Guarantor has determined that the
execution, delivery, and performance of this Guaranty is necessary and
convenient to the conduct, promotion, and attainment of Guarantor's business.
5. Guarantor desires to induce Lender to make such Advances and issue,
or participate in the issuance of, Letters of Credit and Bond Letters of
Credit, which may reasonably be expected to benefit, directly or indirectly,
Guarantor.
AGREEMENT.
Now, therefore, in consideration of the premises and in order to induce
Lenders to make Advances and issue, or participate in the issuance of,
Letters of Credit and Bond Letters of Credit under the Credit Agreement,
Guarantor agrees as follows:
1. GUARANTY.
(a) Guarantor unconditionally and irrevocably guarantees the
punctual payment of, and promises to pay, when due, whether at stated
maturity, by mandatory prepayment, by acceleration or otherwise, all
obligations, indebtedness and liabilities, and
<PAGE>
all rearrangements, renewals and extensions of all or any part thereof,
of Company or any other Obligor now or hereafter arising from, by
virtue of or pursuant to the Credit Agreement, the Notes, any other Loan
Paper, and any and all renewals and extensions thereof, or any part
thereof, or future amendments thereto, whether for principal, interest
(including, without limitation, interest, fees and other charges that
would accrue or become owing both prior to and subsequent to and but for
the commencement of any proceeding against or with respect to Company or
any other Obligor under any chapter of the Bankruptcy Code of 1978, 11
U.S.C. Section 101 ET SEQ. whether or not a claim is allowed for the same
in any such proceeding), premium, fees, commissions, expenses or
otherwise (such obligations being the "OBLIGATION"), and agrees to pay
any and all reasonable expenses (including reasonable counsel fees and
expenses) incurred in enforcement or collection of all or any part
thereof, whether such obligations, indebtedness and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several,
and any rights under this Guaranty.
(b) Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of Guarantor hereunder shall be limited
to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all
other liabilities of Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of Guarantor in respect of intercompany
indebtedness to Company, other Affiliates of Company or other Obligors to
the extent that such indebtedness would be discharged in an amount equal
to the amount paid by Guarantor hereunder) and after giving effect as
assets, subject to PARAGRAPH 4(a) hereof, to the value (as determined
under the applicable provisions of Fraudulent Transfer Laws) of any
rights to subrogation or contribution of Guarantor pursuant to (i)
Applicable Law or (ii) any agreement providing for an equitable allocation
among Guarantor and other Obligors of obligations arising under guaranties
by such parties.
2. GUARANTY ABSOLUTE. Guarantor guarantees that the Obligation will be
paid strictly in accordance with the terms of the Credit Agreement, the
Notes, and the other Loan Papers, regardless of any Applicable Law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of Administrative Lender or any Lender with
respect thereto; PROVIDED, HOWEVER, nothing contained in this Guaranty shall
require Guarantor to make any payment under this Guaranty in violation of any
Applicable Law, regulation or order now or hereafter in effect. The
obligations and liabilities of Guarantor hereunder are independent of the
obligations of Company under the Credit Agreement and of the obligations of
each other Obligor under each other Loan Paper and any Applicable Law. The
liability of Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
-2-
<PAGE>
(a) the taking or accepting of any other security or guaranty for
any or all of the Obligation;
(b) any increase, reduction or payment in full at any time or from
time to time of any part of the Obligation, including any reduction or
termination of the Commitments;
(c) any lack of validity or enforceability of the Credit Agreement,
the Notes, or any other Loan Paper or other agreement or instrument
relating thereto, including but not limited by the unenforceability of
all or any part of the Obligation by reason of the fact that (i) the
Obligation, and/or the interest paid or payable with respect thereto,
exceeds the amount permitted by Applicable Law, (ii) the act of creating
the Obligation, or any part thereof, is ULTRA VIRES, (iii) the officers
creating same acted in excess of their authority, or (iv) for any other
reason;
(d) any lack of corporate, partnership or other power of Company
or any other Obligator;
(e) any Debtor Relief Law involving Company, Guarantor or any
other Obligor;
(f) any renewal, compromise, extension, acceleration or other
change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligation; any adjustment, indulgence, forbearance,
or compromise that may be granted or given by any Lender or
Administrative Lender to Company or any other Obligor; or any other
modification, amendment, or waiver of or any consent to departure from
the Credit Agreement, the Notes, or any other Loan Paper or other
agreement or instrument relating thereto without notification of Guarantor
(the right to such notification being herein specifically waived by
Guarantor);
(g) any exchange, release, sale, subordination, or non-perfection
of any collateral or Lien thereon or any lack of validity or
enforceability or change in priority, destruction, reduction, or loss
or impairment of value of any collateral or Lien thereon;
(h) any release or amendment or waiver of or consent to departure
from any other guaranty for all or any of the Obligation;
(i) the failure by any Lender or Administrative Lender to make any
demand upon or to bring any legal, equitable, or other action against
Company or any other Person (including without limitation any other
Obligor), or the failure or delay by any Lender or Administrative Lender
to, or the manner in which any Lender or Administrative Lender
shall, proceed to exhaust rights against any direct or indirect security
for the Obligation;
-3-
<PAGE>
(j) the existence of any claim, defense, set-off, or other rights
which Company or Guarantor may have at any time against Company, any
Lender, Administrative Lender or any Obligor, or any other Person,
whether in connection with this Guaranty, the Loan Papers, the
transactions contemplated thereby, or any other transaction;
(k) any failure of any Lender or Administrative Lender to notify
Guarantor of any renewal, extension, or assignment of the Obligation or
any part thereof, or the release of any security, or of any other action
taken or refrained from being taken by any Lender or Administrative
Lender, it being understood that Lenders and Administrative Lender shall
not be required to give Guarantor any notice of any kind under any
circumstances whatsoever with respect to or in connection with the
Obligation;
(l) any payment by Company to any Lender or Administrative Lender
is held to constitute a preference under any Debtor Relief Law or if for
any other reason any Lender or Administrative Lender is required to
refund such payment or pay the amount thereof to another Person; or
(m) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Company, Guarantor or any other
Obligor, including without limitation any defense by reason of any
disability or other defense of Company, or the cessation from any cause
whatsoever of the liability of Company, or any claim that Guarantor's
obligations hereunder exceed or are more burdensome than those of Company
or any other Obligor.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the Obligation is rescinded or must
otherwise be returned by any Lender or any other Person upon the insolvency,
bankruptcy or reorganization of Company, any other Obligor or otherwise, all
as though such payment had not been made.
3. WAIVER. To the extent not prohibited by Applicable Law, Guarantor
hereby waives: (a) promptness, protest, diligence, presentments, acceptance,
performance, demands for performance, notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this Guaranty and
notices of the existence, creation or incurrence of new or additional
indebtedness, and any of the events described in SECTION 2 and of any other
occurrence or matter with respect to any of the Obligation, this Guaranty or
any of the other Loan Papers; (b) any requirement that Administrative Lender
or any Lender protect, secure, perfect, or insure any Lien or security
interest or any property subject thereto or exhaust any right or take any
action against Company or any other Person or any collateral or pursue any
other remedy in Administrative Lender's or any Lender's power whatsoever; (c)
any right to assert against Administrative Lender or any Lender as a
counterclaim, set-off or cross-claim, any counterclaim, set-off or claim
which it may now or hereafter have against Administrative Lender, any Lender,
Company or other Obligor; (d) any right to seek or enforce any remedy or
right that Administrative Lender or any Lender now has or may hereafter have
against
-4-
<PAGE>
Company, any other Obligor or any other Person (to the extent permitted by
Applicable Law); (e) any right to participate in any collateral or any right
benefiting Administrative Lender or Lenders in respect of the Obligation; and
(f) any right by which it might be entitled to require suit on an accrued
right of action in respect of any of the Obligation or require suit against
Company or any other Person, whether arising pursuant to Section 34.02 of the
Texas Business and Commerce Code, as amended, Section 17.001 of the Texas
Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of
Civil Procedure, as amended, or otherwise.
4. SUBROGATION AND SUBORDINATION.
(a) Notwithstanding any reference to subrogation contained herein to
the contrary, Guarantor hereby irrevocably waives any claim or other rights
which it may have or hereafter acquire against Company or any other Obligor
that arise from the existence, payment, performance or enforcement of
Guarantor's obligations under this Guaranty, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of any
Lender or Administrative Lender against Company or any other Obligor or any
collateral which any Lender or Administrative Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or
under contract, statutes or common law, including without limitation, the
right to take or receive from Company or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to Guarantor in violation of the preceding sentence and the
Obligation shall not have been paid in full, such amount shall be deemed to
have been paid to Guarantor for the benefit of, and held in trust for the
benefit of, Lenders, and shall forthwith be paid to Administrative Lender to
be credited and applied upon the Obligation, whether matured or unmatured, in
accordance with the terms of the Credit Agreement. Guarantor acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that the waiver set
forth in this PARAGRAPH 4(a) is knowingly made in contemplation of such
benefits.
(b) If Guarantor becomes the holder of any indebtedness payable by
Company or any other Obligor, Guarantor hereby subordinates all indebtedness
owing to it from Company and each other Obligor to all indebtedness of
Company and each other Obligor to Lenders and Administrative Lender, and
agrees that upon the occurrence and continuance of a Default or an Event of
Default, it shall not accept any payment on the same until final payment in
full of the obligations of Company under the Credit Agreement, the Notes and
all other Loan Papers, and shall in no circumstance whatsoever attempt to
set-off or reduce any obligations hereunder because of such indebtedness. If
any amount shall nevertheless be paid to Guarantor by Company or any other
Obligor prior to payment in full of the Obligation, such amount shall be held
in trust for the benefit of Lenders and Administrative Lender and shall
forthwith be paid to Administrative Lender to be credited and applied to the
Obligation, whether matured or unmatured.
-5-
<PAGE>
5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants that all representations and warranties as they apply to Guarantor
only set forth in ARTICLE 4 of the Credit Agreement (each of which is hereby
incorporated by reference) are true and correct.
6. COVENANTS, Guarantor hereby expressly assumes, confirms, and agrees
to perform, observe, and be bound by all conditions and covenants set forth
in the Credit Agreement, to the extent applicable to it, as if it were a
signatory thereto. Guarantor further covenants and agrees (a) punctually and
properly to perform all of Guarantor's covenants and duties under all other
Loan Papers; (b) from time to time promptly to furnish Administrative Lender
with any information or writings which Administrative Lender may request
concerning this Guaranty; and (c) promptly to notify Administrative Lender of
any claim, action, or proceeding affecting this Guaranty.
7. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by
Guarantor, Administrative Lender, and, either all Lenders or Determining
Lenders, as appropriate, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8. ADDRESSES FOR NOTICES. Unless otherwise provided herein, all
notices, requests, consents and demands shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopy to
the respective addresses specified herein, or, as to any party, to such other
addresses as may be designated by it in written notice to all other parties.
All notices, requests, consents and demands hereunder shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy, or if mailed, effective on the earlier of actual
receipt or three days after being mailed by certified mail, return receipt
requested, postage prepaid, addressed as aforesaid.
9. NO WAIVER; REMEDIES. No failure on the part of Administrative
Lender or any Lender to exercise, and no delay in exercising, any right
hereunder or under any of the Loan Papers shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder or under any
of the Loan Papers preclude any other or further exercise thereof or the
exercise of any other right. Neither Administrative Lender nor any Lender
shall be required to (a) prosecute collection or seek to enforce or resort to
any remedies against Company, any other Obligor or any other Person, (b) join
Company, any other Obligor or any other Person in any action in which
Administrative Lender or any Lender prosecutes collection or seeks to enforce
or resort to any remedies against Company, any other Obligor or any other
Person liable on any of the Obligation, or (c) seek to enforce or resort to
any remedies with respect to any Liens granted to (or benefiting, directly or
indirectly) Administrative Lender or any Lender by Company, any other Obligor
or any other Person. Neither Administrative Lender nor any Lender shall have
any obligation to protect, secure or insure any of the Liens or the
properties or interests in properties subject thereto. The remedies herein
provided are cumulative and not exclusive of any remedies provided by
Applicable Law.
-6-
<PAGE>
10. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, each Lender and Administrative Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted
by Law, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or Administrative Lender to or for the credit
or the account of Guarantor against any and all of the obligations of
Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Lender or Administrative Lender shall have made any
demand under this Guaranty. Each Lender and Administrative Lender agrees
promptly to notify Guarantor after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application or provide a defense to Guarantor's obligations under
this Guaranty. The rights of each Lender and Administrative Lender under
this SECTION 10 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender and
Administrative Lender may have.
11. LIENS. To the extent not prohibited by Applicable Law, Guarantor
agrees that Administrative Lender or any Lender, in its discretion, without
notice or demand and without affecting either the liability of Guarantor,
Company or any other Obligor, or any security interest or other Lien, may
foreclose any deed of trust or mortgage or similar Lien covering interests in
real or personal property, and the interests in real or personal property
secured thereby, by nonjudicial sale. Guarantor waives any defense to the
recovery by Administrative Lender or any Lender hereunder against Company,
Guarantor or any collateral of any deficiency after a nonjudicial sale and
Guarantor expressly waives any defense or benefits that may be derived from
Chapter 34 of the Texas Business and Commerce Code, Section 51.003 of the
Texas Property Code, or any similar statute in effect in any other
jurisdiction. Without limiting the foregoing, Guarantor waives, to the
extent not prohibited by Applicable Law, any defense arising out of any such
nonjudicial sale even though such sale operates to impair or extinguish any
right of reimbursement or subrogation or any other right or remedy of
Guarantor against Company or any other Person or any Collateral or any other
collateral. Guarantor agrees that Guarantor is liable, subject to the
limitations of SECTION 1 hereof, for any part of the Obligation remaining
unpaid after any foreclosure.
12. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is an
irrevocable continuing guaranty of payment and shall (a) remain in full force
and effect until final payment in full (after the Term Loan Maturity Date) of
the Obligation and all other amounts payable under this Guaranty, (b) be
binding upon Guarantor, its successors and assigns, and (c) inure to the
benefit of and be enforceable by Lender and Administrative Lender and their
successors, transferees and assigns. Without limiting the generality of the
foregoing CLAUSE (c), to the extent permitted by the Credit Agreement, each
Lender may assign or otherwise transfer its rights under the Credit
Agreement, the Notes or any of the Loan Papers or any interest therein to any
other Person, and such other Person shall thereupon become vested with all
the rights or any interest therein, as appropriate, in respect thereof
granted to such Lender herein or otherwise.
13. INFORMATION. Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from Company and each other Obligor
such information concerning
-7-
<PAGE>
Company's and each Obligor's financial condition or business operations as
Guarantor may require, and that neither Administrative Lender nor any Lender
has any duty at any time to disclose to Guarantor any information relating to
the business operations or financial conditions of Company or any Obligor.
14. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, GUARANTOR AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH. THIS GUARANTY IS PERFORMABLE IN DALLAS COUNTY, TEXAS.
15. WAIVER OF JURY TRIAL. GUARANTOR, ADMINISTRATIVE LENDER, AND
LENDERS HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY
OF THE LOAN PAPERS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO LENDER ENTERING INTO THE CREDIT AGREEMENT.
16. RATABLE BENEFIT. This Guaranty is for the ratable benefit of
Lenders and Administrative Lender, each of which shall share any proceeds of
this Guaranty pursuant to the terms of the Credit Agreement.
17. GUARANTOR INSOLVENCY. Should Guarantor become insolvent, fail to
pay its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject of any proceeding provided for by any Debtor Relief Law
(other than as a creditor or claimant) that could suspend or otherwise
adversely affect the rights of any Lender or Administrative Lender granted
hereunder, then, the obligations of Guarantor under this Guaranty shall be,
as between Guarantor and such Lender and Administrative Lender, a fully-
matured, due, and payable obligation of Guarantor to such Lender and
Administrative Lender (without regard to whether Company or any other Obligor
is then in default under the Credit Agreement or any other Loan Paper or
whether any part of the Obligation is then due and owing by Company or any
other Obligor to such Lender or Administrative Lender), payable in full by
Guarantor to such Lender or Administrative Lender upon demand, which shall be
the estimated amount owing in respect of the contingent claim created
hereunder.
18. ENTIRE AGREEMENT. THIS GUARANTY, TOGETHER WITH THE OTHER LOAN
PAPERS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES
-8-
<PAGE>
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
LA QUINTA INNS OF LUBBOCK, INC.
Address for Guarantor:
112 East Pecan
San Antonio, Texas 78205 By:
___________________________________
John F. Schmutz, Vice President
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<PAGE>
EXHIBIT R
GUARANTY
This Guaranty, dated as of April 21, 1995 (this "GUARANTY"), is made by
LA QUINTA INNS OF PUERTO RICO, INC., a Delaware corporation ("GUARANTOR").
BACKGROUND.
1. La Quinta Inns, Inc., a Texas corporation ("COMPANY"),
NationsBank of Texas, N.A., as Administrative Lender ("ADMINISTRATIVE
LENDER") on behalf of NationsBank of Texas, N.A. and each other lender, and
each other lender (singly, a "LENDER" and collectively, the "LENDERS") have
entered into the Amended and Restated Credit Agreement, dated as of January
25, 1994 (as hereafter amended or otherwise modified from time to time, the
"CREDIT AGREEMENT"). The capitalized terms not otherwise defined herein have
the meanings specified in the Credit Agreement.
2. Pursuant to the Credit Agreement, Company may, subject to the
terms of the Credit Agreement and the other Loan Papers, request that Lenders
make Advances and issue, or participate in the issuance of, Letters of Credit
and Bond Letters of Credit.
3. It is a condition precedent to the obligation of Lenders to
make such Advances and issue, or participate in the issuance of, Letters of
Credit and Bond Letters of Credit that Guarantor guarantee repayment thereof
upon the terms and conditions set forth herein.
4. The Board of Directors of Guarantor has determined that the
execution, delivery, and performance of this Guaranty is necessary and
convenient to the conduct, promotion, and attainment of Guarantor's business.
5. Guarantor desires to induce Lender to make such Advances and
issue, or participate in the issuance of, Letters of Credit and Bond Letters
of Credit, which may reasonably be expected to benefit, directly or
indirectly, Guarantor.
AGREEMENT.
Now, therefore, in consideration of the premises and in order to induce
Lenders to make Advances and issue, or participate in the issuance of,
Letters of Credit and Bond Letters of Credit under the Credit Agreement,
Guarantor agrees as follows:
1. GUARANTY.
(a) Guarantor unconditionally and irrevocably guarantees the
punctual payment of, and promises to pay, when due, whether at stated
maturity, by mandatory prepayment, by acceleration or otherwise, all
obligations, indebtedness and liabilities, and
<PAGE>
all rearrangements, renewals and extensions of all or any part thereof,
of Company or any other Obligor now or hereafter arising from, by virtue
of or pursuant to the Credit Agreement, the Notes, any other Loan Paper,
and any and all renewals and extensions thereof, or any part thereof, or
future amendments thereto, whether for principal, interest (including,
without limitation, interest, fees and other charges that would accrue or
become owing both prior to and subsequent to and but for the commencement
of any proceeding against or with respect to Company or any other Obligor
under any chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101
ET SEQ. whether or not a claim is allowed for the same in any such
proceeding), premium, fees, commissions, expenses or otherwise (such
obligations being the "OBLIGATION"), and agrees to pay any and all
reasonable expenses (including reasonable counsel fees and expenses)
incurred in enforcement or collection of all or any part thereof, whether
such obligations, indebtedness and liabilities are direct, indirect,
fixed, contingent, joint, several or joint and several, and any rights
under this Guaranty.
(b) Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of Guarantor hereunder shall be limited
to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all
other liabilities of Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of Guarantor in respect of intercompany
indebtedness to Company, other Affiliates of Company or other Obligors
to the extent that such indebtedness would be discharged in an amount
equal to the amount paid by Guarantor hereunder) and after giving effect
as assets, subject to PARAGRAPH 4(a) hereof, to the value (as determined
under the applicable provisions of Fraudulent Transfer Laws) of any
rights to subrogation or contribution of Guarantor pursuant to (i)
Applicable Law or (ii) any agreement providing for an equitable
allocation among Guarantor and other Obligors of obligations arising
under guaranties by such parties.
2. GUARANTY ABSOLUTE. Guarantor guarantees that the Obligation will
be paid strictly in accordance with the terms of the Credit Agreement, the
Notes, and the other Loan Papers, regardless of any Applicable Law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of Administrative Lender or any Lender with
respect thereto; PROVIDED, HOWEVER, nothing contained in this Guaranty shall
require Guarantor to make any payment under this Guaranty in violation of any
Applicable Law, regulation or order now or hereafter in effect. The
obligations and liabilities of Guarantor hereunder are independent of the
obligations of Company under the Credit Agreement and of the obligations of
each other Obligor under each other Loan Paper and any Applicable Law. The
liability of Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
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<PAGE>
(a) the taking or accepting of any other security or guaranty
for any or all of the Obligation;
(b) any increase, reduction or payment in full at any time or from
time to time of any part of the Obligation, including any reduction or
termination of the Commitments;
(c) any lack of validity or enforceability of the Credit Agreement,
the Notes, or any other Loan Paper or other agreement or instrument
relating thereto, including but not limited by the unenforceability of
all or any part of the Obligation by reason of the fact that (i) the
Obligation, and/or the interest paid or payable with respect thereto,
exceeds the amount permitted by Applicable Law, (ii) the act of creating
the Obligation, or any part thereof, is ULTRA VIRES, (iii) the officers
creating same acted in excess of their authority, or (iv) for any other
reason;
(d) any lack of corporate, partnership or other power of Company or
any other Obligor;
(e) any Debtor Relief Law involving Company, Guarantor or any other
Obligor;
(f) any renewal, compromise, extension, acceleration or other
change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligation; any adjustment, indulgence, forbearance,
or compromise that may be granted or given by any Lender or Administrative
Lender to Company or any other Obligor; or any other modification,
amendment, or waiver of or any consent to departure from the Credit
Agreement, the Notes, or any other Loan Paper or other agreement or
instrument relating thereto without notification of Guarantor (the right
to such notification being herein specifically waived by Guarantor);
(g) any exchange, release, sale, subordination, or non-perfection
of any collateral or Lien thereon or any lack of validity or
enforceability or change in priority, destruction, reduction, or loss
or impairment of value of any collateral or Lien thereon;
(h) any release or amendment or waiver of or consent to departure
from any other guaranty for all or any of the Obligation;
(i) the failure by any Lender or Administrativ Lender to make any
demand upon or to bring any legal, equitable, or other action against
Company or any other Person (including without limitation any other
Obligor), or the failure or delay by any Lender or Administrative Lender
to, or the manner in which any Lender or Administrative Lender shall,
proceed to exhaust rights against any direct or indirect security for the
Obligation;
-3-
<PAGE>
(j) the existence of any claim, defense, set-off, or other rights
which Company or Guarantor may have at any time against Company, any
Lender, Administrative Lender or any Obligor, or any other Person, whether
in connection with this Guaranty, the Loan Papers, the transactions
contemplated thereby, or any other transaction;
(k) any failure of any Lender or Administrative Lender to notify
Guarantor of any renewal, extension, or assignment of the Obligation or
any part thereof, or the release of any security, or of any other action
taken or refrained from being taken by any Lender or Administrative
Lender, it being understood that Lenders and Administrative Lender shall
not be required to give Guarantor any notice of any kind under any
circumstances whatsoever with respect to or in connection with the
Obligation;
(l) any payment by Company to any Lender or Administrative Lender is
held to constitute a preference under any Debtor Relief Law or if for any
other reason any Lender or Administrative Lender is required to refund
such payment or pay the amount thereof to another Person; or
(m) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Company, Guarantor or any other Obligor,
including without limitation any defense by reason of any disability or
other defense of Company, or the cessation from any cause whatsoever of
the liability of Company, or any claim that Guarantor's obligations
hereunder exceed or are more burdensome than those of Company or any
other Obligor.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligation is rescinded or
must otherwise be returned by any Lender or any other Person upon the
insolvency, bankruptcy or reorganization of Company, any other Obligor or
otherwise, all as though such payment had not been made.
3. WAIVER. To the extent not prohibited by Applicable Law, Guarantor
hereby waives: (a) promptness, protest, diligence, presentments, acceptance,
performance, demands for performance, notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this Guaranty and
notices of the existence, creation or incurrence of new or additional
indebtedness, and any of the events described in SECTION 2 and of any other
occurrence or matter with respect to any of the Obligation, this Guaranty or
any of the other Loan Papers; (b) any requirement that Administrative Lender
or any Lender protect, secure, perfect, or insure any Lien or security
interest or any property subject thereto or exhaust any right or take any
action against Company or any other Person or any collateral or pursue any
other remedy in Administrative Lender's or any Lender's power whatsoever; (c)
any right to assert against Administrative Lender or any Lender as a
counterclaim, set-off or cross-claim, any counterclaim, set-off or claim
which it may now or hereafter have against Administrative Lender, any Lender,
Company or other Obligor; (d) any right to seek or enforce any remedy or
right that Administrative Lender or any Lender now has or may hereafter have
against
-4-
<PAGE>
Company, any other Obligor or any other Person (to the extent permitted by
Applicable Law); (e) any right to participate in any collateral or any right
benefiting Administrative Lender or Lenders in respect of the Obligation; and
(f) any right by which it might be entitled to require suit on an accrued
right of action in respect of any of the Obligation or require suit against
Company or any other Person, whether arising pursuant to Section 34.02 of the
Texas Business and Commerce Code, as amended, Section 17.001 of the Texas
Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of
Civil Procedure, as amended, or otherwise.
4. SUBROGATION AND SUBORDINATION.
(a) Notwithstanding any reference to subrogation contained herein to
the contrary, Guarantor hereby irrevocably waives any claim or other rights
which it may have or hereafter acquire against Company or any other Obligor
that arise from the existence, payment, performance or enforcement of
Guarantor's obligations under this Guaranty, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of any
Lender or Administrative Lender against Company or any other Obligor or any
collateral which any Lender or Administrative Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or
under contract, statutes or common law, including without limitation, the
right to take or receive from Company or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to Guarantor in violation of the preceding sentence and the
Obligation shall not have been paid in full, such amount shall be deemed to
have been paid to Guarantor for the benefit of, and held in trust for the
benefit of, Lenders, and shall forthwith be paid to Administrative Lender to
be credited and applied upon the Obligation, whether matured or unmatured, in
accordance with the terms of the Credit Agreement. Guarantor acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that the waiver set
forth in this PARAGRAPH 4(a) is knowingly made in contemplation of such
benefits.
(b) If Guarantor becomes the holder of any indebtedness payable by
Company or any other Obligor, Guarantor hereby subordinates all indebtedness
owing to it from Company and each other Obligor to all indebtedness of
Company and each other Obligor to Lenders and Administrative Lender, and
agrees that upon the occurrence and continuance of a Default or an Event of
Default, it shall not accept any payment on the same until final payment in
full of the obligations of Company under the Credit Agreement, the Notes and
all other Loan Papers, and shall in no circumstance whatsoever attempt to
set-off or reduce any obligations hereunder because of such indebtedness. If
any amount shall nevertheless be paid to Guarantor by Company or any other
Obligor prior to payment in full of the Obligation, such amount shall be held
in trust for the benefit of Lenders and Administrative Lender and shall
forthwith be paid to Administrative Lender to be credited and applied to the
Obligation, whether matured or unmatured.
-5-
<PAGE>
5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants that all representations and warranties as they apply to Guarantor
only set forth in ARTICLE 4 of the Credit Agreement (each of which is hereby
incorporated by reference) are true and correct.
6. COVENANTS. Guarantor hereby expressly assumes, confirms, and agrees
to perform, observe, and be bound by all conditions and covenants set forth
in the Credit Agreement, to the extent applicable to it, as if it were a
signatory thereto. Guarantor further covenants and agrees (a) punctually and
properly to perform all of Guarantor's covenants and duties under all other
Loan Papers; (b) from time to time promptly to furnish Administrative Lender
with any information or writings which Administrative Lender may request
concerning this Guaranty; and (c) promptly to notify Administrative Lender of
any claim, action, or proceeding affecting this Guaranty.
7. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by
Guarantor, Administrative Lender, and, either all Lenders or Determining
Lenders, as appropriate, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8. ADDRESSES FOR NOTICES. Unless otherwise provided herein, all
notices, requests, consents and demands shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopy to
the respective addresses specified herein, or, as to any party, to such other
addresses as may be designated by it in written notice to all other parties.
All notices, requests, consents and demands hereunder shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy, or if mailed, effective on the earlier of actual
receipt or three days after being mailed by certified mail, return receipt
requested, postage prepaid, addressed as aforesaid.
9. NO WAIVER; REMEDIES. No failure on the part of Administrative
Lender or any Lender to exercise, and no delay in exercising, any right
hereunder or under any of the Loan Papers shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder or under any
of the Loan Papers preclude any other or further exercise thereof or the
exercise of any other right. Neither Administrative Lender nor any Lender
shall be required to (a) prosecute collection or seek to enforce or resort to
any remedies against Company, any other Obligor or any other Person, (b) join
Company, any other Obligor or any other Person in any action in which
Administrative Lender or any Lender prosecutes collection or seeks to enforce
or resort to any remedies against Company, any other Obligor or any other
Person liable on any of the Obligation, or (c) seek to enforce or resort to
any remedies with respect to any Liens granted to (or benefiting, directly or
indirectly) Administrative Lender or any Lender by Company, any other Obligor
or any other Person. Neither Administrative Lender nor any Lender shall have
any obligation to protect, secure or insure any of the Liens or the
properties or interests in properties subject thereto. The remedies herein
provided are cumulative and not exclusive of any remedies provided by
Applicable Law.
-6-
<PAGE>
10. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, each Lender and Administrative Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted
by Law, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or Administrative Lender to or for the credit
or the account of Guarantor against any and all of the obligations of
Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Lender or Administrative Lender shall have made any
demand under this Guaranty. Each Lender and Administrative Lender agrees
promptly to notify Guarantor after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application or provide a defense to Guarantor's obligations under
this Guaranty. The rights of each Lender and Administrative Lender under
this SECTION 10 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender and
Administrative Lender may have.
11. LIENS. To the extent not prohibited by Applicable Law, Guarantor
agrees that Administrative Lender or any Lender, in its discretion, without
notice or demand and without affecting either the liability of Guarantor,
Company or any other Obligor, or any security interest or other Lien, may
foreclose any deed of trust or mortgage or similar Lien covering interests in
real or personal property, and the interests in real or personal property
secured thereby, by nonjudicial sale. Guarantor waives any defense to the
recovery by Administrative Lender or any Lender hereunder against Company,
Guarantor or any collateral of any deficiency after a nonjudicial sale and
Guarantor expressly waives any defense or benefits that may be derived from
Chapter 34 of the Texas Business and Commerce Code, Section 51.003 of the
Texas Property Code, or any similar statute in effect in any other
jurisdiction. Without limiting the foregoing, Guarantor waives, to the
extent not prohibited by Applicable Law, any defense arising out of any such
nonjudicial sale even though such sale operates to impair or extinguish any
right of reimbursement or subrogation or any other right or remedy of
Guarantor against Company or any other Person or any Collateral or any other
collateral. Guarantor agrees that Guarantor is liable, subject to the
limitations of SECTION 1 hereof, for any part of the Obligation remaining
unpaid after any foreclosure.
12. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is an
irrevocable continuing guaranty of payment and shall (a) remain in full force
and effect until final payment in full (after the Term Loan Maturity Date) of
the Obligation and all other amounts payable under this Guaranty, (b) be
binding upon Guarantor, its successors and assigns, and (c) inure to the
benefit of and be enforceable by Lender and Administrative Lender and their
successors, transferees and assigns. Without limiting the generality of the
foregoing CLAUSE (c), to the extent permitted by the Credit Agreement, each
Lender may assign or otherwise transfer its rights under the Credit
Agreement, the Notes or any of the Loan Papers or any interest therein to any
other Person, and such other Person shall thereupon become vested with all
the rights or any interest therein, as appropriate, in respect thereof
granted to such Lender herein or otherwise.
13. INFORMATION. Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from Company and each other Obligor
such information concerning
-7-
<PAGE>
Company's and each Obligor's financial condition or business operations as
Guarantor may require, and that neither Administrative Lender nor any Lender
has any duty at any time to disclose to Guarantor any information relating to
the business operations or financial conditions of Company or any Obligor.
14. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, GUARANTOR AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH. THIS GUARANTY IS PERFORMABLE IN DALLAS COUNTY, TEXAS.
15. WAIVER OF JURY TRIAL. GUARANTOR, ADMINISTRATIVE LENDER, AND
LENDERS HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY
OF THE LOAN PAPERS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO LENDER ENTERING INTO THE CREDIT AGREEMENT.
16. RATABLE BENEFIT. This Guaranty is for the ratable benefit of
Lenders and Administrative Lender, each of which shall share any proceeds of
this Guaranty pursuant to the terms of the Credit Agreement.
17. GUARANTOR INSOLVENCY. Should Guarantor become insolvent, fail to
pay its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject of any proceeding provided for by any Debtor Relief Law
(other than as a creditor or claimant) that could suspend or otherwise
adversely affect the rights of any Lender or Administrative Lender granted
hereunder, then, the obligations of Guarantor under this Guaranty shall be,
as between Guarantor and such Lender and Administrative Lender, a fully-
matured, due, and payable obligation of Guarantor to such Lender and
Administrative Lender (without regard to whether Company or any other Obligor
is then in default under the Credit Agreement or any other Loan Paper or
whether any part of the Obligation is then due and owing by Company or any
other Obligor to such Lender or Administrative Lender), payable in full by
Guarantor to such Lender or Administrative Lender upon demand, which shall be
the estimated amount owing in respect of the contingent claim created
hereunder.
18. ENTIRE AGREEMENT. THIS GUARANTY, TOGETHER WITH THE OTHER LOAN
PAPERS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES
-8-
<PAGE>
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
LA QUINTA INNS OF PUERTO RICO, INC.
Address for Guarantor:
112 East Pecan
San Antonio, Texas 78205 By:
___________________________________
John F. Schmutz, Vice President
-9-
<PAGE>
EXHIBIT 15
La Quinta Inns, Inc.
San Antonio, Texas
Gentlemen:
Re: Registration Statements Nos. 33-26470, 2-97266, 2-67606, 2-65645,
33-42087, and 33-55102 and 33-58866
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated April 21, 1995, related to
our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of sections 7 and 11 of the Act.
KPMG Peat Marwick LLP
San Antonio, Texas
May 11, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMBINED CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,053
<SECURITIES> 0
<RECEIVABLES> 22,565
<ALLOWANCES> 2,936
<INVENTORY> 0
<CURRENT-ASSETS> 32,794
<PP&E> 1,053,440
<DEPRECIATION> 262,016
<TOTAL-ASSETS> 848,710
<CURRENT-LIABILITIES> 71,829
<BONDS> 455,503
<COMMON> 4,920
0
0
<OTHER-SE> 199,646
<TOTAL-LIABILITY-AND-EQUITY> 848,710
<SALES> 0
<TOTAL-REVENUES> 96,735
<CGS> 0
<TOTAL-COSTS> 49,352
<OTHER-EXPENSES> 10,181
<LOSS-PROVISION> 216
<INTEREST-EXPENSE> 10,544
<INCOME-PRETAX> 18,000
<INCOME-TAX> 6,930
<INCOME-CONTINUING> 11,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,070
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
