<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
NOVEMBER 15, 1996 (NOVEMBER 8, 1996)
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<S> <C> <C>
DELAWARE 0-24392 86-0762415
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
410 NORTH 44TH STREET, SUITE 700 PHOENIX, ARIZONA 85008
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 220-6666
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<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 8, 1996, Doubletree Corporation, a Delaware corporation (the
"Company"), completed its acquisition of Red Lion Hotels, Inc., a Delaware
corporation ("Red Lion"), pursuant to the Agreement and Plan of Merger dated as
of September 12, 1996 (the "Merger Agreement"), by and among the Company, RLH
Acquisition Corp. ("Merger Sub") and Red Lion (a copy of which was filed as
Exhibit 2.1 to the Company's Current Report on Form 8-K dated September 12,
1996, and is incorporated herein by reference). A copy of the press release
dated November 8, 1996 issued by the Company with respect to the Merger is filed
herewith as Exhibit 99.1 and is incorporated herein by reference.
Merger Consideration. Pursuant to the Merger Agreement, on November 8,
1996, Merger Sub merged with and into Red Lion (the "Merger"), with Red Lion
continuing as the surviving corporation and as a wholly owned subsidiary of the
Company. As a result of the Merger, each outstanding share of common stock, par
value $.01 per share, of Red Lion ("Red Lion Common Stock") was converted into
the right to receive $21.30 in cash, without interest, plus 0.2314 shares of
common stock, par value $.01 per share, of the Company ("Common Stock"). In
addition, each outstanding Red Lion employee stock option was converted as a
result of the Merger into the right to receive the same cash and stock
consideration into which the share or shares of Red Lion Common Stock issuable
upon exercise of such employee stock option would have been converted if such
employee stock option had been exercised immediately prior to the effective time
of the Merger (the "Effective Time"), reduced on a pro rata basis by the
aggregate exercise price for the shares of Red Lion Common Stock then issuable
upon exercise of such employee stock option and the amount of any withholding
taxes required thereon.
Accordingly, the stockholders and optionholders of Red Lion immediately
prior to the Merger became entitled at or following the Effective Time to
receive, in the aggregate, $688,199,723 in cash and 7,381,588 shares of Common
Stock as a result of the Merger (provided that such securityholders will receive
cash in lieu of any fractional shares represented thereby). The amount of such
consideration was determined pursuant to arm's-length negotiations among the
parties to the Merger Agreement.
Sources of Funds. Simultaneously with the consummation of the Merger on
November 8, 1996, the Company (i) issued and sold 2,627,534 shares of Common
Stock, and five-year warrants to purchase an additional 262,753 shares of Common
Stock (the "Warrants"), to PT Investments, Inc. ("PTI"), a wholly owned
subsidiary of General Electric Pension Trust ("GEPT"), for an aggregate purchase
price of $100,000,000 (the "GEPT Equity Investment"), pursuant to a Securities
Purchase Agreement dated as of October 31, 1996 by and between the Company and
the Trustees of GEPT (the "Securities Purchase Agreement"), (ii) issued and sold
5,600,000 shares of Common Stock in a registered public offering for an
aggregate purchase price, after deducting underwriting discounts and
commissions, of $210,672,000 (the "Public Equity Offering"), and (iii) borrowed
$493,200,000 under a bank term loan facility (the "Credit Facility"), pursuant
to a Credit Agreement dated as of November 8, 1996 by and among the Company,
Morgan Stanley Senior Funding, Inc., as syndication agent and arranger, The Bank
of Nova Scotia, as administrative agent, and the lenders identified therein (the
"Credit Agreement"). Copies of the Securities Purchase Agreement, the
certificate evidencing the Warrants, and the Credit Agreement are filed herewith
as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by
reference.
Of the $803,872,000 of total proceeds from the foregoing financing
transactions, $688,199,723 was or will be used to pay the aggregate cash
consideration payable to Red Lion securityholders as a result of the Merger, and
the remainder, together with cash on hand of the Company, was used to repay
$124,184,099 of outstanding bank indebtedness of Red Lion as of the Effective
Time.
On November 13, 1996, pursuant to an over-allotment option granted by the
Company to the underwriters of the Public Equity Offering in connection
therewith, the Company issued and sold an additional 840,000 shares of Common
Stock to such underwriters for an aggregate purchase price, after deducting
underwriting discounts and commissions, of $31,600,800. The proceeds from such
sale of additional shares were used to repay an equal amount of the outstanding
indebtedness under the Credit Facility. The total outstanding indebtedness of
the Company under the Credit Facility is currently $461,599,200.
<PAGE> 3
Interests of Certain Persons. Upon consummation of the Merger and the
financing transactions described above, (i) the Trustees of GEPT (through GEPT's
wholly owned subsidiary, PTI) and GEPT's affiliate, GE Investment Hotel Partners
I, Limited Partnership ("GEHOP"), together beneficially owned an aggregate of
9,088,402 shares of Common Stock (including 262,753 shares issuable upon
exercise of the Warrants), or 22.83% of the total number of shares of Common
Stock outstanding on a fully diluted basis as of October 11, 1996 (as reported
in the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1996), as adjusted to reflect the issuances of additional shares of Common
Stock pursuant to the Merger and the foregoing financing transactions, and (ii)
Red Lion, a California Limited Partnership (the "Partnership") beneficially
owned 4,836,260 shares of Common Stock, or 12.23% of such total number of shares
outstanding on an adjusted basis as aforesaid.
At the Effective Time, the Board of Directors of the Company was expanded
to include Michael W. Michelson and Edward I. Gilhuly, as designees of the
Partnership. Messrs. Michelson and Gilhuly were each directors of Red Lion until
the Effective Time. Mr. Michelson is a stockholder, director and executive vice
president of RLA-GP, Inc. ("RLA"), the general partner of the Partnership, and
Mr. Gilhuly is a director and executive vice president of RLA. As the sole
general partner of the Partnership, RLA has sole voting and investment power
with respect to the shares of Common Stock owned by the Partnership. Mr.
Michelson and George R. Roberts, who is a stockholder, director and president of
RLA, are each general partners of KKR Associates (Delaware), a limited partner
of the Partnership and an affiliate of Kohlberg Kravis Roberts & Co.
In connection with the Merger, the existing registration rights agreement,
as amended, among the Company and certain of its stockholders (the "1993
Registration Rights Agreement") was amended, among other things, (i) to grant to
the Partnership four demand and unlimited "piggyback" registration rights with
respect to the 4,836,260 shares of Common Stock issued to the Partnership
pursuant to the Merger and (ii) to provide that the 2,627,534 shares of Common
Stock issued to PTI pursuant to the GEPT Equity Investment, and the 262,753
shares of Common Stock issuable upon exercise of the Warrants, will be covered
by the demand and "piggyback" registration rights of GEHOP thereunder. A copy of
such amendment to the 1993 Registration Rights Agreement is filed herewith as
Exhibit 10.4 and is incorporated herein by reference.
Pursuant to the Merger, at the Effective Time, the Company, the
Partnership, Red Lion and certain affiliates of Red Lion entered into a
Partnership Services Agreement (the "Partnership Services Agreement") pursuant
to which the Company has agreed, upon request from the Partnership, to provide
certain support services to the Partnership in return for a fee. In addition,
the Company has agreed thereunder to guaranty, subject to defenses available to
Red Lion, the liabilities and obligations of Red Lion owed to the Partnership
and its affiliates arising out of or related to Red Lion's business. A copy of
Partnership Services Agreement is filed herewith as Exhibit 10.5 and is
incorporated herein by reference.
At the Effective Time, the Company also entered into a Guaranty of Lease
Obligations (the "Partnership Lease Guaranty") with Red Lion and RLH
Partnership, L.P. ("RLH"), a subsidiary of the Partnership, pursuant to which
the Company agreed to guaranty the obligations of Red Lion and its subsidiaries
owed to RLH and its partners and affiliates under a master lease relating to 17
hotel properties leased by RLH to Red Lion (the "Partnership Lease"). Copies of
the Partnership Lease Guaranty and the Partnership Lease are filed herewith as
Exhibits 10.6 and 10.7, respectively, and are incorporated herein by reference.
ITEM 5. OTHER EVENTS
On November 13, 1996, the Company issued a press release (a copy of which
is filed herewith as Exhibit 99.2 and is incorporated herein by reference),
announcing the appointment of Richard M. Kelleher as President and Chief
Executive Officer of the Company.
On the same date, the Company issued a second press release (a copy of
which is filed herewith as Exhibit 99.3 and is incorporated herein by
reference), announcing the appointment of William L. Perocchi as a director of
the Company, thereby increasing the size of the Board of Directors of the
Company to eleven members. Mr. Perocchi is the Executive Vice President, Chief
Financial Officer and Treasurer of the Company.
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
The following financial statements of the acquired businesses referred
to in Item 2 above are filed as a part of this report:
Consolidated Balance Sheets of Red Lion Hotels, Inc. and its
subsidiaries at December 31, 1995 and September 30, 1996;
Consolidated Statements of Income of Red Lion Hotels, Inc. and its
subsidiaries for the ten months ended December 31, 1995, seven
months ended September 30, 1995 and nine months ended September
30, 1996;
Consolidated Statements of Stockholders' Equity of Red Lion
Hotels, Inc. and its subsidiaries for the ten months ended
December 31, 1995 and nine months ended September 30, 1996;
Consolidated Statements of Cash Flows of Red Lion Hotels, Inc. and
its subsidiaries for the ten months ended December 31, 1995, seven
months ended September 30, 1995 and nine months ended September
30, 1996;
Notes to above Consolidated Financial Statements of Red Lion
Hotels, Inc. and its subsidiaries;
Consolidated Balance Sheet of Red Lion, a California Limited
Partnership and its subsidiaries at December 31, 1994;
Consolidated Statements of Operations of Red Lion, a California
Limited Partnership and its subsidiaries for the years ended
December 31, 1994 and 1993 and the seven months ended July 31,
1995;
Consolidated Statements of Partners' Equity of Red Lion, a
California Limited Partnership and its subsidiaries for the years
ended December 31, 1994 and 1993 and the seven months ended July
31, 1995;
Consolidated Statements of Cash Flows of Red Lion, a California
Limited Partnership and its subsidiaries for the years ended
December 31, 1994 and 1993 and the seven months ended July 31,
1995; and
Notes to above Consolidated Financial Statements of Red Lion, a
California Limited Partnership and its subsidiaries.
(b) Pro forma financial information.
The following unaudited pro forma financial information of Doubletree
Corporation and its subsidiaries, relating to the Merger and the other
transactions described in Item 2 above, is filed as a part of this report:
Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the year ended December 31, 1995 and the nine
months ended September 30, 1995 and September 30, 1996, assuming
the Merger and certain other transactions had occurred as of
January 1, 1995;
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996, assuming the Merger and certain other
transactions had occurred as of September 30, 1996; and
Notes to above Unaudited Pro Forma Condensed Consolidated
Financial Information.
<PAGE> 5
(c) Exhibits.
2.1- Agreement and Plan of Merger dated as of September 12, 1996,
by and among Doubletree Corporation, RLH Acquisition Corp. and
Red Lion Hotels, Inc.
10.1 Securities Purchase Agreement dated as of October 31, 1996 by
and between the Company and the Trustees of General Electric
Pension Trust.
10.2 Warrants to purchase 262,753 shares of Common Stock of
Doubletree Corporation.
10.3 Credit Agreement dated as of November 8, 1996 by and among the
Company, Morgan Stanley Senior Funding, Inc., as syndication
agent and arranger thereunder, The Bank of Nova Scotia, as
administrative agent thereunder, and the lenders identified
therein.
10.4 Amendment No. 3 to the Incorporation and Registration Rights
Agreement dated as of November 8, 1996 by and among Doubletree
Corporation, GE Investment Hotel Partners I, Limited
Partnership, Metpark Funding Inc., The Ueberroth Family Trust,
Ueberroth Investment Trust, Richard J. Ferris, Ridge Partners,
L.P., Robert M. Solmson (for himself and as attorney-in-fact
for the RFS Shareholders, as defined therein), Canadian
Pacific Hotel Holdings (U.S.) Inc. and Red Lion, a California
Limited Partnership.
10.5 Partnership Services Agreement dated as of November 8, 1996 by
and among Doubletree Corporation, Red Lion Hotels, Inc., Red
Lion, a California Limited Partnership and the affiliates
thereof identified therein.
10.6 Guaranty of Lease Obligations dated as of November 8, 1996 by
and among Doubletree Corporation, Red Lion Hotels, Inc. and
RLH Partnership, L.P.
10.7 Master Lease dated August 1, 1995 between RLH Partnership,
L.P. and Red Lion Hotels, Inc.
99.1 Press Release of Doubletree Corporation dated November 8,
1996.
99.2 Press Release of Doubletree Corporation dated November 13,
1996.
99.3 Second Press Release of Doubletree Corporation dated November
13, 1996.
- ---------------
- - Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K dated September 12, 1996.
<PAGE> 6
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 hereunto duly authorized.
DOUBLETREE CORPORATION
/s/ William L. Perocchi
--------------------------------------
William L. Perocchi
Executive Vice President, Chief
Financial Officer and Treasurer
Dated: November 21, 1996
<PAGE> 7
INDEX TO FINANCIAL STATEMENTS
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PAGE
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Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets of Red Lion Hotels, Inc. and its subsidiaries at December
31, 1995 and September 30, 1996..................................................... F-3
Consolidated Statements of Income of Red Lion Hotels, Inc. and its subsidiaries for
the ten months ended December 31, 1995, seven months ended September 30, 1995 and
nine months ended September 30, 1996................................................ F-4
Consolidated Statements of Stockholders' Equity of Red Lion Hotels, Inc. and its
subsidiaries for the ten months ended December 31, 1995 and nine months ended
September 30, 1996.................................................................. F-5
Consolidated Statements of Cash Flows of Red Lion Hotels, Inc. and its subsidiaries
for the ten months ended December 31, 1995, seven months ended September 30, 1995
and nine months ended September 30, 1996............................................ F-6
Notes to above Consolidated Financial Statements of Red Lion Hotels, Inc. and its
subsidiaries........................................................................ F-7
Independent Auditors' Report.......................................................... F-21
Consolidated Balance Sheet of Red Lion, a California Limited Partnership and its
subsidiaries at December 31, 1994................................................... F-23
Consolidated Statements of Operations of Red Lion, a California Limited Partnership
and its subsidiaries for the years ended December 31, 1994 and 1993 and the seven
months ended July 31, 1995.......................................................... F-24
Consolidated Statements of Partners' Equity of Red Lion, a California Limited
Partnership and its subsidiaries for the years ended December 31, 1994 and 1993 and
the seven months ended July 31, 1995................................................ F-25
Consolidated Statements of Cash Flows of Red Lion, a California Limited Partnership
and its subsidiaries for the years ended December 31, 1994 and 1993 and the seven
months ended July 31, 1995.......................................................... F-26
Notes to above Consolidated Financial Statements of Red Lion, a California Limited
Partnership and its subsidiaries.................................................... F-28
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended
December 31, 1995 and the nine months ended September 30, 1995 and September 30,
1996, assuming the Merger and certain other transactions had occurred as of January
1, 1995............................................................................. F-38
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996,
assuming the Merger and certain other transactions had occurred as of September 30,
1996................................................................................ F-42
Notes to above Unaudited Pro Forma Condensed Consolidated Financial Information....... F-43
</TABLE>
F-1
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Red Lion Hotels, Inc.:
We have audited the accompanying consolidated balance sheet of Red Lion
Hotels, Inc. and subsidiaries (the "Company") as of December 31, 1995, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the ten month period ended December 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Red Lion Hotels, Inc. and
subsidiaries as of December 31, 1995, and the results of their operations and
their cash flows for the ten month period ended December 31, 1995, in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Portland, Oregon
February 24, 1996
F-2
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RED LION HOTELS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................ $ 68,355 $ 18,706
Accounts receivable, net......................................... 19,709 23,436
Accounts receivable -- affiliates................................ 12,096 4,662
Inventories...................................................... 6,339 6,317
Prepaid expenses and other current assets........................ 5,461 4,250
Deferred income taxes............................................ 2,306 2,616
-------- --------
Total current assets..................................... 114,266 59,987
Property and Equipment, net........................................ 336,269 401,550
Investment in and Advances to Unconsolidated Joint Ventures........ 16,429 18,194
Goodwill, net...................................................... 21,508 32,197
Deferred Income Taxes.............................................. 6,571 2,098
Due from Affiliate................................................. 20,828 22,261
Other Assets, net.................................................. 11,049 11,420
-------- --------
$526,920 $547,707
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................. $ 23,618 $ 16,277
Accrued expenses................................................. 37,197 42,157
Current portion of long-term debt................................ 7,759 48,620
-------- --------
Total current liabilities................................ 68,574 107,054
Long-Term Debt, net of current portion............................. 215,608 164,686
Other Long-Term Obligations........................................ 11,169 11,697
Joint Venturers' Interest.......................................... 1,290 --
-------- --------
Total liabilities........................................ 296,641 283,437
-------- --------
Commitments and Contingencies (Notes 5 and 11)
Stockholders' Equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized;
0 shares issued and outstanding (unaudited)................... -- --
Common stock, $.01 par value; 100,000,000 shares authorized;
31,315,000 shares issued and outstanding (unaudited).......... 313 313
Additional paid-in capital and net assets contributed............ 214,361 214,408
Retained earnings................................................ 15,605 49,549
-------- --------
Total stockholders' equity............................... 230,279 264,270
-------- --------
$526,920 $547,707
======== ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 10
RED LION HOTELS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SEVEN NINE
TEN MONTHS ENDED MONTHS ENDED
MONTHS ENDED SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
DECEMBER 31, 1995 (UNAUDITED) (UNAUDITED)
----------------- ------------------ ------------------
<S> <C> <C> <C>
Revenues:
Rooms........................................ $ 115,370 $ 53,332 $ 236,017
Food and beverage............................ 72,711 26,351 120,278
Other........................................ 26,688 13,012 43,510
----------- ---------- -----------
Total revenues....................... 214,769 92,695 399,805
Operating Costs and Expenses:
Departmental direct expenses:
Rooms..................................... 28,723 11,805 57,419
Food and beverage......................... 54,181 19,791 94,349
Other..................................... 7,996 3,146 14,999
Property indirect expenses................... 43,668 17,241 84,004
Other costs.................................. 17,111 6,502 26,331
Depreciation and amortization................ 8,715 3,918 14,637
Payments due to owners of managed hotels..... 19,428 9,124 39,983
Expenses resulting from the Formation and
Offering.................................. 14,662 14,662 --
----------- ---------- -----------
Operating Income............................. 20,285 6,506 68,083
Equity in Earnings of Unconsolidated Joint
Ventures..................................... 685 271 1,277
Other Income (Expense):
Interest income.............................. 1,600 637 1,630
Interest expense............................. (9,707) (5,295) (13,396)
----------- ---------- -----------
Total other expense.................. (8,107) (4,658) (11,766)
----------- ---------- -----------
Income Before Joint Venturers' Interests..... 12,863 2,119 57,594
Joint Venturers' Interests..................... (1,365) (1,070) (1,354)
----------- ---------- -----------
Income Before Income Taxes................... 11,498 1,049 56,240
Income Tax Benefit (Expense)................... 4,107 8,287 (22,296)
----------- ---------- -----------
Net Income..................................... $ 15,605 $ 9,336 $ 33,944
=========== ========== ===========
Earnings Per Common Share...................... $ 1.00 $ 1.04 $ 1.08
=========== ========== ===========
Weighted Average Common Shares Outstanding..... 15,656,300 8,946,500 31,312,500
=========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
F-4
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RED LION HOTELS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
COMMON STOCK CAPITAL AND
----------------- NET ASSETS RETAINED
SHARES AMOUNT CONTRIBUTED EARNINGS TOTAL
------ ------ ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at February 28, 1995............. -- $ -- $ -- $ -- $ --
Net assets contributed................... 20,900 209 34,427 -- 34,636
Net proceeds from initial public
offering............................... 10,063 101 173,287 -- 173,388
Issuance of shares in conjunction with
termination of an incentive unit
plan................................... 350 3 6,647 -- 6,650
Net income............................... -- -- 15,605 15,605
------ ---- -------- ------- --------
Balance at December 31, 1995............. 31,313 313 214,361 15,605 230,279
Stock options exercised (unaudited)...... 2 -- 47 -- 47
Net income (unaudited)................... -- -- -- 33,944 33,944
------ ---- -------- ------- --------
Balance at September 30, 1996
(unaudited)............................ 31,315 $313 $214,408 $49,549 $264,270
====== ==== ======== ======= ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 12
RED LION HOTELS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEVEN MONTHS NINE MONTHS
TEN MONTHS ENDED ENDED
ENDED SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
DECEMBER 31, 1995 (UNAUDITED) (UNAUDITED)
----------------- ------------------ ------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................................... $ 15,605 $ 9,336 $ 33,944
Adjustments to reconcile net income to cash provided by
operating activities:
Income attributable to joint venturers' interest............ 1,365 1,070 1,354
Distributions to joint venturers............................ (1,702) (830) (933)
Equity in earnings of unconsolidated joint ventures......... (685) (271) (1,277)
Depreciation and amortization............................... 8,715 3,918 14,637
Amortization of other assets................................ 1,092 763 969
Deferred income tax provision (benefit)..................... (8,877) (11,264) 4,163
Issuance of common stock in connection with termination of
the incentive unit plan................................... 6,650 6,650 --
Changes in assets and liabilities:
Accounts receivable....................................... (1,097) (1,451) (3,727)
Accounts receivable -- affiliates......................... (2,015) (3,591) 7,434
Inventories............................................... (413) (247) 22
Prepaid expenses and other current assets................. (427) (332) 1,211
Accounts payable, accrued expenses and other long-term
obligations............................................ 17,683 11,880 (3,143)
--------- ---------- --------
Net cash provided by operating activities.............. 35,894 15,631 54,654
--------- ---------- --------
Cash Flows from Investing Activities:
Purchase of property and equipment, net....................... (16,499) (4,601) (80,259)
Additions to goodwill......................................... -- -- (11,236)
Net decrease (increase) in due from affiliates................ (8,017) 348 (1,433)
Net increase in other assets.................................. 4,153 (1,449) (452)
Net decrease (increase) in advances to and investments in
unconsolidated joint ventures............................... (3,271) 341 (1,118)
Distributions from unconsolidated joint ventures.............. 160 80 209
--------- ---------- --------
Net cash used in investing activities.................. (23,474) (5,281) (94,289)
--------- ---------- --------
Cash Flows from Financing Activities:
Cash received from contribution of assets..................... 10,480 10,480 --
Net proceeds from common stock issued in the Offering......... 173,388 177,279 --
Net proceeds from exercise of stock options................... -- -- 47
Proceeds from long-term borrowings............................ 135,000 135,000 9,000
Repayments of long-term borrowings............................ (256,467) (255,051) (19,381)
Increase in note payable...................................... 230 65 320
Increase in deferred loan costs............................... (6,696) (6,957) --
--------- ---------- --------
Net cash provided by (used in) financing activities.... 55,935 60,816 (10,014)
--------- ---------- --------
Net Increase (Decrease) in Cash and Cash Equivalents............ 68,355 71,166 (49,649)
Cash and Cash Equivalents at Beginning of Period................ -- -- 68,355
--------- ---------- --------
Cash and Cash Equivalents at End of Period...................... $ 68,355 $ 71,166 $ 18,706
========= ========== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest.................................................... $ 8,133 $ 1,732 $ 11,873
Income taxes................................................ 2,945 -- 16,155
Noncash Investing and Financing Activities:
Net assets (other than cash) contributed by Historical Red
Lion (Note 1), including property and equipment of
$327,928 and $45,006 (unaudited), long-term debt of
$344,500 and $45,000 (unaudited), investments in and
advances to unconsolidated joint ventures of $12,790 and
$0 (unaudited), other assets and amounts receivable from
affiliates of $54,644 and $859 (unaudited), other
long-term obligations of $7,396 and $0 (unaudited), joint
venturers' interests of $1,742 and $412 (unaudited),
current assets or $29,572 and $0 (unaudited) and current
liabilities of $47,140 and $546 (unaudited) for the ten
months ended December 31, 1995 and the seven months ended
September 30, 1995, respectively.......................... $ 24,156 $ 93 $ --
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 13
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Operations
Red Lion Hotels, Inc. together with its subsidiaries ("Red Lion" or the
"Company") is a full service hospitality company operating 56 hotels in 10
western states. A typical Red Lion property is a full service hotel located in
close proximity to a business or commercial center, airport, major highway or
tourist destination. Red Lion hotels target the business traveler (both
individual and group) and compete primarily in the upscale segment of the
lodging industry.
The Company was incorporated in Delaware in March 1994 as a wholly owned
subsidiary of Red Lion, a California Limited Partnership ("Historical Red
Lion"). The Company's operations commenced in March 1995 when Historical Red
Lion contributed to the Company a 49.4% interest in a joint venture (the "Santa
Barbara Joint Venture") which owns Fess Parker's Red Lion Resort (the "Santa
Barbara Hotel") located in Santa Barbara, California.
The Company initiated an initial public offering of a portion of its common
stock on July 26, 1995 (the "Offering"), which closed August 1, 1995, raising
net proceeds of approximately $173 million. After giving effect to the Offering,
Historical Red Lion owns approximately 67% of the Company.
On August 1, 1995, prior to the closing of the Offering, Historical Red
Lion repaid certain of its outstanding indebtedness with existing cash balances
and contributed substantially all of its assets (excluding 17 hotels and certain
related obligations (the "Leased Hotels"), certain minority joint venture
interests and certain current assets) and certain liabilities to the Company
(the "Formation"). Historical Red Lion subsequent to the Formation and
refinancing of the Company (the "Partnership") retained the Leased Hotels and
the related goodwill, deferred loan costs and mortgage debt, certain minority
joint venture interests and certain current assets.
On August 1, 1995, the Company refinanced or repaid substantially all of
the debt contributed pursuant to the Formation with the net proceeds of the
Offering, borrowings under a new term loan and existing cash (the
"Refinancing"). The Company also entered into a long-term master lease with the
Partnership for the Leased Hotels.
Pursuant to the contribution agreement entered into between the Company and
the Partnership at the time of Formation, the Partnership exercised its right to
require the Company to purchase the Partnership's retained joint venture
interests. On September 12, 1996, the Company purchased the Partnership's joint
venture interests in seven joint ventures for approximately $1.3 million.
On September 12, 1996, the Company entered into an Agreement and Plan of
Merger ("Merger Agreement") with Doubletree Corporation ("Doubletree"), pursuant
to which the Company was acquired by Doubletree through the merger of a wholly
owned subsidiary with and into the Company. Consummation of the transaction was
completed during the fourth quarter of 1996 (refer to Note 14, subsequent
event).
Basis of Presentation
The accompanying financial statements reflect the contribution, at
Historical Red Lion's net book value, of the interest in the Santa Barbara Joint
Venture. Accordingly, the Santa Barbara Joint Venture has been consolidated with
the Company in the accompanying financial statements prior to the Formation. In
connection with the Formation, the other assets and liabilities contributed by
Historical Red Lion have been recorded in the accompanying consolidated
financial statements at Historical Red Lion's net book value at August 1, 1995.
There were no operations of the Company prior to the contribution of the Santa
Barbara Joint Venture. Therefore, the accompanying consolidated financial
statements reflect ten and seven months rather than twelve and nine months of
1995 operations, consisting of the results of the Santa Barbara Joint Venture
F-7
<PAGE> 14
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for ten and seven months and the results of the other hotels and operations
contributed pursuant to the Formation for five and two months.
The Santa Barbara Joint Venture contribution did not transfer the right to
manage the operations of the Santa Barbara Hotel to the Company. Therefore, the
financial statements of the Company prior to the Formation do not include the
operating revenues and expenses of the Santa Barbara Hotel or that hotel's
current assets and current liabilities. These amounts were included in the
financial statements of Historical Red Lion, which continued to manage the Santa
Barbara Hotel. The right to manage the operations of the Santa Barbara Hotel was
transferred to the Company at Formation, and that hotel's operating revenues,
expenses and current assets and current liabilities are reflected in the
consolidated financial statements of the Company beginning August 1, 1995.
The accompanying consolidated financial statements for the seven months
ended September 30, 1995 reflect the results of the interest in the Santa
Barbara Joint Venture only for approximately five months. Beginning August 1,
1995, the consolidated financial statements reflect the results of the Formation
and Offering and full commencement of the Company's operations.
The consolidated financial statements include four joint ventures in which
the interests of the Company exceed 50%. In addition, the Company consolidates
one of its 50% owned joint ventures because the Company controls the joint
venture through contractual arrangements, has the majority of capital at risk
through its significant ownership percentage and has guaranteed 100% of the
joint venture's third party debt. The unconsolidated joint ventures, including
two 50% and one 10% owned joint venture, are accounted for on the equity method
of accounting.
In 1987, Historical Red Lion sold its interest in 10 hotels to Red Lion
Inns Limited Partnership, a publicly traded limited partnership (the "MLP"). Red
Lion Properties, Inc., the general partner of the MLP, was contributed to the
Company in connection with the Formation and is a wholly owned subsidiary of the
Company. The MLP's public limited partners have an effective 98.01% ownership
interest in the MLP's hotels with the general partner retaining the remaining
1.99 % ownership interest. The Company operates the MLP's hotels under a
management agreement.
Operating revenues, expenses and current assets and current liabilities of
the MLP and other management contract hotels (including the three unconsolidated
joint ventures which are also managed by the Company) are included in the
accompanying consolidated financial statements because the operating
responsibilities associated with these hotels are substantially the same as
those for owned hotels. The operating profit, net of management fee income
earned by the Company for managed hotels, is recorded as an expense in the
accompanying consolidated statements of income. The consolidated financial
statements include current assets and current liabilities of $9,933,000 and
$8,638,000 (unaudited) at December 31, 1995 and September 30, 1996,
respectively, and operating revenues of $73,685,000, $30,408,000 (unaudited) and
$143,897,000 (unaudited) and operating expenses of $49,263,000, $19,249,000
(unaudited) and $94,323,000 (unaudited) for the ten months ended December 31,
1995, seven months ended September 30, 1995 and nine months ended September 30,
1996, respectively, related to the operation of the MLP and other management
contract hotels.
One wholly owned hotel was acquired by Historical Red Lion in 1989 subject
to a nonrecourse cash flow mortgage which requires interest payments contingent
on achieving certain levels of performance. Because of the nonrecourse and cash
flow nature of the loan, the mortgage has not been recorded as an obligation and
the property and equipment of the hotel are excluded from the consolidated
financial statements. The mortgage is in substance a management contract with a
purchase option. Accordingly, the hotel is treated as a management contract in
the accompanying consolidated financial statements.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities,
F-8
<PAGE> 15
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
revenues and expenses and the disclosure of contingent assets and liabilities.
While management endeavors to make accurate estimates, actual results could
differ from estimates.
All significant intercompany accounts and transactions have been eliminated
in consolidation.
The unaudited consolidated financial statements reflect, in the opinion of
the management, all adjustments, all of which are of a normal recurring nature,
necessary to present fairly the financial position of the Company at September
30, 1996 and the results of operations and cash flows for the nine month period
ended September 30, 1996 and for the seven month period ended September 30,
1995. Interim results are not necessarily indicative of results to be expected
for a full fiscal year.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, time
deposits, commercial paper and U.S. government and other short-term securities
with maturities of three months or less when purchased. The carrying amount
approximates fair value because of the short-term maturity of these instruments.
The balance at December 31, 1995 and September 30, 1996 includes commercial
paper of $6,991,000 and $0 (unaudited) and government obligations of $58,443,000
and $15,823,000 (unaudited), respectively.
Accounts Receivable
Accounts receivable are shown net of allowances for doubtful accounts of
$361,000 and $223,000 (unaudited) at December 31, 1995 and September 30, 1996,
respectively.
Inventories
Inventories consist primarily of consumable supplies as well as food and
beverage products held for sale. Inventories are valued at the lower of cost,
determined on a first-in, first-out basis, or market.
Property and Equipment
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
Land.................................................. $ 48,126 $ 56,032
Buildings and improvements............................ 321,940 369,159
Furnishings and equipment............................. 122,351 135,898
Construction in progress.............................. 14,834 19,735
--------- ---------
507,251 580,824
Accumulated depreciation.............................. (170,982) (179,274)
--------- ---------
$ 336,269 $ 401,550
========= =========
</TABLE>
Property and equipment are stated at Historical Red Lion's carrying value
at the date of contribution, plus additions, at cost, made subsequent to the
contribution. Additions and improvements are capitalized at cost, including
interest costs incurred during construction. Normal repairs and maintenance are
charged to expense as incurred. Upon the sale or retirement of property and
equipment, the cost and related accumulated depreciation and amortization are
removed from the respective accounts and the resulting gain or loss, if any, is
included in income.
F-9
<PAGE> 16
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Base stock (linens, china, silverware and glassware) is depreciated to 50%
of its initial cost on a straight-line basis over three years. Subsequent
replacements are expensed when placed in service. The carrying value of base
stock is included in furnishings and equipment.
Depreciation is computed on a straight-line basis using the following
estimated useful lives:
<TABLE>
<S> <C>
Building and improvements.................... 10 to 40 years
Furnishings and equipment.................... 5 to 15 years
</TABLE>
Investment in and Advances to Unconsolidated Joint Ventures
The Company is a partner in three joint ventures which are accounted for on
the equity method of accounting. The Company's equity in and advances to these
joint ventures are shown under the caption "Investment in and Advances to
Unconsolidated Joint Ventures" in the consolidated balance sheets. Because the
Company manages these joint ventures, they are accounted for as managed hotels,
and therefore, the operating revenues, expenses and current assets and current
liabilities of the hotels are included in the consolidated financial statements.
Profits and losses of these joint ventures are allocated in accordance with
the joint venture agreements. The Company's share of the income or losses of the
joint ventures (after management fee income) is recorded under the caption
"Equity in Earnings of Unconsolidated Joint Ventures" in the consolidated
statements of income. If a joint venture experiences operating losses which
reduce the other joint venture partner's equity to a zero balance, the loss
which would otherwise be attributable to the other joint venturer is absorbed
within the Company's consolidated operating results.
Summarized financial information for the unconsolidated joint ventures,
excluding the current assets and current liabilities and operating revenues and
expenses included in the Company's consolidated financial statements, is as
follows (in thousands and unaudited):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
ASSETS
Property and equipment, net............................. $ 35,263 $ 36,674
Goodwill, net........................................... 678 661
Deferred loan costs..................................... 541 559
-------- --------
$ 36,482 $ 37,894
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Net working capital..................................... $ 1,741 $ 292
Long-term debt, excluding current portion............... 21,841 24,778
Company advances........................................ 27,384 27,720
Partners' deficit....................................... (14,484) (14,896)
-------- --------
$ 36,482 $ 37,894
======== ========
</TABLE>
F-10
<PAGE> 17
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TEN MONTHS NINE MONTHS
ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Revenues (payments from the Company representing gross
operating profit, net of management fees)............. $2,729 $7,793
Expenses (principally depreciation and interest on
outside debt and Company advances).................... 3,276 7,753
------ ------
Net..................................................... $ (547) $ 40
====== ======
</TABLE>
Goodwill
Historical Red Lion acquired interests in certain hotels, motor inns and
supporting auxiliary enterprises in 1985. Goodwill resulted from the acquisition
and represents the excess of purchase price over the fair value of net assets
acquired. Goodwill relates primarily to the hotels contributed to the Company by
Historical Red Lion and is being amortized on a straight-line basis over its
estimated useful life of approximately 40 years. Amortization expense was
$301,000 and $548,000 (unaudited) for the ten months ended December 31, 1995 and
nine months ended September 30, 1996, respectively. Accumulated amortization
aggregated $7,219,000 and $7,767,000(unaudited) at December 31, 1995 and
September 30, 1996, respectively.
Deferred Loan Costs
Deferred loan costs incurred in connection with the Company's indebtedness
are included in other assets, net, and are amortized over the life of the
associated debt.
Accrued Expenses
Accrued expenses include the following items (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
Accrued payroll and related costs....................... $22,253 $21,500
Accrued interest........................................ 2,311 2,203
Other................................................... 12,633 18,454
------- -------
$37,197 $42,157
======= =======
</TABLE>
Other Long-Term Obligations
The Company provides for the uninsured portions of medical, property,
liability and workers compensation claims. Such costs are estimated each year
based on historical claims data relating to operations. While actual results may
vary from estimates, the Company maintains stop-loss insurance to minimize the
effect of large claims on financial results. The long-term portion of accrued
claims costs relates primarily to general liability and workers compensation
claims which are not expected to be paid within one year and is reflected in
other long-term obligations.
The Company's retirement savings plan includes a non-qualified Supplemental
Employee Retirement Plan ("SERP") designed to supplement key employees whose
benefits would otherwise be reduced due to certain statutory limits of a 401(k)
plan. In addition, the Chief Executive Officer of the Company has entered into a
separate supplemental income retirement agreement with the Company. Both of
these obligations are reflected in long-term obligations.
F-11
<PAGE> 18
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company utilizes the liability method to account for income taxes.
Under the liability method, deferred taxes are provided for the effects of
temporary differences between the financial statement and tax bases of assets
and liabilities.
Property Indirect Expenses
Property indirect expenses include undistributed property expenses for
selling, general and administrative, utilities, repairs and maintenance and an
allocation of certain corporate services (such as marketing, legal, tax and
accounting services) related to the operation of the properties.
Other Costs
Other costs include corporate administrative and general expenses, property
taxes, insurance, leases and other miscellaneous costs.
Payments Due to Owners of Managed Hotels
Payments due to owners of managed hotels is analogous to rent owed to
outside owners due to the nature of the management contracts and the control the
Company has over operations. The amounts shown in the consolidated statement of
income are net of management fee income of $4,994,000 and $9,340,000 (unaudited)
earned by the Company for the ten months ended December 31, 1995 and nine months
ended September 30, 1996, respectively.
Joint Venturers' Interests
The Company is a partner in eight joint ventures, each of which owns a
separate hotel. The assets and liabilities of five of the eight joint ventures
are fully consolidated due to the Company's control of the ventures. The other
joint ventures are accounted for on the equity method of accounting (see
"Investment in Unconsolidated Joint Ventures"). The caption "joint venturers'
interests" represents the net equity attributable to the joint venturers'
interests, including their share of income, losses, distributions and
contributions.
Profits and losses of each joint venture are allocated in accordance with
the joint venture agreement. If a joint venture experiences operating losses
which reduce the other joint venture partner's equity to a zero balance, the
loss which would otherwise be attributable to the other joint venturer is
absorbed within the Company's consolidated operating results.
Earnings per Share and Stock Options
Earnings per share is computed based on the weighted average number of
common shares outstanding during the period. Common stock equivalents have not
been included in the earnings per share calculation since their effect is
immaterial.
Impairment of Long-Lived Assets
In March 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS No. 121), "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." Management evaluates its ability
to recover the recorded value of long-lived assets such as property and
equipment, goodwill, investments in and advances to unconsolidated joint
ventures and deferred loan costs at least annually, unless events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable. If the sum of projected undiscounted future cash flows is less than
the carrying amount of the asset, an impairment loss would be recognized to the
extent that the carrying amount of the asset differs
F-12
<PAGE> 19
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
from its fair value measured on a discounted cash flow basis. No impairment
losses were recorded for the ten months ended December 31, 1995 or the nine
months ended September 30, 1996.
3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," effective January 1, 1996. SFAS No. 123 defines a fair value
based method of accounting for employee stock options or similar instruments and
permits companies to adopt that method of accounting for all of their employee
stock compensation plans. However, it also allows a company to continue to
measure compensation cost for those plans using the intrinsic value based method
of accounting prescribed by APB Opinion No. 25 ("APB No. 25"), "Accounting for
Stock Issued to Employees." The Company had elected to continue to measure
compensation cost in conformity with APB No. 25 and to make pro forma
disclosures of net income and earnings per share in its annual report on Form
10-K for the year ended December 31, 1996, as if the fair value based method of
accounting defined in SFAS No. 123 had been applied. However, under the terms of
the Merger Agreement with Doubletree, which was consummated during the fourth
quarter of 1996, all outstanding vested and unvested stock options were
converted into the right to receive cash and common stock of Doubletree and
canceled.
4. LONG-TERM DEBT AND CREDIT FACILITIES
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
Term loan, LIBOR plus 2% (8.0% at December 31, 1995 and
7.7% at September 30, 1996) payable through 2002....... $133,750 $123,869
Mortgages, variable rates (7.0% - 8.3% at December 31,
1995 and 6.5% - 7.0% at September 30, 1996) payable
through 1998........................................... 84,900 84,418
Note payable, 8.69%, payable through 2022................ 4,717 5,019
-------- --------
223,367 213,306
Current portion of long-term debt........................ (7,759) (48,620)
-------- --------
Long-term debt, net of current portion................... $215,608 $164,686
======== ========
</TABLE>
The annual principal requirements for the five years subsequent to
September 30, 1996 are as follows (in thousands and unaudited):
<TABLE>
<S> <C>
1997............................................. $ 48,620
1998............................................. 60,650
1999............................................. 20,000
2000............................................. 20,000
2001............................................. 29,500
Thereafter....................................... 34,536
--------
$213,306
========
</TABLE>
The Company has available a $130 million credit line facility of which $80
million is available for acquisitions and $50 million is available for working
capital requirements. The credit line facility has a term of seven years. The
term loan and credit line facility (collectively the "Credit Facility") carry a
variable interest rate based on LIBOR plus 2% (8.0% at December 31, 1995 and
7.5% at September 30, 1996). Quarterly mandatory prepayments which increase over
the term of the Credit Facility are required. In addition, in
F-13
<PAGE> 20
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
March of each year a mandatory prepayment of the Credit Facility is required in
an amount equal to 50% of annual excess cash flow (as defined in the credit
agreement) for the prior fiscal year. The $80.0 million available for
acquisitions is anticipated to be utilized by the Company to finance the
addition of hotels to the Red Lion chain through acquisitions, management
contracts, joint ventures or leases. At September 30, 1996, there was no
outstanding balance on the credit line facility. All debt and credit facilities
are secured by the hotels owned by the Company or by its joint venture
interests.
The Company's credit facilities contain covenants which, among other
things, prohibit the payment of cash dividends, require certain levels of
tangible net worth and require the maintenance of debt coverage, interest
coverage, leverage and debt-to-equity ratios. As of December 31, 1995, the
Company was in compliance with these covenants.
Interest Rate Swap Agreements
The Company enters into interest rate swap agreements in order to reduce
its exposure to interest rate fluctuations. The agreements have effectively
converted floating rate debt, which is tied to LIBOR, to fixed rates.
Accordingly, the net interest received or paid on the interest rate swap is
recorded as an adjustment to interest expense.
At December 31, 1995 and September 30, 1996, the Company had three interest
rate swap agreements outstanding which have substantially converted $75 million
of debt from floating LIBOR based rates to fixed rates ranging from 5.19% to
5.57%. The agreements expire from September 1997 to March 1998. Interest income
earned by the Company relating to interest rate swap agreements for the ten
months ended December 31, 1995 and nine months ended September 30, 1996, was
$215,000 and $49,000 (unaudited), respectively, and is included as an adjustment
to interest expense.
These agreements are with major commercial banks and management does not
anticipate a credit loss due to nonperformance.
5. LEASES
Certain hotels are located on leased land. Certain leases contain rental
provisions and renewal options which are based on a percentage of revenues,
changes in the Consumer Price Index or changes in property values. All land
leases extend over the remaining estimated useful lives of the buildings
situated thereon. The Company also leases certain office space and equipment
under operating leases. The Company leases 17 hotels (Leased Hotels) from the
Partnership. The Leased Hotels are leased for an initial term of 15 years. The
Company may extend the lease on a hotel-by-hotel basis for five additional
five-year periods at comparable terms. Total land, office and equipment and
Leased Hotels rent expense was $6,676,000 and $12,588,000 (unaudited) for the
ten months ended December 31, 1995 and nine months ended September 30, 1996,
respectively. Future minimum rental payments required under land, office and
equipment leases and Leased Hotels for the five years subsequent to September
30, 1996 are as follows (in thousands and unaudited):
<TABLE>
<S> <C>
1997..................................... $ 16,479
1998..................................... 16,244
1999..................................... 16,061
2000..................................... 16,027
2001..................................... 15,997
Thereafter............................... 151,491
--------
$232,299
========
</TABLE>
F-14
<PAGE> 21
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. EMPLOYEE BENEFIT PLANS
The Company has a defined contribution 401(k) retirement plan for all full
time, non-union employees who have completed one year of service and who have
attained the age of 21 years. Under the 401(k) plan, the Company contributes
amounts equal to each participant's elected contributions up to 6% of eligible
compensation. Pension expense under this plan was $723,000 and $2,033,000
(unaudited) for the ten months ended December 31, 1995 and nine months ended
September 30, 1996, respectively.
The Company also has a non-qualified supplemental employee retirement plan.
The SERP was designed to complement the 401(k) plan by restoring benefits
otherwise lost by certain employees due to the statutory limits in the 401(k)
plan. The pension expense under the SERP was $80,000 and $167,000 (unaudited)
for the ten months ended December 31, 1995 and nine months ended September 30,
1996, respectively.
In July 1995, the Company adopted the 1995 Equity Participation Plan (the
"Incentive Plan") which provides for the issuance of incentive or nonqualified
stock options, stock appreciation rights and other awards to key employees,
officers, consultants and non-employee directors at the discretion of the
Compensation Committee. The vesting period is determined at the date of grant
and generally ranges from zero to five years beginning on the date of grant. The
following table summarizes stock option transactions:
<TABLE>
<CAPTION>
SHARES UNDER OPTION PRICE
OPTION PER SHARE
------------ ------------------
<S> <C> <C>
Options outstanding at February 28, 1995............. -- --
Options granted, at fair market value on date of
grant.............................................. 2,250,833 $19.00 to $21.50
Options forfeited.................................... (15,000) $19.00
---------
Options outstanding at December 31, 1995............. 2,235,833 $19.00 to $21.50
Options granted, at fair market value on date of
grant (unaudited).................................. 170,000 $18.25 to $22.875
Options exercised (unaudited)........................ (2,500) $19.00
Options forfeited (unaudited)........................ (161,000) $19.00
---------
Options outstanding at September 30, 1996
(unaudited)........................................ 2,242,333 $18.25 to $22.875
=========
</TABLE>
At December 31, 1995 and September 30, 1996, there were 696,667 and
1,171,208 (unaudited) options exercisable and 1,064,167 and 1,055,167
(unaudited) shares available for grant under the Incentive Plan, respectively.
7. RELATED PARTY TRANSACTIONS
Prior to the Formation the Santa Barbara Hotel was operated and managed by
Historical Red Lion. Management fees paid to Historical Red Lion were $385,000
for the five months ended July 31, 1995 and are included in other costs.
Investments in and advances to unconsolidated joint ventures includes two
notes receivable from one joint venture in the amounts of $1,500,000 and
$2,009,000 at December 31, 1995 and $1,405,000 and $5,603,000 (unaudited) at
September 30, 1996. The notes bear interest at a fixed rate of 10.0% and prime
plus 1.0% (9.5% at December 31, 1995 and 9.25% at September 30, 1996),
respectively. The $1,405,000 note matures on November 21, 2003. The $5,603,000
note has an unspecified term and is to be repaid based on cash flow available
for distribution, as defined. In addition, other assets, net, includes a note
receivable from a joint venture partner in the amount of $1,628,000 and
$1,759,000 (unaudited) at December 31, 1995 and September 30, 1996,
respectively, which bears interest at a rate based on prime (10.5% at December
31, 1995 and 10.2% at September 30, 1996) and has an unspecified term with
repayment amounts based on cash flow available for distribution, as defined. In
addition, accounts receivable-affiliates includes $4,120,000 and
F-15
<PAGE> 22
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$2,821,000 (unaudited) at December 31, 1995 and September 30, 1996,
respectively, receivable from the management contract hotels and other related
parties other than Red Lion Inns Limited Partnership.
The Company leases the Leased Hotels from the Partnership. Annual lease
payments aggregate $15,000,000. Lease expense for the period from the Formation
through December 31, 1995 and for the nine months ended September 30, 1996
totaled $6,250,000 and $11,250,000 (unaudited), respectively.
Transactions with Red Lion Inns Limited Partnership
A wholly owned subsidiary of the Company serves as general partner and owns
1.99 percent of the MLP. The general partner is responsible for management and
administration of the MLP. In accordance with the partnership agreement, the MLP
reimburses the Company for related administrative costs.
Under a management agreement, the MLP pays base and incentive management
fees to the Company. Base management fees payable to the Company are equal to 3%
of the annual gross revenues of the MLP hotels. Incentive management fees
payable to the Company are equal to the sum of 15% of adjusted gross operating
profit up to $36 million (operating profit target) and 25% of adjusted gross
operating profit in excess of the operating profit target. Adjusted gross
operating profit is gross operating profit less base management fees.
Incentive management fees are only payable to the extent that cash flow
available for distributions and incentive management fees exceeds the amount
required to pay the annual priority distribution to the MLP's limited partners.
Cash flow is defined as pre-tax income (or loss) before noncash charges
(primarily depreciation and amortization) and incentive management fees, but
after the reserve for capital improvements and principal payments on certain
debt.
The Company also charges the MLP hotels for their pro rata share of support
services such as computer, advertising, public relations, promotional and sales
and central reservation services.
All MLP personnel are employees of the Company. All costs for services of
such employees are reimbursed to the Company by the MLP. These costs include
salaries, wages, payroll taxes and other employee benefits. Additionally,
auxiliary enterprises owned by the Company sell operating supplies, furnishings
and equipment to the MLP.
The aggregate amounts, excluding personnel related expenses, charged by the
Company to the MLP under the arrangements described above are as follows (in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS
TEN MONTHS ENDED
ENDED SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
Management fees....................................... $3,614 $6,906
Support services...................................... 1,732 5,211
Purchases from auxiliary enterprises.................. 6,064 8,691
General Partner administrative expenses............... 197 411
</TABLE>
Included in accounts receivable-affiliates and due from affiliate is
$19,078,000 and $19,675,000 (unaudited) at December 31, 1995 and September 30,
1996, respectively, representing amounts receivable from the MLP primarily for
advances made by the Company and Historical Red Lion for capital improvements
which exceeded the 3% reserve established in accordance with the provisions of
the management agreement. Such amounts are presented net of current assets and
current liabilities related to the managed MLP hotels of $2,194,000 and
$2,490,000 (unaudited) at December 31, 1995 and September 30, 1996,
respectively. The current balance of $2,823,000 and $1,841,000 (unaudited) at
December 31, 1995 and September 30, 1996, respectively, is included in accounts
receivable-affiliates. The remaining balance of
F-16
<PAGE> 23
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$16,255,000 and $17,834,000 (unaudited) at December 31, 1995 and September 30,
1996, respectively, is classified as due from affiliate. Amounts receivable from
the MLP earn interest at the rate of prime plus 0.5% (9.0% at December 31, 1995
and 8.75% at September 30, 1996).
Accounts receivable-affiliates and due from affiliate also include certain
other advances to and deferred incentive management fees receivable from the
MLP. A total of $3,726,000 was advanced to the MLP to fund distributions during
the first 36 months of the MLP's operations. The advance is non-interest
bearing, has an unspecified term and is to be repaid out of available cash flow
or refinancing proceeds. Additionally, non-interest bearing deferred incentive
management fees receivable of $6,000,000 were contributed to the Company in the
Formation. At December 31, 1995, $5,153,000 and $847,000 are classified as
accounts-receivable-affiliates and due from affiliate, respectively. The Company
received $5,299,000 (unaudited) of such fees during the nine months ended
September 30, 1996. The remaining balance of $701,000 (unaudited) is classified
as due from affiliate at September 30, 1996.
Summarized income statement information for the MLP is as follows (in
thousands and unaudited):
<TABLE>
<CAPTION>
AUGUST 1 NINE MONTHS
THROUGH ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Revenues................................................ $16,884 $31,765
Net income.............................................. 2,364 4,146
</TABLE>
Revenues of the MLP represent the gross operating profit (operating
revenues less operating expenses) of the MLP hotels as this amount is similar to
gross rent received from the Company to manage the hotels. As discussed in Note
1, the operating revenues and expenses of the MLP hotels are consolidated.
Consolidation of the operating revenues and expenses of the MLP does not affect
the Company's cash flow or net income except to the extent that management fees
were earned.
Summarized balance sheet information for the MLP, not included in the
accompanying consolidated balance sheets (including amounts due to the Company)
is as follows (in thousands and unaudited):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Cash.................................................... $ 229 $ 1,405
Noncurrent assets, primarily property and equipment..... 166,038 167,516
Current liabilities..................................... 29,094 24,917
Long-term obligations, net of current portion........... 117,266 126,600
Deferred income taxes................................... 1,673 2,010
Partners' equity........................................ 18,234 15,394
</TABLE>
F-17
<PAGE> 24
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. INCOME TAXES
Income tax benefit (expense) consists of the following (in thousands):
<TABLE>
<CAPTION>
NINE MONTHS
TEN MONTHS ENDED
ENDED SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
Current
Federal............................................... $(3,928) $(16,391)
State................................................. (842) (3,083)
Deferred
Federal............................................... 7,767 (2,257)
State................................................. 1,110 (565)
------- --------
Total tax benefit (expense)........................... $ 4,107 $(22,296)
======= ========
</TABLE>
The effective tax rate varies from the statutory rate due to the following
(in thousands):
<TABLE>
<CAPTION>
NINE MONTHS
TEN MONTHS ENDED
ENDED SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
Expected tax expense at federal statutory rates......... $(4,007) $(19,684)
Deferred income tax benefit due to the difference
between the book and tax bases of net assets
contributed........................................... 9,736 --
Nondeductible Formation and Offering Costs.............. (879) --
State income taxes...................................... (586) (2,812)
Other................................................... (157) 200
------- --------
Total tax benefit (expense)................... $ 4,107 $(22,296)
======= ========
</TABLE>
Since Historical Red Lion was a partnership, no deferred tax benefits had
been provided on the net assets contributed to the Company. In accordance with
SFAS No. 109, "Accounting for Income Taxes," the Company recorded net deferred
tax assets of $1.2 million and $8.5 million related to the contribution of the
Santa Barbara Joint Venture and the Formation, respectively.
F-18
<PAGE> 25
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the net deferred income tax assets are as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, 1996
1995 (UNAUDITED)
------------ -------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Basis difference in joint ventures.................... $ 9,720 $ 9,900
Accrued expenses...................................... 5,851 5,153
Payroll related costs and other....................... 1,734 1,834
------- --------
Total deferred tax assets..................... 17,305 16,887
DEFERRED TAX LIABILITIES:
Basis difference in property and equipment............ (8,428) (12,173)
------- --------
Net deferred tax asset................................ $ 8,877 $ 4,714
======= ========
Net deferred tax assets are presented as follows (in
thousands):
Current deferred tax asset.............................. $ 2,306 $ 2,616
Noncurrent deferred tax asset........................... 6,571 2,098
------- --------
Net deferred tax asset........................ $ 8,877 $ 4,714
======= ========
</TABLE>
9. INSURANCE PROCEEDS (UNAUDITED)
On February 8, 1996, three of the Company's hotels were evacuated due to
flooding in northwestern Oregon and southwestern Washington. Two of the hotels
were damaged by flood waters, have reopened and have been repaired. The third
hotel was undamaged and reopened quickly. As the Company maintains flood and
business interruption insurance, management does not believe that the ultimate
outcome will have a material adverse effect on the results of operations or
financial position of the Company. Moreover, as the Company's flood insurance
policy covers the replacement cost of the damaged property, insurance proceeds
will likely exceed the net book value of the underlying property, resulting in
the recognition of gains when such proceeds are received.
10. EXPENSES RESULTING FROM THE FORMATION AND OFFERING
Expenses resulting from the Formation and Offering include certain
Formation costs of $1,314,000 and expenses resulting from the Offering of
$11,348,000 and $2,000,000 related to the termination of an incentive unit plan
and assumption of the obligation of a supplemental income retirement agreement,
respectively, for the ten months ended December 31, 1995 and seven months ended
September 30, 1995.
11. COMMITMENTS AND CONTINGENCIES
At September 30, 1996, the Company had commitments relating to capital
improvement projects aggregating approximately $10,395,000 (unaudited).
In connection with the Formation, the Company agreed to indemnify the
Partnership with respect to any potential obligations arising out of the
transfer to the Company of certain assets and the assumption of certain
liabilities. Management is not aware of any such obligations.
The Company is party to litigation arising in the ordinary course of
business. In the opinion of management, these actions will not have a material
adverse effect, if any, on the Company's financial position, results of
operations or liquidity.
F-19
<PAGE> 26
RED LION HOTELS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments and the
methods and assumptions used to estimate such fair values at December 31, 1995,
are as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
--------- ----------
<S> <C> <C>
Accounts receivable-affiliates (Note 7)...................... $ 12,096 $ 11,990
Due from affiliate (Note 7).................................. 20,828 20,080
Long-term debt............................................... (223,367) (223,367)
Interest rate swaps.......................................... -- 24
</TABLE>
The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses and other long-term obligations is a
reasonable approximation of their fair value.
The carrying value of accounts receivable-affiliates approximates fair
value due to the short-term nature of the receivable. The carrying value of due
from affiliate includes non-interest bearing receivables at December 31, 1995
aggregating $4,573,000, as discussed in Note 7. The fair value of due from
affiliate is determined using estimated rates for similar notes, based on
anticipated repayment dates. Based on borrowing rates currently quoted by
financial institutions for debt with similar terms and remaining maturities, the
carrying value of long-term debt approximates fair value.
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
The quarterly results of the Company are not comparable since the quarter
ended June 30, 1995 only includes the operations of one joint venture
contributed by Historical Red Lion in March 1995. The quarter ended September
30, 1995 includes the operations of that joint venture for the quarter as well
as the results of the Company subsequent to the Formation. The quarter ended
December 31, 1995 was the first full quarter of operations subsequent to the
Formation. Summarized quarterly financial data are as follows (in thousands,
except share and per share amounts, room and occupancy statistics):
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1996 1996 1996
-------- ------------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues................. $ 2,764 $ 89,274 $ 122,074 $ 120,650 $ 137,317 $ 141,838
Operating income......... $ 1,800 $ 4,290 $ 13,779 $ 14,384 $ 24,343 $ 29,356
Net income............... $ 220 $ 7,902 $ 6,269 $ 6,448 $ 12,388 $ 15,108
Earnings per share....... $ 2,200 $ 0.38 $ 0.20 $ 0.21 $ 0.40 $ 0.48
Weighted average common
shares outstanding..... 100 20,875,033 31,312,500 31,312,500 31,312,500 31,312,600
Occupancy percentage..... -- 80.7% 65.5% 66.6% 75.3% 79.3%
Average room rate........ $ -- $ 76.93 $ 73.51 $ 78.16 $ 81.12 $ 82.39
</TABLE>
14. SUBSEQUENT EVENT (UNAUDITED)
Effective November 8, 1996, the Company became a wholly owned subsidiary of
Doubletree pursuant to a merger transaction in which a wholly owned subsidiary
of Doubletree was merged with and into the Company. The purchase price for
acquisition of all of the outstanding common stock of the Company was paid in a
combination of approximately $688 million of cash and approximately 7.4 million
shares of Doubletree common stock.
F-20
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
To the Partners of Red Lion, a California Limited Partnership:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Red Lion, a California Limited Partnership
("Historical Red Lion"), and subsidiaries for the seven month period ended July
31, 1995. These financial statements are the responsibility of Historical Red
Lion's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Historical Red Lion and subsidiaries for the seven month period ended
July 31, 1995, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Portland, Oregon
February 24, 1996
F-21
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
To the Partners of Red Lion, a California Limited Partnership:
We have audited the accompanying consolidated balance sheet of Red Lion, a
California Limited Partnership ("Historical Red Lion"), and subsidiaries as of
December 31, 1994, and the related consolidated statements of operations,
partners' equity and cash flows for each of the two years in the period ended
December 31, 1994. These financial statements are the responsibility of
Historical Red Lion's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Historical
Red Lion and subsidiaries as of December 31, 1994, and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, Historical
Red Lion has given retroactive effect to the changes in accounting for their
investment in two joint ventures and its accounting for joint venturers'
interests. Also, as discussed in Note 1 to the consolidated financial
statements, effective January 1, 1993, Historical Red Lion changed their
accounting method for measuring impairment of hotel properties.
ARTHUR ANDERSEN LLP
Portland, Oregon
February 7, 1995
F-22
<PAGE> 29
HISTORICAL RED LION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................................................... $ 27,804
Short-term debt securities.................................................... 40,891
Accounts receivable, net...................................................... 17,486
Accounts receivable, affiliates............................................... 13,138
Inventories................................................................... 6,361
Prepaid expenses and other current assets..................................... 3,729
--------
Total current assets.................................................. 109,409
--------
PROPERTY AND EQUIPMENT, NET..................................................... 514,807
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES..................................... 14,281
OTHER ASSETS:
Goodwill, net................................................................. 36,453
Other, net.................................................................... 18,394
--------
Total assets.......................................................... $693,344
========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.............................................................. $ 19,290
Accrued expenses.............................................................. 33,007
Current portion of long-term debt............................................. 108,358
--------
Total current liabilities............................................. 160,655
--------
LONG-TERM DEBT, EXCLUDING CURRENT PORTION..................................... 388,944
OTHER LONG-TERM OBLIGATIONS................................................... 7,682
JOINT VENTURERS' INTEREST..................................................... 905
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4 & 5)
PARTNERS' EQUITY.............................................................. 135,158
--------
Total liabilities and partners' equity................................ $693,344
========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-23
<PAGE> 30
HISTORICAL RED LION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
SEVEN MONTHS 31,
ENDED JULY 31, ---------------------
1995 1994 1993
-------------- -------- --------
<S> <C> <C> <C>
REVENUES:
Rooms................................................. $161,834 $257,699 $242,193
Food and beverage..................................... 92,570 159,154 156,242
Other................................................. 27,802 46,035 41,582
-------- -------- --------
Total revenues................................ 282,206 462,888 440,017
-------- -------- --------
OPERATING COSTS AND EXPENSES:
Departmental direct expenses:
Rooms.............................................. 39,670 64,121 60,785
Food and beverage.................................. 73,269 124,070 123,518
Other.............................................. 10,592 17,586 16,935
Property indirect expenses............................ 60,342 99,673 95,118
Other costs........................................... 10,787 19,570 18,346
Depreciation and amortization......................... 17,053 31,313 31,144
Payments due to owners of managed hotels.............. 32,073 42,841 41,722
-------- -------- --------
OPERATING INCOME........................................ 38,420 63,714 52,449
EQUITY IN EARNINGS OF UNCONSOLIDATED JOINT VENTURES..... 1,614 1,327 1,213
OTHER EXPENSE:
Interest expense, net................................. (20,316) (32,737) (30,065)
Loss on sale of property.............................. -- -- (1,701)
-------- -------- --------
Total other expense........................... (20,316) (32,737) (31,766)
-------- -------- --------
INCOME BEFORE JOINT VENTURERS' INTERESTS AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE........................... 19,718 32,304 21,896
JOINT VENTURERS' INTERESTS.............................. 411 (1,321) (323)
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE.... 20,129 30,983 21,573
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
(NOTE 1).............................................. -- -- (29,878)
-------- -------- --------
NET INCOME (LOSS)....................................... $ 20,129 $ 30,983 $ (8,305)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-24
<PAGE> 31
HISTORICAL RED LION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
AND SEVEN MONTHS ENDED JULY 31, 1995
(In thousands)
<TABLE>
<CAPTION>
PARTNERS' ACCUMULATED
CAPITAL DEFICIT TOTAL
--------- ----------- --------
<S> <C> <C> <C>
BALANCE, December 31, 1992................................ $180,000 $(67,520) $112,480
Net loss.................................................. -- (8,305) (8,305)
-------- -------- --------
BALANCE, December 31, 1993................................ 180,000 (75,825) 104,175
Net income................................................ -- 30,983 30,983
-------- -------- --------
BALANCE, December 31, 1994................................ 180,000 (44,842) 135,158
Net income................................................ -- 20,129 20,129
-------- -------- --------
BALANCE, July 31, 1995.................................... $180,000 $(24,713) $155,287
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-25
<PAGE> 32
HISTORICAL RED LION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
SEVEN MONTHS YEARS ENDED
ENDED DECEMBER 31,
JULY 31, --------------------
1995 1994 1993
------------ -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $ 20,129 $ 30,983 $ (8,305)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of accounting change................ -- -- 29,878
Loss on sale of property.............................. -- -- 1,701
Income attributable to joint venturers' interests..... (411) 1,321 323
Equity in earnings of unconsolidated joint ventures... (1,614) (1,327) (1,213)
Depreciation and amortization......................... 16,316 31,313 31,144
Amortization of other assets (principally deferred
loan costs)......................................... 737 1,927 1,612
Decrease (increase) in accounts receivable, net....... (1,185) (2,217) 72
Increase in accounts receivable, affiliates........... (1,441) (1,545) (6,253)
Decrease (increase) in inventories.................... 435 (520) 714
Decrease (increase) in prepaid expenses and other
current assets...................................... (1,305) 89 (249)
Increase (decrease) in accounts payable, accrued
expenses and other long-term obligations............ (4,548) 4,920 5,139
-------- -------- --------
Total adjustments........................................ 6,984 33,961 62,868
-------- -------- --------
Net cash provided by operating activities........ 27,113 64,944 54,563
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment....................... (15,858) (23,959) (20,002)
Proceeds from sale of property and equipment............. -- -- 1,190
Distributions to joint venturers......................... (252) (1,241) (467)
Purchase of short-term debt securities................... (19,694) (44,307) --
Proceeds from sales of short-term debt securities........ 60,585 3,416 --
Other investing activities, net.......................... 1,751 72 1,911
-------- -------- --------
Net cash (used in) provided by investing
activities..................................... 26,532 (66,019) (17,368)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings....................... $ 1,223 $ 1,892 $ 50,430
Net increase (decrease) in revolving lines of credit..... -- 72,000 (14,148)
Repayment of long-term debt.............................. (13,839) (45,523) (71,550)
Other financing activities............................... -- (768) (2,053)
-------- -------- --------
Net cash (used in) provided by financing
activities..................................... (12,616) 27,601 (37,321)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....... 41,029 26,526 (126)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............. 27,804 1,278 1,404
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD................... $ 68,833 $ 27,804 $ 1,278
======== ======== ========
</TABLE>
F-26
<PAGE> 33
HISTORICAL RED LION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
SEVEN MONTHS YEARS ENDED
ENDED DECEMBER 31,
JULY 31, --------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest,
net of capitalized portion............................ $ 23,633 $ 28,368 $ 26,738
NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property for noncash consideration........... $ -- $ -- $ 1,500
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-27
<PAGE> 34
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Red Lion, a California Limited Partnership ("Historical Red Lion"),
acquired interests in certain hotels, motor inns and supporting auxiliary
enterprises on April 10, 1985, which were previously operating as Red Lion Inns
and Thunderbird Motor Inns. One of the previous principal owners contributed his
ownership interests in exchange for a limited partnership interest in Historical
Red Lion.
On April 14, 1987, Historical Red Lion sold its interest in 10 hotels to
Red Lion Inns Limited Partnership, a publicly traded limited partnership (the
"MLP"). Red Lion Properties, Inc., a wholly-owned subsidiary of Historical Red
Lion, is the general partner of the MLP. Since completion of this sale, the
MLP's limited partners have had an effective 98.01% ownership interest in the
hotels with the general partner retaining the remaining 1.99% ownership
interest. Historical Red Lion operates the MLP's hotels under a management
agreement.
Basis of Presentation
The accompanying consolidated financial statements include Historical Red
Lion, its wholly-owned subsidiaries and five of its seven partially owned joint
ventures. Historical Red Lion consolidates those entities which it controls.
Historical Red Lion is the managing general partner, controls and owns 75
percent, 66.67 percent, 66.67 percent, 51 percent and 50 percent of the joint
venture interests of the five consolidated joint ventures. Historical Red Lion
consolidates one of its 50 percent owned joint ventures because Historical Red
Lion controls the joint venture through contractual arrangements, has the
majority of capital at risk through its significant ownership percentage and has
guaranteed 100 percent of the joint venture's third party debt. The remaining
two joint ventures are accounted for using the equity method of accounting. Each
of the seven joint ventures is a single purpose venture whose only business is
the operation of one Red Lion hotel.
Operating revenues and expenses and current assets and current liabilities
of the MLP and other management contract hotels (including the two
unconsolidated joint ventures which are also managed by Historical Red Lion) are
included in the accompanying consolidated financial statements because the
operating responsibilities associated with these hotels are substantially the
same as those for owned hotels. The operating profit net of management fee
income for managed hotels is recorded as an expense in the accompanying
consolidated statements of operations. The consolidated financial statements
also include the following amounts related to managed hotels (including the two
unconsolidated joint ventures which are also managed by Historical Red Lion):
current assets and current liabilities of $8,121,000 at December 31, 1994;
operating revenues of $155,668,000, $166,283,000 and $110,684,000 for the years
ended December 31, 1993 and 1994 and for the seven month period ended July 31,
1995, respectively; and operating expenses of $107,801,000, $113,131,000 and
$72,216,000 for the years ended December 31, 1993 and 1994 and for the seven
month period ended July 31, 1995, respectively.
One wholly-owned hotel was acquired in 1989 subject to a non-recourse
cash-flow mortgage which requires interest payments contingent on achieving
certain levels of performance. Because of the non-recourse and cash flow nature
of the loan, the mortgage has not been recorded as an obligation, and the
property and equipment of the hotel are excluded from the accompanying
consolidated financial statements. The mortgage is in substance a management
contract with a purchase option. Accordingly, the hotel is treated as a
management contract in the accompanying consolidated financial statements.
All significant intercompany accounts and transactions have been eliminated
in consolidation.
F-28
<PAGE> 35
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, certificates
of deposit, time deposits and U.S. government and other short-term securities
with maturities of three months or less when purchased. The carrying amount
approximates fair value because of the short term maturity of these instruments.
Short-Term Debt Securities
Short-term debt securities include treasury bills, commercial paper and
other short-term debt securities with maturities greater than three months when
purchased. All of these securities mature within ten months from December 31,
1994. As the securities are actively traded, Historical Red Lion has classified
these investments as trading securities and these securities are recorded at
market which approximated cost at December 31, 1994.
Accounts Receivable
Accounts receivable are shown net of allowances for doubtful accounts of
$357,000 at December 31, 1994 and approximate fair value.
Inventories
Inventories consist primarily of consumable supplies as well as food and
beverage products held for sale. Inventories are valued at the lower of cost,
determined on a first-in, first-out basis, or market.
Property and Equipment
Property and equipment consist of the following at December 31, 1994 (in
thousands):
<TABLE>
<S> <C>
Land............................................................. $ 70,579
Buildings and improvements....................................... 500,922
Furnishings and equipment........................................ 183,506
Construction in progress......................................... 7,878
---------
762,885
Less allowance for depreciation and amortization................. (248,078)
---------
$ 514,807
=========
</TABLE>
Additions and improvements are capitalized at cost, including interest
costs incurred during construction. There was no capitalized interest during the
seven month period ended July 31, 1995, or during each of the two years ended
December 31, 1994. Normal repairs and maintenance are charged to expense as
incurred. Upon the sale or retirement of property and equipment, the cost and
related accumulated depreciation and amortization are removed from the
respective accounts and the resulting gain or loss, if any, is included in
income.
Base stock (linens, china, silverware and glassware) is depreciated to 50%
of its initial cost on a straightline basis over three years. Subsequent
replacements are expensed when placed in service. The carrying value of base
stock is included in furnishings and equipment as noted above.
Depreciation and amortization of property and equipment were computed on a
straight-line basis using the following estimated useful lives:
<TABLE>
<S> <C>
Buildings....................................................... 40 years
Improvements.................................................... 10-15 years
Furnishings and equipment....................................... 3-15 years
</TABLE>
F-29
<PAGE> 36
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Effective January 1, 1993, Historical Red Lion prospectively changed the
estimated useful lives of its buildings to 40 years from lives averaging 32
years. The change was made to align building lives with actual experience and
common industry practice. The effect of the change was to decrease depreciation
expense for 1993 by approximately $2,600,000.
Effective January 1, 1993, Historical Red Lion changed its accounting
method for measuring impairment of hotel properties from using undiscounted
future cash flows to discounted future cash flows. Historical Red Lion made this
change because it believes this is a preferable method of measuring impairment
of hotel properties. As a result of this change, the 1993 consolidated financial
statements include a reduction in the carrying value of one hotel of $29,878,000
reflected as a cumulative effect of accounting change in the accompanying
consolidated statements of operations for the year ended December 31, 1993. The
reduction in depreciation expense as a result of this change was $994,000 in
1993.
Investment in Unconsolidated Joint Ventures
Historical Red Lion is a partner in two joint ventures that are accounted
for on the equity method of accounting. Historical Red Lion's equity in and
advances to these joint ventures are shown under the caption "Investment in
Unconsolidated Joint Ventures" in the accompanying consolidated balance sheets.
Because Historical Red Lion manages these joint ventures, they are accounted for
as managed hotels, and therefore, the operating working capital of the hotels
are consolidated in the accompanying consolidated balance sheets.
Profits and losses of these joint ventures are allocated in accordance with
the joint venture agreements. Because the hotels are accounted for as managed
hotels, the operating revenues and expenses are consolidated in the accompanying
statements of operations with Historical Red Lion's share of the income or
losses of the joint ventures (after management fee income) recorded under the
caption "Equity in Earnings of Unconsolidated Joint Ventures." If a joint
venture experiences operating losses which reduce the other joint venture
partner's equity to a zero balance, the loss which would otherwise be
attributable to the other joint venturer is absorbed within Historical Red
Lion's consolidated operating results.
Summarized financial information for the unconsolidated joint ventures,
excluding the working capital and operating revenues and expenses which are
consolidated in Historical Red Lion's consolidated financial statements, is as
follows (in thousands and unaudited):
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
ASSETS
Total current assets............................................ $ 470
Property and equipment, net..................................... 24,161
Goodwill, net................................................... 701
Other assets.................................................... 68
--------
$ 25,400
========
LIABILITIES AND PARTNERS' DEFICIT
Total current liabilities....................................... $ 1,076
Long-term debt, excluding current portion....................... 8,913
Historical Red Lion advances.................................... 26,973
Partners' deficit............................................... (11,562)
--------
$ 25,400
========
</TABLE>
F-30
<PAGE> 37
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
SEVEN MONTHS YEARS ENDED
ENDED DECEMBER 31,
JULY 31, -----------------
1995 1994 1993
------------ ------ ------
<S> <C> <C> <C>
Revenues (payments from Historical Red Lion
representing gross operating profit)....... $4,533 $6,642 $5,831
Expenses (principally depreciation and
interest on outside debt and Historical
Red Lion advances)......................... 4,484 6,850 5,817
------ ------ ------
Net income (loss)............................ $ 49 $ (208) $ 14
====== ====== ======
</TABLE>
Goodwill
Goodwill resulted from the April 10, 1985 acquisition and represents the
excess of purchase price over the net fair value of assets acquired and is being
amortized on a straight-line basis over 40 years. Accumulated amortization was
$11,177,000 at December 31, 1994. Management evaluates its accounting for
goodwill impairment, considering such factors as historical and future
profitability, annually, or more frequently when events or changes in
circumstances indicate that the carrying amount of goodwill may not be
recoverable. To perform that review, the Company estimates the sum of expected
future discounted cash flows from operating activities. If the estimated net
cash flows are less than the carrying amount of goodwill, the Company will
recognize an impairment loss in an amount necessary to write down goodwill to a
fair value as determined from expected future discounted cash flows. Management
believes that the goodwill at December 31, 1994 is realizable and the
amortization period is appropriate.
Deferred Loan Costs
Deferred loan costs are included in other assets, net and represent prepaid
mortgage financing fees which are amortized over the life of the associated
mortgages.
Other Assets
Other assets include approximately $2.7 million of costs incurred through
December 31, 1994 related to the initial public offering. This amount was
contributed to Red Lion Hotels, Inc. and netted against the proceeds of such
initial public offering.
Accrued Expenses
Accrued expenses include the following items at December 31, 1994 (in
thousands):
<TABLE>
<S> <C>
Accrued payroll and related costs.................................. $20,682
Accrued interest................................................... 2,676
Other.............................................................. 9,649
-------
$33,007
=======
</TABLE>
Insurance Reserves
Historical Red Lion provides for the uninsured costs of medical, property,
liability and workers compensation claims. Such costs are estimated each year
based on historical claim data relating to operations conducted through December
31, 1994. The long-term portion of accrued claims costs relate primarily to
general liability and workers compensation claims and are reflected in other
long-term obligations in the accompanying consolidated balance sheets.
F-31
<PAGE> 38
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
Historical Red Lion is a limited partnership. Accordingly, no provision is
made for income taxes as taxes on income are the responsibility of the partners.
The allocation of taxable income or loss and depreciation expense to each
partner is based on the terms of the partnership agreement.
Property Indirect Expenses
Property indirect expenses include undistributed property expenses for
selling, general and administrative, utilities, repairs and maintenance, and an
allocation of certain corporate services (such as marketing, legal, tax and
accounting services) related to the operation of the properties.
Other Costs
Other costs include corporate administrative and general expenses, property
taxes, insurance, leases and other miscellaneous costs.
Payments Due to Owners of Managed Hotels
"Payments due to owners of managed hotels" is analogous to rent owed to
outside owners due to the nature of the management contracts and the control
Historical Red Lion has over operations. The amounts shown on the statements of
operations are net of management fee income of $6,145,000 and $10,311,000 for
1993 and 1994, respectively, and $6,395,000 for the seven month period ended
July 31, 1995.
Joint Venturers' Interests
Historical Red Lion is a partner in seven joint ventures, each of which
owns a separate hotel. The assets and liabilities of five of the seven joint
ventures are fully consolidated in the accompanying financial statements. The
other joint ventures are accounted for on the equity method of accounting (see
Investment in Unconsolidated Joint Ventures above). The assets and liabilities
attributable to joint venturers' interests existing at the date of the April 10,
1985 acquisition were valued at historical amounts and were not revalued to
reflect appraised values at that date. The caption "joint venturers' interests"
represents the net equity attributable to the joint venturers' interests,
including their share of income, losses, distributions and contributions.
Profits and losses of each joint venture are allocated in accordance with a
joint venture agreement. If a joint venture experiences operating losses which
reduce the other joint venture partner's equity to a zero balance, the loss
which would otherwise be attributable to the other joint venturer is absorbed
within Historical Red Lion's consolidated operating results.
Prior Year Restatements
In 1994, Historical Red Lion retroactively changed two of its accounting
principles for all years presented in the accompanying consolidated financial
statements as follows:
- In prior years, Historical Red Lion generally absorbed losses
attributable to other joint venturers' interests once the equity of
the other joint venturer was reduced to zero. However, certain
distributions and losses attributable to other joint venturers'
interests were not absorbed by Historical Red Lion if such amounts
were deemed recoverable from the fair value of the joint ventures'
assets. Accordingly, these distributions and losses were reflected
as joint ventures' interests in the consolidated balance sheets. In
1994, Historical Red Lion changed its accounting policy to absorb
all losses and distributions to outside joint venturers once a
partner's equity has been reduced to zero. Historical Red Lion
changed its accounting policy for joint ventures'
F-32
<PAGE> 39
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
interest to more closely align with the accounting treatment
discussed in Emerging Issues Task Force No. 94-2 issued in 1994.
This change decreased income before cumulative effect of accounting
change by $515,000 for the year ended December 31, 1993. The change
also increased accumulated deficit at December 31, 1991 by
approximately $11.8 million.
- Two of Historical Red Lion's 50 percent owned joint ventures, which
had been previously consolidated, are now accounted for on the
equity method. Historical Red Lion's five other joint ventures
continue to be consolidated in the accompanying financial
statements. There was no effect of this change on net income or
partners' equity in any year.
Prior Year Reclassifications
Certain prior year amounts have been reclassified to conform to current
year presentation.
2. LONG-TERM DEBT
Long-term debt at December 31, 1994 consists of the following (in
thousands):
<TABLE>
<S> <C>
Mortgages, secured by hotel properties, variable rates, 7.13% to
10%, payable in varying installments through 1999............... $390,750
Mortgages, secured by hotel properties, fixed rates, 8.75% to 11%,
payable in varying installments through 2008.................... 4,211
Note payable, fixed rate, 8.69%, payable through 2022............. 4,341
Bank revolving credit lines, unsecured............................ --
Term loan, unsecured, variable rate, 8.06%, payable through
1997............................................................ 98,000
--------
497,302
Current portion of long-term debt................................. (108,358)
--------
Long-term debt, excluding current portion............... $388,944
========
</TABLE>
The annual principal requirements for the five years subsequent to December
31, 1994 are as follows (in thousands):
<TABLE>
<S> <C>
1995............................................................ $108,358
1996............................................................ 110,328
1997............................................................ 215,120
1998............................................................ 46,992
1999............................................................ 15,298
Thereafter...................................................... 1,206
--------
$497,302
========
</TABLE>
The current portion of long-term debt at December 31, 1994 includes $87
million related to balloon payments on four mortgages which are due in 1995.
Management believes that these maturities can be satisfied from existing or
future financing resources.
Loan Extension Options
The above presentation of principal payments due for each of the five years
subsequent to December 31, 1994 and thereafter reflects Historical Red Lion's
plan to exercise certain options under the existing loan agreements to extend
the due dates of various loans.
F-33
<PAGE> 40
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Revolving Credit Lines and Term Loan
At December 31, 1993, Historical Red Lion had two revolving credit line
facilities, with a combined total amount available of $105 million, of which
$32,218,000 was outstanding, including amounts due under the cash management
system.
Historical Red Lion's primary credit agreement provided a $100 million
three-year revolving credit line with variable interest rates that varied, at
Historical Red Lion's option, on the bank's prime rate, certificate of deposit
rate or the London Interbank Offering Rate (LIBOR). The weighted average
interest rate for 1993 was 5.4%, with the rate at December 31, 1993, equal to
5.3%. At December 31, 1993, $26 million was outstanding under this line.
The credit agreement, with the same interest rate options, converted to a
three-year term loan on September 1, 1994. At December 31, 1994, $98 million was
outstanding under this term loan. Quarterly principal payments, equal to 2% of
the term loan balance as of September 1, 1994, will be required through 1997 at
which time the remaining principal balance will be due and payable. The weighted
average interest rate for 1994 was 6.92% with the rate at December 31, 1994
equal to 8.06%. Historical Red Lion must maintain, among other things, certain
financial covenants over the term of the loan. As of December 31, 1994,
Historical Red Lion was in compliance with these covenants.
Historical Red Lion also had a $5 million line of credit which was
terminated in 1994.
Historical Red Lion had outstanding letters of credit of $10,762,000 at
December 31, 1994. These letters of credit are unsecured.
Interest Rate Swap Agreements
Historical Red Lion enters into interest rate swap agreements in order to
lessen its exposure to interest rate changes. The agreements have effectively
converted floating rate debt, which is tied to LIBOR, to fixed rate debt. The
interest cost relating to interest rate swap agreements for the years ended
December 31, 1993 and 1994 was $1,345,000 and $743,000, respectively, and
interest income for the seven months ended July 31, 1995 was $353,000.
At December 31, 1994, Historical Red Lion had three interest rate swap
agreements outstanding which have substantially converted $75 million of debt
from floating LIBOR based rates to all-in fixed rates ranging from 7.01% to
7.39% in 1994. The terms of the agreements range from four and one half to five
years.
These agreements are with major commercial banks and the exposure to a
credit loss in the event of nonperformance by the banks is minimal.
Disclosures About Fair Value of Financial Instruments
Based on the borrowing rates currently quoted by financial institutions for
bank loans with terms and maturities similar to Historical Red Lion's long-term
debt, the carrying value of such debt approximates its fair value. Based on
quotes obtained from dealers, Historical Red Lion would have had a gain of
approximately $5,375,000 to settle the interest rate swap agreements at December
31, 1994.
3. LEASES
Certain Historical Red Lion hotels are located on leased land. Two of these
leases contain rental provisions which are based on a percentage of revenues.
All land leases extend over the remaining useful lives of the buildings situated
thereon. Historical Red Lion also leases certain office space and equipment
under operating leases. Total land, office and equipment rent expense was
$1,252,000 and $1,350,000 for the years ended December 31, 1993 and 1994,
respectively and $961,000 for the seven months ended July 31, 1995.
F-34
<PAGE> 41
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum rental payments subsequent to December 31, 1994 required
under land, office and equipment leases are as follows (in thousands).
<TABLE>
<S> <C>
1995............................................................... $ 975
1996............................................................... 945
1997............................................................... 898
1998............................................................... 721
1999............................................................... 668
Thereafter......................................................... 12,786
-------
$16,993
=======
</TABLE>
4. EMPLOYEE BENEFIT PLANS
Historical Red Lion has a defined contribution 401(k) retirement plan for
all full time, non-union employees who have completed one year of service and
who have attained the age of 21 years.
Under the 401(k) plan, Historical Red Lion contributes amounts equal to
each participants' elected contributions up to 6% of eligible compensation.
Pension expense under this plan was $1,670,000 and $1,758,000 for the years
ended December 31, 1993 and 1994, respectively, and $1,338,000 for the seven
months ended July 31, 1995.
Historical Red Lion also has a non-qualified supplemental employee
retirement plan ("SERP"). The SERP was designed to complement the 401(k) plan by
restoring participants' benefits otherwise lost by certain employees due to the
statutory limits in the 401(k) plan. The pension expense under the SERP was
$287,000 and $322,000 for the years ended December 31, 1993 and 1994,
respectively, and $126,000 for the seven months ended July 31, 1995.
Certain management employees are participants in an incentive unit plan.
Participation units are awarded at the discretion of Historical Red Lion's
general partner. No units have been awarded since 1991. Awarded units vest five
years after the award date and are payable five years after vesting or earlier
under certain circumstances. Unit values are determined by various formulas tied
to cash flow, as defined, and appreciation in value of Historical Red Lion and
partners' equity. No accrual for this plan was required for the years ended
December 31, 1993 or 1994, or the seven month period ended July 31, 1995.
The Chief Executive Officer of Historical Red Lion has an incentive
compensation agreement, the value of which is tied to the increase, if any, in
the value of Historical Red Lion's partners' equity. No accrual for this
agreement was required for the years ended December 31, 1993 or 1994, or the
seven month period ended July 31, 1995.
5. COMMITMENTS AND CONTINGENCIES
At December 31, 1994, Historical Red Lion had commitments, relating to
capital improvement projects, of $7,994,000.
Historical Red Lion is party to litigation arising in the ordinary course
of business. In the opinion of management, these actions will not have a
material adverse effect, if any, on Historical Red Lion's financial position,
results of operations or liquidity.
6. RELATED PARTY TRANSACTIONS
At December 31, 1994, other assets, net, include $1,483,000 of interest
bearing notes receivable from a joint venturer.
F-35
<PAGE> 42
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Other significant related party transactions are discussed in Notes 1 and
7.
7. TRANSACTIONS WITH RED LION INNS LIMITED PARTNERSHIP
As discussed in Note 1, Red Lion Properties, Inc. ("Properties"), a
wholly-owned subsidiary of Historical Red Lion, serves as general partner and
owns 1.99% of the MLP.
Historical Red Lion manages the MLP hotels pursuant to a management
agreement and receives a base management fee equal to 3% of annual gross
revenues plus an incentive management fee based on adjusted gross operating
profit, as defined in the management agreement. The management agreement, which
began in 1987, has a seventy-five year term including renewal options.
Historical Red Lion also charges the MLP hotels for their pro rata share of
support services such as computer, advertising, public relations, promotional
and sales and central reservation services.
All the MLP personnel are employees of Historical Red Lion and its
affiliates. Additionally, auxiliary enterprises owned by Historical Red Lion
sell operating supplies, furnishings and equipment to the MLP. In the opinion of
management, sales to the MLP by the auxiliary enterprises were made at prices
and terms which approximate arms-length transactions.
The aggregate amounts, excluding personnel related expenses, charged to the
MLP under the arrangements described above were as follows (in thousands):
<TABLE>
<CAPTION>
SEVEN MONTHS YEARS ENDED
ENDED DECEMBER 31,
JULY 31, -----------------
1995 1994 1993
------------ ------ ------
<S> <C> <C> <C>
Management fees...................................... $4,956 $7,456 $4,029
Support services..................................... 2,409 3,778 3,653
Purchase from auxiliary enterprises.................. 5,184 9,513 9,409
</TABLE>
Incentive management fees are subordinate to distributions by the MLP to
facilitate current payment of distributions to the limited partners. The
subordinated fees accrue without interest up to a maximum amount of $6 million.
This ceiling was reached in 1988 and, because management does not anticipate it
will be paid during 1995, such amount has been classified as non-current under
the caption other assets, net, in the consolidated balance sheet at December 31,
1994.
At December 31, 1994, other assets, net, include $3,726,000 which
Properties advanced to the MLP under a $4 million credit facility made available
to facilitate cash distributions to partners during the MLP's first 36 months of
operations. The amount outstanding under this facility will be repaid to
Historical Red Lion out of either (i) cash flow after payment of priority
distributions and incentive management fees or (ii) sale or refinancing proceeds
prior to any distribution to limited partners.
In addition to the incentive management fee and general partner loan
discussed above, Historical Red Lion was due $13,482,000 from the MLP for
services, payroll funding and capital expenditure funding provided as of
December 31, 1994. These amounts are included in accounts receivable, affiliates
in the consolidated balance sheet, net of working capital related to the managed
MLP hotels of $1,160,000, at December 31, 1994.
F-36
<PAGE> 43
HISTORICAL RED LION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Summarized income statement information for MLP is as follows (in
thousands):
<TABLE>
<CAPTION>
SEVEN MONTHS YEARS ENDED
ENDED DECEMBER 31,
JULY 31, -------------------
1995 1994 1993
------------ ------- -------
<S> <C> <C> <C>
Revenues........................................... $22,258 $35,620 $32,511
======= ======= =======
Income before cumulative effect of change in
accounting principle............................. 2,153 2,929 3,206
Cumulative effect of change in accounting for
income taxes..................................... -- -- (1,351)
------- ------- -------
Net income......................................... $ 2,153 $ 2,929 $ 1,855
======= ======= =======
</TABLE>
Revenues of the MLP represent the gross operating profit (operating
revenues less operating expenses) of the MLP hotels as this amount is similar to
gross rent received from Historical Red Lion to manage the hotels. As discussed
in Note 1, the operating revenues and expenses of the MLP hotels are
consolidated in Historical Red Lion's consolidated financial statements.
Consolidation of the operating revenues and expenses of the MLP does not
affect Historical Red Lion's cash flow or net income except to the extent that
management fees were paid.
Summarized balance sheet information for the MLP, not included in the
accompanying consolidated balance sheet (including amounts due from and owed to
Historical Red Lion) is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Cash.................................................... $ --
Noncurrent assets, primarily property and equipment..... 165,205
Current liabilities..................................... 17,343
Long-term obligations, net of current portion........... 123,430
Deferred income taxes................................... 1,401
Partners' equity........................................ 23,031
</TABLE>
8. LOSS ON SALE OF PROPERTY
During 1993, Historical Red Lion recorded a loss of $1,701,000 which
resulted from the sale of excess land and other assets.
9. SUBSEQUENT EVENTS (UNAUDITED)
On August 1, 1995, Historical Red Lion contributed substantially all of its
assets (excluding 17 hotels (the "Leased Hotels"), certain minority joint
venture interests and certain current assets) and certain liabilities to Red
Lion Hotels, Inc. ("RLHI") in exchange for 20,899,900 shares of RLHI's common
stock. An additional 10,062,500 shares of RLHI's common stock were sold to the
public at the August 1, 1995 closing of RLHI's initial public offering, raising
net proceeds of $173,388,000.
Also on August 1, 1995, Historical Red Lion paid $50,052,000 of the
remaining indebtedness and contributed the Leased Hotels and the remaining
related debt to a new partnership wholly-owned by Historical Red Lion. Such
debt, aggregating approximately $91,136,000, was repaid with proceeds from a
$97,500,000 refinancing of the Leased Hotels.
F-37
<PAGE> 44
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Red Lion was incorporated in March 1994 as a wholly-owned subsidiary of Red
Lion, a California Limited Partnership (prior to August 1, 1995, "Historical Red
Lion" and, on and after August 1, 1995, the "Partnership"). Red Lion's
operations commenced in March 1995 when Historical Red Lion contributed a 49.4%
interest in a joint venture which owns the Santa Barbara Red Lion Hotel to Red
Lion. Red Lion completed an initial public offering of its common stock on
August 1, 1995 (the "Red Lion Offering"). Immediately prior to the closing of
the Red Lion Offering, Historical Red Lion repaid certain of its outstanding
indebtedness with existing cash balances and contributed substantially all of
its assets (excluding 17 hotels (the "Red Lion Leased Hotels"), certain minority
joint venture interests and certain current assets) and certain liabilities to
Red Lion (the "Red Lion Formation"). On August 1, 1995, Red Lion refinanced or
repaid substantially all of the debt contributed pursuant to the Red Lion
Formation with the net proceeds of the Red Lion Offering, borrowings under a new
term loan and existing cash (the "Red Lion Refinancing"). Red Lion also entered
into a long-term master lease with the Partnership for the Red Lion Leased
Hotels. In July 1996, Red Lion acquired a hotel in Houston, Texas, containing
319 rooms. In September 1996, Red Lion purchased the Modesto, California hotel,
which it managed prior to such acquisition. These two acquisitions and the April
1996 acquisition of a hotel in San Antonio, Texas are referred to herein as the
"Red Lion 1996 Hotel Acquisitions."
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the year ended December 31, 1995 and the nine month periods ended September 30,
1995 and September 30, 1996 present the results of operations of Doubletree
assuming that the Merger, the financing transactions described in Item 2 of the
Doubletree Current Report on Form 8-K of which this Unaudited Pro Forma
Condensed Consolidated Financial Information is a part (the "Financing
Transactions") and the Red Lion Formation and the Red Lion 1996 Hotel
Acquisitions had been completed as of January 1, 1995. All material adjustments
necessary to conform the financial statement presentation of the results of
operations for Red Lion to that of Doubletree and to reflect the foregoing
assumptions are presented in the Reclassification Adjustments and Pro Forma
Adjustments columns, respectively, which are further described in the Notes to
Unaudited Pro Forma Condensed Consolidated Financial Information.
The unaudited pro forma consolidated balance sheet presents the historical
consolidated balance sheets of Doubletree and Red Lion adjusted to reflect the
Merger and the Financing Transactions as if each had occurred on September 30,
1996.
The following information is not necessarily indicative of the results of
operations of Doubletree as they may be in the future or as they might have been
had the Merger, the Financing Transactions, the Red Lion Formation and the Red
Lion 1996 Hotel Acquisitions been consummated at the beginning of the period
shown. The Unaudited Pro Forma Condensed Consolidated Statements of Operations
should be read in conjunction with the audited historical consolidated financial
statements of Doubletree and Red Lion and the notes thereto.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Current Report on Form 8-K referred
to above.
F-38
<PAGE> 45
DOUBLETREE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RED LION DOUBLETREE
------------------------------------------------ -----------------------------------
RECLASSIFICATION PRO FORMA
PRO FORMA(1) ADJUSTMENTS(2) AS ADJUSTED ACTUAL ADJUSTMENTS TOTAL
------------ ------------------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Management and franchise fees.......... $ -- $ 11,389 $ 11,389 $ 30,082 $ (299)(a) $ 41,172
Owned hotel revenues................... -- 185,413 185,413 7,081 27,074(a) 219,568
Leased hotel revenues.................. -- 132,213 132,213 141,942 -- 274,155
Purchasing and service fees............ -- 44,634 44,634 16,487 -- 61,121
Other fees and income.................. -- 2,299 2,299 994 -- 3,293
Rooms revenues......................... 277,204 (277,204) -- -- -- --
Food and beverage revenues............. 165,281 (165,281) -- -- -- --
Other revenues......................... 49,884 (49,884) -- -- -- --
-------- --------- -------- -------- -------- --------
Total revenues....................... 492,369 (116,421) 375,948 196,586 26,775 599,309
-------- --------- -------- -------- -------- --------
Operating costs and expenses:
Corporate general and administrative
expenses............................. -- 10,470 10,470 14,413 -- 24,883
Owned hotel expenses................... -- 122,502 122,502 6,049 20,538(a) 149,089
Leased hotel expenses.................. -- 108,877 108,877 132,644 -- 241,521
Purchasing and service expenses........ -- 42,345 42,345 13,925 -- 56,270
Depreciation and amortization.......... 19,327 -- 19,327 4,686 25,425(a) 49,438
Business combination expenses.......... 14,662 -- 14,662 2,565 -- 17,227
Departmental direct expenses:
Rooms................................ 68,393 (68,393) -- -- -- --
Food and beverage.................... 127,450 (127,450) -- -- -- --
Other................................ 18,588 (18,588) -- -- -- --
Property indirect expenses............. 104,010 (104,010) -- -- -- --
Other costs............................ 36,445 (36,445) -- -- -- --
Payments due to owners of managed
hotels............................... 46,895 (46,895) -- -- -- --
-------- --------- -------- -------- -------- --------
Total operating costs and expenses... 435,770 (117,587) 318,183 174,282 45,963 538,428
-------- --------- -------- -------- -------- --------
Operating income......................... 56,599 1,166 57,765 22,304 (19,188) 60,881
Equity in earnings of unconsolidated
joint ventures....................... 2,299 (2,299) -- -- -- --
Interest income........................ 3,697 1,133 4,830 4,147 -- 8,977
Interest expense....................... (21,759) -- (21,759) (227) (17,429)(b) (39,415)
-------- --------- -------- -------- -------- --------
Income before income taxes and minority
interest............................... 40,836 -- 40,836 26,224 (36,617) 30,443
Minority interest share of income
(loss)............................... (758) -- (758) 35 -- (723)
-------- --------- -------- -------- -------- --------
Income before income taxes............... 40,078 -- 40,078 26,259 (36,617) 29,720
Income tax expense..................... (7,327) -- (7,327) (8,468) 11,198(c) (4,597)
-------- --------- -------- -------- -------- --------
Net income............................... $ 32,751 $ -- $ 32,751 $ 17,791 $(25,419) $ 25,123(3)
======== ========= ======== ======== ======== ========
EARNINGS PER SHARE....................... $ 0.80 $ 0.65(3)
======== ========
Weighted average common and common
equivalent shares outstanding.......... 22,219 38,669
======== ========
</TABLE>
- ---------------
(1) Presents the pro forma operating results of Red Lion as if the Red Lion
Formation and the Red Lion Refinancing had occurred on January 1, 1995. The
pro forma operating results include the operating results of Historical Red
Lion for the seven months ended July 31, 1995, the operating results of Red
Lion for the ten months ended December 31, 1995 and the following pro forma
adjustments: (i) to record $8.5 million of net lease expenses on the Red
Lion Leased Hotels, (ii) to decrease depreciation and amortization by $6.4
million related to the Red Lion Leased Hotels, (iii) to decrease interest
expense by $10.4 million reflecting the Red Lion Refinancing, (iv) to
decrease the minority interest in income from joint venturer by $0.2
million, (v) to increase income tax expense by $11.4 million and (vi) to
eliminate $4.6 million of offsetting other revenues and payments due to
owners of managed hotels.
(2) Reclassifications to conform the financial statement presentations of Red
Lion to that of Doubletree.
(3) During 1995, Doubletree incurred $2.6 million of business combination
expenses related to the acquisition of RFS, Inc. ("RFS Management"), a hotel
operating company (such acquisition, the "RFS Acquisition"). The pro forma
operating results of Red Lion include non-recurring costs associated with
the Red Lion Formation of $14.7 million and $9.7 million of deferred tax
benefits. Excluding these items and adjusting income taxes to Doubletree's
effective tax rate and the statutory tax rate for Red Lion, net income and
earnings per share on a pro forma basis would have been $26.2 million and
$0.68, respectively.
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
F-39
<PAGE> 46
DOUBLETREE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RED LION DOUBLETREE
------------------------------------------------ ---------------------------------------
RECLASSIFICATION PRO FORMA
PRO FORMA(1) ADJUSTMENTS(2) AS ADJUSTED ACTUAL ADJUSTMENTS TOTAL
------------ ------------------- ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Management and franchise fees..... $ -- $ 8,483 $ 8,483 $ 22,231 $ (221)(a) $ 30,493
Owned hotel revenues.............. -- 138,554 138,554 5,200 20,190(a) 163,944
Leased hotel revenues............. -- 100,278 100,278 104,328 -- 204,606
Purchasing and service fees....... -- 33,031 33,031 11,542 -- 44,573
Other fees and income............. -- 1,885 1,885 941 -- 2,826
Rooms revenues.................... 215,166 (215,166) -- -- -- --
Food and beverage revenues........ 118,921 (118,921) -- -- -- --
Other revenues.................... 36,208 (36,208) -- -- -- --
-------- --------- -------- -------- -------- --------
Total revenues.................. 370,295 (88,064) 282,231 144,242 19,969 446,442
-------- --------- -------- -------- -------- --------
Operating costs and expenses:
Corporate general and
administrative expenses......... -- 6,083 6,083 10,841 -- 16,924
Owned hotel expenses.............. -- 91,153 91,153 4,403 15,320(a) 110,876
Leased hotel expenses............. -- 81,237 81,237 97,265 -- 178,502
Purchasing and service expenses... -- 30,671 30,671 9,684 -- 40,355
Depreciation and amortization..... 14,530 -- 14,530 3,252 19,034(a) 36,816
Business combination expenses..... 14,662 -- 14,662 -- -- 14,662
Departmental direct expenses:
Rooms........................... 51,475 (51,475) -- -- -- --
Food and beverage............... 93,060 (93,060) -- -- -- --
Other........................... 13,738 (13,738) -- -- -- --
Property indirect expenses........ 77,583 (77,583) -- -- -- --
Other costs....................... 25,836 (25,836) -- -- -- --
Payments due to owners of managed
hotels.......................... 36,591 (36,591) -- -- -- --
-------- --------- -------- -------- -------- --------
Total operating costs and
expenses...................... 327,475 (89,139) 238,336 125,445 34,354 398,135
-------- --------- -------- -------- -------- --------
Operating income.................... 42,820 1,075 43,895 18,797 (14,385) 48,307
Equity in earnings of
unconsolidated
joint ventures.................. 1,885 (1,885) -- -- -- --
Interest income................... 2,735 810 3,545 3,094 -- 6,639
Interest expense.................. (17,348) -- (17,348) (181) (12,043)(b) (29,572)
-------- --------- -------- -------- -------- --------
Income before income taxes and
minority interest................. 30,092 -- 30,092 21,710 (26,428) 25,374
Minority interest share of
(income) loss................... (463) -- (463) 77 -- (386)
-------- --------- -------- -------- -------- --------
Income before income taxes.......... 29,629 -- 29,629 21,787 (26,428) 24,988
Income tax expense................ (3,147) -- (3,147) (6,792) 7,984(c) (1,955)
-------- --------- -------- -------- -------- --------
Net income.......................... $ 26,482 $ -- $ 26,482 $ 14,995 $ (18,444) $ 23,033(3)
======== ========= ======== ======== ======== ========
EARNINGS PER SHARE.................. $ 0.68 $ 0.60(3)
======== ========
Weighted average common and common
equivalent shares outstanding..... 22,137 38,587
======== ========
</TABLE>
- ---------------
(1) Presents the pro forma operating results of Red Lion as if the Red Lion
Formation and the Red Lion Refinancing had occurred on January 1, 1995. The
pro forma operating results include the operating results of Historical Red
Lion for the seven months ended July 31, 1995, the operating results of Red
Lion for the seven months ended September 30, 1995 and the following pro
forma adjustments: (i) to record $8.5 million of net lease expenses on the
Red Lion Leased Hotels, (ii) to decrease depreciation and amortization by
$6.4 million related to the Red Lion Leased Hotels, (iii) to decrease
interest expense by $10.4 million reflecting the Red Lion Refinancing, (iv)
to decrease the minority interest in income from joint venturer by $0.2
million, and (v) to increase income tax expense by $11.4 million.
(2) Reclassifications to conform the financial statement presentations of Red
Lion to that of Doubletree.
(3) RFS Management, as a Subchapter S corporation in 1995 for federal income tax
purposes, was generally not liable for federal income taxes. If income
taxes, at Doubletree's effective rate, are provided on RFS Management's
earnings then net income and earnings per share on a pro forma basis would
have been $22.2 million and $0.58, respectively.
See Notes to Unaudited Pro Forma Condensed
Consolidated Financial Information
F-40
<PAGE> 47
DOUBLETREE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RED LION DOUBLETREE
-------------------------------------------- ------------------------------------
RECLASSIFICATION PRO FORMA
ACTUAL ADJUSTMENTS(1) AS ADJUSTED ACTUAL ADJUSTMENTS TOTAL
-------- ------------------- ----------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Management and franchise fees............ $ -- $ 9,340 $ 9,340 $ 28,258 $ (190)(a) $ 37,408
Owned hotel revenues..................... -- 150,651 150,651 5,972 14,581(a) 171,204
Leased hotel revenues.................... -- 105,984 105,984 137,701 -- 243,685
Purchasing and service fees.............. -- 40,894 40,894 11,800 -- 52,694
Other fees and income.................... -- 1,277 1,277 2,233 -- 3,510
Rooms revenues........................... 236,017 (236,017) -- -- -- --
Food and beverage revenues............... 120,278 (120,278) -- -- -- --
Other revenues........................... 43,510 (43,510) -- -- -- --
-------- --------- -------- -------- -------- --------
Total revenues......................... 399,805 (91,659) 308,146 185,964 14,391 508,501
-------- --------- -------- -------- -------- --------
Operating costs and expenses:
Corporate general and administrative
expenses............................... -- 6,914 6,914 12,811 -- 19,725
Owned hotel expenses..................... -- 97,609 97,609 4,740 11,465(a) 113,814
Leased hotel expenses.................... -- 81,927 81,927 127,153 -- 209,080
Purchasing and service expenses.......... -- 39,005 39,005 8,694 -- 47,699
Depreciation and amortization............ 14,637 -- 14,637 4,417 18,927(a) 37,981
Departmental direct expenses:
Rooms.................................. 57,419 (57,419) -- -- -- --
Food and beverage...................... 94,349 (94,349) -- -- -- --
Other.................................. 14,999 (14,999) -- -- -- --
Property indirect expenses............... 84,004 (84,004) -- -- -- --
Other costs.............................. 26,331 (26,331) -- -- -- --
Payments due to owners of managed
hotels................................. 39,983 (39,983) -- -- -- --
-------- --------- -------- -------- -------- --------
Total expenses......................... 331,722 (91,630) 240,092 157,815 30,392 428,299
-------- --------- -------- -------- -------- --------
Operating income........................... 68,083 (29) 68,054 28,149 (16,001) 80,202
Equity in earnings of unconsolidated
joint ventures......................... 1,277 (1,277) -- -- -- --
Interest income.......................... 1,630 1,306 2,936 3,478 -- 6,414
Interest expense......................... (13,396) -- (13,396) (175) (15,995)(b) (29,566)
-------- --------- -------- -------- -------- --------
Income before income taxes and minority
interest................................. 57,594 -- 57,594 31,452 (31,996) 57,050
Minority interest share of (income)
loss................................... (1,354) -- (1,354) 6 -- (1,348)
-------- --------- -------- -------- -------- --------
Income before income taxes................. 56,240 -- 56,240 31,458 (31,996) 55,702
Income tax expense....................... (22,296) -- (22,296) (11,011) 10,212(c) (23,095)
-------- --------- -------- -------- -------- --------
Net income................................. $ 33,944 $ -- $ 33,944 $ 20,447 $ (21,784) $ 32,607
======== ========= ======== ======== ======== ========
EARNINGS PER SHARE....................... $ 0.88 $ 0.82
======== ========
Weighted average common and common
equivalent shares outstanding.......... 23,183 39,633
======== ========
</TABLE>
- ---------------
(1) Reclassifications to conform the financial statement presentations of Red
Lion to that of Doubletree.
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
F-41
<PAGE> 48
DOUBLETREE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
------------------------------------------------
HISTORICAL PRO FORMA
DOUBLETREE ADJUSTMENTS(4) PRO FORMA
---------- -------------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents......................... $ 50,701 $ (6,862)(a)(c) $ 43,839
Accounts receivable, net.......................... 25,054 22,969(b) 48,023
Other............................................. 4,534 7,723(b) 12,257
-------- ---------- ----------
Total current assets......................... 80,289 23,830 104,119
-------- ---------- ----------
Notes and other receivables....................... 33,021 1,800(b) 34,821
Investments....................................... 36,039 43,100(b) 79,139
Due from affiliates............................... -- 29,000(b) 29,000
Property and equipment, net....................... 13,787 636,350(b) 650,137
Management contracts, net......................... 47,560 422,300(b) 469,860
Deferred costs and other assets................... 4,164 21,470(b) 25,634
Goodwill, net..................................... 15,127 344,965(b) 360,092
-------- ---------- ----------
$229,987 $1,522,815 $1,752,802
======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses............. $ 47,455 $ 81,204(b)(c) $ 128,659
Current portion of long-term debt................. -- 5,000(d) 5,000
-------- ---------- ----------
Total current liabilities.................... 47,455 86,204 133,659
-------- ---------- ----------
Long-term debt, net of current portion............ -- 545,722(d) 545,722
Other long-term liabilities....................... -- 11,697(b) 11,697
Deferred income taxes............................. 19,885 246,846(b) 266,731
-------- ---------- ----------
Total liabilities............................ 67,340 890,469 957,809
-------- ---------- ----------
Common stock...................................... 231 164(e) 395
Additional paid-in capital........................ 128,191 632,182(e) 760,373
Unearned employee compensation.................... (158) -- (158)
Unrealized gain on marketable securities.......... 44 -- 44
Retained earnings................................. 34,339 -- 34,339
-------- ---------- ----------
Total Stockholders' Equity................... 162,647 632,346 794,993
-------- ---------- ----------
$229,987 $1,522,815 $1,752,802
======== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
F-42
<PAGE> 49
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
DOUBLETREE CORPORATION
1. ASSUMPTIONS
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the year ended December 31, 1995 and the nine month periods ended September 30,
1995 and September 30, 1996 are presented as if each of the following events
occurred on January 1, 1995: (1) the Merger, including the issuance of
approximately $291.6 million of Doubletree Common Stock as Merger consideration,
(2) the Red Lion 1996 Hotel Acquisitions (which are further described below),
(3) the borrowing of $461.6 million under the Credit Facility, (4) the sale of
$100.0 million of Doubletree Common Stock pursuant to the GEPT Equity
Investment, (5) the receipt of net proceeds (after deducting underwriting
discounts and offering expenses) of $240.8 million from the Public Equity
Offering, (6) the payment of approximately $688.2 million in cash consideration
to the stockholders and optionholders of Red Lion pursuant to the Merger and (7)
the repayment of existing Red Lion indebtedness of approximately $124.2 million
with a portion of the proceeds obtained from the Financing Transactions and cash
on hand of Doubletree. The Merger has been accounted for as a purchase
transaction in accordance with generally accepted accounting principles and,
accordingly, the assets acquired and liabilities assumed were recorded at their
estimated fair values as of that date. The excess of the purchase price over the
fair value of the net assets acquired, goodwill, is being amortized over 40
years.
2. RECLASSIFICATIONS
Reclassifications have been made to the pro forma statements of operations
and balance sheet for Red Lion to conform with the financial statement
presentation used by Doubletree as follows:
-- Red Lion has followed the practice of recording the operating revenues
and expenses and working capital of hotels managed but not owned by Red
Lion. The hotel owners' profit had been recorded as payments due to
owners. Reclassifications have been made to eliminate these amounts and
reflect the net management fee earned by Red Lion.
-- Revenues earned and expenses incurred in providing purchasing and other
services to hotels, previously reported at an amount equal to the net
profit resulting from the transactions, have been grossed up.
-- Reclassification of hotel revenues and expenses as managed, owned and
leased from departmental revenues and expenses.
3. PRO FORMA ADJUSTMENTS -- STATEMENTS OF OPERATIONS
The following adjustments have been made to the Unaudited Pro Forma
Condensed Consolidated Statements of Operations:
(a) To record the change in depreciation and amortization resulting
from the application of purchase accounting and amortization of loan fees
related to the Financing Transactions. Red Lion acquired one hotel in April
of 1996 for $26.0 million and two hotels for $37.3 million during the third
quarter of 1996 (the "Red Lion 1996 Hotel Acquisitions"). The pro forma
results of operations include the operating results of these hotels as if
they were owned as of January 1, 1995. Hotel management fees from the hotel
acquired in September of 1996 (which was previously managed) have been
eliminated.
(b) To eliminate actual interest expense of Red Lion and record
interest expense associated with the Financing Transactions. An effective
interest rate of 7.06% was assumed for all periods on borrowings under the
Credit Facility. The effect of a 1/8 percent change in the interest rate
would be approximately $577,000 for the year ended December 31, 1995 and
$433,000 for the nine months ended September 30, 1995 and 1996,
respectively.
F-43
<PAGE> 50
(c) To reflect an effective tax rate of 40% on all pro forma
adjustments except for amortization of goodwill.
4. PRO FORMA ADJUSTMENTS -- BALANCE SHEET
The following adjustments have been made to the Unaudited Pro Forma
Condensed Consolidated Balance Sheet:
(a) Adjustments to reflect the net increase in cash and cash
equivalents consisting of:
<TABLE>
<S> <C>
Existing Red Lion cash................................... $ 18,706
Proceeds from the GEPT Equity Investment................. 100,000
Net proceeds from the Public Equity Offering............. 240,773
Proceeds from borrowings under the Credit Facility....... 461,600
Expenses paid at closing................................. (15,557)
Repayment of existing notes payable...................... (124,184)
Cash consideration paid pursuant to the Merger........... (688,200)
---------
$ (6,862)
=========
</TABLE>
(b) Adjustment to reflect the allocation of the purchase price to the
assets acquired, liabilities assumed, deferred tax liability on the step-up
in the historical basis and the excess of the purchase price over the net
assets acquired.
(c) Adjustment to increase accounts payable and accrued expenses by
the estimated costs to be incurred to complete the transaction of $30.7
million.
(d) Adjustment to record debt to reflect the Financing Transactions.
(e) Adjustment to record the shares issued in connection with the
Merger, the Public Equity Offering and the GEPT Equity Investment.
F-44
<PAGE> 51
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ --------------------------------------------------------------------- ------------
<C> <S> <C>
2.1- Agreement and Plan of Merger dated as of September 12, 1996, by and
among Doubletree Corporation, RLH Acquisition Corp. and Red Lion
Hotels, Inc..........................................................
10.1 Securities Purchase Agreement dated as of October 31, 1996 by and
between the Company and the Trustees of General Electric Pension
Trust................................................................
10.2 Warrants to purchase 262,753 shares of Common Stock of Doubletree
Corporation..........................................................
10.3 Credit Agreement dated as of November 8, 1996 by and among the
Company, Morgan Stanley Senior Funding, Inc., as syndication agent
and arranger thereunder, The Bank of Nova Scotia, as administrative
agent thereunder, and the lenders identified therein.................
10.4 Amendment No. 3 to the Incorporation and Registration Rights
Agreement dated as of November 8, 1996 by and among Doubletree
Corporation, GE Investment Hotel Partners I, Limited Partnership,
Metpark Funding Inc., The Ueberroth Family Trust, Ueberroth
Investment Trust, Richard J. Ferris, Ridge Partners, L.P., Robert M.
Solmson (for himself and as attorney-in-fact for the RFS
Shareholders, as defined therein), Canadian Pacific Hotel Holdings
(U.S.) Inc. and Red Lion, a California Limited Partnership...........
10.5 Partnership Services Agreement dated as of November 8, 1996 by and
among Doubletree Corporation, Red Lion Hotels, Inc., Red Lion, a
California Limited Partnership and the affiliates thereof identified
therein..............................................................
10.6 Guaranty of Lease Obligations dated as of November 8, 1996 by and
among Doubletree Corporation, Red Lion Hotels, Inc. and RLH
Partnership, L.P.....................................................
10.7 Master Lease dated August 1, 1995 between RLH Partnership, L.P. and
Red Lion Hotels, Inc.................................................
99.1 Press Release of Doubletree Corporation dated November 8, 1996.......
99.2 Press Release of Doubletree Corporation dated November 13, 1996......
99.3 Second Press Release of Doubletree Corporation dated November 13,
1996.................................................................
</TABLE>
- ---------------
* Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K dated September 12, 1996.
<PAGE> 1
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of October 31, 1996
(this "Agreement"), by and between Doubletree Corporation, a Delaware
corporation (the "Seller"), and the Trustees of General Electric Pension
Trust, a New York common law trust (the "Buyer"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed to
them in the Merger Agreement referred to below.
RECITALS
WHEREAS, the Seller, RLH Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of the Seller ("Merger Sub"), and Red
Lion Hotels, Inc., a Delaware corporation ("Red Lion"), are parties to an
Agreement and Plan of Merger dated as of September 12, 1996 (the "Merger
Agreement"), pursuant to which Merger Sub will merge with and into Red Lion
(the "Merger") and Red Lion will become a wholly owned subsidiary of the
Seller; and
WHEREAS, in order to finance a portion of the Cash
Consideration payable under the Merger Agreement and other fees and expenses
related to the Merger, the Seller wishes to issue and sell to the Buyer or an
affiliate thereof, and the Buyer wishes to purchase (or to cause an affiliate
of the Buyer to purchase) from the Seller, (i) the number of shares of Common
Stock, par value $.01 per share, of the Seller ("Common Stock") determined in
accordance with Section 1.2 below (the "Shares") and (ii) warrants,
substantially in the form attached hereto as Exhibit A, entitling the holders
thereof to purchase an aggregate of 10% of such number of Shares (the
"Warrants"), all upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
Section 1.1 Purchase and Sale of Securities. Upon the terms
and subject to the conditions set forth in
<PAGE> 2
this Agreement, the Buyer agrees to purchase (or to cause an affiliate of the
Buyer to purchase) from the Seller, and the Seller agrees to issue and sell to
the Buyer or such affiliate, the Shares and the Warrants (collectively, the
"Securities"), for an aggregate purchase price of $100,000,000 in immediately
available funds (the "Purchase Price").
Section 1.2 Elected Price. The actual number of Shares
purchased hereunder shall be equal to the quotient (rounded to the nearest
whole number) of the Purchase Price divided by the "Elected Price" determined
as follows:
(a) The Seller has heretofore notified the Buyer that the
expected date of the Closing under the Merger Agreement is November 8, 1996.
The Seller shall use its best efforts to notify the Buyer of any changes
hereafter in the expected date of the Closing (the original notice, and each
notice of change, of the expected date of the Closing, a "Closing Date
Notice").
(b) The parties have agreed that, at or prior to the close of
business on the twentieth day immediately prior to the date on which the
Closing occurs (the "Closing Date"), the Buyer shall be entitled to elect a per
Share purchase price (the "Elected Price") consisting of either (i) the
Acquisition Price (as defined below), or (ii) the Market Price (as defined
below), by giving written notice to the Seller of its election thereof (an
"Election Notice"). For purposes hereof:
"Acquisition Price" means an implied price per share of Common
Stock equal to the product obtained by multiplying (i) a fraction, the
numerator of which is the initial Exchange Ratio or 0.2398 and the
denominator of which is the final adjusted Exchange Ratio, by (ii)
$36.7253. For purposes of illustration, assuming that the Final
Parent Stock Price were $45 (resulting in a final adjusted Exchange
Ratio of 0.2153), then the Acquisition Price would be equal to $40.90.
All calculations of the Acquisition Price shall be made in a manner
consistent with the foregoing illustration.
"Market Price" means (A) if the Seller shall consummate an
underwritten public offering of at least $100,000,000 of its Common
Stock at or immediately prior to the Closing, the per share price at
which shares of Common Stock are sold to the underwriters (e.g. net
of any underwriting discounts) in connection with such underwritten
public offering, or (B) otherwise, the Final Parent Stock Price under
the Merger Agreement.
2
<PAGE> 3
(c) The Buyer has delivered an Election Notice dated October
10, 1996 in which it elected the Acquisition Price to be the Elected Price.
The Buyer shall be entitled hereafter to change its election with respect to
the Elected Price by delivering one or more subsequent Election Notices,
specifying a different Elected Price. If the actual Closing Date is three (3)
or more days later than November 8, 1996, the last Election Notice received by
the Seller not less than 20 business days (as defined in the Merger Agreement)
prior to the actual Closing Date shall supercede all other Election Notices
given hereunder, and the Elected Price determined in accordance with such last
Election Notice shall be final and binding upon the parties hereto.
Section 1.3 Closing. Subject to the satisfaction or waiver
of the conditions to closing set forth in Article IV hereof, the closing of the
purchase and sale of the Securities hereunder shall take place at the time,
date and place of the Closing under the Merger Agreement. At the Closing, (a)
the Seller shall issue and deliver to the Buyer (or an affiliate thereof
designated by the Buyer) one or more certificates representing each of the
Securities, all registered in the name of the Buyer or such affiliate, against
(b) payment by the Buyer or such affiliate, as the case may be, to the Seller
of the Purchase Price by wire transfer of immediately available funds to an
account or accounts designated by the Seller in a written notice delivered to
the Buyer not later than two (2) business days prior to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Buyer as follows:
(a) Organization and Power. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
(b) Authorization and Enforceability. The execution,
delivery and performance of this Agreement by the Seller and the
consummation of the transactions pursuant hereto have been duly and
validly authorized by all necessary corporate action on the part of
the Seller. This Agreement has been duly executed and
3
<PAGE> 4
delivered by the Seller and constitutes the legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
or by the application of general principles of equity (regardless of
whether such equitable principles are applied in a proceeding at law
or in equity).
(c) No Conflict. Subject to making the filings and obtaining
the approvals identified in the next paragraph, the execution and
delivery of this Agreement by the Seller do not, and the performance
by the Seller of its obligations hereunder and the consummation by the
Seller of the transactions pursuant hereto will not, (i) conflict with
or violate the certificate of incorporation or by-laws of the Seller,
(ii) conflict with or violate any law, statute, rule, regulation,
order, judgment, writ, injunction or decree applicable to the Seller,
or (iii) result in any violation or breach of, or constitute a default
under, any agreement, contract or other instrument to which the Seller
is a party.
(d) Consents and Approvals. The execution and delivery
of this Agreement by the Seller do not, and the performance by the
Seller of its obligations hereunder and the consummation by the Seller
of the transactions pursuant hereto will not, require the Seller to
obtain any consent, approval, authorization or permit of, or to make
any filing with or notification to, any Governmental Entity or other
Person except as required by the HSR Act, the Securities Act, the
Exchange Act and Blue Sky Laws.
(e) Litigation. There is no action, suit, claim or
proceeding pending or, to the knowledge of the Seller, threatened
against the Seller or any of its subsidiaries by or before any court
or other Governmental Entity which seeks to enjoin or prohibit the
performance by the Seller of its obligations hereunder or the
consummation by the Seller of any of the transactions pursuant hereto.
(f) Title to Securities. (i) The Shares have been duly
authorized and, when issued in accordance with this Agreement, will be
validly issued, fully paid and nonassessable and subject to no
preemptive rights. Upon issuance of the Shares to the Buyer or its
affiliate as aforesaid, the Buyer or such affiliate (as the case may
be) will acquire good and marketable title
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to the Shares, free and clear of any liens and encumbrances.
(ii) The Warrants have been duly authorized and, when issued
in accordance with this Agreement, will be validly issued. Upon
issuance of the Warrants to the Buyer or its affiliate as aforesaid,
the Buyer or such affiliate (as the case may be) will acquire good and
marketable title to the Warrants, free and clear of any liens and
encumbrances. At all times following the Closing during which any
Warrants are outstanding and exercisable, the Seller will reserve and
keep available out of its authorized Common Stock, solely for issuance
and delivery upon exercise of Warrants, at least the number of shares
of Common Stock issuable upon exercise of all then outstanding
Warrants. The shares of Common Stock that are issued upon exercise of
Warrants will, when issued in accordance with the terms thereof, be
duly authorized, validly issued, fully paid, nonassessable, subject to
no preemptive rights, and free and clear of any liens or encumbrances.
(g) Use of Proceeds. The Purchase Price will be used solely
to pay a portion of the Cash Consideration and other fees and expenses
related to the Merger.
(h) Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the issuance and sale of Securities pursuant hereto
based upon arrangements made by or on behalf of the Seller.
(i) Full Disclosure. No representation or warranty by
the Seller contained in this Agreement or in the Registration
Statement on Form S-3 (File No. 333-13161), as amended, of the Seller
contains any untrue statement of a material fact by the Seller or
omits to state a material fact required to be stated therein or
necessary to make the statements contained therein by the Seller, in
light of the circumstances under which it was made, not false or
misleading.
Section 2.2 Representations and Warranties of the Buyer. The
Buyer hereby represents and warrants to the Seller as follows:
(a) Organization and Power. The Buyer is a common law trust
duly organized, validly existing and in good standing under the laws
of the State of New York, and has all requisite power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
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<PAGE> 6
(b) Authorization and Enforceability. The execution,
delivery and performance of this Agreement by the Buyer and the
consummation of the transactions pursuant hereto have been duly and
validly authorized by all necessary action on the part of the Buyer.
This Agreement has been duly executed and delivered by the Buyer and
constitutes the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, except as
such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally or by the application
of general principles of equity (regardless of whether such equitable
principles are applied in a proceeding at law or in equity).
(c) No Conflict. Subject to making the filings and obtaining
the approvals identified in the next paragraph, the execution and
delivery of this Agreement by the Buyer do not, and the performance by
the Buyer of its obligations hereunder and the consummation by the
Buyer or its affiliate of the transactions pursuant hereto will not,
(i) conflict with or violate the trust instrument or other
organization documents of the Buyer or any such affiliate, (ii)
conflict with or violate any law, statute, rule, regulation, order,
judgment, writ, injunction or decree applicable to the Buyer or any
such affiliate, or (iii) result in any violation or breach of, or
constitute a default under, any agreement, contract or other
instrument to which the Buyer or any such affiliate is a party.
(d) Consents and Approvals. The execution and delivery
of this Agreement by the Buyer do not, and the performance by the
Buyer of its obligations hereunder and the consummation by the Buyer
or its affiliate of the transactions pursuant hereto will not, require
the Buyer or any such affiliate to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification
to, any Governmental Entity or other Person except as required by the
HSR Act, the Securities Act, the Exchange Act and Blue Sky Laws.
(e) Litigation. There is no action, suit, claim or
proceeding pending or, to the knowledge of the Buyer, threatened
against the Buyer or any of its subsidiaries by or before any court or
other Governmental Entity which seeks to enjoin or prohibit the
performance by the Buyer of its obligations hereunder or the
consummation by the Buyer or its affiliate of any of the transactions
pursuant hereto.
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<PAGE> 7
(f) Investment Intent. The Securities are being acquired by
the Buyer or an affiliate thereof for the account of the Buyer or such
affiliate, as the case may be, without a present view to the
distribution or resale thereof or of any interest therein (it being
understood that the Buyer or any such affiliate shall have the right
to sell or otherwise dispose of any such Securities or any Common
Stock deliverable upon exercise of the Warrants, pursuant to
registration or an exemption therefrom under the Securities Act and
Blue Sky Laws).
(g) Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the purchase of Securities pursuant hereto based upon
arrangements made by or on behalf of the Buyer or any affiliate
thereof.
ARTICLE III
COVENANTS
Section 3.1 Further Assurances. Each of the parties hereto
shall use all commercially reasonable good faith efforts to take, or cause to
be taken, all actions, and do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations (including, without
limitation, under the HSR Act, the Securities Act, the Exchange Act and Blue
Sky Laws), and consult with and fully cooperate with and provide reasonable
assistance to each other party hereto and their respective Representatives in
order, to consummate and make effective the transactions contemplated hereby as
promptly as practicable hereafter.
Section 3.2 Expenses. The Seller shall bear all expenses
incurred by the parties hereto in connection with this Agreement or any of the
transactions contemplated hereby.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions. The obligation of the Seller to
issue and sell the Securities to the Buyer or an affiliate thereof designated
by the Buyer, and the obligation of the Buyer to purchase (or to cause an
affiliate thereof to purchase) the Securities hereunder, shall be subject to
the satisfaction at or prior to the Closing of the following conditions, either
or both of which
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<PAGE> 8
may be waived, in whole or in part, to the extent permitted by applicable law:
(a) any waiting period (and any extension thereof) under the
HSR Act applicable to the issuance and sale of the Securities shall
have expired or been terminated; and
(b) the Closing under the Merger Agreement shall have
occurred.
Section 4.2 Additional Buyer Conditions. The obligation of
the Buyer to purchase, or to cause an affiliate to purchase, the Securities
hereunder shall also be subject to the following conditions, any or all of
which may be waived, in whole or in part, to the extent permitted by applicable
law:
(a) each of the representations and warranties of the
Seller contained in this Agreement shall be true and correct as of the
Closing Date as though made on and as of the Closing Date (except
where the failure to be so true and correct would not, individually or
in the aggregate, have a Parent Material Adverse Effect), and the
Buyer and any such affiliate shall have received a certificate
executed by an executive officer of the Seller to such effect;
(b) the Buyer or any such affiliate shall have received
an opinion or opinions, in form and substance reasonably satisfactory
to the Buyer or such affiliate, dated the Closing Date, from the
General Counsel of the Seller or Dewey Ballantine, special counsel to
the Seller, to the effect that:
(i) the Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(ii) the execution, delivery and performance of this
Agreement by the Seller and the consummation of the transactions
pursuant hereto have been duly and validly authorized by all necessary
corporate action on the part of the Seller; this Agreement has been
duly executed and delivered by the Seller and constitutes the legal,
valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the
8
<PAGE> 9
enforcement of creditors' rights generally or by the application of
general principles of equity (regardless of whether such equitable
principles are applied in a proceeding at law or in equity);
(iii) the Shares have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable and, to the knowledge of such counsel, subject to no
preemptive rights;
(iv) the Warrants have been duly authorized and, when
issued in accordance with this Agreement, will be validly issued; and
the shares of Common Stock that are issued upon exercise of the
Warrants will, when issued in accordance with the terms of the
Warrants, be validly issued, fully paid and nonassessable and, to the
knowledge of such counsel, subject to no preemptive rights; and
(v) assuming the accuracy of the representations and
warranties of the Buyer set forth in Section 2.2(f) hereof, the
issuance, sale and delivery of the Securities by the Seller are exempt
from registration under the Securities Act; and
(c) the Seller shall have entered into the Registration
Rights Agreement (or another agreement, in form and substance
reasonably satisfactory to the Buyer, providing for the Shares and any
shares of Common Stock issuable upon exercise of the Warrants to be
covered by the existing registration rights of the Buyer under the
"Existing Agreement" referred to in the form of Registration Rights
Agreement attached as Exhibit B to the Merger Agreement).
Section 4.3 Additional Seller Condition. The obligation of
the Seller to issue and sell the Securities hereunder shall also be subject to
the condition that each of the representations and warranties of the Buyer
contained in this Agreement shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except where the failure to be so
true and correct would not, individually or in the aggregate, have a material
adverse effect on the ability of the Buyer to perform its obligations hereunder
or the ability of the Buyer or any affiliate thereof to consummate the
transactions pursuant hereto), and the Seller shall have received a certificate
executed by a trustee of the Buyer to such effect.
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<PAGE> 10
ARTICLE V
MISCELLANEOUS
Section 5.1 Notices. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by registered or
certified mail, postage prepaid, or when given by facsimile transmission, as
follows:
(a) If to the Seller:
Doubletree Corporation
410 North 44th Street
Suite 700
Phoenix, Arizona 85008
Telecopy No.: (602) 220-6602
Attention: Chief Financial Officer
(b) If to the Buyer:
General Electric Investment Corporation
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06905
Telecopy No.: (203) 326-4179
Attention: David W. Wiederecht
or to such other person as either party hereto shall designate by written
notice to the other in the manner provided in this Section 5.1.
Section 5.2 Limited Liability. Any monetary obligation or
liability of the Buyer under this Agreement shall be enforced solely against
the assets of the Buyer and not against the Trustees of the Buyer or General
Electric Company or any affiliate thereof.
Section 5.3 Entire Agreement. This Agreement (including the
documents specifically referred to herein) constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings between the parties with
respect thereto.
Section 5.4 Amendments. This Agreement may only be amended
or modified in an instrument executed by both parties hereto. This Agreement
may not be assigned, in whole or in part, by either party hereto without the
prior written consent of the other party hereto.
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Section 5.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to the conflict of law principles thereof.
Section 5.6 Counterparts. This Agreement may be executed by
the parties in two counterparts, each of which when so executed shall be an
original and all of which together shall constitute one and the same
instrument.
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<PAGE> 12
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first written above.
DOUBLETREE CORPORATION
By: /s/ David L. Stivers
-------------------------
Name: David L. Stivers
Title: Sr. Vice President
TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
By: /s/ John H. Myers
---------------------
Name: John H. Myers
Title: Trustee
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<PAGE> 1
Exhibit 10.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER.
Void after 5:00 P.M., November 8, 2001 Warrants to Purchase Common Stock
(unless previously terminated under Dated: November 8, 1996
the circumstances described herein)
WARRANT CERTIFICATE REPRESENTING
WARRANTS TO PURCHASE COMMON STOCK OF
DOUBLETREE CORPORATION
FOR VALUE RECEIVED, Doubletree Corporation, a Delaware corporation (the
"Company"), hereby certifies that, PT Investments, Inc. ("Holder"), the holder
of these Warrants (the "Warrants", and each right to purchase a share of Common
Stock, a "Warrant") is entitled, subject to the terms set forth below, at any
time on or after November 8, 1996, or from time to time thereafter, but not
later than November 8, 2001 to purchase from the Company 262,753 fully paid and
nonassessable shares of Common Stock, par value $.01 per share ("Common
Stock"), of the Company. These Warrants and all rights hereunder, to the
extent such rights shall not have been exercised, shall terminate and become
null and void at 5:00 p.m., New York time, on November 8, 2001.
These Warrants shall be subject to the terms set forth in the
Securities Purchase Agreement dated as of October 31, 1996 by and between the
Company and the Trustees of General Electric Pension Trust, pursuant to which
these Warrants are being issued, and to the following terms and conditions:
SECTION 1. Exercise of Warrants; Exercise Price;
Adjustments Relative to Exercise of Warrants
1A. Exercise of Warrants. (a) Subject to the conditions
of this Section 1, the holder of any Warrant at the holder's option may
exercise such holder's rights under all or any part of the Warrants to purchase
Common Stock (the
<PAGE> 2
"Warrant Shares") at a price per share equal to $38.06 (the "Exercise Price")
at any time on or after the date hereof. The Warrant Shares and the Exercise
Price are subject to certain adjustments as set forth in this Section 1 and the
terms Warrant Shares and Exercise Price as used herein shall as of any time be
deemed to include all such adjustments to be given effect as of such time in
accordance with the terms hereof.
1B. Stock Dividends. In case at any time the Company
shall declare a dividend or make any other distribution upon any class or
series of stock of the Company payable in shares of Common Stock or any stock
or securities convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein called
"Convertible Securities"), the Exercise Price in effect on the record date for
such dividend or distribution shall be proportionately reduced. In case the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution payable in shares
of Common Stock or in Convertible Securities, then such record date shall be
deemed to be the date of the issue of the shares of Common Stock deemed to have
been issued as a result of the declaration of such dividend or the making of
such other distribution, as the case may be, unless such dividend or other
distribution is to be measured by the market price of the Common Stock in
effect on the date such dividend or other distribution is made, in which case
such date shall be deemed to be the date of the issue of the shares of Common
Stock deemed to have been so issued. For purposes of such adjustment, the
number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company.
1C. Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of shares of
Common Stock issuable upon exercise of each Warrant shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock of
the Company shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased and the number of shares of Common Stock issuable upon exercise of
each Warrant shall be proportionately decreased.
1D. Changes in Common Stock. If any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with another corporation, or sale,
transfer or other disposition of all or substantially all of its properties to
another corpora-
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<PAGE> 3
tion, shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each holder of Warrants
shall thereafter have the right to purchase and receive upon the basis and upon
the terms and conditions herein specified and in lieu of the shares of the
Common Stock of the Company immediately theretofore issuable upon exercise of
the Warrants, such shares of stock, securities or properties, if any, as may be
issuable or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such Common Stock
immediately theretofore issuable upon exercise of the Warrants had such
reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of each holder of
Warrants to the end that the provisions hereof (including without limitation
provisions for adjustment of the Exercise Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any
shares of stock, securities or properties thereafter deliverable upon the
exercise thereof. The Company shall not effect any such consolidation, merger,
sale, transfer or other disposition, unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing or
otherwise acquiring such properties shall assume, by written instrument
executed and mailed or delivered to the holders of Warrants at the last address
of such holders appearing on the books of the Company, the obligation to
deliver to such holders such shares of stock, securities or properties as, in
accordance with the foregoing provisions, such holders may be entitled to
acquire. The above provisions of this subparagraph shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers, or other dispositions.
1E. Other Adjustments. In case (i) the Company shall
issue or sell any shares of its Common Stock for a consideration per share less
than the fair market value thereof at the time of such issue or sale, or issue
or grant any rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or Convertible Securities at an exercise price per
share of Common Stock less than the fair market value thereof on the date of
such issue or grant, or issue or sell any Convertible Securities having a
conversion or exchange price per share of Common Stock less than the fair
market value thereof on the date of such issue or sale, or (ii) any other
corporate event or transaction of the Company, outside the ordinary course of
business consistent with past practice, not specified or contemplated by this
Section 1 occurs which equitably requires an anti-dilutive adjustment to
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<PAGE> 4
the Warrants represented hereby, then the Board of Directors of the Company
shall make such appropriate adjustments to the Warrants as it may determine in
its reasonable business judgment.
1F. Notice of Adjustment. Upon any adjustment of the
Exercise Price or the number of shares issuable upon exercise of any Warrants
represented hereby, then and in each such case the Company shall promptly
deliver to the Holder a certificate of the chief financial officer of the
Company setting forth the Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares of Common Stock issuable
upon exercise of the Warrant or Warrants held by each holder of Warrants, and
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
1G. Prohibition of Certain Actions. The Company will not
(i) authorize or issue, or agree to authorize or issue, any shares of its
capital stock of any class preferred as to dividends or as to the distribution
of assets upon voluntary or involuntary liquidation, dissolution or winding-up
of the Company unless the rights of the holders thereof shall be limited to a
fixed sum or percentage of par value in respect of participation in dividends
and in the distribution of such assets or (ii) take any action which would
result in any adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after such action upon exercise of all of the Warrants
would exceed the total number of shares of Common Stock then authorized by the
Company's Certificate of Incorporation.
1H. Stock to be Reserved. The Company will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue upon the exercise of Warrants as herein provided, such number
of shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants, and the Company will maintain at all times all other
rights and privileges sufficient to enable it to fulfill all its obligations
hereunder. The Company covenants that all shares of Common Stock which shall
be so issuable shall, upon issuance, be duly authorized, validly issued, fully
paid and nonassessable, free from preemptive or similar rights on the part of
the holders of any shares of capital stock or securities of the Company, and
free from all Liens and charges with respect to the issue thereof; and without
limiting the generality of the foregoing, the Company covenants that it will
from time to time take all such action as may be required to assure that the
par value, if any, per share of the Common Stock is at all times equal to or
less than the then effective Exercise Price. The Company will take all such
action as may be necessary to assure that such shares of Common Stock may be so
issued without violation by the
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<PAGE> 5
Company of any applicable law or regulation, or of any requirements of any
domestic securities exchange upon which the Common Stock may be listed.
1I. Registration and Listing of Common Stock. If any
shares of Common Stock required to be reserved for purposes of exercise of
Warrants hereunder require registration with or approval of any governmental
authority under any Federal or state law (other than the Securities Act) before
such shares may be issued upon exercise, the Company will, at its expense and
as expeditiously as possible, use its best efforts to cause such shares to be
duly registered or approved, as the case may be. Shares of Common Stock
issuable upon exercise of the Warrants shall be registered by the Company under
the Securities Act or similar statute then in effect if required by paragraph
11 and subject to the conditions stated in such paragraph. If and so long as
the Common Stock is listed on The Nasdaq Stock Market's National Market or any
national securities exchange, the Company will, at its expense, obtain promptly
and maintain the approval for listing on each such exchange upon official
notice of issuance, of shares of Common Stock issuable upon exercise of the
then outstanding Warrants and maintain the listing of such shares after their
issuance; and the Company will also list on such national securities exchange,
will register under the Securities Exchange Act of 1933, as amended (the
"Exchange Act"), and will maintain such listing of, any other securities that
at any time are issuable upon exercise of the Warrants, if and at the time that
any securities of the same class shall be listed on such national securities
exchange by the Company or shall require registration under the Exchange Act.
1J. Closing of Books. The Company will at no time close
its transfer books against the transfer of any Warrant or of any shares of
Common Stock issued or issuable upon the exercise of any Warrant in any manner
which interferes with the timely exercise of such Warrant.
1K. No Rights or Liabilities as Shareholders. No Warrant
shall entitle any holder thereof to any of the rights of a shareholder of the
Company. No provision of this Warrant, in the absence of the actual exercise
of such Warrant or any part thereof by the holder thereof into Common Stock
issuable upon such exercise, shall give rise to any liability on the part of
such holder as a shareholder of the Company, whether such liability shall be
asserted by the Company or by creditors of the Company.
SECTION 2. METHOD OF EXERCISE OF WARRANTS
(a) The Warrants may be exercised by the surrender of this
Certificate, with the Form of Subscription attached hereto duly executed by the
holder, to the Company at its
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<PAGE> 6
principal office, accompanied by payment of the Exercise Price for the number
of shares of Common Stock specified. The Warrants may be exercised for less
than the full number of shares of Common Stock called for hereby by surrender
of this Certificate in the manner and at the place provided above, accompanied
by payment for the number of shares of Common Stock being purchased. If the
Warrants should be exercised in part only, the Company shall, upon surrender of
this Warrant Certificate for cancellation, execute and deliver a new Warrant
Certificate evidencing the right of the holder to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company of this Warrant
Certificate at the office of the Company, in proper form for exercise,
accompanied by the full Exercise Price in cash or certified or bank cashier's
check, the holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Common Stock shall not then be actually delivered to the
holder.
(b) Alternatively, at the option of the Holder, the Warrants
may be exercised by the exchange of all of or part of the Warrants (a "Warrant
Exchange"), into the number of shares of Common Stock determined in accordance
with this Section 2(b), by surrendering this Certificate, with the Form of
Subscription attached hereto duly executed by the Holder, to the Company at its
principal office. If the Warrants should be exercised in part only, the
Company shall, upon surrender of this Warrant Certificate for cancellation,
execute and deliver a new Warrant Certificate evidencing the right of the
Holder to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant Certificate at the office of the
Company, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or the certificates representing such Common Stock shall not then be
actually delivered to the Holder. In connection with any Warrant Exchange,
this Warrant Certificate shall represent the right to subscribe for and acquire
the number of shares of Common Stock (rounded to the next highest integer)
equal to (i) the number of shares specified by the Holder in its Form of
Subscription (the "Total Number") less (ii) the number of shares equal to the
quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price by (B) the "volume-weighted average quote" of the
reported sales prices per share of Common Stock quoted on The Nasdaq Stock
Market's National Market ("NASDAQ"), as reported by Bloomberg L.P., for the ten
consecutive trading days immediately preceding the exercise of the Warrant (or
the comparable closing price if the Common
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<PAGE> 7
Stock shall not then be quoted on NASDAQ or reported by Bloomberg L.P.).
(c) As soon as practicable after the exercise of these
Warrants in whole or in part and, in any event, within ten days thereafter, the
Company at its expense will cause to be issued in the name of and delivered to
the holder a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock (and any new Warrants) to which the holder
shall be entitled upon such exercise. Each certificate for shares of Common
Stock so delivered shall be in such denominations as may be requested by the
holder and shall be registered in the name of the holder or such other name as
the holder may designate.
SECTION 3. PAYMENT OF TAXES
The issuance of certificates for shares of Common Stock upon
exercise of the Warrants shall be made without charge to the holders of the
Warrants exercised for any issuance tax in respect thereto; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Warrant or Warrants
exercised.
SECTION 4. MUTILATED OR MISSING WARRANT CERTIFICATES
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant Certificate, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification and upon surrender and cancellation of
this Warrant Certificate, if mutilated, the Company will execute and deliver a
new Warrant Certificate of like tenor and date.
7
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, as of the day and year first above written.
DOUBLETREE CORPORATION
By: /s/ David L. Stivers
----------------------------------------
Name: David L. Stivers
Title: Senior Vice President, General
Counsel and Secretary
8
<PAGE> 9
FORM OF SUBSCRIPTION
DATE: _____________ 19__
TO: DOUBLETREE CORPORATION
The Undersigned, the holder of the within Warrants, hereby
irrevocably elects to exercise all or part of the purchase right represented by
such Warrants for, and to purchase thereunder, [_______________ shares of
Common Stock of DOUBLETREE CORPORATION (the "Company") and herewith makes
payment of $___________ to the Company, evidenced by delivery
of_________________,] [alternatively, pursuant to Section 2(b) of the Warrants:
[___ (the "Total Number") number of shares of Common Stock of DOUBLETREE
CORPORATION (the "Company") in a Warrant Exchange described in Section 2(b) of
the Warrants,] and requests that the certificate of such shares be issued in
the name of, and be delivered to ________________, whose address is
___________________________ __________.
_____________________________
(Name of Holder)
_____________________________
(Authorized Signatory)
_____________________________
(Address)
<PAGE> 1
Exhibit 10.3
CREDIT AGREEMENT
among
DOUBLETREE CORPORATION,
VARIOUS BANKS,
MORGAN STANLEY SENIOR FUNDING, INC.,
as SYNDICATION AGENT and as ARRANGER,
and
THE BANK OF NOVA SCOTIA,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of November 8, 1996
----------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
SECTION 1. Amount and Terms of Credit.............................................................. 1
1.01 The Commitments...................................................................... 1
1.02 Minimum Amount of Each Borrowing..................................................... 5
1.03 Notice of Borrowing.................................................................. 5
1.04 Disbursement of Funds................................................................ 6
1.05 Notes................................................................................ 7
1.06 Conversions.......................................................................... 9
1.07 Pro Rata Borrowings.................................................................. 9
1.08 Interest............................................................................. 10
1.09 Interest Periods..................................................................... 10
1.10 Increased Costs, Illegality, etc..................................................... 12
1.11 Compensation......................................................................... 14
1.12 Change of Lending Office............................................................. 14
1.13 Replacement of Banks................................................................. 15
SECTION 2. Letters of Credit....................................................................... 16
2.01 Letters of Credit.................................................................... 16
2.02 Maximum Letter of Credit Outstandings; Final Maturities.............................. 18
2.03 Letter of Credit Requests............................................................ 18
2.04 Letter of Credit Participations...................................................... 18
2.05 Agreement to Repay Letter of Credit Drawings......................................... 21
2.06 Increased Costs...................................................................... 21
SECTION 3. Commitment Commission; Fees; Reductions of Commitment................................... 22
3.01 Fees................................................................................. 22
3.02 Voluntary Termination of Unutilized Commitments...................................... 23
3.03 Mandatory Reduction of Commitments................................................... 25
SECTION 4. Prepayments; Payments; Taxes............................................................ 26
4.01 Voluntary Prepayments................................................................ 26
4.02 Mandatory Repayments and Commitment Reductions....................................... 27
4.03 Method and Place of Payment.......................................................... 37
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
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4.04 Net Payments......................................................................... 37
SECTION 5. Conditions Precedent to Initial Credit Events........................................... 40
5.01 Execution of Agreement; Notes........................................................ 40
5.02 Officer's Certificate................................................................ 40
5.03 Opinions of Counsel.................................................................. 40
5.04 Corporate Documents; Proceedings; etc................................................ 40
5.05 Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Collective Bargaining Agreements; Existing
Indebtedness Agreements; Tax Sharing Agreements; Joint Venture
Agreements; Property Management Agreements........................................ 41
5.06 Equity Financing; Equity Rollover.................................................... 42
5.07 Consummation of Acquisition; Cash on Hand............................................ 43
5.08 Refinancing.......................................................................... 43
5.09 Adverse Change, etc.................................................................. 44
5.10 Litigation........................................................................... 45
5.11 Pledge Agreement..................................................................... 45
5.12 Security Agreement................................................................... 45
5.13 Subsidiaries Guaranty................................................................ 46
5.14 Mortgages; Title Insurance; Survey; etc.............................................. 46
5.15 Projections; Pro Forma Balance Sheet................................................. 47
5.16 Solvency Certificate; Insurance Certificates......................................... 47
5.17 Fees, etc............................................................................ 47
SECTION 6. Conditions Precedent to All Credit Events............................................... 47
6.01 No Default; Representations and Warranties........................................... 47
6.02 Notice of Borrowing; Letter of Credit Request........................................ 48
SECTION 7. Representations, Warranties and Agreements.............................................. 48
7.01 Corporate and Other Status........................................................... 49
7.02 Corporate and Other Power and Authority.............................................. 49
7.03 No Violation......................................................................... 49
7.04 Approvals............................................................................ 50
7.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; etc.................................................................. 50
7.06 Litigation........................................................................... 52
7.07 True and Complete Disclosure......................................................... 52
7.08 Use of Proceeds; Margin Regulations.................................................. 52
7.09 Tax Returns and Payments............................................................. 53
7.10 Compliance with ERISA................................................................ 53
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C>
7.11 The Security Documents............................................................... 55
7.12 Representations and Warranties in Acquisition Documents.............................. 56
7.13 Properties........................................................................... 56
7.14 Capitalization....................................................................... 56
7.15 Subsidiaries and Joint Ventures...................................................... 57
7.16 Compliance with Statutes, etc........................................................ 57
7.17 Investment Company Act............................................................... 57
7.18 Public Utility Holding Company Act................................................... 57
7.19 Environmental Matters................................................................ 57
7.20 Labor Relations...................................................................... 58
7.21 Patents, Licenses, Franchises and Formulas........................................... 58
7.22 Indebtedness......................................................................... 59
7.23 Transaction.......................................................................... 59
SECTION 8. Affirmative Covenants................................................................... 59
8.01 Information Covenants................................................................ 60
8.02 Books, Records and Inspections....................................................... 63
8.03 Maintenance of Property; Insurance................................................... 63
8.04 Corporate Franchises................................................................. 64
8.05 Compliance with Statutes, etc........................................................ 65
8.06 Compliance with Environmental Laws................................................... 65
8.07 ERISA................................................................................ 66
8.08 End of Fiscal Years; Fiscal Quarters................................................. 67
8.09 Performance of Obligations........................................................... 67
8.10 Payment of Taxes..................................................................... 67
8.11 Interest Rate Protection............................................................. 67
8.12 Additional Security; Further Assurances.............................................. 68
8.13 Foreign Subsidiaries Security........................................................ 68
8.14 Joint Venture Distributions.......................................................... 69
8.15 Existing Glendale Debt............................................................... 70
8.16 Maintenance of Corporate Separateness................................................ 70
SECTION 9. Negative Covenants...................................................................... 70
9.01 Liens................................................................................ 70
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc............................... 74
9.03 Dividends............................................................................ 79
9.04 Indebtedness......................................................................... 79
9.05 Advances, Investments and Loans...................................................... 83
9.06 Transactions with Affiliates......................................................... 84
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
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9.07 Capital Expenditures; Permitted Hotel Acquisitions; Permitted
Hotel Investments................................................................ 85
9.08 Consolidated Fixed Charge Coverage Ratio............................................ 89
9.09 Consolidated Interest Coverage Ratio. .............................................. 89
9.10 Maximum Leverage Ratio.............................................................. 90
9.11 Minimum Consolidated Net Worth...................................................... 90
9.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, By-
Laws and Certain Other Agreements; etc........................................... 90
9.13 Limitation on Certain Restrictions on Subsidiaries.................................. 91
9.14 Limitation on Issuance of Capital Stock............................................. 92
9.15 Business............................................................................ 92
9.16 Limitation on Creation of Subsidiaries and Joint Ventures........................... 92
SECTION 10. Events of Default..................................................................... 93
10.01 Payments........................................................................... 93
10.02 Representations, etc............................................................... 93
10.03 Covenants.......................................................................... 93
10.04 Default Under Other Agreements..................................................... 94
10.05 Bankruptcy, etc.................................................................... 94
10.06 ERISA.............................................................................. 95
10.07 Security Documents................................................................. 95
10.08 Subsidiaries Guaranty.............................................................. 96
10.09 Judgments.......................................................................... 96
10.10 Change of Control.................................................................. 96
10.11 Certain Master Leases.............................................................. 96
SECTION 11. Definitions and Accounting Terms...................................................... 97
11.01 Defined Terms...................................................................... 97
SECTION 12. The Administrative Agent and the Syndication Agent.................................... 135
12.01 Appointment........................................................................ 135
12.02 Nature of Duties................................................................... 135
12.03 Lack of Reliance on the Administrative Agent and the Syndication
Agent............................................................................ 136
12.04 Certain Rights of the Agents....................................................... 136
12.05 Reliance........................................................................... 137
12.06 Indemnification.................................................................... 137
12.07 The Administrative Agent and the Syndication Agent in their
Individual Capacity.............................................................. 137
</TABLE>
(iv)
<PAGE> 6
<TABLE>
<CAPTION>
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12.08 Holders............................................................................ 138
12.09 Resignation by the Administrative Agent and the Syndication
Agent............................................................................ 138
12.10 Managing Agent.................................................................... 139
SECTION 13. Miscellaneous......................................................................... 139
13.01 Payment of Expenses, etc........................................................... 139
13.02 Right of Setoff.................................................................... 140
13.03 Notices............................................................................ 140
13.04 Benefit of Agreement; Assignments; Participations.................................. 141
13.05 No Waiver; Remedies Cumulative..................................................... 143
13.06 Payments Pro Rata.................................................................. 143
13.07 Calculations; Computations; Accounting Terms....................................... 144
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL...................................................... 144
13.09 Counterparts....................................................................... 146
13.10 Effectiveness...................................................................... 146
13.11 Headings Descriptive............................................................... 146
13.12 Amendment or Waiver; etc........................................................... 146
13.13 Survival........................................................................... 148
13.14 Domicile of Loans.................................................................. 148
13.15 Register........................................................................... 149
13.16 Confidentiality.................................................................... 149
13.17 Limitation on Increased Costs...................................................... 150
13.18 Certain Post-Closing Actions....................................................... 150
</TABLE>
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Indebtedness to be Refinanced
SCHEDULE V Capitalization
SCHEDULE VI Subsidiaries and Joint Ventures
SCHEDULE VII Existing Indebtedness
SCHEDULE VIII Insurance
SCHEDULE IX Existing Liens
SCHEDULE X Existing Investments
SCHEDULE XI Additional Capital Expenditures
SCHEDULE XII Base Case EBITDA
SCHEDULE XIII Designated Hotel Properties
SCHEDULE XIV ERISA
(v)
<PAGE> 7
SCHEDULE XV Subsidiary Restrictions
SCHEDULE XVI Existing Doubletree Investments
SCHEDULE XVII Existing Red Lion Investments
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Tranche A Term Note
EXHIBIT B-2 Tranche B Term Note
EXHIBIT B-3 Revolving Note
EXHIBIT B-4 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Opinion of Dewey Ballantine, counsel to the Credit
Parties
EXHIBIT E-2 Opinion of Wolf, Block, Schorr and Solis-Cohen,
counsel to the Credit Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I Subsidiaries Guaranty
EXHIBIT J Solvency Certificate
EXHIBIT K Assignment and Assumption Agreement
EXHIBIT L Intercompany Note
(vi)
<PAGE> 8
CREDIT AGREEMENT, dated as of November 8, 1996, among
DOUBLETREE CORPORATION, a Delaware corporation (the "Borrower"), the Banks party
hereto from time to time, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication
Agent and as Arranger, and THE BANK OF NOVA SCOTIA, as Administrative Agent (all
capitalized terms used herein and defined in Section 11 are used herein as
therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set
forth herein, the Banks are willing to make available to the Borrower the
respective credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with a Tranche A Term Loan Commitment
severally agrees to make a term loan or term loans (each a "Tranche A Term Loan"
and, collectively, the "Tranche A Term Loans") to the Borrower, which Tranche A
Term Loans (i) only may be incurred by the Borrower (x) on the Initial Borrowing
Date and (y) on the Second Term Loan Borrowing Date, (ii) shall, at the option
of the Borrower, be incurred and maintained as, and/or converted into, Base Rate
Loans or Eurodollar Loans, provided that (A) except as otherwise specifically
provided in Section 1.10(b), all Tranche A Term Loans comprising the same
Borrowing shall at all times be of the same Type and (B) no more than three
Borrowings of Tranche A Term Loans maintained as Eurodollar Loans may be
incurred prior to the earlier of (1) the 90th day after the Initial Borrowing
Date or, if an Interest Period relating to any then outstanding Tranche A Term
Loans beginning before such 90th day extends thereafter, the last day of such
Interest Period, and (2) that date (the "Syndication Date") upon which the
Agents shall have determined in their sole discretion (and shall have notified
the Borrower) that the primary syndication (and resultant addition of
institutions as Banks pursuant to Section 13.04(b)) has been completed (each of
which Borrowings of Eurodollar Loans may only have an Interest Period of one
month, and the first of which Borrowings may only be made on a single date on or
after the Initial Borrowing Date and on or prior to the sixth Business Day
following the Initial Borrowing Date, and the second and third of which
Borrowings may only be made on the last day of the immediately preceding
<PAGE> 9
Interest Period) and (iii) shall be made by each such Bank on any Term Loan
Borrowing Date in that aggregate principal amount which does not exceed the
Tranche A Term Loan Commitment of such Bank on such Term Loan Borrowing Date
(before giving effect to any reductions thereto on such date pursuant to Section
3.03(b)(i) or (ii) but after giving effect to any reductions thereto on or prior
to such date pursuant to Section 3.03(b)(iii)); provided, however, that until
all Indebtedness to be Refinanced has been repaid in full, the Borrower will not
be permitted to incur Tranche A Term Loans if, after giving effect to the
incurrence thereof and the application of the proceeds therefrom, the remaining
Total Tranche A Term Loan Commitment would be less than the aggregate
outstanding principal amount of the remaining Indebtedness to be Refinanced.
Once repaid, Tranche A Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth
herein, each Bank with a Tranche B Term Loan Commitment severally agrees to
make, on the Initial Borrowing Date, a term loan or term loans (each a "Tranche
B Term Loan" and, collectively, the "Tranche B Term Loans") to the Borrower,
which Tranche B Term Loans (i) shall, at the option of the Borrower, be incurred
and maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (A) except as otherwise specifically provided in Section 1.10(b),
all Tranche B Term Loans comprising the same Borrowing shall at all times be of
the same Type and (B) no more than three Borrowings of Tranche B Term Loans
maintained as Eurodollar Loans may be incurred prior to the earlier of (1) the
90th day after the Initial Borrowing Date or, if an Interest Period relating to
any then outstanding Tranche B Term Loans beginning before such 90th day extends
thereafter, the last day of such Interest Period, and (2) the Syndication Date
(each of which Borrowings of Eurodollar Loans may only have an Interest Period
of one month, and the first of which Borrowings may only be made on the same day
as the first day of the first Interest Period of the Tranche A Term Loans that
are maintained as Eurodollar Loans, and the second and third of which Borrowings
may only be made on the last day of the immediately preceding Interest Period)
and (ii) shall be made by each such Bank in that aggregate principal amount
which equals the Tranche B Term Loan Commitment of such Bank on the Initial
Borrowing Date (before giving effect to the termination thereof on such date
pursuant to Section 3.03(c)(i) but after giving effect to any reductions thereto
on or prior to such date pursuant to Section 3.03(c)(ii)). Once repaid, Tranche
B Term Loans incurred hereunder may not be reborrowed.
(c) Subject to and upon the terms and conditions set forth
herein, each Bank with a Revolving Loan Commitment severally agrees, at any time
and from time to time on and after the Initial Borrowing Date and prior to the
Revolving Loan Maturity Date, to make a revolving loan or revolving loans (each
a "Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower,
which Revolving Loans (i) shall, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (A) except as otherwise specifically provided in Section 1.10(b),
-2-
<PAGE> 10
all Revolving Loans comprising the same Borrowing shall at all times be of the
same Type and (B) no more than three Borrowings of Revolving Loans maintained as
Eurodollar Loans may be incurred prior to the earlier of (1) the 90th day after
the Initial Borrowing Date or, if an Interest Period relating to any then
outstanding Revolving Loans beginning before such 90th day extends thereafter,
the last day of such Interest Period, and (2) the Syndication Date (each of
which Borrowings of Eurodollar Loans may only have an Interest Period of one
month, and the first of which Borrowings may only be made on the same day as the
first day of the first Interest Period of the Tranche A Term Loans that are
maintained as Eurodollar Loans, and the second and third of which Borrowings may
only be made on the last day of the immediately preceding Interest Period), (ii)
may be repaid and reborrowed in accordance with the provisions hereof, (iii)
shall not exceed for any such Bank at any time outstanding that aggregate
principal amount which, when added to the product of (x) such Bank's Adjusted RL
Percentage and (y) the sum of (I) the aggregate amount of all Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (II) the aggregate principal amount of all
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding, equals the Revolving Loan Commitment of such
Bank at such time and (iv) shall not exceed for all Banks at any time
outstanding that aggregate principal amount which, when added to (I) the amount
of all Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time and (II) the aggregate
principal amount of all Swingline Loans (exclusive of Swingline Loans which are
repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) then outstanding, equals the Total
Revolving Loan Commitment at such time.
(d) Subject to and upon the terms and conditions set forth
herein, the Swingline Bank agrees to make, at any time and from time to time on
and after the Initial Borrowing Date and prior to the Swingline Expiry Date, a
revolving loan or revolving loans (each a "Swingline Loan" and, collectively,
the "Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made
and maintained as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks then
outstanding and the Letter of Credit Outstandings at such time, an amount equal
to the Adjusted Total Revolving Loan Commitment at such time (after giving
effect to any reductions to the Adjusted Total Revolving Loan Commitment on such
date), and (iv) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount. Notwithstanding anything to the
contrary contained in this Section 1.01(d), the Swingline Bank shall not make
any Swingline Loan after it has received written notice from the Borrower or the
Required Banks stating that a Default or an Event of Default exists and is
continuing until such time as the
-3-
<PAGE> 11
Swingline Bank shall have received written notice (i) of rescission of all such
notices from the party or parties originally delivering such notice, (ii) of the
waiver of such Default or Event of Default by the Required Banks or (iii) that
the Agents in good faith believe that such Default or Event of Default has
ceased to exist.
(e) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans shall
be funded with one or more Borrowings of Revolving Loans (provided that such
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10), in which case one
or more Borrowings of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately succeeding
Business Day by all Banks with a Revolving Loan Commitment (without giving
effect to any reductions thereto pursuant to the last paragraph of Section 10)
pro rata based on each such Bank's Adjusted RL Percentage (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 10) and the proceeds thereof shall be applied
directly by the Swingline Bank to repay the Swingline Bank for such outstanding
Swingline Loans. Each such Bank hereby irrevocably agrees to make Revolving
Loans upon one Business Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified in writing by the Swingline Bank notwithstanding (i) the amount of the
Mandatory Borrowing may not comply with the Minimum Borrowing Amount otherwise
required hereunder, (ii) whether any conditions specified in Section 6 are then
satisfied, (iii) whether a Default or an Event of Default then exists, (iv) the
date of such Mandatory Borrowing and (v) the amount of the Total Revolving Loan
Commitment or the Adjusted Total Revolving Loan Commitment at such time. In the
event that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower), then each such Bank hereby agrees that it shall forthwith purchase
(as of the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrower on or after such date and
prior to such purchase) from the Swingline Bank such participations in the
outstanding Swingline Loans as shall be necessary to cause such Banks to share
in such Swingline Loans ratably based upon their respective Adjusted RL
Percentages (determined before giving effect to any termination of the Revolving
Loan Commitments pursuant to the last paragraph of Section 10), provided that
(x) all interest payable on the Swingline Loans shall be for the account of the
Swingline Bank until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date and
(y) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay the Swingline Bank
interest on the principal amount of participation purchased for each day from
and including the day upon which the Mandatory Borrowing would otherwise have
occurred to but excluding the date
-4-
<PAGE> 12
of payment for such participation, at the overnight Federal Funds Rate for the
first three days and at the rate otherwise applicable to Revolving Loans
maintained as Base Rate Loans hereunder for each day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Loans under a respective Tranche shall not be less
than the Minimum Borrowing Amount for such Tranche. More than one Borrowing may
occur on the same date, but at no time shall there be outstanding more than
sixteen Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
incur Loans hereunder (excluding Swingline Loans and Revolving Loans incurred
pursuant to a Mandatory Borrowing), the Borrower shall give the Administrative
Agent at its Notice Office at least one Business Day's prior notice of each Base
Rate Loan and at least three Business Days' prior notice of each Eurodollar Loan
to be incurred hereunder, provided that any such notice shall be deemed to have
been given on a certain day only if given before 1:00 P.M. (New York time) on
such day. Each such notice (each a "Notice of Borrowing"), except as otherwise
expressly provided in Section 1.10, shall be irrevocable and shall be given by
the Borrower in writing, or by telephone promptly confirmed in writing, in the
form of Exhibit A, appropriately completed to specify the aggregate principal
amount of the Loans to be incurred pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day), whether the Loans being incurred
pursuant to such Borrowing shall constitute Tranche A Term Loans, Tranche B Term
Loans or Revolving Loans and whether the Loans being incurred pursuant to such
Borrowing are to be initially maintained as Base Rate Loans or Eurodollar Loans
and, if Eurodollar Loans, the initial Interest Period to be applicable thereto.
The Administrative Agent shall promptly give each Bank which is required to make
Loans of the Tranche specified in the respective Notice of Borrowing, notice of
such proposed Borrowing, of such Bank's proportionate share thereof and of the
other matters required by the immediately preceding sentence to be specified in
the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give the Swingline Bank no later than 2:00 P.M.
(New York time) on the date that a Swingline Loan is to be incurred, written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred hereunder. Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(e), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of the Mandatory Borrowings as
set forth in Section 1.01(e).
-5-
<PAGE> 13
(c) Without in any way limiting the obligation of the Borrower
to confirm in writing any telephonic notice of any Borrowing or prepayment of
Loans, the Administrative Agent or the Swingline Bank, as the case may be, may
act without liability upon the basis of telephonic notice of such Borrowing or
prepayment, believed by the Administrative Agent or the Swingline Bank, as the
case may be, in good faith to be from the Chief Executive Officer, the
President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer
or the Controller of the Borrower, or from any other authorized person of the
Borrower designated in writing by the Borrower to the Administrative Agent as
being authorized to give such notices, prior to receipt of written confirmation.
In each such case, the Borrower hereby waives the right to dispute the
Administrative Agent's or the Swingline Bank's record of the terms of such
telephonic notice of such Borrowing or prepayment of Loans (absent manifest
error).
1.04 Disbursement of Funds. No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than 3:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, no
later than 1:00 P.M. (New York time) on the date specified in Section 1.01(e)),
each Bank with a Commitment of the respective Tranche will make available its
pro rata portion (determined in accordance with Section 1.07) of each such
Borrowing requested to be made on such date (or, in the case of Swingline Loans,
the Swingline Bank will make available the full amount thereof). All such
amounts will be made available in Dollars and in immediately available funds at
the Payment Office of the Administrative Agent, and the Administrative Agent
will make available to the Borrower at the Payment Office the aggregate of the
amounts so made available by the Banks (other than in respect of Mandatory
Borrowings). Unless the Administrative Agent shall have been notified by any
Bank prior to the date of Borrowing that such Bank does not intend to make
available to the Administrative Agent such Bank's portion of any Borrowing to be
made on such date, the Administrative Agent may assume that such Bank has made
such amount available to the Administrative Agent on such date of Borrowing and
the Administrative Agent may (but shall not be obligated to), in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Bank, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover on demand from such Bank
or the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Administrative Agent to the Borrower until the date such corresponding
amount is recovered by the Administrative Agent, at a rate per annum equal to
(i) if recovered from such Bank, at the customary rate set by the Administrative
Agent for the correction of errors among banks for each day during
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<PAGE> 14
the period consisting of the first three Business Days following such date of
availability and thereafter at the Base Rate as in effect from time to time and
(ii) if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Bank as a result of any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Bank shall be evidenced (i) if
Tranche A Term Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-1, with blanks appropriately
completed in conformity herewith (each a "Tranche A Term Note" and,
collectively, the "Tranche A Term Notes"), (ii) if Tranche B Term Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-2, with blanks appropriately completed in conformity herewith
(each a "Tranche B Term Note" and, collectively, the "Tranche B Term Notes"),
(iii) if Revolving Loans, by a promissory note duly executed and delivered by
the Borrower substantially in the form of Exhibit B-3, with blanks appropriately
completed in conformity herewith (each a "Revolving Note" and, collectively, the
"Revolving Notes") and (iv) if Swingline Loans, by a promissory note duly
executed and delivered by the Borrower substantially in the form of Exhibit B-4,
with blanks appropriately completed in conformity herewith (the "Swingline
Note").
(b) The Tranche A Term Note issued to each Bank that has a
Tranche A Term Loan Commitment or outstanding Tranche A Term Loans shall (i) be
executed by the Borrower, (ii) be payable to such Bank or its registered assigns
and be dated the Initial Borrowing Date (or, if issued after the Initial
Borrowing Date, be dated the date of the issuance thereof), (iii) be in a stated
principal amount equal to the Tranche A Term Loan Commitment of such Bank on the
Initial Borrowing Date (before giving effect to the making of any Tranche A Term
Loans on such date by such Bank) (or, if issued after the Initial Borrowing
Date, be in a stated principal amount equal to any outstanding Tranche A Term
Loan Commitment of such Bank at such time plus the outstanding principal amount
of any Tranche A Term Loans of such Bank at such time) and be payable in the
outstanding principal amount of Tranche A Term Loans evidenced thereby, (iv)
mature on the Tranche A Term Loan Maturity Date, (v) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(c) The Tranche B Term Note issued to each Bank that has a
Tranche B Term Loan Commitment or outstanding Tranche B Term Loans shall (i) be
executed by the Borrower, (ii) be payable to such Bank or its registered assigns
and be dated the Initial
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<PAGE> 15
Borrowing Date (or, if issued after the Initial Borrowing Date, be dated the
date of the issuance thereof), (iii) be in a stated principal amount equal to
the Tranche B Term Loans made by such Bank and be payable in the outstanding
principal amount of Tranche B Term Loans evidenced thereby, (iv) mature on the
Tranche B Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(d) The Revolving Note issued to each Bank that has a
Revolving Loan Commitment or outstanding Revolving Loans shall (i) be executed
by the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the Initial Borrowing Date (or, if issued after the Initial Borrowing
Date, be dated the date of the issuance thereof), (iii) be in a stated principal
amount equal to the Revolving Loan Commitment of such Bank (or, if issued after
the termination thereof, be in a stated principal amount equal to the
outstanding Revolving Loans of such Bank at such time) and be payable in the
outstanding principal amount of the Revolving Loans evidenced thereby, (iv)
mature on the Revolving Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(e) The Swingline Note issued to the Swingline Bank shall (i)
be executed by the Borrower, (ii) be payable to the Swingline Bank or its
registered assigns and be dated the Initial Borrowing Date, (iii) be in a stated
principal amount equal to the Maximum Swingline Amount and be payable in the
outstanding principal amount of the Swingline Loans evidenced thereby from time
to time, (iv) mature on the Swingline Expiry Date, (v) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01, and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(f) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in such notation shall not affect (i.e., will not increase or
decrease) the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day occurring after the Initial Borrowing Date, all or
a portion equal to at least the Minimum Borrowing Amount of the outstanding
principal amount of Loans (other than
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<PAGE> 16
Swingline Loans, which may not be converted pursuant to this Section 1.06) made
pursuant to one or more Borrowings (so long as of the same Tranche) of one or
more Types of Loans into a Borrowing (of the same Tranche) of another Type of
Loan, provided that, (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable to the Loans being converted and no such partial
conversion of Eurodollar Loans shall reduce the outstanding principal amount of
such Eurodollar Loans made pursuant to a single Borrowing to less than the
Minimum Borrowing Amount applicable thereto, (ii) Base Rate Loans may only be
converted into Eurodollar Loans if no Default or Event of Default is in
existence on the date of the conversion, (iii) unless the Agents otherwise shall
have determined that the Syndication Date has occurred, prior to the 90th day
after the Initial Borrowing Date, conversions of Base Rate Loans into Eurodollar
Loans may only be made if the conversion is effective on the first day of the
first, second or third Interest Period referred to in clause (B) of the proviso
of each of Sections 1.01(a)(ii), 1.01(b)(i) and 1.01(c)(i) and so long as such
conversion does not result in a greater number of Borrowings of Eurodollar Loans
prior to the 90th day after the Initial Borrowing Date than are permitted under
Sections 1.01(a), 1.01(b) and 1.01(c) and (iv) no conversion pursuant to this
Section 1.06 shall result in a greater number of Borrowings of Eurodollar Loans
than is permitted under Section 1.02. Each such conversion shall be effected by
the Borrower by giving the Administrative Agent at its Notice Office prior to
1:00 P.M. (New York time) at least three Business Days' prior notice (each a
"Notice of Conversion") specifying the Loans to be so converted, the Borrowing
or Borrowings pursuant to which such Loans were made and, if to be converted
into Eurodollar Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans. Upon any such conversion the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Tranche A Term
Loans, Tranche B Term Loans and Revolving Loans under this Agreement shall be
incurred from the Banks pro rata on the basis of their Tranche A Term Loan
Commitments, Tranche B Term Loan Commitments or Revolving Loan Commitments, as
the case may be, provided, that all Borrowings of Revolving Loans made pursuant
to a Mandatory Borrowing shall be incurred from the Banks with Revolving Loan
Commitments pro rata on the basis of their Adjusted RL Percentages. It is
understood that no Bank shall be responsible for any default by any other Bank
of its obligation to make Loans hereunder and that each Bank shall be obligated
to make the Loans provided to be made by it hereunder, regardless of the failure
of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrower until the earlier of (i) the
maturity thereof (whether by acceleration or otherwise) and (ii) the conversion
of such Base Rate Loan into a Eurodollar Loan pursuant
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<PAGE> 17
to Section 1.06, at a rate per annum which shall be equal to the sum of the
Applicable Margin plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
thereof (whether by acceleration or otherwise) and (ii) the conversion of such
Eurodollar Loan into a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as
applicable, at a rate per annum which shall, during each Interest Period
applicable thereto, be equal to the sum of the Applicable Margin plus the
Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to 2% per
annum in excess of the rate otherwise applicable to Base Rate Loans of the
respective Tranche of Loans from time to time with such interest to be payable
on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower (but otherwise subject to the limitation set forth in
clause (B) of the proviso in each of Sections 1.01(a)(ii), 1.01(b)(i) and
1.01(c)(i)), be a one, two, three or six-month period or, if available to all
Banks with Loans of the respective Tranche at such time, a nine or twelve-month
period, provided that:
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<PAGE> 18
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Loan of a different Type) and
each Interest Period occurring thereafter in respect of such Eurodollar
Loan shall commence on the day on which the next preceding Interest
Period applicable thereto expires;
(iii) if any Interest Period for a Eurodollar Loan begins on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of such calendar month;
(iv) if any Interest Period for a Eurodollar Loan would
otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day; provided,
however, that if any Interest Period for a Eurodollar Loan would
otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default or an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any
Tranche of Loans shall be selected which extends beyond the respective
Maturity Date for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of
Tranche A Term Loans or Tranche B Term Loans, as the case may be, shall
be selected which extends beyond any date upon which a mandatory
repayment of such Tranche of Term Loans will be required to be made
under Section 4.02(b) or (c), as the case may be, if the aggregate
principal amount of Tranche A Term Loans or Tranche B Term Loans, as
the case may be, which have Interest Periods which will expire after
such date will be in excess of the aggregate principal amount of
Tranche A Term Loans or Tranche B Term Loans, as the case may be, then
outstanding less the aggregate amount of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be
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<PAGE> 19
deemed to have elected to convert such Eurodollar Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
any Bank shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but, with
respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the date
of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any
Bank of the principal of or interest on the Notes or any other amounts
payable hereunder (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of such Bank
pursuant to the laws of the jurisdiction in which it is organized or in
which its principal office or applicable lending office is located or
any subdivision thereof or therein) or (B) a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the
Eurodollar Rate and/or (y) other circumstances since the date of this
Agreement affecting the New York interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone promptly confirmed
in writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer
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<PAGE> 20
be available until such time as the Administrative Agent notifies the Borrower
and the Banks that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion given by the Borrower with respect to Eurodollar Loans which have not
yet been incurred (including by way of conversion) shall be deemed rescinded by
the Borrower, (y) in the case of clause (ii) above, the Borrower shall, subject
to the provisions of Section 13.17 (to the extent applicable), pay to such Bank,
within 5 Business Days after such Bank's written request therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank in its sole discretion shall
determine (but without duplication of any amounts that may be payable to such
Bank under Section 1.10(c)) as shall be required to compensate such Bank for
such increased costs or reductions in amounts received or receivable hereunder
(a written notice as to the additional amounts owed to such Bank, showing in
reasonable detail the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding on all the parties hereto) and (z) in the case of clause (iii) above,
the Borrower shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, by giving the Administrative
Agent telephonic notice (confirmed in writing) on the same date that the
Borrower was notified by the affected Bank or the Administrative Agent pursuant
to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan is then
outstanding, upon at least three Business Days' written notice to the
Administrative Agent, require the affected Bank to convert such Eurodollar Loan
into a Base Rate Loan, provided that, if more than one Bank is affected at any
time, then all affected Banks must be treated the same pursuant to this Section
1.10(b).
(c) If at any time after the date of this Agreement any Bank
determines that the introduction of or any change (which introduction or change
shall have occurred after the date of this Agreement) in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank, the NAIC or comparable agency, will have the effect of increasing the
amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank based on the existence of such Bank's
Commitments hereunder or its obligations hereunder, then the Borrower shall,
subject to the provisions of Section 13.17 (to the extent applicable), pay to
such Bank, within 5 Business Days after its written demand therefor, such
additional amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation or the
reduction in
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<PAGE> 21
the rate of return to such Bank or such other corporation as a result of such
increase of capital (but without duplication of any amounts that may be payable
to such Bank under Section 1.10(a)). In determining such additional amounts,
each Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that such Bank's
determination of compensation owing under this Section 1.10(c) shall, absent
manifest error, be final and conclusive and binding on all the parties hereto.
Each Bank, upon determining that any additional amounts will be payable pursuant
to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall show in reasonable detail the basis for calculation
of such additional amounts.
1.11 Compensation. The Borrower shall compensate each Bank,
within 5 Business Days after its written request (which request shall set forth
in reasonable detail the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund its Eurodollar Loans
but excluding loss of anticipated profits) which such Bank may sustain: (i) if
for any reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any repayment (including any repayment made pursuant
to Section 4.01, 4.02 or as a result of an acceleration of the Loans pursuant to
Section 10) or conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of an Interest Period with respect thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any
other default by the Borrower to repay its Loans when required by the terms of
this Agreement or any Note held by such Bank or (y) any election made pursuant
to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage which such Bank determines, in its
sole discretion, to be adverse in any material respect, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Bank provided in Sections 1.10,
2.06 and 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a
Defaulting Bank or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings, (y) upon the
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<PAGE> 22
occurrence of an event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to any Bank
which results in such Bank charging to the Borrower increased costs in excess of
those being generally charged by the other Banks or (z) in the case of a refusal
by a Bank to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as (and to the extent) provided in Section 13.12(b), the Borrower
shall have the right, if no Default or Event of Default then exists (or, in the
case of preceding clause (z), no Default or Event of Default will exist
immediately after giving effect to such replacement), to either (1) replace such
Bank (the "Replaced Bank") with one or more other Eligible Transferees, none of
whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") and each of whom shall be required to be
reasonably acceptable to the Administrative Agent or (2) at the option of the
Borrower, replace only (a) the Revolving Loan Commitment (and outstandings
pursuant thereto) of the Replaced Bank with an identical Revolving Loan
Commitment provided by the Replacement Bank or (b) in the case of a replacement
as provided in Section 13.12(b) where the consent of the respective Bank is
required with respect to less than all Tranches of its Loans or Commitments, the
Commitments and/or outstanding Term Loans of such Bank in respect of each
Tranche where the consent of such Bank would otherwise be individually required,
with identical Commitments and/or Term Loans of the respective Tranche provided
by the Replacement Bank, provided that (i) at the time of any replacement
pursuant to this Section 1.13, the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with all
fees payable pursuant to said Section 13.04(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all of the
Commitments and outstanding Loans (or, in the case of the replacement of only
(a) the Revolving Loan Commitment, the Revolving Loan Commitment and outstanding
Revolving Loans and participations in outstanding Letters of Credit and/or (b)
the outstanding Term Loans of one or more Tranches, the Term Loans of the
respective Tranche or Tranches) of, and in each case participations in Letters
of Credit by, the Replaced Bank and, in connection therewith, shall pay to (x)
the Replaced Bank in respect thereof an amount equal to the sum of (I) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans
(or of the Loans of the respective Tranche or Tranches being replaced) of the
Replaced Bank, (II) an amount equal to all Unpaid Drawings that have been funded
by (and not reimbursed to) such Replaced Bank, together with all then unpaid
interest with respect thereto at such time and (III) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank (but only with
respect to the relevant Tranche, in the case of the replacement of less than all
Tranches of Loans then held by the respective Replaced Bank) pursuant to Section
3.01, (y) except in the case of the replacement of only the outstanding Term
Loans of one or both Tranches of a Replaced Bank, each Issuing Bank an amount
equal to such Replaced Bank's Adjusted RL Percentage (for this purpose,
determined as if the adjustment described in clause (y) of the immediately
succeeding sentence had been made with respect to such Replaced Bank) of any
Unpaid Drawing (which at such time remains an Unpaid Drawing) to the extent such
amount was not theretofore funded by such
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<PAGE> 23
Replaced Bank to such Issuing Bank and (z) except in the case of the replacement
of only the outstanding Term Loans of one or both Tranches of a Replaced Bank,
the Swingline Bank an amount equal to such Replaced Bank's Adjusted RL
Percentage of any Mandatory Borrowing to the extent such amount was not
theretofore funded by such Replaced Bank, and (ii) all obligations of the
Borrower due and owing to the Replaced Bank at such time (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Assumption Agreement, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Bank, delivery to the Replacement Bank of the appropriate Note or
Notes executed by the Borrower, (x) the Replacement Bank shall become a Bank
hereunder and, unless the respective Replaced Bank continues to have outstanding
Term Loans or a Commitment hereunder, the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.06,
4.04, 12.06 and 13.01), which shall survive as to such Replaced Bank and (y)
except in the case of the replacement of only outstanding Term Loans of one or
both Tranches of a Replaced Bank, the Adjusted RL Percentages of the Banks shall
be automatically adjusted at such time to give effect to such replacement (and
to give effect to the replacement of a Defaulting Bank with one or more
Non-Defaulting Banks). It is understood and agreed that replacements pursuant to
this Section 1.13 shall be effected by means of assignments which otherwise meet
the applicable requirements of Section 13.04(b).
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Initial Borrowing Date
and prior to the 30th day prior to the Revolving Loan Maturity Date, (x) for the
account of the Borrower and for the benefit of any holder (or any trustee, agent
or other similar representative for any such holders) of L/C Supportable
Obligations of the Borrower or any of its Subsidiaries or Joint Ventures, an
irrevocable standby letter of credit, in a form customarily used by such Issuing
Bank or in such other form as has been approved by such Issuing Bank (each such
standby letter of credit, a "Standby Letter of Credit") in support of such L/C
Supportable Obligations and (y) for the account of the Borrower and for the
benefit of sellers of goods and materials used in the ordinary course of
business of the Borrower or any of its Subsidiaries or Joint Ventures an
irrevocable sight commercial letter of credit in a form customarily used by such
Issuing Bank or in such other form as has been approved by such Issuing Bank
(each such commercial letter of credit, a "Trade Letter of Credit", and each
such Trade Letter of Credit and each Standby Letter of Credit, a "Letter of
Credit") in support of commercial transactions of the Borrower and its
Subsidiaries and Joint Ventures. All Letters of Credit shall be denominated in
Dollars.
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(b) Subject to and upon the terms and conditions set forth
herein, each Issuing Bank hereby agrees that it will, at any time and from time
to time on and after the Initial Borrowing Date and prior to the 30th day prior
to the Revolving Loan Maturity Date, following its receipt of the respective
Letter of Credit Request, issue for the account of the Borrower, one or more
Letters of Credit (x) in the case of Standby Letters of Credit, in support of
such L/C Supportable Obligations of the Borrower or any of its Subsidiaries or
Joint Ventures as are permitted to remain outstanding without giving rise to a
Default or an Event of Default and (y) in the case of Trade Letters of Credit,
in support of sellers of goods or materials used in the ordinary course of
business of the Borrower or any of its Subsidiaries or Joint Ventures as
referenced in Section 2.01(a), provided that the respective Issuing Bank shall
be under no obligation to issue any Letter of Credit of the types described
above if at the time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain such Issuing Bank from issuing such Letter of Credit or any
requirement of law applicable to such Issuing Bank or any request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over such Issuing Bank shall
prohibit, or request that such Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon such Issuing Bank with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which
such Issuing Bank is not otherwise compensated) not in effect on the
date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date
hereof and which such Issuing Bank reasonably and in good faith deems
material to it; or
(ii) such Issuing Bank shall have received notice from the
Required Banks prior to the issuance of such Letter of Credit of the
type described in the penultimate sentence of Section 2.03(b).
2.02 Maximum Letter of Credit Outstandings; Final Maturities.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) $20,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans made by NonDefaulting Banks then
outstanding and the aggregate principal amount of all Swingline Loans then
outstanding, an amount equal to the Adjusted Total Revolving Loan Commitment at
such time and (ii) each Letter of Credit shall by its terms terminate on or
before (A) in the case of Standby Letters of Credit, the earlier of (x) the date
which occurs 12 months after the date of the issuance thereof (although any such
Standby Letter of Credit may be extendable for successive periods of up to 12
months, but not beyond the third Business Day prior to the
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<PAGE> 25
Revolving Loan Maturity Date, on terms acceptable to the Issuing Bank thereof)
and (y) the third Business Day prior to the Revolving Loan Maturity Date and (B)
in the case of Trade Letters of Credit, the earlier of (x) the date which occurs
360 days after the date of issuance thereof and (y) 30 days prior to the
Revolving Loan Maturity Date.
2.03 Letter of Credit Requests. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Administrative Agent and the respective Issuing Bank at least five
Business Days' (or such shorter period as is acceptable to the respective
Issuing Bank) written notice thereof. Each notice shall be in the form of
Exhibit C (each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 2.02. Unless the respective Issuing Bank has received notice from
the Required Banks before it issues a Letter of Credit that one or more of the
conditions specified in Section 5 are not satisfied on the Initial Borrowing
Date or Section 6 are not then satisfied, or that the issuance of such Letter of
Credit would violate Section 2.02, then, subject to the terms and conditions of
this Agreement, such Issuing Bank shall issue the requested Letter of Credit for
the account of the Borrower in accordance with such Issuing Bank's usual and
customary practices. Upon the issuance of or amendment or modification to a
Standby Letter of Credit, the respective Issuing Bank shall promptly notify the
Borrower and the Administrative Agent of such issuance, amendment or
modification and such notification shall be accompanied by a copy of the issued
Standby Letter of Credit or amendment or modification.
2.04 Letter of Credit Participations. (a) Immediately upon the
issuance by the respective Issuing Bank of any Letter of Credit, such Issuing
Bank shall be deemed to have sold and transferred to each Bank with a Revolving
Loan Commitment, other than such Issuing Bank (each such Bank, in its capacity
under this Section 2.04, a "Participant"), and each such Participant shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted RL Percentage, in
such Letter of Credit, each drawing or payment made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Loan Commitments or Adjusted RL Percentages of the Banks pursuant to
Section 1.13 or 13.04, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this Section 2.04 to reflect the new Adjusted RL
Percentages of the assignor and assignee Bank, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
the respective Issuing Bank shall have no obligation relative to the other Banks
other than to confirm that
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any documents required to be delivered under such Letter of Credit appear to
have been delivered and that they appear to substantially comply on their face
with the requirements of such Letter of Credit. Any action taken or omitted to
be taken by any Issuing Bank under or in connection with any Letter of Credit if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not create for such Issuing Bank any resulting liability to the Borrower, any
other Credit Party, any Bank or any other Person.
(c) In the event that any Issuing Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Issuing Bank pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted RL Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted RL Percentage of the amount of such payment
on such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted RL Percentage of the amount of such payment
available to such Issuing Bank, such Participant agrees to pay to such Issuing
Bank, forthwith on demand such amount, together with interest thereon, for each
day from such date until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate for the first three days and at the interest
rate applicable to Revolving Loans maintained as Base Rate Loans for each day
thereafter. The failure of any Participant to make available to such Issuing
Bank its Adjusted RL Percentage of any payment under any Letter of Credit shall
not relieve any other Participant of its obligation hereunder to make available
to such Issuing Bank its Adjusted RL Percentage of any Letter of Credit on the
date required, as specified above, but no Participant shall be responsible for
the failure of any other Participant to make available to such Issuing Bank such
other Participant's Adjusted RL Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, such Issuing Bank shall pay to each
Participant which has paid its Adjusted RL Percentage thereof, in Dollars and in
same day funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.
(e) Upon the request of any Participant, each Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such Participant.
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(f) The obligations of the Participants to make payments to
each Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever (except
as otherwise expressly provided in the last sentence of Section 2.04(b)) and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries or Joint Ventures
may have at any time against a beneficiary named in a Letter of Credit,
any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, any Participant,
or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
or any Subsidiary or Joint Venture of the Borrower and the beneficiary
named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the respective Issuing Bank, by making
payment to the Administrative Agent in immediately available funds at the
Payment Office, for any payment or disbursement made by such Issuing Bank under
any Letter of Credit issued by it (each such amount, so paid until reimbursed,
an "Unpaid Drawing"), immediately after, and in any event on the date of, such
payment or disbursement, with interest on the amount so paid or disbursed by
such Issuing Bank, to the extent not reimbursed prior to 1:00 P.M. (New York
time) on the date of such payment or disbursement, from and including the date
paid or disbursed to but excluding the date such Issuing Bank was reimbursed by
the Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Margin for Revolving Loans maintained as
Base Rate Loans; provided, however, to the extent such amounts are not
reimbursed prior to 1:00 P.M. (New York time) on the third Business Day
following the receipt by the Borrower of notice of such payment or dis-
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bursement or following the occurrence of a Default or an Event of Default under
Section 10.05, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Bank (and until reimbursed by the Borrower) at a rate
per annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Revolving Loans maintained as Base Rate Loans plus 2%, in
each such case, with interest to be payable on demand. The respective Issuing
Bank shall give the Borrower prompt written notice of each Drawing under any
Letter of Credit, provided that the failure to give any such notice shall in no
way affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against any Bank
(including in its capacity as issuer of the Letter of Credit or as Participant),
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit (each a "Drawing") to conform to the terms of the
Letter of Credit or any nonapplication or misapplication by the beneficiary of
the proceeds of such Drawing; provided, however, that the Borrower shall not be
obligated to reimburse any Issuing Bank for any wrongful payment made by such
Issuing Bank under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Issuing
Bank.
2.06 Increased Costs. If at any time after the date of this
Agreement, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Participant with any request or directive by any such authority (including
the NAIC) (whether or not having the force of law), shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against letters of credit issued by any Issuing Bank or participated
in by any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement; and the
result of any of the foregoing is to increase the cost to any Issuing Bank or
any Participant of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuing
Bank or any Participant hereunder or reduce the rate of return on its capital
with respect to Letters of Credit (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of such Issuing Bank or
such Participant pursuant to the laws of the jurisdiction in which it is
organized or in which its principal office or applicable lending office is
located or any subdivision thereof or therein), then, within 5 Business Days of
the delivery of the certificate referred to below to the Borrower by such
Issuing Bank or any Participant (a copy of which certificate shall be sent by
such Issuing Bank or such Participant to the Agent), the Borrower shall, subject
to the provisions of Section 13.17 (to the extent applicable), pay to such
Issuing Bank or such
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<PAGE> 29
Participant such additional amount or amounts as will compensate such Bank for
such increased cost or reduction in the amount receivable or reduction on the
rate of return on its capital. Any Issuing Bank or any Participant, upon
determining that any additional amounts will be payable pursuant to this Section
2.06, will give prompt written notice thereof to the Borrower, which notice
shall include a certificate submitted to the Borrower by such Issuing Bank or
such Participant (a copy of which certificate shall be sent by such Issuing Bank
or such Participant to the Agent), setting forth in reasonable detail the basis
for the calculation of such additional amount or amounts necessary to compensate
such Issuing Bank or such Participant. In determining such additional amounts,
each Issuing Bank and each Participant will act reasonably and in good faith,
provided that the certificate required to be delivered pursuant to this Section
2.06 shall, absent manifest error, be final and conclusive and binding on the
Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a) The Borrower agrees to pay to the
Administrative Agent for distribution to each Non-Defaulting Bank with a Term
Loan Commitment, a commitment commission (the "Term Loan Commitment Commission")
for the period from and including the Effective Date to but excluding the date
on which the Total Term Loan Commitment shall have been terminated, computed at
a rate for each day equal to the Applicable Commitment Commission Percentage on
the daily average Term Loan Commitment of such Bank. Accrued Term Loan
Commitment Commission shall be due and payable on the Initial Borrowing Date,
quarterly in arrears on each Quarterly Payment Date and on the date on which the
Total Term Loan Commitment shall have been terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment commission (the "Revolving Loan Commitment Commission") for the
period from and including the Effective Date to but excluding the Revolving Loan
Maturity Date (or such earlier date as the Total Revolving Loan Commitment shall
have been terminated), computed at a rate for each day equal to the Applicable
Commitment Commission Percentage on the daily average Unutilized Revolving Loan
Commitment of such Non-Defaulting Bank. Accrued Revolving Loan Commitment
Commission shall be due and payable quarterly in arrears on each Quarterly
Payment Date and on the Revolving Loan Maturity Date or such earlier date upon
which the Total Revolving Loan Commitment is terminated.
(c) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on each such Non-Defaulting Bank's respective Adjusted RL Percentage) a fee in
respect of each Letter of Credit issued hereunder (the "Letter of Credit Fee"),
for the period from and including the date of issuance of such Letter of Credit
to and including the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the Applicable Margin for
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Revolving Loans maintained as Eurodollar Loans on the daily Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and on the first day after
the termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(d) The Borrower agrees to pay to each Issuing Bank, for its
own account, a facing fee in respect of each Letter of Credit issued by such
Issuing Bank (the "Facing Fee"), for the period from and including the date of
issuance of such Letter of Credit to and including the date of the termination
of such Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the
daily Stated Amount of such Letter of Credit. Accrued Facing Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and upon the
first day after the termination of the Total Revolving Loan Commitment upon
which no Letters of Credit remain outstanding.
(e) The Borrower agrees to pay, upon each drawing under,
issuance of, or amendment to, any Letter of Credit, such amount as shall at the
time of such event be the administrative charge and the reasonable expenses
which the applicable Issuing Bank is generally imposing in connection with such
occurrence with respect to letters of credit.
(f) The Borrower agrees to pay to the Agents, for their own
account, such other fees as have been agreed to in writing by the Borrower and
the Agents.
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon
at least one Business Day's prior written notice to the Administrative Agent at
its Notice Office (which notice the Administrative Agent shall promptly transmit
to each of the Banks), the Borrower shall have the right, at any time or from
time to time, without premium or penalty, to terminate the Total Unutilized
Revolving Loan Commitment, in whole or in part, in integral multiples of
$1,000,000 in the case of partial reductions to the Total Unutilized Revolving
Loan Commitment, provided that (i) each such reduction shall apply
proportionately to permanently reduce the Revolving Loan Commitment of each Bank
with such a Commitment and (ii) the reduction to the Total Unutilized Revolving
Loan Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any Bank to be reduced (as required by preceding clause (i))
by an amount which exceeds the remainder of (x) the Unutilized Revolving Loan
Commitment of such Bank as in effect immediately before giving effect to such
reduction minus (y) such Bank's Adjusted RL Percentage of the aggregate
principal amount of Swingline Loans then outstanding.
(b) At any time after the Initial Borrowing Date and prior to
the termination of the Total Tranche A Term Loan Commitment and upon notice to
the Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall have the
right, without premium or penalty, to terminate the remaining Total Tranche A
Term Loan Commitment in the event that the Borrower has
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determined after the Initial Borrowing Date to keep the Existing Glendale Debt
outstanding and not have it be part of the Indebtedness to be Refinanced. The
amount by which the Total Tranche A Term Loan Commitment is terminated pursuant
to this Section 3.02(b) shall be applied to reduce the then remaining Tranche A
Term Loan Scheduled Repayments pro rata based upon the then remaining amount of
each such Tranche A Term Loan Scheduled Repayment. The termination of the Total
Tranche A Term Loan Commitment pursuant to this Section 3.02(b) shall be applied
to terminate the Tranche A Term Loan Commitment of each Bank with such a
Commitment.
(c) In the event of a refusal by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, subject to its compliance with
the requirements of Section 13.12(b), upon five Business Days' prior written
notice to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks) terminate all
of the Revolving Loan Commitment of such Bank, so long as all Loans, together
with accrued and unpaid interest, Fees and all other amounts, owing to such Bank
(other than amounts owing in respect of any Tranche of Loans maintained by such
Bank which are not being repaid pursuant to Section 13.12(b)) are repaid
concurrently with the effectiveness of such termination pursuant to Section
4.01(b) (at which time Schedule I shall be deemed modified to reflect such
changed amounts), and at such time, unless the respective Bank continues to have
outstanding Loans of one or more Tranches hereunder, such Bank shall no longer
constitute a "Bank" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without limitation, Sections
1.10, 1.11, 2.06, 4.04, 12.06 and 13.01), which shall survive as to such repaid
Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total
Commitments (and the Tranche A Term Loan Commitment, the Tranche B Term Loan
Commitment and the Revolving Loan Commitment of each Bank) shall terminate in
their entirety on January 31, 1997 unless the Initial Borrowing Date has
occurred on or before such date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Tranche A Term Loan Commitment (and the
Tranche A Term Loan Commitment of each Bank) shall (i) be reduced on each Term
Loan Borrowing Date (after giving effect to the making of Tranche A Term Loans
on such date), in an amount equal to the aggregate principal amount of Tranche A
Term Loans incurred on such date, (ii) terminate in its entirety (to the extent
not theretofore terminated) at 5:00 P.M. (New York time) on the Tranche A Term
Loan Commitment Termination Date, whether or not any Tranche A Term Loans are
incurred on such date and (iii) prior to the termination of the Total Tranche A
Term Loan Commitment, be reduced from time to time to the extent required by
Section 4.02. In the event that the Total Tranche A Term Loan Commitment is
terminated on the Tranche A Term Loan Commitment Termination Date and either no
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Tranche A Term Loans are incurred on such date or Tranche A Term Loans are
incurred in an amount less than the Total Tranche A Term Loan Commitment as then
in effect, the amount by which the Total Tranche A Term Loan Commitment is
terminated (after giving effect to any reduction thereto on such date as
provided in Section 4.02(e)(ii)(y)) shall be applied to reduce the then
remaining Tranche A Term Loan Scheduled Repayments pro rata based upon the then
remaining amount of each such Tranche A Term Loan Scheduled Repayment.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Tranche B Term Loan Commitment (and the
Tranche B Term Loan Commitment of each Bank) shall (i) terminate in its entirety
on the Initial Borrowing Date (after giving effect to the making of the Tranche
B Term Loans on such date) and (ii) prior to the termination of the Total
Tranche B Term Loan Commitment, be reduced from time to time to the extent
required by Section 4.02.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Bank) shall terminate in its entirety on the
Revolving Loan Maturity Date.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Effective Date upon which
a mandatory repayment of Term Loans or a mandatory reduction to the Total Term
Loan Commitment pursuant to any of Sections 4.02(d) through (i), inclusive, is
required (and exceeds in amount the aggregate principal amount of Term Loans
then outstanding and the Total Term Loan Commitment was then in effect) or would
be required if Term Loans were then outstanding or the Total Term Loan
Commitment was then in effect, the Total Revolving Loan Commitment shall be
permanently reduced by the amount, if any, by which the amount required to be
applied pursuant to said Sections (determined as if an unlimited amount of Term
Loans were actually outstanding) exceeds the aggregate principal amount of Term
Loans then outstanding and the Total Term Loan Commitment then in effect.
(f) Each reduction to the Total Tranche A Term Loan
Commitment, the Total Tranche B Term Loan Commitment and the Total Revolving
Loan Commitment pursuant to this Section 3.03 (or pursuant to Section 4.02)
shall be applied proportionately to permanently reduce the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment or the Revolving Loan Commitment,
as the case may be, of each Bank with such a Commitment.
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SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. (a) The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part at
any time and from time to time on the following terms and conditions: (i) the
Borrower shall give the Administrative Agent prior to 1:00 P.M. (New York time)
at its Notice Office (x) at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay Base
Rate Loans and (y) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, whether Tranche A Term Loans, Tranche B Term Loans, Revolving
Loans or Swingline Loans shall be prepaid, the amount of such prepayment and the
Types of Loans to be prepaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, which notice the Administrative
Agent shall promptly transmit to each of the Banks; (ii) each prepayment shall
be in an aggregate principal amount of at least $500,000 (or $100,000 in the
case of Swingline Loans), provided that if any partial prepayment of Eurodollar
Loans made pursuant to any Borrowing shall reduce the outstanding principal
amount of Eurodollar Loans made pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount applicable thereto, then such Borrowing may
not be continued as a Borrowing of Eurodollar Loans and any election of an
Interest Period with respect thereto given by the Borrower shall have no force
or effect; (iii) prepayments of Eurodollar Loans made pursuant to this Section
4.01(a) may only be made on the last day of an Interest Period applicable
thereto except that the Borrower may make prepayments of Eurodollar Loans on a
day which is not the last day of an Interest Period applicable to the Loans
being prepaid so long as the Borrower shall compensate each Bank for any
breakage costs and any other amounts due such Bank in accordance with Section
1.11; (iv) each prepayment in respect of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans; (v) except as provided below in this
clause (v), each voluntary prepayment of Term Loans pursuant to this Section
4.01(a) shall be applied pro rata to each Tranche of Term Loans (with each
Tranche of Term Loans to be allocated its respective Term Loan Percentage of the
amount to be applied), and (a) in the case of repayments of Tranche A Term
Loans, such repayments shall be applied to reduce the then remaining Tranche A
Term Loan Scheduled Repayments pro rata based upon the then remaining amount of
each Tranche A Term Loan Scheduled Repayment after giving effect to all prior
reductions thereto, and (b) in the case of repayments of Tranche B Term Loans,
such repayments shall be applied to reduce the then remaining Tranche B
Scheduled Term Loan Scheduled Repayments pro rata based upon the then remaining
amount of each Tranche B Term Loan Scheduled Repayment after giving effect to
all prior reductions thereto, provided that (A) any voluntary prepayment of Term
Loans pursuant to this Section 4.01(a) which is made (x) in any fiscal year with
proceeds of the Retained Excess Cash Flow Amount, as then in effect, for such
fiscal year or (y) with proceeds of the Retained Net Equity Proceeds Amount may
(in each case) be applied, at the Borrower's option (and upon written notice to
the Administrative Agent at the time notice of such prepayment is given by the
Borrower), to prepay only one Tranche of
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<PAGE> 34
Term Loans, and with each such prepayment to reduce the then remaining Scheduled
Repayments of such Tranche of Term Loans pro rata based upon the then remaining
amount of each such Scheduled Repayment after giving effect to all prior
reductions thereto and (B) no more than $10,000,000 (or $15,000,000 commencing
on January 1, 2000) may be applied in any calendar year in accordance with this
proviso; and (vi) at the Borrower's election in connection with any prepayment
of Revolving Loans pursuant to this Section 4.01(a), such prepayment shall not
be applied to any Revolving Loan of a Defaulting Bank.
(b) In the event of a refusal by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, upon five Business Days' prior
written notice to the Administrative Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans, together with accrued and unpaid interest, Fees, and other amounts owing
to such Bank (or owing to such Bank with respect to each Tranche which gave rise
to the need to obtain such Bank's individual consent) in accordance with, and
subject to the requirements of, said Section 13.12(b) so long as (A) in the case
of the repayment of Revolving Loans of any Bank pursuant to this clause (b) the
Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment pursuant to Section 3.02(c) (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments), and (B) the
consents, if any, required by Section 13.12(b) in connection with the repayment
pursuant to this clause (b) have been obtained.
4.02 Mandatory Repayments and Commitment Reductions. (a) (i)
On any day on which the sum of the aggregate outstanding principal amount of the
Revolving Loans made by Non-Defaulting Banks, Swingline Loans and the Letter of
Credit Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then
in effect, the Borrower shall prepay on such day principal of Swingline Loans
and, after all Swingline Loans have been repaid in full, Revolving Loans of
Non-Defaulting Banks in an amount equal to such excess. If, after giving effect
to the prepayment of all outstanding Swingline Loans and Revolving Loans of
Non-Defaulting Banks, the aggregate amount of the Letter of Credit Outstandings
exceeds the Adjusted Total Revolving Loan Commitment as then in effect, the
Borrower shall pay to the Administrative Agent at the Payment Office on such day
an amount of cash or Cash Equivalents equal to the amount of such excess (up to
a maximum amount equal to the Letter of Credit Outstandings at such time), such
cash or Cash Equivalents to be held as security for all obligations of the
Borrower to the Issuing Banks and the Non-Defaulting Banks hereunder in a cash
collateral account to be established by the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal
amount of the Revolving Loans made by any Defaulting Bank exceeds the Revolving
Loan Commitment of such Defaulting Bank, the Borrower shall prepay on such day
principal of Revolving Loans of such Defaulting Bank in an amount equal to such
excess.
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<PAGE> 35
(iii) If on December 1 of each year commencing on December 1,
1997, a Clean-Down Period shall not have occurred since January 30 of such year,
the Borrower shall repay Revolving Loans and/or Swingline Loans in an amount
necessary to reduce the aggregate outstanding principal amount of Revolving
Loans and Swingline Loans to $50,000,000, which amount may not be exceeded until
the Clean-Down Period for such year has ended.
(b) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date set forth
below, the Borrower shall be required to repay that principal amount of Tranche
A Term Loans, to the extent then outstanding, as is set forth opposite such date
(each such repayment, as the same may be reduced as provided in Sections 4.01(a)
and 4.02(k), a "Tranche A Term Loan Scheduled Repayment," and each such date, a
"Tranche A Term Loan Scheduled Repayment Date"):
<TABLE>
<CAPTION>
Tranche A Term Loan
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
March 31, 1997 $ 1,200,000
June 30, 1997 $ 1,200,000
September 30, 1997 $ 1,200,000
December 31, 1997 $ 1,200,000
March 31, 1998 $12,000,000
June 30, 1998 $12,000,000
September 30, 1998 $12,000,000
December 31, 1998 $12,000,000
March 31, 1999 $15,500,000
June 30, 1999 $15,500,000
September 30, 1999 $15,500,000
December 31, 1999 $15,500,000
March 31, 2000 $17,750,000
June 30, 2000 $17,750,000
</TABLE>
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<PAGE> 36
<TABLE>
<S> <C>
September 30, 2000 $17,750,000
December 31, 2000 $17,750,000
March 31, 2001 $21,500,000
June 30, 2001 $21,500,000
September 30, 2001 $21,500,000
December 31, 2001 $21,500,000
March 31, 2002 $22,600,000
June 30, 2002 $22,600,000
September 30, 2002 $22,600,000
Tranche A Term Loan Maturity Date $22,600,000
</TABLE>
(c) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date set forth
below, the Borrower shall be required to repay that principal amount of Tranche
B Term Loans, to the extent then outstanding, as is set forth opposite such date
(each such repayment, as the same may be reduced as provided in Sections 4.01(a)
and 4.02(k), a "Tranche B Term Loan Scheduled Repayment," and each such date, a
"Tranche B Term Loan Scheduled Repayment Date," and the Tranche A Term Loan
Scheduled Repayments and the Tranche B Term Loan Scheduled Repayments are
collectively referred to as the "Scheduled Repayments"):
<TABLE>
<CAPTION>
Tranche B Term Loan
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
March 31, 1997 $ 400,000
June 30, 1997 $ 400,000
September 30, 1997 $ 400,000
December 31, 1997 $ 400,000
March 31, 1998 $ 400,000
June 30, 1998 $ 400,000
September 30, 1998 $ 400,000
December 31, 1998 $ 400,000
March 31, 1999 $ 400,000
June 30, 1999 $ 400,000
September 30, 1999 $ 400,000
December 31, 1999 $ 400,000
March 31, 2000 $ 400,000
June 30, 2000 $ 400,000
</TABLE>
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<PAGE> 37
<TABLE>
<S> <C>
September 30, 2000 $ 400,000
December 31, 2000 $ 400,000
March 31, 2001 $ 400,000
June 30, 2001 $ 400,000
September 30, 2001 $ 400,000
December 31, 2001 $ 400,000
March 31, 2002 $ 400,000
June 30, 2002 $ 400,000
September 30, 2002 $ 400,000
December 31, 2002 $ 400,000
March 31, 2003 $26,900,000
June 30, 2003 $26,900,000
September 30, 2003 $26,900,000
December 31, 2003 $26,900,000
March 31, 2004 $26,900,000
Tranche B Term Loan Maturity Date $26,900,000
</TABLE>
(d) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date on or after
the Effective Date upon which the Borrower or any of its Wholly-Owned
Subsidiaries or Joint Ventures receives any cash proceeds from any capital
contribution or any sale or issuance of its equity (other than (i) the first
$319,800,000 of gross cash proceeds received by the Borrower as part of the
Equity Financing, (ii) cash proceeds received from capital contributions to, or
equity investments in, any Wholly-Owned Subsidiary or Joint Venture of the
Borrower to the extent made by the Borrower, any other Subsidiary of the
Borrower or the respective joint venture partner of such Joint Venture and (iii)
cash proceeds received from sales or issuances of equity to officers or
directors of the Borrower or any of its Subsidiaries in an aggregate amount not
to exceed $1,000,000 in any fiscal year of the Borrower), an amount equal to 50%
(or in the case of Net Equity Proceeds received within 30 days after the Initial
Borrowing Date from the exercise of the underwriters overallotment option for
the Public Equity Financing, such other percentage as the Borrower may elect) of
the Net Equity Proceeds of such capital contribution or sale or issuance shall
be applied as a mandatory repayment of principal of outstanding Term Loans
(and/or, if the Total Term Loan Commitment has not yet been terminated, as a
mandatory reduction to the Total Term Loan Commitment) in accordance with the
requirements of Sections 4.02(j) and (k) (or in the case of any capital
contribution to, or any sale or issuance of equity by, any Joint Venture, an
amount equal to 50% of the Borrower's Allocable Share of such Net Equity
Proceeds shall be applied as provided above in this Section 4.02(d), but such
amount shall be applied only as, when and to the extent such Net Equity Proceeds
are distributed by such Joint Venture to the Borrower or a Wholly-Owned
Subsidiary thereof).
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<PAGE> 38
(e) (i) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date on or after
the Effective Date upon which the Borrower or any of its Wholly-Owned
Subsidiaries or Joint Ventures receives any cash proceeds from any incurrence by
the Borrower or any of its Wholly-Owned Subsidiaries or Joint Ventures of
Indebtedness for borrowed money (other than Indebtedness for borrowed money
permitted to be incurred pursuant to Section 9.04 as such Section is in effect
on the Effective Date), an amount equal to 100% of the Net Debt Proceeds of the
respective incurrence of Indebtedness shall be applied as a mandatory repayment
of principal of outstanding Term Loans (and/or, if the Total Term Loan
Commitment has not yet been terminated, as a mandatory reduction to the Total
Term Loan Commitment) in accordance with the requirements of Sections 4.02(j)
and (k) (or in the case of any incurrence of Indebtedness for borrowed money by
any Joint Venture, an amount equal to 100% of the Borrower's Allocable Share of
such Net Debt Proceeds shall be applied as provided above in this Section
4.02(e), but such amount shall be applied only as, when and to the extent such
Net Debt Proceeds are distributed by such Joint Venture to the Borrower or a
Wholly-Owned Subsidiary thereof).
(ii) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, (x) on the Initial
Borrowing Date (but before giving effect to the incurrence of any Term Loans on
such date), the Total Term Loan Commitment shall be reduced in an amount equal
to $40,000,000 in the event that the Existing Glendale Debt is to remain
outstanding after the Initial Borrowing Date and has been designated by the
Borrower as not being part of the Indebtedness to be Refinanced pursuant to
Section 5.08, with such reduction to be effected in accordance with the
requirements of Section 4.02(k) and (y) on any date after the Initial Borrowing
Date and prior to the termination of the Total Tranche A Term Loan Commitment on
which the Existing Glendale Debt is refinanced with proceeds of a loan made by
any Person (other than the Borrower, any Subsidiary thereof or any Bank under
this Agreement), the Total Tranche A Term Loan Commitment shall be reduced
(before giving effect to the incurrence of any Tranche A Term Loans on such
date) in accordance with the requirements of Section 4.02(k) in an amount equal
to the principal amount of such loan.
(f) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date on or after
the Effective Date upon which the Borrower or any of its Wholly-Owned
Subsidiaries or Joint Ventures receives cash proceeds from any Asset Sale or any
Specified Red Lion Event, an amount equal to the Applicable Recapture Percentage
of the Net Sale Proceeds from the respective Asset Sale or the Applicable
Recapture Percentage of the Specified Red Lion Proceeds from the respective
Specified Red Lion Event shall be applied as a mandatory repayment of principal
of outstanding Term Loans (and/or, if the Total Term Loan Commitment has not yet
been terminated, as a mandatory reduction to the Total Term Loan Commitment) in
accordance
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<PAGE> 39
with the requirements of Sections 4.02(j) and (k) (or in the case of any Asset
Sale by any Joint Venture, an amount equal to the Applicable Recapture
Percentage of the Borrower's Allocable Share of the Net Sale Proceeds therefrom
shall be applied as provided above in this Section 4.02(f), but such amount
shall be applied only as, when and to the extent such Net Sale Proceeds are
distributed by such Joint Venture to the Borrower or a Wholly-Owned Subsidiary
thereof); provided that, so long as no Default or Event of Default then exists,
up to $75,000,000 in the aggregate over any three-year period (but no more than
$35,000,000 in any fiscal year of the Borrower) of Net Sale Proceeds from Asset
Sales (other than proceeds from an Asset Sale pursuant to Section 9.02(xiv),
which proceeds shall be applied as provided above in this Section 4.02(f)
without regard to this proviso) and of Specified Red Lion Proceeds from
Specified Red Lion Events may be used to purchase like assets pursuant to
Section 9.07(h) within 360 days following the date of the respective Asset Sale
or Specified Red Lion Event (and the Applicable Recapture Percentage therefrom
shall not be required to be applied on the date of receipt of such Net Sale
Proceeds or Specified Red Lion Proceeds pursuant to this Section 4.02(f)) so
long as (x) the Borrower delivers a certificate to the Agents on or prior to
such date stating that such Net Sale Proceeds or Specified Red Lion Proceeds
shall be used to purchase like assets within 360 days following the date of such
Asset Sale or Specified Red Lion Event (which certificate shall set forth the
estimates of the proceeds to be so expended) and (y) within 180 days following
the date of such Asset Sale or Specified Red Lion Event, the Borrower or the
applicable Wholly-Owned Subsidiary or Joint Venture has purchased the like
assets or entered into a binding commitment to purchase such replacement assets,
and, provided further, that if all or any portion of such Net Sale Proceeds or
Specified Red Lion Proceeds are not so reinvested in like assets within such 360
day period (or committed to be so reinvested within such 180-day period), the
Applicable Recapture Percentage of such remaining portion shall be applied on
the last day of such applicable period as a mandatory repayment of principal of
outstanding Term Loans as provided above in this Section 4.02(f) without regard
to this proviso. Notwithstanding the foregoing provisions of this Section
4.02(f), in the case of an Asset Sale by Red Lion Properties at a time when Red
Lion Properties is subject to the minimum net worth requirement described in
Schedule XV, the Applicable Recapture Percentage of the Net Sale Proceeds from
the respective Asset Sale, to the extent not reinvested as permitted by the
first proviso of the immediately preceding sentence, shall only be required to
be applied to the Obligations when, as and to the extent that Red Lion
Properties can distribute the Applicable Recapture Percentage of such Net Sale
Proceeds to the Borrower without violating such minimum net worth covenant.
(g) In addition to any other mandatory repayments pursuant to
this Section 4.02, on each Excess Cash Payment Date, an amount equal to 50% of
the Excess Cash Flow for the relevant Excess Cash Payment Period shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Sections 4.02(j) and (k).
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<PAGE> 40
(h) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, within 10 days following
each date on or after the Effective Date upon which the Borrower or any of its
Wholly-Owned Subsidiaries or Joint Ventures receives any cash proceeds from any
Recovery Event, an amount equal to 100% of the Net Insurance Proceeds of such
Recovery Event shall be applied as a mandatory repayment of principal of
outstanding Term Loans (and/or, if the Total Term Loan Commitment has not yet
been terminated, as a mandatory reduction to the Total Term Loan Commitment) in
accordance with the requirements of Sections 4.02(j) and (k) (or in the case of
any Recovery Event by any Joint Venture, an amount equal to 100% of the
Borrower's Allocable Share of such Net Insurance Proceeds shall be applied as
provided above in this Section 4.02(h), but such amount shall be applied only
as, when and to the extent such Net Insurance Proceeds are distributed by such
Joint Venture to the Borrower or a Wholly-Owned Subsidiary thereof); provided
that, so long as no Default or Event of Default then exists, such proceeds shall
not be required to be so applied on such date to the extent that the Borrower
has delivered a certificate to the Agents on or prior to such date stating that
such proceeds shall be used or shall be contractually committed to be used to
replace or restore any properties or assets in respect of which such proceeds
were paid within one year following the date of the receipt of such proceeds
(which certificate shall set forth the estimates of the proceeds to be so
expended), and provided further, that if all or any portion of such proceeds not
required to be applied to the repayment of outstanding Term Loans (and/or as a
reduction to the Total Term Loan Commitment) are either (A) not so used or
contractually committed to be used within one year after the date of the receipt
of such proceeds or (B) if contractually committed to be used within one year
after the date of receipt of such proceeds and not so used within three years
after the date of receipt of such proceeds (so long as the Borrower or such
Wholly-Owned Subsidiary or Joint Venture is diligently proceeding with such
replacement or restoration in accordance with the terms of the contractual
arrangements applicable thereto) then, in either such case, such remaining
portion not used or contractually committed to be used in the case of preceding
clause (A) and not used in the case of preceding clause (B) shall be applied on
the date which is the first anniversary of the date of the receipt of such
proceeds in the case of clause (A) above or the date occurring three years after
the date of the receipt of such proceeds (or such earlier date on which the
Borrower or such Wholly-Owned Subsidiary or Joint Venture is no longer
diligently proceeding with such replacement or restoration) in the case of
clause (B) above as a mandatory repayment of principal of outstanding Term Loans
as provided above in this Section 4.02(h) without regard to the preceding
proviso.
(i) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date on or after
the Effective Date upon which the Borrower or any of its Wholly-Owned
Subsidiaries receives cash proceeds from any Designated Event, an amount equal
to 100% of the cash proceeds therefrom shall be applied as a mandatory repayment
of principal of outstanding Term Loans (and/or, if the Total Term Loan
Commitment has not yet been terminated, as a mandatory reduction to the Total
Term
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<PAGE> 41
Loan Commitment) in accordance with the requirements of Section 4.02(j) and (k);
provided that, so long as no Default or Event of Default then exists, up to
$25,000,000 in the aggregate of such cash proceeds in any fiscal year of the
Borrower shall not be required to be applied pursuant to this Section 4.02(i).
Notwithstanding the foregoing provisions of this Section 4.02(i), in the event
that RFS or RFS Sub sells the RFS REIT Equity at a time when RFS and/or RFS Sub
are subject to the minimum net worth requirement described in Schedule XV, the
cash proceeds received from the respective sale, to the extent that same would
otherwise be required to be applied as provided above in this Section 4.02(i),
shall only be required to be so applied when, as and to the extent that RFS
and/or RFS Sub can distribute such cash proceeds to the Borrower without
violating such minimum net worth covenant.
(j) With respect to each repayment of Loans required by this
Section 4.02, the Borrower may designate the Types of Loans of the respective
Tranche which are to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings of the respective Tranche pursuant to which
made, provided that: (i) repayments of Eurodollar Loans pursuant to this Section
4.02 may only be made on the last day of an Interest Period applicable thereto
unless all Eurodollar Loans of the respective Tranche with Interest Periods
ending on such date of required repayment and all Base Rate Loans of the
respective Tranche have been paid in full; (ii) if any repayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto, such Borrowing shall be converted
at the end of the then current Interest Period into a Borrowing of Base Rate
Loans; and (iii) each repayment of any Loans made pursuant to a Borrowing shall
be applied pro rata among such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent shall,
subject to the above, make such designation in its sole discretion.
Notwithstanding the foregoing provisions of this Section 4.02(j), if at any time
a mandatory repayment of Loans pursuant to this Section 4.02(j) would result,
after giving effect to the procedures set forth above in this Section 4.02(j),
in the Borrower incurring breakage costs under Section 1.11 as a result of
Eurodollar Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected Eurodollar Loans"), then the Borrower may in
its sole discretion, and upon notice to the Administrative Agent, initially
deposit a portion (up to 100%) of the amount that otherwise would have been paid
in respect of the Affected Eurodollar Loans with the Administrative Agent (which
deposit must be equal in amount to the amount of the Affected Eurodollar Loans
not immediately repaid) to be held as security for the Obligations of the
Borrower pursuant to a cash collateral arrangement satisfactory to the
Administrative Agent and the Borrower which shall permit investments in Cash
Equivalents reasonably satisfactory to the Administrative Agent, with such cash
collateral to be directly applied upon the earlier of (x) the first occurrence
(or occurrences) thereafter of the last day of an Interest Period applicable to
the relevant Affected Eurodollar Loans of the respective Tranche or Tranches
that were initially required to be repaid (or such earlier date or dates as
shall be requested by
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<PAGE> 42
the Borrower) and (y) the date which is 180 days after such initial deposit, to
repay an aggregate principal amount of such Loans equal to the Affected
Eurodollar Loans not initially repaid pursuant to this sentence. Notwithstanding
anything to the contrary contained in the immediately preceding sentence, all
amounts deposited as cash collateral pursuant to the immediately preceding
sentence shall be held first for the sole benefit of the Banks whose Loans would
otherwise have been immediately repaid with the amounts deposited and upon the
taking of any action by the Administrative Agent or the Banks pursuant to the
remedial provisions of Section 10, any amounts held as cash collateral pursuant
to this Section 4.02(j) shall first be immediately applied to such Loans and
thereafter to the other Obligations of the Borrower.
(k) Each amount required to be applied to Term Loans (and/or
to the Total Term Loan Commitment) pursuant to Sections 4.02(d), (e) (other than
clause (ii)(y) thereof), (f), (g), (h) and (i) shall be applied pro rata to each
Tranche of Term Loans (in an amount equal to the Tranche A Term Loan Percentage
and/or the Tranche B Term Loan Percentage, as the case may be, of such
prepayment or reduction). Any amount required to be applied to either Tranche of
Term Loans pursuant to Sections 4.02(d), (e) (other than clause (ii)(y)
thereof), (f), (g), (h) and (i) shall be applied (i) first, to repay the
outstanding principal amount of Term Loans of the respective Tranche and (ii)
second, to the extent in excess thereof, to reduce the Total Tranche A Term Loan
Commitment or the Total Tranche B Term Loan Commitment, as the case may be). The
amount of each principal repayment of Term Loans (and the amount of each
reduction to the Term Loan Commitments) made as required by said Sections
4.02(d), (e) (other than clause (ii)(y) thereof), (f), (g), (h) and (i) shall be
applied to reduce the then remaining Scheduled Repayments of the respective
Tranche of Term Loans pro rata based upon the then remaining amount of each
Scheduled Repayment of the respective Tranche after giving effect to all prior
reductions thereto. Notwithstanding anything to the contrary contained above in
this Section 4.02(k), any amount required to be applied to reduce the Total
Tranche A Term Loan Commitment pursuant to clause (y) of Section 4.02(e)(ii)
only shall be applied to reduce the then remaining Tranche A Term Loan Scheduled
Repayments pro rata based upon the then remaining amount of each such Tranche A
Term Loan Scheduled Repayment after giving effect to all prior reductions
thereto.
(l) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, all then outstanding Loans of any
Tranche shall be repaid in full on the respective Maturity Date for such Tranche
of Loans.
(m) Notwithstanding anything to the contrary contained in
Section 4.02(k), with respect to any mandatory repayments of Tranche A Term
Loans or Tranche B Term Loans required pursuant to Sections 4.02(d), (e) (other
than clause (ii)(y) thereof), (f), (g), (h) and (i), but only so long as both
Tranche A Term Loans and Tranche B Term Loans are outstanding on the date of any
such mandatory repayment, if on or prior to the date the respective mandatory
repayment is otherwise required to be made pursuant to such Sections,
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<PAGE> 43
the Borrower has given the Agents written notification that the Borrower has
elected to give each Bank with a Tranche A Term Loan or each Bank with a Tranche
B Term Loan, as the case may be, the right to waive such Bank's rights to
receive such repayment (the "Waivable Mandatory Repayment") (it being understood
that with respect to any particular Waivable Mandatory Repayment, the Borrower
shall only be entitled to exercise its rights pursuant to this Section 4.02(m)
with respect to a single Tranche of Term Loans), the Administrative Agent shall
notify such Banks of such receipt and the amount of the repayment required to be
applied to each such Bank's Tranche A Term Loans or Tranche B Term Loans, as the
case may be. In the event any such Bank with a Tranche A Term Loan or a Tranche
B Term Loan, as the case may be, desires to waive such Bank's right to receive
any such Waivable Mandatory Repayment in whole or in part, such Bank shall so
advise the Administrative Agent no later than 5:00 P.M. (New York time) five
Business Days after the date of such notice from the Administrative Agent which
notice shall also include the amount such Bank desires to receive. If any such
Bank does not reply to the Administrative Agent within the five Business Day
period, such Bank will be deemed to have accepted the total payment. If any such
Bank does not specify the amount that such Bank wishes to receive, such Bank
will be deemed to have accepted 100% of the total payment. In the event that any
such Bank waives such Bank's right (in whole or in part) to any such Waivable
Mandatory Repayment, the Administrative Agent shall apply 100% of the amount so
waived by such Banks (i) first, to repay the other Tranche of Term Loans in
accordance with Sections 4.02(j) and (k), (ii) second, to the extent such other
Tranche of Term Loans have been (or are concurrently being) repaid in full, any
excess amount shall be applied to repay such Tranche of Term Loans (including
the Term Loans of any Bank or Banks that have initially waived their right to
receive such repayment) in accordance with Sections 4.02(j) and (k), and (iii)
third, to the extent in excess of the amount required to be applied pursuant to
the preceding clauses (i) and (ii), to reduce the Total Revolving Loan
Commitment as provided in Section 3.03(e) (as if no Term Loans were then
outstanding). If the Borrower elects to give the notice described above in this
Section 4.02(m) with respect to the applicable mandatory repayment, the amount
of the respective Waivable Mandatory Repayment shall be deposited with the
Administrative Agent on the date the mandatory repayment would otherwise be
required pursuant to the relevant provisions of Section 4.02(d), (e) (other than
clause (ii)(y) thereof), (f), (g), (h) or (i), as the case may be (and held by
the Administrative Agent as cash collateral for the Tranche A Term Loans or the
Tranche B Term Loans, as the case may be, and, but only to the extent Banks with
Tranche A Term Loans or Tranche B Term Loans, as the case may be, waive their
right to receive their share of the Waivable Mandatory Repayment, for the
benefit of the other Tranche of Term Loans, in a cash collateral account which
shall permit the investment thereof in Cash Equivalents reasonably satisfactory
to the Administrative Agent until the proceeds are applied to the secured
obligations), and the respective mandatory repayment shall not be required to be
made until the eighth Business Day occurring after the date the respective
mandatory repayment would otherwise have been required to be made pursuant to
any such Section (and with interest continuing to accrue on such Loans during
such period at the rate otherwise provided for herein with respect to such
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Loans). Notwithstanding anything to the contrary contained above, if one or more
Banks waives its right to receive all or any part of any Waivable Mandatory
Repayment, but less than all the Banks holding Tranche A Term Loans or Tranche B
Term Loans, as the case may be, waive in full their right to receive 100% of the
total payment otherwise required with respect to the Tranche A Term Loans or
Tranche B Term Loans, as the case may be, then of the amount actually applied to
the repayment of Tranche A Term Loans or Tranche B Term Loans, as the case may
be, of Banks which have waived in part, but not in full, their right to receive
100% of such repayment, such amount shall be applied to each then outstanding
Borrowing of Tranche A Term Loans or Tranche B Term Loans, as the case may be,
on a pro rata basis (so that each Bank holding Tranche A Term Loans or Tranche B
Term Loans, as the case may be, shall, after giving effect to the application of
the respective repayment, maintain the same percentage (as determined for such
Bank, but not the same percentage as the other Banks hold and not the same
percentage held by such Bank prior to repayment) of each Borrowing of Tranche A
Term Loans or Tranche B Term Loans, as the case may be, which remains
outstanding after giving effect to such application).
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or under any
Note shall be made to the Administrative Agent for the account of the Bank or
Banks entitled thereto not later than 1:00 P.M. (New York time) on the date when
due and shall be made in Dollars in immediately available funds at the Payment
Office of the Administrative Agent. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or profits of a Bank pursuant to the
laws of the jurisdiction in which it is organized or the jurisdiction in which
the principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect to such non-excluded taxes, levies, imposts, duties,
fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes (other than Taxes or other amounts
deducted or withheld pursuant to the third sentence of Section 4.04(b), except
to the extent otherwise provided in the last sentence of Section 4.04(b)) are so
levied or imposed, the Borrower agrees to pay the full amount of such
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Taxes, and such additional amounts as may be necessary so that every payment of
all amounts due under this Agreement or under any Note, after withholding or
deduction for or on account of any such Taxes, will not be less than the amount
provided for herein or in such Note. If any amounts are payable in respect of
Taxes pursuant to the preceding sentence, the Borrower agrees to reimburse each
Bank, within 5 Business Days after the written request of such Bank, for taxes
imposed on or measured by the net income or profits of such Bank pursuant to the
laws of the jurisdiction in which such Bank is organized or in which the
principal office or applicable lending office of such Bank is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction in which such Bank is organized or in which the principal office or
applicable lending office of such Bank is located and for any withholding of
taxes as such Bank shall determine are payable by, or withheld from, such Bank,
in respect of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Bank pursuant to this sentence. The Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower agrees to indemnify and hold harmless each Bank, and
reimburse such Bank within 5 Business Days after its written request, for the
amount of any Taxes so levied or imposed and paid by such Bank. All amounts
payable pursuant to this Section 4.04(a) shall be subject to the provisions of
Section 13.17 (to the extent applicable).
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees to deliver to the Borrower and the Administrative Agent on or
prior to the Effective Date, or in the case of a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 1.13 or 13.04
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if the Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a "Section 4.04(b)(ii) Certificate") and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note (the Internal
Revenue Service forms described in preceding clauses (i) and (ii) are
hereinafter referred to as the "U.S. Internal Revenue Service Forms"). In
addition, each Bank agrees that from time to time after the Effective Date as
required by applicable U.S. Federal income tax law, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, such Bank will deliver to the Borrower and
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the Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
4.04(b)(ii) Certificate, as the case may be, and such other certifications or
forms as may be required by U.S. Federal income tax law and timely requested by
the Borrower in writing in order to confirm or establish the entitlement of such
Bank to a continued exemption from or reduction in United States withholding tax
with respect to payments under this Agreement and any Note, or such Bank shall
immediately notify the Borrower and the Administrative Agent of its inability
under applicable law to deliver any such Form or Certificate, in which case such
Bank shall not be required to deliver any such Form or Certificate pursuant to
this Section 4.04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 13.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, Fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue Service Forms
and such other certifications or forms that establish a complete exemption from
such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 4.04(a) hereof to gross-up payments to be made to a Bank in
respect of income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) if (I) such Bank
has not provided to the Borrower the Internal Revenue Service Forms and such
other certifications or forms as are required to be provided to the Borrower
pursuant to this Section 4.04(b) or (II) in the case of a payment, other than
interest, to a Bank described in clause (ii) above, to the extent that such
Forms do not establish a complete exemption from the deduction or withholding of
such taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 4.04 and except as set forth in Section
13.04(b), the Borrower agrees to pay any additional amounts and to indemnify
each Bank in the manner set forth in Section 4.04(a) (without regard to the
identity of the jurisdiction requiring the deduction or withholding) in respect
of any Taxes deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Effective Date in any
applicable law, treaty, governmental rule, regulation, guideline or order, or in
the interpretation thereof, relating to the deducting or withholding of such
Taxes.
SECTION 5. Conditions Precedent to Initial Credit Events. The
obligation of each Bank to make Loans, and the obligation of any Issuing Bank to
issue Letters of Credit, on the Initial Borrowing Date, is subject at the time
of the making of such Loans or the issuance of such Letters of Credit to the
satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agents for the account of each of the Banks the
appropriate Tranche A Term Note, Tranche
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B Term Note and/or Revolving Note executed by the Borrower and to the Swingline
Bank, the Swingline Note executed by the Borrower, in each case in the amount,
maturity and as otherwise provided herein.
5.02 Officer's Certificate. On the Initial Borrowing Date, the
Agents shall have received a certificate, dated the Initial Borrowing Date and
signed on behalf of the Borrower by the President or any Vice President of the
Borrower, stating that all of the conditions in Sections 5.05, 5.06, 5.07, 5.08,
5.09, 5.10 and 6.01 have been satisfied on such date.
5.03 Opinions of Counsel. On the Initial Borrowing Date, the
Agents shall have received from (i) Dewey Ballantine and Wolf, Block, Schorr and
Solis-Cohen, each counsel to the Credit Parties, opinions addressed to the
Administrative Agent, the Syndication Agent, the Collateral Administrative Agent
and each of the Banks and dated the Initial Borrowing Date, covering the matters
set forth in Exhibits E-1 and E-2, respectively, and such other matters incident
to the transactions contemplated herein as any Agent may reasonably request and
(ii) local counsel (reasonably satisfactory to the Agents), opinions each of
which (x) shall be addressed to the Administrative Agent, the Syndication Agent,
the Collateral Administrative Agent and each of the Banks and dated the Initial
Borrowing Date, (y) shall be in form and substance reasonably satisfactory to
the Agents and (z) shall cover the perfection of the security interests granted
pursuant to the Security Documents and such other matters incident to the
transactions contemplated herein as any Agent may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a) On the Initial
Borrowing Date, the Agents shall have received a certificate from each Credit
Party, dated the Initial Borrowing Date, signed by the President or any Vice
President of such Credit Party, and attested to by the Secretary or any
Assistant Secretary of such Credit Party, in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of incorporation
(or equivalent organizational document) and by-laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate, and each such
certificate of incorporation and by-laws shall be in the form provided to the
Agents prior to the Effective Date or in such other form as is reasonably
acceptable to the Agents, and the foregoing resolutions shall be in form and
substance reasonably acceptable to the Agents.
(b) All corporate and legal proceedings and all instruments
and agreements in connection with the transactions contemplated by this
Agreement and the other Documents shall be reasonably satisfactory in form and
substance to the Agents, and the Agents shall have received all information and
copies of all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and (in the case of the
Borrower, Merger Sub and Red Lion) bring-down telegrams or facsimiles, if any,
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which any Agent reasonably may have requested in connection therewith, such
documents and papers where appropriate to be certified by proper corporate or
governmental authorities.
5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining Agreements; Existing Indebtedness
Agreements; Tax Sharing Agreements; Joint Venture Agreements; Property
Management Agreements; Material Leases. On or prior to the Initial Borrowing
Date, there shall have been made available for review by the Agents true and
correct copies of the following documents:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of
the most recent such report (including, to the extent required, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information), and
for each Plan that is a "single-employer plan," as defined in Section
4001(a)(15) of ERISA, the most recently prepared actuarial valuation
therefor) and any other "employee benefit plans," as defined in Section
3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees of
the Borrower or any of its Subsidiaries or any ERISA Affiliate
(provided that the foregoing shall apply in the case of any
multi-employer plan, as defined in 4001(a)(3) of ERISA, only to the
extent that any document described therein is in the possession of the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate or
reasonably available thereto from the sponsor or trustee of any such
plan)(collectively, the "Employee Benefit Plans");
(ii) all material agreements entered into by the Borrower or
any of its Subsidiaries or any of the Existing Red Lion Joint Ventures
governing the terms and relative rights of its capital stock and any
agreements entered into by shareholders relating to any such entity
with respect to its capital stock (collectively, the "Shareholders'
Agreements");
(iii) all material agreements with members of, or with respect
to, the senior management and management of the Borrower or any of its
Subsidiaries or any of the Existing Red Lion Joint Ventures
(collectively, the "Management Agreements");
(iv) all collective bargaining agreements applying or relating
to any employee of the Borrower or any of its Subsidiaries
(collectively, the "Collective Bargaining Agreements");
(v) all agreements evidencing or relating to Indebtedness of
the Borrower or any of its Subsidiaries or any of its Existing Red Lion
Joint Ventures which is to remain outstanding after giving effect to
the incurrence of Loans on the Initial
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Borrowing Date to the extent such Indebtedness exceeds (or upon the
utilization of any unused commitments may exceed) $1,000,000
(collectively, the "Existing Indebtedness Agreements");
(vi) all tax sharing, tax allocation and other similar
agreements entered into by the Borrower or any of its Subsidiaries or
any of its Existing Red Lion Joint Ventures (collectively, the "Tax
Sharing Agreements");
(vii) all articles of incorporation, joint venture agreements
and/or partnership agreements relating to all Joint Ventures in
existence on the Initial Borrowing Date (collectively, the "Joint
Venture Agreements");
(viii) without duplication of the Management Agreements
referred to in clause (iii) above, all material Hotel Property
management agreements (including the Red Lion Master Property
Management Agreement) under which the Borrower or any of its
Subsidiaries is the hotel manager (collectively, the "Hotel Property
Management Agreements"); and
(ix) all material leases (including the Red Lion Master Lease
and the Doubletree Master REIT Lease) under which the Borrower or any
of its Subsidiaries lease (as lessee) any Hotel Property (collectively,
the "Material Leases");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Collective Bargaining Agreements, Existing Indebtedness Agreements,
Tax Sharing Agreements, Joint Venture Agreements, Hotel Property Management
Agreements and Material Leases shall be in full force and effect on the Initial
Borrowing Date.
5.06 Equity Financing; Equity Rollover. (a) On or prior to the
Initial Borrowing Date, (i) the Borrower shall have received at least
$319,800,000 of gross cash proceeds from the Equity Financing and (ii) the
Borrower shall have utilized at least $319,800,000 of gross cash proceeds from
the Equity Financing to make payments owing in connection with the Transaction
prior to utilizing any proceeds of Loans for such purpose.
(b) On or prior to the Initial Borrowing Date, (i) the Agents
shall have received true and correct copies of the Equity Financing Documents,
all of which shall be required to be in form and substance (including as to all
of the terms and conditions thereof) reasonably satisfactory to the Agents and
the Required Banks and (ii) each of the conditions precedent set forth in the
Equity Financing Documents shall have been satisfied and not waived (unless
waived with the consent of the Agents and the Required Banks).
(c) On or prior to the Initial Borrowing Date, the Borrower
shall have issued for the account of the selling shareholders of Red Lion shares
of the Borrower's common
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stock having an implied value of $283,000,000 (subject to adjustment as set
forth in the Acquisition Agreement), and the Agents shall have received true and
correct copies of the Acquisition Agreement and all SEC filings made in
connection with the Transaction, each of which shall be in full force and effect
and shall be in form and substance reasonably satisfactory to the Agents and the
Required Banks.
5.07 Consummation of Acquisition; Cash on Hand. (a) On the
Initial Borrowing Date, (i) the Acquisition shall have been consummated in
accordance with the Acquisition Documents and all applicable laws and (ii) each
of the conditions precedent set forth in the Acquisition Documents shall have
been satisfied in all material respects, and not waived except with the
reasonable consent of the Agents and the Required Banks, to the reasonable
satisfaction of the Agents and the Required Banks, (iii) the Agents shall have
received true and complete copies of all Acquisition Documents, and with those
Acquisition Documents which were delivered to the Agents on or before September
12, 1996 to be in the form so delivered with such changes thereto or waivers
therefrom to be reasonably satisfactory to the Agents and the Required Banks,
and with all other Acquisition Documents to be in form and substance reasonably
satisfactory to the Agents and the Required Banks and (iv) the Agents shall have
received copies of the "comfort letters" referred to in Sections 6.2(f) and
6.3(e) of the Acquisition Agreement.
(b) On the Initial Borrowing Date, the Agents shall have
received evidence satisfactory to them that the Borrower and/or Red Lion have
cash on hand, when added to the amount of the Total Term Loan Commitment, up to
$15,000,000 of the Total Revolving Loan Commitment and the amount received (or
to be received on the Initial Borrowing Date) from the Equity Financing, that is
sufficient to consummate the Acquisition and the Refinancing and to pay the fees
and expenses incurred in connection with the Transaction.
5.08 Refinancing. On the Initial Borrowing Date and after
giving effect to the Acquisition and the Loans incurred on the Initial Borrowing
Date, neither the Borrower nor any of its Subsidiaries shall have any
Indebtedness outstanding except for (x) the Obligations and (y) the Existing
Indebtedness. Schedule IV sets forth a true and complete list of all
Indebtedness to be Refinanced, in each case showing the aggregate principal
amount thereof and accrued interest thereon (immediately before giving effect to
the Initial Borrowing Date) and the name of the respective borrower thereof. On
the Initial Borrowing Date, all Indebtedness to be Refinanced (other than the
Existing Glendale Debt to the extent that same is to be refinanced after the
Initial Borrowing Date) shall have been repaid in full and all commitments in
respect thereof shall have been terminated and all Liens and guaranties in
connection therewith shall have been terminated (and all appropriate releases,
termination statements or other instruments of assignment with respect thereto
shall have been obtained) to the reasonable satisfaction of the Agents. The
Agents shall have received evidence, in form and substance reasonably
satisfactory to them, that the matters set forth in the immediately preceding
sentence have been satisfied as of the Initial Borrowing Date. In
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addition, on or prior to the Initial Borrowing Date, the Borrower shall have
informed the Agents in writing as to whether the Borrower intends to refinance
the Existing Glendale Debt as part of the Refinancing.
5.09 Adverse Change, etc. (a) On or prior to the Initial
Borrowing Date, nothing shall have occurred (and (x) neither the Agents nor the
Banks shall have become aware of any facts or conditions not previously
disclosed to them and (y) no information previously submitted by or on behalf of
the Borrower to the Agents (including, without limitation, financial, accounting
and tax information) shall be inaccurate, incomplete or misleading) which (in
any such case) has had, or could reasonably be expected to have, a material
adverse effect on the Transaction or on the business, property, assets,
operations, liabilities or financial condition of the Borrower, Red Lion and
their respective Subsidiaries taken as a whole.
(b) All necessary governmental approvals and/or consents
(other than approvals and/or consents required to effect the transfer of liquor
licenses), all necessary shareholder and board of director approvals and/or
consents and the approval of the lenders to Red Lion Inns Operating, L.P. (or
the written acknowledgment by such lenders that such approval is not necessary
or the issuance of an opinion of counsel of the Borrower, satisfactory in form
and substance to the Agents, that no such approval is necessary), in each case
in connection with the Transaction and the other transactions contemplated by
the Documents and otherwise referred to herein or therein shall have been
obtained and remain in effect, and all applicable waiting periods with respect
thereto shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon, the consummation of the Transaction or the other transactions contemplated
by the Documents or otherwise referred to herein or therein. Additionally, there
shall not exist any judgment, order, injunction or other restraint issued or
filed or a hearing seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions upon the
Transaction or the other transactions contemplated by the Documents.
(c) On or prior to the Initial Borrowing Date, there shall not
have occurred and be continuing a material disruption of or a material adverse
change in financial, banking or capital markets that would have a material
adverse effect on the successful syndication of the Commitments as determined by
the Agents in their reasonable discretion. The Borrower and Red Lion shall have
fully cooperated in the Agents' syndication efforts, including, without
limitation, by promptly providing the Agents with all information deemed
necessary by the Agents to successfully complete such syndication.
5.10 Litigation. On the Initial Borrowing Date, no material
litigation by any entity (private or governmental) shall be pending or
threatened with respect to the Transaction or any Document.
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5.11 Pledge Agreement. On the Initial Borrowing Date, each
Credit Party shall have duly authorized, executed and delivered the Pledge
Agreement in the form of Exhibit G (as amended, modified or supplemented from
time to time, the "Pledge Agreement") and shall have delivered to the Collateral
Administrative Agent, as Pledgee thereunder, all of the Pledged Securities, if
any, referred to therein then owned by such Credit Party, (x) endorsed in blank
in the case of promissory notes constituting Pledged Securities and (y) together
with executed and undated stock powers in the case of capital stock constituting
Pledged Securities.
5.12 Security Agreement. On the Initial Borrowing Date, each
Credit Party shall have duly authorized, executed and delivered the Security
Agreement in the form of Exhibit H (as modified, supplemented or amended from
time to time, the "Security Agreement") covering all of such Credit Party's
present and future Security Agreement Collateral, together with:
(i) proper Financing Statements (Form UCC-1 or the equivalent)
fully executed for filing under the UCC or other appropriate filing
offices of each jurisdiction as may be necessary or, in the reasonable
opinion of the Collateral Administrative Agent, desirable to perfect
the security interests purported to be created by the Security
Agreement;
(ii) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements that name any Credit Party as debtor and that are filed in
the jurisdictions referred to in clause (i) above, together with copies
of such other financing statements that name any Credit Party as debtor
(none of which shall cover the Collateral except to the extent
evidencing Permitted Liens or in respect of which the Collateral
Administrative Agent shall have received termination statements (Form
UCC-3) or such other termination statements as shall be required by
local law fully executed for filing); and
(iii) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Administrative Agent, desirable to
perfect and protect the security interests purported to be created by
the Security Agreement have been (or within 10 days following the
Initial Borrowing Date will be) taken.
5.13 Subsidiaries Guaranty. On the Initial Borrowing Date,
each Subsidiary Guarantor shall have duly authorized, executed and delivered the
Subsidiaries Guaranty in the form of Exhibit I (as amended, modified or
supplemented from time to time, the "Subsidiaries Guaranty").
5.14 Mortgages; Title Insurance; Survey; etc. On the Initial
Borrowing Date, the Collateral Administrative Agent shall have received:
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(i) fully executed counterparts of Mortgages, in form and
substance reasonably satisfactory to the Agents, which Mortgages shall
cover the Mortgaged Properties owned or leased by the Credit Parties on
the Initial Borrowing Date as designated on Schedule III, together with
evidence that counterparts of such Mortgages have been delivered to the
title insurance company insuring the Lien of such Mortgages for
recording in all places to the extent necessary or, in the reasonable
opinion of the Collateral Administrative Agent, desirable, to
effectively create a valid and enforceable first priority mortgage lien
on each such Mortgaged Property in favor of the Collateral
Administrative Agent (or such other trustee as may be required or
desired under local law) for the benefit of the Secured Creditors;
(ii) a mortgagee title insurance policy on each such Mortgaged
Property issued by a title insurer reasonably satisfactory to the
Agents (the "Mortgage Policies") in amounts satisfactory to the Agents
assuring the Collateral Administrative Agent that the Mortgages on such
Mortgaged Properties are valid and enforceable first priority mortgage
liens on the respective Mortgaged Properties, free and clear of all
defects and encumbrances except Permitted Encumbrances and such
Mortgage Policies shall otherwise be in form and substance reasonably
satisfactory to the Agents and shall include, as appropriate, an
endorsement for future advances under this Agreement and the Notes and
for any other matter that any Agent in its reasonable discretion may
reasonably request, shall not include (to the extent permissible under
applicable state law) an exception for mechanics' liens, and shall
provide for affirmative insurance and such reinsurance as any Agent in
its discretion may reasonably request;
(iii) a survey, in form and substance reasonably satisfactory to
the Agents, of each such Mortgaged Property, certified by a licensed
professional surveyor reasonably satisfactory to the Agents;
(iv) such landlord waivers and/or estoppel certificates as any
Agent may have reasonably required, which landlord waivers and/or
estoppel certificates shall be in form and substance reasonably
satisfactory to the Agents; and
(v) fully executed counterparts of Collateral Assignments, in
form and substance reasonably satisfactory to the Agents, which
Collateral Assignments shall be executed in respect of those Pledged
Notes issued by any Joint Venture or other Persons that are required to
be delivered pursuant to the Pledge Agreement to the extent that such
Pledged Notes are secured by all or a portion of the assets of such
Joint Venture or other Person.
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5.15 Projections; Pro Forma Balance Sheet. On or prior to the
Initial Borrowing Date, the Agents shall have received copies of the financial
statements (including the pro forma financial statements) and Projections
referred to in Sections 7.05(a) and (d).
5.16 Solvency Certificate; Insurance Certificates. On the
Initial Borrowing Date, the Borrower shall have delivered to the Agents:
(i) a solvency certificate from the Chief Financial Officer of
the Borrower in the form of Exhibit J; and
(ii) certificates of insurance complying with the requirements
of Section 8.03 for the business and properties of the Borrower and its
Subsidiaries, in form and substance satisfactory to the Agents and
naming the Collateral Administrative Agent as an additional insured and
as loss payee, and stating that such insurance shall not be cancelled
without at least 30 days prior written notice by the insurer to the
Collateral Administrative Agent (or such shorter period of time as a
particular insurance company generally provides).
5.17 Fees, etc. On the Initial Borrowing Date, the Borrower
shall have paid to the Agents and each Bank all costs, fees and expenses
(including, without limitation, legal fees and expenses) payable to the Agents
and such Bank to the extent then due.
SECTION 6. Conditions Precedent to All Credit Events. The
obligation of each Bank to make Loans (including Loans made on the Initial
Borrowing Date), and the obligation of any Issuing Bank to issue any Letter of
Credit, is subject, at the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time
of each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior
to the making of each Loan (other than a Swingline Loan or a Revolving Loan made
pursuant to a Mandatory Borrowing), the Administrative Agent shall have received
a Notice of Borrowing meeting the requirements of Section 1.03(a). Prior to the
making of each Swingline Loan, the Swingline Bank shall have received the notice
referred to in Section 1.03(b)(i).
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(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
The acceptance of the proceeds of each Loan and the making of
each Letter of Credit Request shall constitute a representation and warranty by
the Borrower to the Agents and each of the Banks that all the conditions
specified in Section 5 (with respect to Credit Events on the Initial Borrowing
Date) and in this Section 6 (with respect to Credit Events on and after the
Initial Borrowing Date) and applicable to such Credit Event exist as of that
time. All of the Notes, certificates, legal opinions and other documents and
papers referred to in Section 5 and in this Section 6, unless otherwise
specified, shall be delivered to the Administrative Agent at the Notice Office
for the account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
reasonably satisfactory to the Agents and the Required Banks.
SECTION 7. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans,
and issue (or participate in) the Letters of Credit as provided herein, the
Borrower makes the following representations, warranties and agreements, in each
case after giving effect to the Transaction, all of which shall survive the
execution and delivery of this Agreement and the Notes and the making of the
Loans and issuance of the Letters of Credit, with the occurrence of each Credit
Event on or after the Initial Borrowing Date being deemed to constitute a
representation and warranty that the matters specified in this Section 7 are
true and correct in all material respects on and as of the Initial Borrowing
Date and on the date of each such Credit Event (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct only as of such specified date).
7.01 Corporate and Other Status. Each Credit Party and each of
its Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate or partnership power
and authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
7.02 Corporate and Other Power and Authority. Each Credit
Party has the corporate or partnership power and authority to execute, deliver
and perform the terms and
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provisions of each of the Documents to which it is party and has taken all
necessary corporate or partnership action to authorize the execution, delivery
and performance by it of each of such Documents. Each Credit Party has duly
executed and delivered each of the Documents to which it is party, and each of
such Documents constitutes its legal, valid and binding obligation enforceable
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, (i) will contravene any
provision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality (other than
contraventions relating to an Acquisition Document which, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
(x) on the Acquisition or the Transaction or (y) on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole), (ii) will conflict with
or result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of the Borrower or any of
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument, to which the Borrower or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to which it
may be subject or (iii) will violate any provision of the certificate of
incorporation, by-laws or partnership agreement (or equivalent organizational
documents) of the Borrower or any of its Subsidiaries (other than violations of
immaterial partnership agreements existing on the Initial Borrowing Date by
reason of the Acquisition).
7.04 Approvals. (a) No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with ((x)
other than those required to effect the transfer of liquor licenses as part of
the Acquisition and (y) except for those that have otherwise been obtained or
made on or prior to the Initial Borrowing Date and which remain in full force
and effect on the Initial Borrowing Date, or to the extent not required to be
obtained or made on or prior to the Initial Borrowing Date pursuant to the
Documents, as will be obtained or made on or prior to the required date
therefor), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Document or (ii) the
legality, validity, binding effect or enforceability of any such Document.
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(b) All necessary shareholder and board of director approvals
and/or consents and all material third party non-governmental approvals and/or
consents, in each case in connection with the Transaction and the execution,
delivery and performance of any Document have been obtained and remain in full
force and effect on the Initial Borrowing Date.
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) The consolidated balance sheet of the
Borrower and its Subsidiaries at December 31, 1995 and September 30, 1996 and
the related consolidated statements of operations, cash flows and shareholders'
equity of the Borrower and its Subsidiaries for the fiscal year and nine-month
period ended on such date, as the case may be, copies of which have been
furnished to the Banks prior to the Initial Borrowing Date, present fairly the
financial position of the Borrower and its Subsidiaries at the date of such
balance sheets and the results of the operations of the Borrower and its
Subsidiaries for the periods covered thereby. The consolidated balance sheet of
Red Lion and its Subsidiaries at December 31, 1995 and September 30, 1996 and
the related consolidated statements of income, cash flows and shareholders'
equity of Red Lion and its Subsidiaries for the fiscal year and nine-month
period ended on such date, as the case may be, copies of which have been
furnished to the Banks prior to the Initial Borrowing Date, present fairly the
financial position of Red Lion and its Subsidiaries at the date of such balance
sheets and the results of the operations of Red Lion and its Subsidiaries for
the periods covered thereby. The pro forma consolidated balance sheet of the
Borrower and its Subsidiaries (including Red Lion and its Subsidiaries) at June
30, 1996 and the pro forma income statements of the Borrower and its
Subsidiaries (including Red Lion and its Subsidiaries) for the periods ended
December 31, 1995 and June 30, 1996, copies of which have been furnished to the
Banks prior to the Initial Borrowing Date, present fairly the pro forma
financial position of the Borrower and its Subsidiaries (including Red Lion and
its Subsidiaries) at June 30, 1996 and the results of the operations of the
Borrower and its Subsidiaries (including Red Lion and its Subsidiaries) for the
periods ended December 31, 1995 and June 30, 1996 and, in the case of the pro
forma income statements, have been prepared on the assumption that the
Transaction had been consummated on January 1, 1995. All such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied, subject to normal year-end audit adjustments in
the case of the nine-month financial statements referred to above. After giving
effect to the Transaction (but for this purpose assuming that the Transaction
had occurred prior to December 31, 1995), since December 31, 1995, there has
been no material adverse change in the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole (it being understood and agreed, however, that
the representation and warranty made pursuant to this sentence is only being
made in connection with Credit Events that occur after the Initial Borrowing
Date).
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(b) (i) On and as of the Initial Borrowing Date and after
giving effect to the Transaction and to all Indebtedness (including the Loans)
being incurred or assumed and Liens created by the Credit Parties in connection
therewith, (a) the sum of the assets, at a fair valuation, of each of the
Borrower on a stand alone basis and of the Borrower and its Subsidiaries taken
as a whole will exceed its debts; (b) each of the Borrower on a stand alone
basis and the Borrower and its Subsidiaries taken as a whole has not incurred
and does not intend to incur, and does not believe that they will incur, debts
beyond their ability to pay such debts as such debts mature; and (c) each of the
Borrower on a stand alone basis and the Borrower and its Subsidiaries taken as a
whole will have sufficient capital with which to conduct its business. For
purposes of this Section 7.05(b), "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Initial Borrowing
Date no liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
could reasonably be expected to be material to the Borrower and its Subsidiaries
taken as a whole. As of the Initial Borrowing Date, the Borrower does not know
of any basis for the assertion against it or any of its Subsidiaries of any
liability or obligation of any nature whatsoever that is not fully disclosed in
the financial statements delivered pursuant to Section 7.05(a) which, either
individually or in the aggregate, could reasonably be expected to be material to
the Borrower and its Subsidiaries taken as a whole.
(d) On and as of the Initial Borrowing Date, the Projections
delivered to the Agents and the Banks prior to the Initial Borrowing Date have
been prepared in good faith and are based on reasonable assumptions, and there
are no statements or conclusions in the Projections which are based upon or
include information known to the Borrower to be misleading in any material
respect or which fail to take into account material information known to the
Borrower regarding the matters reported therein. On the Initial Borrowing Date,
the Borrower believes that the Projections are reasonable, it being understood
that the Projections include assumptions as to future events that are not to be
viewed as facts and that actual results may differ from the projected results
and such differences may be material.
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7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower, threatened (i) with respect
to any Document or (ii) that are reasonably likely to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole (it being understood and agreed, however, that the representation and
warranty made pursuant to this Section 7.06 is only being made in connection
with Credit Events that occur after the Initial Borrowing Date).
7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by any Credit Party in writing to any Agent or any
Bank (including, without limitation, all information contained in the Documents
and in the Confidential Information Memorandum) for purposes of or in connection
with this Agreement, the other Credit Documents or any transaction contemplated
herein or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of any Credit Party in writing to any Agent
or any Bank will be, true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
the Term Loans will be used by the Borrower (i) to effect the Acquisition and
the Refinancing and (ii) to pay fees and expenses related to the Transaction.
(b) (i) Up to $15,000,000 of proceeds of Revolving Loans may
be used on the Initial Borrowing Date for the purposes described in Section
7.08(a) and (ii) the proceeds of all other Revolving Loans and all Swingline
Loans will be used for the Borrower's and its Subsidiaries' general corporate
and working capital purposes.
(c) No part of any Credit Event (or the proceeds thereof) will
be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock, provided that Loans made on
the Initial Borrowing Date may be used to consummate the Acquisition. Neither
the making of any Loan nor the use of the proceeds thereof nor the occurrence of
any other Credit Event will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of the Borrower and each
of its Subsidiaries has filed all federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all material taxes and assessments payable by it which have become due,
except for those contested in good faith and adequately disclosed and fully
provided for on the financial statements of the Borrower and its
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Subsidiaries in accordance with generally accepted accounting principles. The
Borrower and each of its Subsidiaries have at all times paid, or have provided
adequate reserves (in the good faith judgment of the management of the Borrower)
for the payment of, all federal, state and foreign income taxes applicable for
all prior fiscal years and for the current fiscal year to date. There is no
material (with respect to the Borrower and its Subsidiaries taken as a whole)
action, suit, proceeding, investigation, audit, or claim now pending or, to the
knowledge of the Borrower threatened, by any authority regarding any taxes
relating to the Borrower or any of its Subsidiaries. As of the Initial Borrowing
Date, neither the Borrower nor any of its Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of the Borrower or any of its Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of
the Borrower or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations.
7.10 Compliance with ERISA. (i) Except as disclosed on
Schedule XIV, each Plan and to the knowledge of the Borrower each Multiemployer
Plan (and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including, without
limitation, ERISA and the Code; except as disclosed on Schedule XIV, each Plan
and to the knowledge of the Borrower each Multiemployer Plan (and each related
trust, if any) which is intended to be qualified under Section 401(a) of the
Code has received a determination letter from the Internal Revenue Service to
the effect that it meets the requirements of Sections 401(a) and 501(a) of the
Code; no Reportable Event has occurred with respect to a Plan; to the knowledge
of the Borrower, no Multiemployer Plan is insolvent or in reorganization; no
Plan has an Unfunded Current Liability; no Plan and to the knowledge of the
Borrower no Multiemployer Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding deficiency, within the meaning
of such sections of the Code or ERISA, or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
all material contributions required to be made by the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate with respect to a Plan or a Multiemployer
Plan have been timely made; neither the Borrower nor any Subsidiary of the
Borrower nor any ERISA Affiliate has incurred any material liability (including
any indirect or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 4062, 4063, 4064 or 4069 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or expects to incur any such material
liability under any of the foregoing sections with respect to any Plan; to the
knowledge of the Borrower, no condition exists which presents a material risk to
the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of
incurring a material liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code; no proceedings have been instituted
to terminate or appoint a trustee to administer any Plan which is subject to
Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation
with respect to the administration, operation or the investment of assets of any
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Plan (other than routine claims for benefits) is pending or, to the knowledge of
the Borrower, threatened; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates to all
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the date
of this Agreement, would not exceed $2,000,000 and with respect to fiscal years
ended prior to the date of each Credit Event would not be material; each group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) which covers or has covered employees or former employees of the Borrower,
any Subsidiary of the Borrower or any ERISA Affiliate has at all times been
operated in substantial compliance with the provisions of Part 6 of subtitle B
of Title I of ERISA and Section 4980B of the Code; no lien imposed under the
Code or ERISA on the assets of the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate exists or is likely to arise on account of any Plan; neither
the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has
incurred any material liability (including any indirect or secondary liability)
under Sections 515, 4201, 4202 or 4212 of ERISA with respect to any
Multiemployer Plan; to the knowledge of the Borrower, no condition exists which
presents a material risk to the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate of incurring a material liability to or on account of a
Multiemployer Plan pursuant to the foregoing provisions of ERISA; to the
knowledge of the Borrower, no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Multiemployer Plan (other than routine claims for benefits) that
could reasonably be expected to be material to the Borrower and its Subsidiaries
taken as a whole is pending or threatened; and the Borrower and its Subsidiaries
do not maintain or contribute to any employee welfare benefit plan (as defined
in Section 3(1) of ERISA), which provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan or
Multiemployer Plan, the obligations with respect to which could reasonably be
expected to have a material adverse effect on the ability of the Borrower and
its Subsidiaries to perform their obligations under the Credit Documents.
(ii) To the knowledge of the Borrower, each Foreign Pension
Plan has been maintained in substantial compliance with its terms and with the
requirements of any and all applicable laws, statutes, rules, regulations and
orders and has been maintained, where required, in good standing with applicable
regulatory authorities. All material contributions required to be made with
respect to a Foreign Pension Plan have been timely made. Neither the Borrower
nor any of its Subsidiaries has incurred any material obligation in connection
with the termination of or withdrawal from any Foreign Pension Plan. The
Borrower and its Subsidiaries do not maintain or contribute to any Foreign
Pension Plan the obligations with respect to which could reasonably be expected
to have a material adverse effect on the ability of the Borrower and its
Subsidiaries to perform their obligations under the Credit Documents.
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7.11 The Security Documents. (a) The provisions of the
Security Agreement are effective to create in favor of the Collateral
Administrative Agent for the benefit of the Secured Creditors a legal, valid and
enforceable security interest in all right, title and interest of the Credit
Parties party thereto in the Security Agreement Collateral described therein,
and the Collateral Administrative Agent, for the benefit of the Secured
Creditors, has a fully perfected lien on, and security interest in, all right,
title and interest in all of the Security Agreement Collateral described
therein, subject to no other Liens other than Permitted Liens. The recordation
of the Assignment of Security Interest in U.S. Patents and Trademarks in the
form attached to the Security Agreement in the United States Patent and
Trademark Office together with filings on Form UCC-1 made pursuant to the
Security Agreement will create, as may be perfected by such filing and
recordation, a perfected security interest granted to the Collateral
Administrative Agent in the trademarks and patents covered by the Security
Agreement and the recordation of the Assignment of Security Interest in U.S.
Copyrights in the form attached to the Security Agreement with the United States
Copyright Office together with filings on Form UCC-1 made pursuant to the
Security Agreement will create, as may be perfected by such filing and
recordation, a perfected security interest granted to the Collateral
Administrative Agent in the copyrights covered by the Security Agreement.
(b) The security interests created in favor of the Collateral
Administrative Agent, as Pledgee, for the benefit of the Secured Creditors,
under the Pledge Agreement constitute first priority perfected security
interests in the Pledged Securities described in the Pledge Agreement, subject
to no security interests of any other Person. No filings or recordings are
required in order to perfect (or maintain the perfection or priority of) the
security interests created in the Pledged Securities under the Pledge Agreement.
(c) The Mortgages create, for the obligations purported to be
secured thereby, a valid and enforceable perfected security interest in and
mortgage lien on all of the Mortgaged Properties in favor of the Collateral
Administrative Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Secured Creditors, superior to and prior to
the rights of all third persons (except that the security interest and mortgage
lien created in the Mortgaged Properties may be subject to the Permitted
Encumbrances related thereto) and subject to no other Liens (other than Liens
permitted under Section 9.01). Schedule III contains a true and complete list of
each parcel of Real Property owned or leased by the Borrower and its
Subsidiaries on the Initial Borrowing Date, and the type of interest therein
held by the Borrower or such Subsidiary. The Borrower and each of its
Subsidiaries have good and marketable title to all fee-owned Real Property and
valid leasehold title to all Leaseholds, in each case free and clear of all
Liens except those described in the first sentence of this subsection (c).
(d) The provisions of the Collateral Assignments are effective
to create in favor of the Collateral Administrative Agent for the benefit of the
Secured Creditors a legal,
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valid and enforceable security interest in all right, title and interest of the
Credit Parties party thereto in the Collateral Assignment Collateral described
therein, and the Collateral Administrative Agent, for the benefit of the Secured
Creditors, has a fully perfected lien on, and security interest in, all right,
title and interest in all of the Collateral Assignment Collateral described
therein, subject to no other Liens other than Permitted Liens.
7.12 Representations and Warranties in Acquisition Documents.
All representations and warranties set forth in the other Documents were true
and correct in all material respects at the time as of which such
representations and warranties were (or are) made (or deemed made).
7.13 Properties. The Borrower and each of its Subsidiaries
have good and marketable title to all material properties owned by them,
including all material property reflected in the balance sheets referred to in
Section 7.05(a) and all property acquired pursuant to the Acquisition (except as
sold or otherwise disposed of since the date of such balance sheet in the
ordinary course of business or in compliance with the terms of this Agreement),
free and clear of all Liens, other than Liens permitted by Section 9.01.
7.14 Capitalization. On the Initial Borrowing Date, the
authorized capital stock of the Borrower shall consist of (i) 100,000,000 shares
of common stock, $.01 par value per share and (ii) 5,000,000 shares of preferred
stock, $.01 par value per value, of which no shares of such preferred stock are
issued or outstanding. All outstanding shares of capital stock of the Borrower
have been duly and validly issued, are fully paid and nonassessable. Except (i)
as set forth on Schedule V and (ii) for options or warrants to purchase shares
of common stock of the Borrower, as of the Initial Borrowing Date, the Borrower
does not have outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
7.15 Subsidiaries and Joint Ventures. As of the Initial
Borrowing Date, the Borrower has no Subsidiaries or Joint Ventures other than
those Subsidiaries and Joint Ventures listed on Schedule VI. Schedule VI
correctly sets forth, as of the Initial Borrowing Date, (i) the percentage
ownership (direct or indirect) of the Borrower in each class of capital stock or
other equity of each of its Subsidiaries and Joint Ventures and also identifies
the direct owner thereof and (ii) which Joint Venture Agreements prohibit the
assignment by a Credit Party of its equity interest in the respective Joint
Venture.
7.16 Compliance with Statutes, etc. Each of the Borrower and
each of its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
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regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
7.17 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
7.18 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.19 Environmental Matters. (a) The Borrower and each of its
Subsidiaries have complied with, and on the date of such Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or, to the
best knowledge of the Borrower, threatened Environmental Claims against the
Borrower or any of its Subsidiaries (including any such claim arising out of the
ownership or operation by the Borrower or any of its Subsidiaries of any Real
Property no longer owned or operated by the Borrower or any of its Subsidiaries)
or any Real Property owned or operated by the Borrower or any of its
Subsidiaries. There are no facts, circumstances, conditions or occurrences with
respect to any Real Property owned or operated by the Borrower or any of its
Subsidiaries (including any Real Property formerly owned or operated by the
Borrower or any of its Subsidiaries but no longer owned or operated by the
Borrower or any of its Subsidiaries) or, to the best knowledge of the Borrower,
any property adjoining or adjacent to any such Real Property that could
reasonably be expected (i) to form the basis of an Environmental Claim against
the Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries, or (ii) to cause any Real Property
owned or operated by the Borrower or any of its Subsidiaries to be subject to
any restrictions on the ownership, occupancy or transferability of such Real
Property by the Borrower or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property owned
or operated by the Borrower or any of its Subsidiaries where such generation,
use, treatment or storage has violated or could reasonably be expected to
violate any Environmental Law. Hazardous Materials have not at any time been
Released on or from any Real Property owned or
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operated by the Borrower or any of its Subsidiaries where such Release has
violated or could reasonably be expected to violate any applicable Environmental
Law.
(c) Notwithstanding anything to the contrary in this Section
7.19, the representations made in this Section 7.19 shall not be untrue unless
the aggregate effect of all violations, claims, restrictions, failures and
noncompliances of the types described above could reasonably be expected to have
a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
7.20 Labor Relations. Neither the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrower and its Subsidiaries
taken as a whole. There is (i) no unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the
Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries and (iii) no union
representation question exists with respect to the employees of the Borrower or
any of its Subsidiaries, except (with respect to any matter specified in clause
(i), (ii) or (iii) above, either individually or in the aggregate) such as could
not reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of the
Borrower and each of its Subsidiaries owns all the patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises, proprietary
information (including but not limited to rights in computer programs and
databases) and formulas, or rights with respect to the foregoing, and has
obtained assignments of all leases and other rights of whatever nature,
necessary for the present conduct of its business, without any known conflict
with the rights of others which, or the failure to obtain which, as the case may
be, could reasonably be expected to result in a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
7.22 Indebtedness. Schedule VII sets forth a true and complete
list of all Indebtedness (including Contingent Obligations) of the Borrower and
its Subsidiaries as of the Initial Borrowing Date and which is to remain
outstanding after giving effect to the Transaction (excluding the Loans and the
Letters of Credit (but including the Existing
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Glendale Debt to the extent that same is to be refinanced after the Initial
Borrowing Date as part of the Refinancing or is to remain outstanding without
being so refinanced), the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower and
any Credit Party or any of its Subsidiaries which directly or indirectly
guaranteed such debt.
7.23 Transaction. At the time of consummation thereof, the
Transaction shall have been consummated in accordance with the terms of the
respective Documents and all applicable laws. At the time of consummation
thereof, all material consents and approvals of, and filings and registrations
with, and all other actions in respect of, all governmental agencies,
authorities or instrumentalities required in order to make or consummate the
Transaction to the extent then required have been obtained, given, filed or
taken and are or will be in full force and effect (or effective judicial relief
with respect thereto has been obtained). All applicable waiting periods with
respect thereto have or, prior to the time when required, will have, expired
without, in all such cases, any action being taken by any competent authority
which restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or the occurrence of any Credit Event or the performance by any
Credit Party of its obligations under the Documents to which it is party. All
actions taken by each Credit Party pursuant to or in furtherance of the
Transaction have been taken in compliance in all material respects with the
respective Documents and all applicable laws.
SECTION 8. Affirmative Covenants. The Borrower hereby
covenants and agrees that on and after the Effective Date and until the Total
Commitments and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
8.01 Information Covenants. The Borrower will furnish to
each Bank:
(a) Quarterly Financial Statements. Within 50 days after the
close of the first three quarterly accounting periods in each fiscal year of the
Borrower, (i) the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly accounting period and the related
consolidated statements of income and retained earnings and statement of cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period, in each
case setting forth comparative figures for the related periods in the prior
fiscal year, all of which shall be certified by the Chief Financial Officer of
the Borrower or another senior financial officer of the Borrower, subject to
normal year-end audit adjustments and (ii) management's discussion and analysis
of the important operational and financial developments during the quarterly and
year-to-date periods, it being understood that the delivery by the Borrower of
its Form 10-Q as filed with the SEC shall satisfy the requirements of this
Section 8.01(a).
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(b) Annual Financial Statements. (A) Within 95 days after the
close of each fiscal year of the Borrower, (i) the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of cash
flows for such fiscal year setting forth comparative figures for the preceding
fiscal year and certified by KPMG Peat Marwick LLP, any other "Big Six"
independent certified public accountants or such other independent certified
public accountants of recognized national standing reasonably acceptable to the
Agents and (ii) management's discussion and analysis of the important
operational and financial developments during the respective fiscal year, it
being understood that the delivery by the Borrower of its Form 10-K as filed
with the SEC shall satisfy the requirements of this Section 8.01(b)(A).
(B) At the time of the delivery of the annual financial
statements pursuant to clause (A) above, a report of the applicable accounting
firm stating that in the course of its regular audit of the financial statements
of the Borrower and its Subsidiaries, which audit was conducted in accordance
with generally accepted auditing standards, such accounting firm obtained no
knowledge of any Default or Event of Default which has occurred and is
continuing under any of Sections 9.07 through 9.11, inclusive, or, if in the
opinion of such accounting firm such a Default or an Event of Default has
occurred and is continuing under any such Sections , a statement as to the
nature thereof.
(c) Management Letters. Promptly after the Borrower's or any
of its Subsidiaries' receipt thereof, a copy of any "management letter" received
from its certified public accountants.
(d) Budgets. No later than the 30th day of each fiscal year of
the Borrower, a budget in form satisfactory to the Agents (including budgeted
statements of income and sources and uses of cash and balance sheets) prepared
by the Borrower for each of the months of such fiscal year prepared in detail,
setting forth, with appropriate discussion, the principal assumptions upon which
such budget was based.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 8.01(a) and (b), a certificate of
the Chief Financial Officer of the Borrower or another senior financial officer
of the Borrower to the effect that, to the best of such officer's knowledge, no
Default or Event of Default has occurred and is continuing or, if any Default or
Event of Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate shall (x) set forth in reasonable detail the
calculations required to establish whether the Borrower and its Subsidiaries
were in compliance with the provisions of Sections 9.08 through 9.11, inclusive,
at the end of such fiscal quarter or year, as the case may be, (y) if delivered
with the financial statements required by Section 8.01(b), set forth in
reasonable detail the calculations required to establish whether the Borrower
and its Subsidiaries were in compliance with the provisions of Sections 4.02(g)
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and 9.07 as at the end of such fiscal year and the amount of (and the
calculations required to establish the amount of) Excess Cash Flow for the
respective Excess Cash Payment Period and (z) set forth the amount of the
Retained Net Equity Proceeds Amount and the Retained Excess Cash Flow Amount at
the end of such fiscal quarter or year, as the case may be.
(f) Notice of Default or Litigation. Promptly upon, and in any
event within three Business Days (or five Business Days in the case of clause
(ii) below) after, an officer of the Borrower obtains knowledge thereof, notice
of (i) the occurrence of any event which constitutes a Default or an Event of
Default and (ii) any litigation or governmental investigation or proceeding
pending (x) against the Borrower or any of its Subsidiaries which could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (y) with
respect to the Transaction or any Document.
(g) Other Reports and Filings. Promptly after the filing or
delivery thereof, copies of all financial information, proxy materials and
reports, if any, which the Borrower or any of its Subsidiaries shall publicly
file with the Securities and Exchange Commission or any successor thereto (the
"SEC") or deliver to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(h) Environmental Matters. Promptly upon, and in any event
within ten Business Days after, an officer of the Borrower obtains knowledge
thereof, notice of one or more of the following environmental matters, unless
such environmental matters could not, individually or when aggregated with all
other such environmental matters, be reasonably expected to materially and
adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against
the Borrower or any of its Subsidiaries or any Real Property owned or
operated by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by the Borrower or any of its Subsidiaries
that (a) results in noncompliance by the Borrower or any of its
Subsidiaries with any applicable Environmental Law or (b) could
reasonably be expected to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any such owned or
operated Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by the Borrower or any of its Subsidiaries that could
reasonably be expected to cause
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such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by the Borrower or any of its
Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by the Borrower or any of its Subsidiaries
as required by any Environmental Law or any governmental or other
administrative agency; provided, that in any event the Borrower shall
deliver to each Bank all notices received by the Borrower or any of its
Subsidiaries from any government or governmental agency under, or
pursuant to, CERCLA which identify the Borrower or any of its
Subsidiaries as potentially responsible parties for remediation costs
or which otherwise notify the Borrower or any of its Subsidiaries of
potential liability under CERCLA.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial
action and the Borrower's or such Subsidiary's response thereto.
(i) Certain Pro Forma Financial Information. For each Test
Period which ends on or before September 30, 1997, the consolidated
income statement of the Borrower and its Subsidiaries for such Test
Period which shall contain historical financial information for that
portion of the Test Period which occurs on and after the Initial
Borrowing Date and pro forma financial information for that portion of
the Test Period which occurs prior to the Initial Borrowing Date, which
pro forma financial information shall be calculated as if the
Transaction, the related financing thereof and the other transactions
contemplated hereby had been consummated on the first day of such Test
Period (and shall exclude any extraordinary adjustments as a result of
the Transaction), shall be calculated and presented in a manner
consistent with the pro forma income statements referred to in Section
7.05(a) which were furnished to the Banks on or prior to the Initial
Borrowing Date, and shall be delivered at the same time as the annual
financial statements are delivered pursuant to Section 8.01(b).
(j) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to the
Borrower or any of its Subsidiaries or Joint Ventures as any Agent or
any Bank may reasonably request.
8.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and accounts
in which full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities. Upon reasonable
notice to the Borrower, the Borrower will, and will cause
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each of its Subsidiaries to, permit officers and designated representatives of
any Agent or any Bank to visit and inspect, under guidance of officers of the
Borrower or such Subsidiary, any of the properties owned or leased by the
Borrower or such Subsidiary, and to examine the books of account of the Borrower
or such Subsidiary and discuss the affairs, finances and accounts of the
Borrower or such Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as such Agent or such Bank may
reasonably request (provided that the Borrower shall have the right to take part
in any discussions with its independent accountants).
8.03 Maintenance of Property; Insurance. (a) Schedule VIII
sets forth a true and complete listing of all insurance maintained by the
Borrower and its Subsidiaries as of the Initial Borrowing Date. The Borrower
will, and will cause each of its Subsidiaries to, (i) keep all property owned or
leased by the Borrower and its Subsidiaries necessary to the business of the
Borrower and its Subsidiaries in reasonably good working order and condition,
ordinary wear and tear excepted, (ii) maintain, with financially sound and
reputable insurers, insurance on all such property in at least such amounts and
against at least such risks as is consistent and in accordance with industry
practice for companies similarly situated owning similar properties in the same
general areas in which the Borrower or any of its Subsidiaries operates, and
(iii) furnish to any Agent or any Bank, upon written request, full information
as to the insurance carried.
(b) The Borrower will, and will cause each of the other Credit
Parties to, at all times keep its property insured in favor of the Collateral
Administrative Agent, and all policies (including Mortgage Policies) or
certificates (or certified copies thereof) with respect to such insurance (and
any other insurance maintained by the Borrower and/or such other Credit Parties)
(i) shall be endorsed to the Collateral Administrative Agent's satisfaction for
the benefit of the Collateral Administrative Agent (including, without
limitation, by naming the Collateral Administrative Agent as loss payee and/or
additional insured), (ii) shall state that such insurance policies shall not be
cancelled without at least 30 days' prior written notice thereof by the
respective insurer to the Collateral Administrative Agent (or such shorter
period of time as a particular insurance company policy generally provides),
(iii) shall provide that the respective insurers irrevocably waive any and all
rights of subrogation with respect to the Collateral Administrative Agent and
the Secured Creditors, (iv) shall contain the standard non-contributing mortgage
clause endorsement in favor of the Collateral Administrative Agent with respect
to hazard liability insurance, (v) shall, except in the case of public liability
insurance, provide that any losses shall be payable notwithstanding (A) any act
or neglect of the Borrower or any such other Credit Party, (B) the occupation or
use of the properties for purposes more hazardous than those permitted by the
terms of the respective policy if such coverage is obtainable at commercially
reasonable rates and is of the kind from time to time customarily insured
against by Persons owning or using similar property and in such amounts as are
customary, (C) any foreclosure or other proceeding
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relating to the insured properties or (D) any change in the title to or
ownership or possession of the insured properties and (vi) shall be deposited
with the Collateral Administrative Agent.
(c) If the Borrower or any of its Subsidiaries shall fail to
insure its property in accordance with this Section 8.03, or if the Borrower or
any of its Subsidiaries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Collateral Administrative Agent shall
have the right (but shall be under no obligation), after giving the Borrower
prior written notice, to procure such insurance and the Borrower agrees to
reimburse the Collateral Administrative Agent for all costs and expenses of
procuring such insurance.
8.04 Corporate Franchises. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
this Section 8.04 shall prevent (i) sales of assets and other transactions by
the Borrower or any of its Subsidiaries in accordance with Section 9.02 or (ii)
the withdrawal by the Borrower or any of its Subsidiaries of its qualification
as a foreign corporation in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) The Borrower will
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership or use of its Real Property now
or hereafter owned or operated by the Borrower or any of its Subsidiaries
(except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole), will promptly
pay or cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws. Neither the
Borrower nor any of its Subsidiaries will generate,
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use, treat, store, release or dispose of, or permit the generation, use,
treatment, storage, release or disposal of Hazardous Materials on any Real
Property now or hereafter owned or operated by the Borrower or any of its
Subsidiaries, or transport or permit the transportation of Hazardous Materials
to or from any such Real Property, except to the extent that any such
generation, use, treatment, storage, release or disposal could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
(b) At the reasonable written request of the Agents or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, the Borrower will provide, at the
sole expense of the Borrower, an environmental site assessment report concerning
any Real Property owned or operated by the Borrower or any of its Subsidiaries,
prepared by an environmental consulting firm reasonably approved by the Agents,
indicating the presence or absence of Hazardous Materials and the potential cost
of any removal or remedial action in connection with such Hazardous Materials on
such Real Property, provided that in no event shall such request be made more
often than once every two years for any particular Real Property unless either
(i) the Obligations have been declared (or have become) due and payable pursuant
to Section 10 or (ii) the Banks receive notice under Section 8.01(h) of any
event for which notice is required to be delivered for any such Real Property.
If the Borrower fails to provide the same within ninety days after such request
was made, the Agents may order the same, the cost of which shall be borne by the
Borrower, and the Borrower shall grant and hereby grants to the Agents and the
Banks and their agents access to such Real Property and specifically grants the
Agents and the Banks an irrevocable non-exclusive license, subject to the rights
of tenants, to undertake such an assessment at any reasonable time upon
reasonable notice to the Borrower, all at the sole and reasonable expense of the
Borrower.
8.07 ERISA. As soon as possible and, in any event, within ten
(10) Business Days after the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate knows or has reason to know of the occurrence of any of the
following, the Borrower will deliver to each of the Banks a certificate of the
Chief Financial Officer of the Borrower setting forth the full details as to
such occurrence and the action, if any, that the Borrower, such Subsidiary or
such ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred; that
an accumulated funding deficiency, within the meaning of Section 412 of the Code
or Section 302 of ERISA, has been incurred or an application may be or has been
made for a waiver or modification of the minimum funding standard (including any
required installment payments) or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan or
a Multiemployer Plan; that a contribution for a material amount required to be
made with
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respect to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been
timely made; that a Plan or a Multiemployer Plan has been or may be terminated
under Section 4041(c) or 4042 of ERISA, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability; that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan or a Multiemployer Plan which is subject
to Title IV of ERISA; that a proceeding has been instituted pursuant to Section
515 of ERISA to collect a delinquent contribution to a Multiemployer Plan; that
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any material liability (including any indirect or secondary liability) to
or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064 or 4069 of ERISA or with respect to a Plan under Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of
ERISA or under Section 4980B(a) of the Code with respect to a group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code or with respect to a Multiemployer Plan under Sections
4201, 4204 or 4212 of ERISA; or that the Borrower or any Subsidiary of the
Borrower may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any Plan which is subject to Title IV of ERISA, any
Multiemployer Plan or any Foreign Pension Plan. Upon written request of any
Agent, the Borrower will deliver to each of the Banks a complete copy of the
annual report (on Internal Revenue Service Form 5500-series) of each Plan
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information) required to be filed with the Internal Revenue
Service or any other material financial information the Borrower or any
Subsidiary has with respect to any Plan. In addition to any certificates or
notices delivered to the Banks pursuant to the first sentence hereof, copies of
any material notices pertaining to the foregoing events received by the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with respect to
any Plan, Multiemployer Plan or Foreign Pension Plan shall be delivered to the
Banks no later than ten (10) Business Days after the date such notice has been
received by the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. The Borrower will
cause (i) each of its, and each of its Subsidiaries', fiscal years to end on
December 31, and (ii) each of its, and each of its Subsidiaries', fiscal
quarters to end on March 31, June 30, September 30 and December 31.
8.09 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement, loan agreement or credit
agreement and each other material agreement, contract or instrument by which it
is bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse
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effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
8.10 Payment of Taxes. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for sums that have become
due and payable which, if unpaid, might become a Lien not otherwise permitted
under Section 9.01(i); provided, that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with generally
accepted accounting principles.
8.11 Interest Rate Protection. No later than 90 days following
the Initial Borrowing Date, the Borrower will enter into, and shall for 2 years
thereafter maintain, Interest Rate Protection Agreements acceptable to the
Agents establishing a fixed or maximum interest rate acceptable to the Agents
for an aggregate amount equal to at least 40% of the aggregate principal amount
of all Term Loans then outstanding and the amount of the Total Tranche A Term
Loan Commitment then in effect.
8.12 Additional Security; Further Assurances. (a) The Borrower
will, and will cause each of the Subsidiary Guarantors to, grant to the
Collateral Administrative Agent security interests and mortgages in such assets
and properties (including Real Property) of the Borrower and such Subsidiary
Guarantors which are of the type required to be pledged or assigned pursuant to
the original Security Documents and as are not covered by such original Security
Documents, and as may be requested from time to time by the Agents or the
Required Banks (collectively, the "Additional Security Documents"). All such
security interests and mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Agents and shall constitute
valid and enforceable perfected security interests and mortgages superior to and
prior to the rights of all third Persons and subject to no other Liens except
for Permitted Liens. The Additional Security Documents or instruments related
thereto shall have been duly recorded or filed in such manner and in such places
as are required by law to establish, perfect, preserve and protect the Liens in
favor of the Collateral Administrative Agent required to be granted pursuant to
the Additional Security Documents and all taxes, fees and other charges payable
in connection therewith shall have been paid in full.
(b) The Borrower will, and will cause each of the Subsidiary
Guarantors to, at the expense of the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Administrative Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, real property surveys, reports and other assurances or instruments
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and take such further steps relating to the collateral covered by any of the
Security Documents as the Collateral Administrative Agent may reasonably
require. Furthermore, the Borrower will cause to be delivered to the Collateral
Administrative Agent such opinions of counsel, title insurance and other related
documents as may be reasonably requested by the Agents to assure itself that
this Section 8.12 has been complied with.
(c) The Borrower agrees that each action required above by
this Section 8.12 shall be completed within 90 days after such action is either
requested to be taken by the Agents or the Required Banks or required to be
taken by the Borrower and the Subsidiary Guarantors pursuant to the terms of
this Section 8.12; provided that in no event will the Borrower or any Subsidiary
Guarantor be required to take any action, other than using its reasonable
efforts, to obtain consents from third parties with respect to its compliance
with this Section 8.12.
8.13 Foreign Subsidiaries Security. If following a change in
the relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Agents does not within 30 days after a
request from the Agents or the Required Banks deliver evidence, in form and
substance mutually satisfactory to the Agents and the Borrower, with respect to
any Foreign Subsidiary of the Borrower which has not already had all of its
stock pledged pursuant to the Pledge Agreement that (i) a pledge of 66-2/3% or
more of the total combined voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign
Subsidiary of a security agreement in substantially the form of the Security
Agreement and (iii) the entering into by such Foreign Subsidiary of a guaranty
in substantially the form of the Subsidiaries Guaranty, in any such case would
cause the undistributed earnings of such Foreign Subsidiary as determined for
Federal income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, then in the
case of a failure to deliver the evidence described in clause (i) above, that
portion of such Foreign Subsidiary's outstanding capital stock not theretofore
pledged pursuant to the Pledge Agreement shall be pledged to the Collateral
Administrative Agent for the benefit of the Secured Creditors pursuant to the
Pledge Agreement (or another pledge agreement in substantially similar form, if
needed), and in the case of a failure to deliver the evidence described in
clause (ii) above, such Foreign Subsidiary (to the extent that same is a Wholly-
Owned Foreign Subsidiary and would otherwise constitute a Subsidiary Guarantor)
will execute and deliver the Security Agreement (or another security agreement
in substantially similar form, if needed), granting the Collateral
Administrative Agent for the benefit of the Secured Creditors a security
interest in all of such Foreign Subsidiary's assets and securing the Obligations
of the Borrower under the Credit Documents and under any Interest Rate
Protection Agreement or Other Hedging Agreement and, in the event the
Subsidiaries Guaranty shall have been executed by such Foreign Subsidiary, the
obligations of such Foreign Subsidiary thereunder, and in the case of a failure
to deliver the evidence described
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in clause (iii) above, such Foreign Subsidiary (to the extent that same is a
Wholly-Owned Foreign Subsidiary and would otherwise constitute a Subsidiary
Guarantor) will execute and deliver the Subsidiaries Guaranty (or another
guaranty in substantially similar form, if needed), guaranteeing the Obligations
of the Borrower under the Credit Documents and under any Interest Rate
Protection Agreement or Other Hedging Agreement, in each case to the extent that
the entering into such Security Agreement or Subsidiaries Guaranty is permitted
by the laws of the respective foreign jurisdiction and with all documents
delivered pursuant to this Section 8.13 to be in form and substance reasonably
satisfactory to the Agents.
8.14 Joint Venture Distributions. To the extent any Joint
Venture receives any proceeds from any of the events specified in Sections
4.02(d), (e), (f) and (h) then, to the extent the Net Equity Proceeds, Net Debt
Proceeds, Net Sale Proceeds or Net Insurance Proceeds, as the case may be, from
any such event would have to be applied to repay outstanding Term Loans or
outstanding Revolving Loans (as a result of a reduction to the Total Revolving
Loan Commitment), if received by the Borrower or a Wholly-Owned Subsidiary of
the Borrower, the Borrower will use its best efforts to cause such Joint Venture
to distribute to the Borrower or a Wholly-Owned Subsidiary thereof, concurrently
with or as soon after the respective event as is practicable, the Borrower's
Allocable Share of such proceeds received by such Joint Venture, provided that
the Borrower's obligations under this Section 8.14 are subject to (i) the
ability of the Borrower or a Wholly-Owned Subsidiary thereof to control the
timing of distributions by such Joint Venture, (ii) any applicable contractual
restrictions, (iii) any fiduciary responsibility that the Borrower or such
Wholly-Owned Subsidiary may have to the other joint venture partner or partners,
(iv) in the case of any Non-Subsidiary Joint Venture (other than an Existing Red
Lion Joint Venture), the right of such Non-Subsidiary Joint Venture to use such
proceeds in the ordinary course of its business (including to repay any
Indebtedness of such Non-Subsidiary Joint Venture) and (v) in the case of Net
Equity Proceeds received by any non-Wholly-Owned Subsidiary of the Borrower, the
right of such Subsidiary to use such Net Equity Proceeds for the purpose or
purposes for which such Net Equity Proceeds were initially received.
8.15 Existing Glendale Debt. Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the Existing Glendale
Debt is to be refinanced (in whole or in part) with proceeds of Loans, the
Borrower or a Subsidiary Guarantor shall be required to loan the proceeds of
such Loans to the respective Joint Venture to refinance the Existing Glendale
Debt.
8.16 Maintenance of Corporate Separateness. The Borrower will,
and will cause each of its Subsidiaries and Unrestricted Subsidiaries to,
satisfy customary corporate formalities, including the holding of regular board
of directors' and shareholders' meetings or action by directors or shareholders
without a meeting and the maintenance of corporate offices and records. Neither
the Borrower nor any of its Subsidiaries shall make any payment to a creditor of
any Unrestricted Subsidiaries in respect of any liability of any
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Unrestricted Subsidiaries, and no bank account of any Unrestricted Subsidiary
shall be commingled with any bank account of the Borrower or any of its
Subsidiaries. Any financial statements distributed to any creditors of any
Unrestricted Subsidiaries shall clearly establish or indicate the corporate
separateness of such Unrestricted Subsidiary from the Borrower and its
Subsidiaries. Finally, neither the Borrower nor any of its Subsidiaries shall
take any action, or conduct its affairs in a manner, which is likely to result
in the corporate existence of the Borrower or any of its Subsidiaries or
Unrestricted Subsidiaries being ignored, or in the assets and liabilities of the
Borrower or any of its Subsidiaries being substantively consolidated with those
of any other such Person or any Unrestricted Subsidiary in a bankruptcy, \
reorganization or other insolvency proceeding.
SECTION 9. Negative Covenants. The Borrower hereby covenants
and agrees that on and after the Effective Date and until the Total Commitments
and all Letters of Credit have terminated and the Loans, Notes and Unpaid
Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
9.01 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to the Borrower
or any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute; provided that the provisions
of this Section 9.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
"Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles;
(ii) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's, materialmen's and mechanics'
liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from
the value of the Borrower's or such Subsidiary's property or assets or
materially impair the use thereof in the operation of the business of
the Borrower or such Subsidiary or (y) which are being contested in
good faith by appropriate pro-
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ceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or assets subject to any such Lien;
(iii) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Schedule IX, but
only to the respective date, if any, set forth in such Schedule IX for
the removal, replacement and termination of any such Liens, plus
renewals, replacements and extensions of such Liens to the extent set
forth on Schedule IX, provided that (x) except to the extent
specifically set forth on Schedule IX, the aggregate principal amount
of the Indebtedness, if any, secured by such Liens does not increase
from that amount outstanding at the time of any such renewal,
replacement or extension and (y) any such renewal, replacement or
extension does not encumber any additional assets or properties of the
Borrower or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted to other Persons not
materially interfering with the conduct of the business of the Borrower
or any of its Subsidiaries;
(vii) Liens upon assets of the Borrower or any of its
Subsidiaries subject to Capitalized Lease Obligations to the extent
such Capitalized Lease Obligations are permitted by Section 9.04(iv),
provided that (x) such Liens only serve to secure the payment of
Indebtedness arising under such Capitalized Lease Obligation and (y)
the Lien encumbering the asset giving rise to the Capitalized Lease
Obligation does not encumber any other asset of the Borrower or any
Subsidiary of the Borrower;
(viii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any of its Subsidiaries
at the time of acquisition thereof by the Borrower or any such
Subsidiary or within 90 days thereafter to secure Indebtedness incurred
to pay all or a portion of the purchase price thereof or to secure
Indebtedness incurred solely for the purpose of financing the
acquisition of any such equipment or machinery or extensions, renewals
or replacements of any of the foregoing for the same or a lesser
amount, provided that (x) the aggregate outstanding principal amount of
all Indebtedness secured by Liens permitted by this clause (viii) shall
not at any time exceed $10,000,000 and (y) in all events, the Lien
encumbering the equipment or machinery so acquired does not encumber
any other asset of the Borrower or such Subsidiary;
(ix) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies, in
each case not securing
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Indebtedness and not materially interfering with the conduct of the
business of the Borrower or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing
statement filings regarding operating leases;
(xi) Liens arising out of judgments or awards in respect of
which the Borrower or any of its Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review in respect of which
there shall have been secured a subsisting stay of execution pending
such appeal or proceedings, provided that the aggregate amount of such
judgments and the aggregate amount of any cash and the fair market
value of any property subject to consensual security interests securing
such Liens does not exceed $10,000,000 at any time outstanding;
(xii) statutory and common law landlords' liens under leases
to which the Borrower or any of its Subsidiaries is a party;
(xiii) Liens (other than Liens imposed under ERISA) incurred in
the ordinary course of business in connection with workers compensation
claims, unemployment insurance and social security benefits and Liens
securing the performance of bids, tenders, leases and contracts in the
ordinary course of business, statutory obligations, surety bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business (exclusive of obligations in respect of
the payment for borrowed money), provided that the aggregate value of
all cash and property encumbered by consensual Liens permitted pursuant
to this clause (xiii) shall not at any time exceed $10,000,000;
(xiv) Liens on property or assets acquired pursuant to a Hotel
Acquisition, or on property or assets of a Subsidiary of the Borrower
in existence at the time such Subsidiary is acquired pursuant to a
Hotel Investment, provided that (x) any Indebtedness that is secured by
such Liens is permitted to exist under Section 9.04(xiii), (y) the
aggregate amount of outstanding Indebtedness secured by such Liens,
when added to the aggregate amount of outstanding Indebtedness secured
by Liens permitted under clause (xvii) of this Section 9.01, does not
exceed $25,000,000 and (z) such Liens are not incurred in connection
with, or in contemplation or anticipation of, such Hotel Acquisition or
Hotel Investment and do not attach to any other asset of the Borrower
or any of its Subsidiaries;
(xv) Liens securing any Indebtedness incurred by a
non-Wholly-Owned Subsidiary of the Borrower to refinance any unsecured
Existing Indebtedness of such non-Wholly-Owned Subsidiary owing to the
Borrower or any Wholly-Owned Subsidiary thereof, provided that (x) such
Existing Indebtedness is permitted to be
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refinanced pursuant to Section 9.04(ii) and (y) in all events, the Lien
securing such Indebtedness does not encumber any assets or property
other than the assets or property of the non-Wholly-Owned Subsidiary
incurring such Indebtedness;
(xvi) Liens securing Non-Recourse Indebtedness of Specified
Subsidiaries, provided that (x) such Non-Recourse Indebtedness is
permitted to be incurred under Section 9.04(xi) and (y) in all events,
the Lien securing such Non-Recourse Indebtedness does not encumber any
assets or property other than the assets or property of the Specified
Subsidiary incurring such Non-Recourse Indebtedness;
(xvii) Liens securing Indebtedness of Subsidiaries of the
Borrower incurred under Section 9.04(xiii), provided that (x) the
aggregate amount of outstanding Indebtedness secured by such Liens,
when added to the aggregate amount of outstanding Indebtedness secured
by Liens permitted under clause (xiv) of this Section 9.01, does not
exceed $25,000,000 and (y) in all events, the Lien securing such
Indebtedness only encumbers property or assets acquired after the
Initial Borrowing Date and does not encumber any Collateral or any
assets or property other than the assets or property of the Subsidiary
incurring such Indebtedness;
(xviii) Liens on property or assets of a Subsidiary of the
Borrower in favor of, and securing obligations owed to, the Borrower or
any Subsidiary Guarantor;
(xix) Liens securing Indebtedness incurred pursuant to Section
9.04(xii), so long as the Liens securing such Indebtedness do not
encumber any assets or property other than the assets or property of
the Joint Venture of the Borrower that owns the Red Lion Hotel in
Glendale, California; and
(xx) preferences that arise solely by reason of the Borrower or
any of its Subsidiaries agreeing to contractually subordinate any
management fees payable to them as required by any lender to a hotel
property managed by the Borrower or any of its Subsidiaries.
In connection with the granting of Liens of the type described in clauses (vii),
(viii) and (xiv) of this Section 9.01 by the Borrower or any of its
Subsidiaries, the Administrative Agent and the Collateral Administrative Agent
shall be authorized to take any actions deemed appropriate by it in connection
therewith (including, without limitation, by executing appropriate lien releases
or lien subordination agreements in favor of the holder or holders of such
Liens, in either case solely with respect to the item or items of equipment or
other assets subject to such Liens).
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
The Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its
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affairs or enter into any transaction of merger or consolidation, or convey,
sell, lease or otherwise dispose of all or any part of its property or assets,
or enter into any sale-lease-back transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of business) of any Person (or agree to do any
of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries
shall be permitted to the extent not in violation of Section 9.07;
(ii) each of the Borrower and its Subsidiaries may in the
ordinary course of business sell, lease or otherwise dispose of any
equipment or materials which, in the reasonable judgment of such
Person, are obsolete or worn out;
(iii) each of the Borrower and its Subsidiaries may sell assets
(other than the capital stock of any Subsidiary Guarantor and any
Designated Hotel Property), so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii) each such sale is
in an arm's-length transaction and the Borrower or the respective
Subsidiary receives at least fair market value (as determined in good
faith by the Borrower or such Subsidiary, as the case may be), (iii) at
least 75% of the total consideration received by the Borrower or such
Subsidiary is cash and is paid at the time of the closing of such sale,
(iv) the Net Sale Proceeds therefrom are applied as (and to the extent)
required by Section 4.02(f) and (v) the aggregate amount of the
proceeds received from all assets sold pursuant to this clause (iii)
shall not exceed $20,000,000 in any fiscal year of the Borrower;
(iv) each of the Borrower and its Subsidiaries may sell the
Designated Hotel Properties (other than pursuant to a sale-leaseback
transaction), so long as (i) no Default or Event of Default then exists
or would result therefrom, (ii) each such sale is in an arms'-length
transaction and the Borrower or the respective Subsidiary receives at
least fair market value (as determined in good faith by the Borrower or
such Subsidiary, as the case may be), (iii) at least 75% of the total
consideration received by the Borrower or such Subsidiary is cash and
is paid at the time of the closing of such sale, (iv) the Net Sale
Proceeds therefrom are applied as (and to the extent) required by
Section 4.02(f) and (v) (I) based on calculations made by the Borrower
on a Pro Forma Basis after giving effect to the respective sale, no
Default or Event of Default will exist under, or would have existed
during the Test Period last reported (or required to be reported
pursuant to Section 8.01(a) or (b), as the case may be) prior to the
date of the respective sale pursuant to, the financial covenants
contained in Sections 9.08 through 9.11, inclusive (provided that for
purposes of determining pro forma compliance with any such Section for
any period during which the covenants contained therein are not yet
required to be tested pursuant to
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the terms thereof, the Borrower shall instead use the historical
financial results of the Borrower and its Subsidiaries for the most
recently ended four fiscal quarter period (but calculated as if the
Transaction, the related financing thereof and the other transactions
contemplated hereby had been consummated on the first day of such
period and (x) assuming that the amount of Capital Expenditures, Hotel
Investments and/or Hotel Acquisitions made during any portion of such
period prior to the Initial Borrowing Date is at an assumed per annum
rate of $40,000,000 and (y) with Consolidated EBITDA for such period to
be determined in accordance with the definition thereof) and the
Borrower shall be required to demonstrate, on a Pro Forma Basis, that
no Default or Event of Default will exist under, or would have existed
during such period prior to the date of the respective sale pursuant
to, the financial covenants contained in any of such Sections 9.08
through 9.11, inclusive (but assuming, for this purpose, that the level
of financial performance required to be satisfied is the level
applicable to any such Section the first time compliance with such
Section is required to be tested pursuant to the terms thereof)), and
(II) the Borrower shall have delivered to the Agents an officer's
certificate executed by the Chief Financial Officer of the Borrower or
another senior financial officer of the Borrower, certifying to the
best of such officer's knowledge, compliance with the requirements of
this clause (iv) and containing the calculations (in reasonable detail)
required by this clause (iv);
(v) RFS and RFS Sub may sell the RFS REIT Equity to the RFS
REIT or to any other Person (other than to the Borrower or a Subsidiary
thereof), in each case for cash and at fair market value (as determined
in good faith by RFS or RFS Sub) so long as the Net Sale Proceeds
therefrom are applied as (and to the extent) required by Section
4.02(i);
(vi) each of the Borrower and its Subsidiaries may sell all or
a portion of their equity interests in the Existing Red Lion Joint
Ventures, so long as (i) no Default or Event of Default then exists or
would result therefrom, (ii) each such sale is in an arms'-length
transaction and the Borrower or the respective Subsidiary receives at
least fair market value (as determined in good faith by the Borrower or
such Subsidiary, as the case may be), (iii) at least 75% of the total
consideration received by the Borrower or such Subsidiary is cash and
is paid at the time of the closing of such sale, (iv) the Net Sale
Proceeds therefrom are applied as (and to the extent) required by
Section 4.02(f) and (v) (I) based on calculations made by the Borrower
on a Pro Forma Basis after giving effect to the respective sale, no
Default or Event of Default will exist under, or would have existed
during the Test Period last reported (or required to be reported
pursuant to Section 8.01(a) or (b), as the case may be) prior to the
date of the respective sale pursuant to, the financial covenants
contained in Sections 9.08 through 9.11, inclusive (provided that for
purposes of determining pro forma compliance with any such Section for
any period
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during which the covenants contained therein are not yet required to be
tested pursuant to the terms thereof, the Borrower shall instead use
the historical financial results of the Borrower and its Subsidiaries
for the most recently ended four fiscal quarter period (but calculated
as if the Transaction, the related financing thereof and the other
transactions contemplated hereby had been consummated on the first day
of such period and (x) assuming that the amount of Capital
Expenditures, Hotel Investments and/or Hotel Acquisitions made during
any portion of such period prior to the Initial Borrowing Date is at an
assumed per annum rate of $40,000,000 and (y) with Consolidated EBITDA
for such period to be determined in accordance with the definition
thereof) and the Borrower shall be required to demonstrate, on a Pro
Forma Basis, that no Default or Event of Default will exist under, or
would have existed during such period prior to the date of the
respective sale pursuant to, the financial covenants contained in any
of such Sections 9.08 through 9.11, inclusive (but assuming, for this
purpose, that the level of financial performance required to be
satisfied is the level applicable to any such Section the first time
compliance with such Section is required to be tested pursuant to the
terms thereof)), and (II) the Borrower shall have delivered to the
Agents an officer's certificate executed by the Chief Financial Officer
of the Borrower or another senior financial officer of the Borrower,
certifying to the best of such officer's knowledge, compliance with the
requirements of this clause (vi) and containing the calculations (in
reasonable detail) required by this clause (vi);
(vii) each of the Borrower and its Subsidiaries may sell Hotel
Properties acquired by them after the Initial Borrowing Date pursuant
to a Hotel Acquisition (except to the extent that such Hotel Property
constitutes a newly acquired Designated Hotel Property), and each of
the Borrower and its Subsidiaries may sell all or any portion of their
equity interest in a Joint Venture acquired by them after the Initial
Borrowing Date pursuant to a Hotel Investment, in either case, so long
as (i) no Default or Event of Default then exists or would result
therefrom, (ii) each such sale is in an arm's-length transaction and
the Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or such Subsidiary,
as the case may be), (iii) at least 75% of the total consideration
received by the Borrower or such Subsidiary is cash and is paid at the
time of the closing of such sale and (iv) in the case of a sale of an
equity interest in a Joint Venture, the cash proceeds therefrom are
applied as (and to the extent) required by Section 4.02(i);
(viii) each of the Borrower and its Subsidiaries may sell Hotel
Properties as part of a Temporary Hotel Acquisition Transaction;
(ix) Investments may be made to the extent permitted by
Section 9.05;
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(x) each of the Borrower and its Subsidiaries may lease (as
lessee) real or personal property (so long as any such lease does not
create a Capitalized Lease Obligation except to the extent permitted by
Section 9.04(iv));
(xi) each of the Borrower and its Subsidiaries may make sales
of inventory in the ordinary course of business;
(xii) the Transaction shall be permitted;
(xiii) Hotel Acquisitions shall be permitted to the extent
provided in Section 9.07;
(xiv) each of the Borrower and its Subsidiaries may enter into
sale-lease-back transactions with respect to owned Hotel Properties
(including the Designated Hotel Properties), so long as each such
transaction (w) is for at least 75% in cash and is paid at the time of
the closing of such transaction, (x) is at fair market value (as
determined in good faith by the Borrower or such Subsidiary, as the
case may be), (y) all of the Net Sale Proceeds therefrom are applied as
required by Section 4.02(f) and (z) no Default or Event of Default then
exists or would result therefrom;
(xv) the Borrower may transfer any assets to a Subsidiary
Guarantor, and any Subsidiary of the Borrower may merge or consolidate
with and into, or be liquidated into, or transfer any of its assets to,
the Borrower or any Subsidiary Guarantor, in each case, so long as (i)
the Borrower or the respective Subsidiary Guarantor is the surviving
corporation of any such transaction, (ii) in the case of any such
transaction involving a non-Wholly-Owned Subsidiary, the only
consideration paid to third parties in connection therewith are shares
of common stock of the Borrower and cash in an aggregate amount for all
such transactions not to exceed the amount permitted to be spent on
Hotel Investments at such time pursuant to Section 9.07 (and with the
amount of cash paid pursuant to this Section 9.02(xv) to constitute a
Hotel Investment pursuant to Section 9.07) and (iii) in the case of any
transaction between or among the Borrower and the Subsidiary
Guarantors, all Liens granted pursuant to the Security Documents on any
property or assets involved shall remain in full force and effect (with
at least the same priority as such Lien would have had if such transfer
pursuant to the clause (xv) had not occurred);
(xvi) each of the Borrower and its Subsidiaries may grant
leases or sub-leases to other Persons not materially interfering with
the conduct of the business of the Borrower or any of its Subsidiaries;
(xvii) each of the Borrower and its Subsidiaries may sell Cash
Equivalents permitted to be held by them pursuant to Section 9.05(ii)
so long as each such sale
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is for cash and at fair market value (as determined in good faith by
the Borrower or such Subsidiary, as the case may be); and
(xviii) each of the Borrower and its Subsidiaries may, in the
ordinary course of business, license, as licensor or licensee, patents,
trademarks, copyrights and know-how to or from third Persons and to one
another so long as any such license by the Borrower or any other Credit
Party in its capacity as licensor is permitted to be assigned pursuant
to the Security Agreement (to the extent that the security interest in
such patents, trademarks, copyrights and know-how is granted
thereunder) and does not otherwise prohibit the granting of a Lien by
the Borrower or any other Credit Party pursuant to the Security
Agreement in the intellectual property covered by such license.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 9.02 (other than to the Borrower or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Liens created by the Security
Documents, and the Administrative Agent and the Collateral Administrative Agent
shall be authorized to take any actions deemed appropriate in order to effect
the foregoing.
9.03 Dividends. The Borrower will not, and will not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends with respect to
the Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends
to the Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) any non-Wholly-Owned Subsidiary of the Borrower may pay
cash Dividends to its shareholders or partners generally so long as the
Borrower or its respective Subsidiary which owns the equity interest or
interests in the Subsidiary paying such Dividends receives at least its
proportionate share thereof (based upon either its relative holdings of
equity interests in the Subsidiary paying such Dividends and taking
into account the relative preferences, if any, of the various classes
of equity interests in such Subsidiary or the terms of any agreements
applicable thereto); and
(iii) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment thereof),
the Borrower may repurchase outstanding shares of its common stock (or
options to purchase such common stock) following the death, disability
or termination of employment of employees of the Borrower or any of its
Subsidiaries, provided that the aggregate amount of Dividends
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paid by the Borrower pursuant to this clause (iii) shall not exceed
$3,500,000 in any fiscal year of the Borrower.
9.04 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
(ii) Existing Indebtedness outstanding on the Initial Borrowing
Date and listed on Schedule VII, without giving effect to any
subsequent extension, renewal or refinancing thereof except to the
extent set forth on Schedule VII, provided that except to the extent
specifically set forth on Schedule VII, the aggregate principal amount
of the Indebtedness to be extended, renewed or refinanced does not
increase from that amount outstanding at the time of any such
extension, renewal or refinancing; (iii) Indebtedness under Interest
Rate Protection Agreements entered into with respect to other
Indebtedness permitted under this Section 9.04;
(iv) Indebtedness of the Borrower and its Subsidiaries
evidenced by Capitalized Lease Obligations to the extent permitted
pursuant to Section 9.07, provided that in no event shall the aggregate
principal amount of Capitalized Lease Obligations permitted by this
clause (iv) exceed $10,000,000 at any time outstanding;
(v) Indebtedness subject to Liens permitted under Section
9.01(viii);
(vi) intercompany Indebtedness to the extent permitted by Sec-
tions 9.05(viii), (ix) and (x);
(vii) Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values in connection with
the Borrower's or any of its Subsidiaries' ordinary course of business
operations so long as management of the Borrower or such Subsidiary, as
the case may be, has determined in good faith that the entering into of
such Other Hedging Agreements are bona fide hedging activities;
(viii) Indebtedness of the Borrower consisting of guaranties of
Indebtedness of franchisees of Candlewood, so long as (i) the
Borrower's maximum exposure on any single Candlewood property or
franchise does not exceed $2,000,000 and (ii) the Borrower's maximum
exposure at any time under all such guaranties does not exceed
$30,000,000;
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(ix) Contingent Obligations of the Borrower and its
Subsidiaries to maintain the net worth of those Persons listed on
Schedule XV in accordance with the terms of the applicable agreements
with respect thereto as in effect on the Initial Borrowing Date,
provided that any payments made by the Borrower or a Subsidiary thereof
to satisfy such obligations shall count as a Hotel Investment made
pursuant to Section 9.07;
(x) unsecured subordinated Indebtedness of the Borrower (the
"New Subordinated Notes"), so long as (i) the aggregate outstanding
principal amount thereof does not exceed $150,000,000 (less any
repayments of principal thereof), (ii) at least 20 Business Days prior
to the issuance thereof, the Borrower shall have delivered to each of
the Banks substantially final drafts of the documents pursuant to which
the New Subordinated Notes are to be issued and with any changes
thereto made after the initial delivery of such documents to be
delivered to the Agents and with any significant changes thereto made
after such initial delivery to be delivered to each of the Banks at
least five days prior to the issuance of such New Subordinated Notes,
(iii) the final maturity date thereof is at least 270 days beyond the
Tranche B Term Loan Maturity Date, (iv) there are no required
amortization, mandatory redemption or sinking fund provisions or
similar provisions prior to the 270th day after the Tranche B Term Loan
Maturity Date, (v) all other terms and conditions thereof (including,
without limitation, interest rates, covenants, defaults, remedies and
subordination provisions) are reasonably satisfactory to the Agents,
(vi) no Default or Event of Default then exists or would result
therefrom and (vii) (I) based on calculations made by the Borrower on
a Pro Forma Basis after giving effect to the respective incurrence, no
Default or Event of Default will exist under, or would have existed
during the Test Period last reported (or required to be reported
pursuant to Section 8.01(a) or (b), as the case may be) prior to the
date of the respective incurrence pursuant to, the financial covenants
contained in Sections 9.08 through 9.11, inclusive (provided that for
purposes of determining pro forma compliance with any such Section for
any period during which the covenants contained therein are not yet
required to be tested pursuant to the terms thereof, the Borrower shall
instead use the historical financial results of the Borrower and its
Subsidiaries for the most recently ended four fiscal quarter period
(but calculated as if the Transaction, the related financing thereof
and the other transactions contemplated hereby had been consummated on
the first day of such period and (x) assuming that the amount of
Capital Expenditures, Hotel Investments and/or Hotel Acquisitions made
during any portion of such period prior to the Initial Borrowing Date
is at an assumed per annum rate of $40,000,000 and (y) with
Consolidated EBITDA for such period to be determined in accordance with
the definition thereof) and the Borrower shall be required to
demonstrate, on a Pro Forma Basis, that no Default or Event of Default
will exist under, or would have existed during such period prior to the
date of the respective incurrence pursuant to, the financial covenants
contained in any of such
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Sections 9.08 through 9.11, inclusive (but assuming, for this purpose,
that the level of financial performance required to be satisfied is the
level applicable to any such Section the first time compliance with
such Section is required to be tested pursuant to the terms thereof)),
and (II) the Borrower shall have delivered to the Agents an officer's
certificate executed by the Chief Financial Officer of the Borrower or
another senior financial officer of the Borrower, certifying to the
best of such officer's knowledge, compliance with the requirements of
this clause (x) and containing the calculations (in reasonable detail)
required by this clause (x);
(xi) Non-Recourse Indebtedness of a Specified Subsidiary
incurred to finance the development or acquisition (and the related
working capital requirements) of a Hotel Property developed or acquired
after the Initial Borrowing Date, so long as (i) the aggregate
principal amount of all such Non-Recourse Indebtedness does not exceed
$100,000,000 at any time outstanding, (ii) no Default
or Event of Default then exists or would result therefrom and (iii) (I)
based on calculations made by the Borrower on a Pro Forma Basis after
giving effect to the respective incurrence, no Default or Event of
Default will exist under, or would have existed during the Test Period
last reported (or required to be reported pursuant to Section 8.01(a)
or (b), as the case may be) prior to the date of the respective
incurrence pursuant to, the financial covenants contained in Sections
9.08 through 9.11, inclusive (provided that for purposes of determining
pro forma compliance with any such Section for any period during which
the covenants contained therein are not yet required to be tested
pursuant to the terms thereof, the Borrower shall instead use the
historical financial results of the Borrower and its Subsidiaries for
the most recently ended four fiscal quarter period (but calculated as
if the Transaction, the related financing thereof and the other
transactions contemplated hereby had been consummated on the first day
of such period and (x) assuming that the amount of Capital
Expenditures, Hotel Investments and/or Hotel Acquisitions made during
any portion of such period prior to the Initial Borrowing Date is at an
assumed per annum rate of $40,000,000 and (y) with Consolidated EBITDA
for such period to be determined in accordance with the definition
thereof) and the Borrower shall be required to demonstrate, on a Pro
Forma Basis, that no Default or Event of Default will exist under, or
would have existed during such period prior to the date of the
respective incurrence pursuant to, the financial covenants contained in
any of such Sections 9.08 through 9.11, inclusive (but assuming, for
this purpose, that the level of financial performance required to be
satisfied is the level applicable to any such Section the first time
compliance with such Section is required to be tested pursuant to the
terms thereof)), and (II) the Borrower shall have delivered to the
Agents an officer's certificate executed by the Chief Financial Officer
of the Borrower or another senior financial officer of the Borrower,
certifying to the best of such officer's knowledge, compliance with the
requirements of this clause (xi) and containing the calculations (in
reasonable detail) required by this clause (xi);
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(xii) to the extent that the Existing Glendale Debt is
refinanced with the proceeds of Loans as part of the Refinancing,
Indebtedness of the Joint Venture that originally incurred such
Existing Glendale Debt, so long as the proceeds thereof are used to
refinance an intercompany loan made by the Borrower or a Subsidiary
Guarantor to such Joint Venture to refinance the Existing Glendale
Debt, provided that (x) the aggregate principal amount of the
Indebtedness so incurred by such Joint Venture pursuant to this clause
(xii) does not exceed the amount of the inter-company loan owing to the
Borrower or such Subsidiary Guarantor and (y) such Indebtedness may be
guaranteed on an unsecured basis by the Borrower and/or Red Lion to the
same extent that the Borrower and Red Lion guaranty the Existing
Glendale Debt on the Initial Borrowing Date; and
(xiii) additional Indebtedness of the Borrower and its
Subsidiaries not to exceed $50,000,000 in aggregate principal amount at
any time outstanding, provided that no more than $25,000,000 of such
Indebtedness may be secured and then only to the extent permitted by
Sections 9.01(xiv) and (xvii).
9.05 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, lend
money or credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other Person, or purchase or own a futures contract
or otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in
the ordinary course of business and payable or dischargeable in
accordance with customary terms, and the Borrower and its Subsidiaries
may own Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(ii) the Borrower and its Subsidiaries may acquire and hold or
invest in cash and Cash Equivalents;
(iii) the Borrower and its Subsidiaries may receive non-cash
consideration in connection with any asset sale permitted by Sections
9.02(iii), (iv), (vi), (vii) and (xiv) but only to the extent set forth
in such Sections 9.02(iii), (iv), (vi), (vii) and (xiv);
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<PAGE> 90
(iv) the Borrower and its Subsidiaries may hold the Investments
held by them on the Initial Borrowing Date and described on Schedule X,
provided that any additional Investments made with respect thereto
shall be permitted only if independently justified under the other
provisions of this Section 9.05;
(v) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to their respective
employees so long as the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs
of such loans and advances) shall not exceed $2,000,000;
(vi) the Borrower may enter into Interest Protection Agreements
to the extent permitted by Section 9.04(iii);
(vii) the Borrower and its Subsidiaries may enter into Other
Hedging Agreements to the extent permitted by Section 9.04(vii);
(viii) the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances between or among one another
(collectively, "Intercompany Loans"), so long as each Intercompany Loan
shall be evidenced by an Intercompany Note that is pledged to the
Collateral Administrative Agent pursuant to the Pledge Agreement, and
the Borrower and the Subsidiary Guarantors may make cash Investments to
their Subsidiaries to the extent that such Subsidiaries are Subsidiary
Guarantors;
(ix) the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances to non-Wholly-Owned Subsidiaries and
other Persons to the extent permitted by Section 9.07, so long as any
such intercompany loan or advance that is evidenced by a note shall be
pledged to the Collateral Administrative Agent pursuant to (and to the
extent required by) the Pledge Agreement;
(x) to the extent that the Existing Glendale Debt is to be
refinanced (in whole or in part) with proceeds of Loans made on or
prior to the Tranche A Term Loan Commitment Termination Date, the
Borrower may make an intercompany loan to the Joint Venture that has
incurred the Existing Glendale Debt in an amount not to exceed the
principal amount of Loans incurred to refinance the Existing Glendale
Debt, so long as such intercompany loan shall be evidenced by a note
that is pledged to the Collateral Administrative Agent pursuant to the
Pledge Agreement;
(xi) RFS may contribute to a newly-formed Wholly-Owned
Subsidiary of RFS ("RFS Sub") one or more of the leasehold interests
held by RFS in the RFS REIT Leases, together with a corresponding
portion of the RFS REIT Equity held
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by RFS, in each case in connection with the securitization of RFS
REIT's fee interest in the hotels leased to RFS pursuant to such RFS
Leases; and
(xii) the Borrower and its Subsidiaries may make additional
Hotel Investments to the extent permitted by Section 9.07.
9.06 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and condi tions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted: (i) Dividends may be paid to the extent provided
in Section 9.03, (ii) loans may be made and other transactions may be entered
into by the Borrower and its Subsidiaries to the extent permitted by Sections
9.02, 9.04, 9.05 and 9.07, (iii) customary fees may be paid to non-officer
directors of the Borrower and (iv) Subsidiaries and Joint Ventures of the
Borrower may pay management and similar fees to the Borrower or any Wholly-Owned
Subsidiary of the Borrower.
9.07 Capital Expenditures; Permitted Hotel Acquisitions;
Permitted Hotel Investments. (a) The Borrower will not, and will not permit any
of its Subsidiaries to, make any Capital Expenditures, Hotel Acquisitions or
Hotel Investments, except that (x) during the period from the Effective Date
through and including December 31, 1996, the Borrower and its Subsidiaries may
make Capital Expenditures, Hotel Acquisitions and Hotel Investments in an
aggregate amount not to exceed $25,000,000 and (y) during any fiscal year set
forth below (taken as one accounting period), the Borrower and its Subsidiaries
may make Capital Expenditures, Hotel Acquisitions and Hotel Investments so long
as the aggregate amount of all such Capital Expenditures, Hotel Acquisitions and
Hotel Investments does not exceed in any fiscal year set forth below the amount
set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
December 31, 1997 $40,000,000
December 31, 1998 $45,000,000
December 31, 1999 $50,000,000
and each fiscal year
thereafter
</TABLE>
; provided that during each fiscal year set forth in the table above, at least
3% of the aggregate gross revenues from Hotel Properties owned or leased by Red
Lion and its Wholly-
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Owned Subsidiaries for such fiscal year shall be used to make maintenance
Capital Expenditures pursuant to this clause (a).
(b) (i) In addition to the foregoing, in the event that the
amount of Capital Expenditures, Hotel Acquisitions and Hotel Investments
permitted to be made by the Borrower and its Subsidiaries pursuant to clause (a)
above in any fiscal year set forth in the table above (before giving effect to
any increase in such permitted expenditure amount pursuant to this clause (b)(i)
but after giving effect to any reduction in such amount as a result of Capital
Expenditures, Hotel Acquisitions and Hotel Investments made pursuant to clause
(b)(ii) below) is greater than the amount of such Capital Expenditures, Hotel
Acquisitions and Hotel Investments made by the Borrower and its Subsidiaries
during such fiscal year, such excess may be carried forward and utilized to make
Capital Expenditures, Hotel Acquisitions and Hotel Investments in the
immediately succeeding fiscal year, provided, that (x) any amount carried
forward from the immediately preceding fiscal year may not be utilized during
the current fiscal year unless and until the relevant amount for such current
fiscal year shall have been utilized in full to make Capital Expenditures, Hotel
Acquisitions and/or Hotel Investments during such current fiscal year, (y) in no
event shall the aggregate amount of Capital Expenditures, Hotel Acquisitions and
Hotel Investments made by the Borrower and its Subsidiaries during any fiscal
year pursuant to Section 9.07(a), this clause (b)(i) and clause (b)(ii) below
exceed 115% of the amount set forth opposite such fiscal year as set forth in
the table in such Section 9.07(a) (before giving effect to any reduction in
such amount pursuant to clause (b)(ii) below as a result of Capital
Expenditures, Hotel Acquisitions and Hotel Investments made pursuant to clause
(b)(ii) below) and (z) no amounts once carried forward to the next fiscal year
may be carried forward to fiscal years thereafter.
(ii) In addition to the foregoing, commencing in the
Borrower's fiscal year beginning January 1, 1997, in the event that the Borrower
and its Subsidiaries have made Capital Expenditures, Hotel Acquisitions and
Hotel Investments in any fiscal year pursuant to clauses (a) and (b)(i) above in
an amount equal to the maximum amount permitted to be made in such fiscal year
pursuant to such clauses and so long as no Default or Event of Default then
exists, the Borrower and its Subsidiaries may make Capital Expenditures, Hotel
Acquisitions and Hotel Investments in such fiscal year by utilizing expenditure
amounts permitted to be made in the immediately succeeding fiscal year pursuant
to clause (a) above, and with any Capital Expenditures, Hotel Acquisitions and
Hotel Investments made pursuant to this clause (b)(ii) in such current fiscal
year to reduce the amount of Capital Expenditures, Hotel Acquisitions and Hotel
Investments permitted to be made in the immediately succeeding fiscal year,
provided that in no event shall the aggregate amount of Capital Expenditures,
Hotel Acquisitions and Hotel Investments made by the Borrower and its
Subsidiaries during any fiscal year pursuant to Section 9.07(a), clause (b)(i)
above and this clause (b)(ii) exceed 115% of the amount set forth opposite such
fiscal year as set forth in the table in such Section 9.07(a) (before giving
effect to any reduction in such amount
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pursuant to the clause (b)(ii) as a result of Capital Expenditures, Hotel
Acquisitions and Hotel Investments made pursuant to this clause (b)(ii)).
(c) In addition to the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures with the amount of Net Insurance
Proceeds received by the Borrower or any of its Subsidiaries from any Recovery
Event so long as such Net Insurance Proceeds are used to replace or restore any
properties or assets in respect of which such Net Insurance Proceeds were paid
within the applicable time periods set forth in Section 4.02(h) but only to the
extent such Net Insurance Proceeds are not required to be applied pursuant to
Section 4.02(h) (or Section 3.03(e), as the case may be).
(d) In addition to the foregoing and so long as no Default or
Event of Default then exists, the Borrower and its Subsidiaries may make Capital
Expenditures, Hotel Acquisitions and Hotel Investments in an amount not to
exceed the Retained Net Equity Proceeds Amount at such time.
(e) In addition to the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures, Hotel Acquisitions and Hotel
Investments in fiscal year 1997 as and to the extent set forth in Schedule XI.
(f) In addition to the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures, Hotel Acquisitions and Hotel
Investments at any time during any fiscal year of the Borrower in an amount
equal to the Retained Excess Cash Flow Amount with respect to such fiscal year
as then in effect, provided that (x) no Capital Expenditures, Hotel Acquisitions
or Hotel Investments may be made pursuant to this clause (f) during any fiscal
year of the Borrower unless the Borrower's EBITDA for the immediately preceding
fiscal year exceeded 90% of the Borrower's Base Case EBITDA for such fiscal year
and (y) in the event that the amount of Capital Expenditures, Hotel Acquisitions
and Hotel Investments permitted to be made by the Borrower and its Subsidiaries
pursuant to this clause (f) in any fiscal year of the Borrower is greater than
the amount of such Capital Expenditures, Hotel Acquisitions and Hotel
Investments made by the Borrower and its Subsidiaries during such fiscal year,
such excess may be carried forward and utilized to make Capital Expenditures,
Hotel Acquisitions and Hotel Investments in the immediately succeeding fiscal
year, provided further, (i) that any amount carried forward from the immediately
preceding fiscal year may not be utilized during the current fiscal year unless
and until the relevant amount for such current fiscal year as set forth in the
table in Section 9.07(a) shall have been utilized in full to make Capital
Expenditures, Hotel Acquisitions and/or Hotel Investments during such current
fiscal year, and (ii) that no amounts once carried forward to the next fiscal
year may be carried forward to fiscal years thereafter.
(g) In addition to the foregoing, after January 1, 1998, the
Borrower and its Subsidiaries may make Capital Expenditures, Hotel Acquisitions
and Hotel Investments in
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an aggregate amount not to exceed $20,000,000, provided that no more than
$10,000,000 of such Capital Expenditures, Hotel Acquisitions and Hotel
Investments may be made in any fiscal year of the Borrower.
(h) In addition to the foregoing and so long as no Default or
Event of Default then exists, the Borrower and its Subsidiaries may make Capital
Expenditures, Hotel Acquisitions and Hotel Investments with the Net Sale
Proceeds received from any Asset Sale and with the Specified Red Lion Proceeds
from any Specified Red Lion Event so long as (i) such Net Sale Proceeds or
Specified Red Lion Proceeds are used to purchase like assets within the
applicable time periods set forth in Section 4.02(f), (ii) the aggregate amount
of Capital Expenditures, Hotel Acquisitions and Hotel Investments made pursuant
to this Section 9.07(h) does not exceed that amount permitted by Section
4.02(f), (iii) such Net Sale Proceeds or Specified Red Lion Proceeds are not
required to be applied to repay Loans (or reduce Commitments) pursuant to
Section 4.02(f) (or Section 3.03(e), as the case may be) and (iv) to the extent
that the asset so sold constitutes Collateral, the Collateral Administrative
Agent is granted a first priority perfected security interest in the like asset
acquired at least to the same extent (and with at least the same rights) as the
Collateral Administrative Agent's security interest in the Collateral so sold.
(i) In addition to the foregoing and as long as no Default or
Event of Default then exists, the Borrower and its Wholly-Owned Subsidiaries may
make Capital Expenditures, Hotel Acquisitions and Hotel Investments with cash
proceeds received from a Designated Event so long as such proceeds are not
required to be applied to repay Loans (or reduce Commitments) pursuant to
Section 4.02(i) (or Section 3.03(e), as the case may be).
(j) In addition to the foregoing and so long as no Default or
Event of Default then exists, the Borrower and its Subsidiaries may make Capital
Expenditures, Hotel Acquisitions and Hotel Investments with the Net Sale
Proceeds received from the sale of those Hotel Properties acquired by the
Borrower and its Subsidiaries after the Initial Borrowing Date (except to the
extent that such Hotel Property constitutes a newly acquired Designated Hotel
Property).
(k) In addition to the foregoing and so long as no Default or
Event of Default then exists, the Borrower and its Wholly-Owned Subsidiaries may
effect Hotel Acquisitions as part of a Temporary Hotel Acquisition Transaction,
provided that, to the extent the Borrower or such Wholly-owned Subsidiary
consummates a Hotel Acquisition and fails to sell the Hotel Property as part of
the Temporary Hotel Acquisition Transaction within 120 days after the
acquisition thereof or fails to sell the Hotel Property for at least the same
purchase price as originally paid by the Borrower or such Wholly-Owned
Subsidiary, such Hotel Acquisition (or such portion thereof to the extent that
the Borrower or such Wholly-Owned Subsidiary fails to receive at least the same
purchase price originally paid by the
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<PAGE> 95
Borrower or such Wholly-Owned Subsidiary) shall constitute a Hotel Acquisition
effected under one of the other provisions of this Section 9.07 and shall be
required to be independently justified under such other provisions.
Notwithstanding anything to the contrary contained above in this Section 9.07,
in the case of any Hotel Acquisition or Hotel Investment in which the total
consideration equals or exceeds $25,000,000 (other than a Hotel Acquisition
pursuant to Section 9.07(k)), (I) based on calculations made by the Borrower on
a Pro Forma Basis after giving effect to the respective Hotel Acquisition or
Hotel Investment, no Default or Event of Default will exist under, or would have
existed during the Test Period last reported (or required to be reported
pursuant to Section 8.01(a) or (b), as the case may be) prior to the date of the
respective Hotel Acquisition or Hotel Investment pursuant to, the financial
covenants contained in Sections 9.08 through 9.11, inclusive (provided that for
purposes of determining pro forma compliance with any such Section for any
period during which the covenants contained therein are not yet required to be
tested pursuant to the terms thereof, the Borrower shall instead use the
historical financial results of the Borrower and its Subsidiaries for the most
recently ended four fiscal quarter period (but calculated as if the Transaction,
the related financing thereof and the other transactions contemplated hereby had
been consummated on the first day of such period and (x) assuming that the
amount of Capital Expenditures, Hotel Investments and/or Hotel Acquisitions made
during any portion of such period prior to the Initial Borrowing Date is at an
assumed per annum rate of $40,000,000 and (y) with Consolidated EBITDA for such
period to be determined in accordance with the definition thereof) and the
Borrower shall be required to demonstrate, on a Pro Forma Basis, that no Default
or Event of Default will exist under, or would have existed during such period
prior to the date of the respective Hotel Acquisition or Hotel Investment
pursuant to, the financial covenants contained in any of such Sections 9.08
through 9.11, inclusive (but assuming, for this purpose, that the level of
financial performance required to be satisfied is the level applicable to any
such Section the first time compliance with such Section is required to be
tested pursuant to the terms thereof)), and (II) the Borrower shall have
delivered to the Agents an officer's certificate executed by the Chief Financial
Officer of the Borrower or another senior financial officer of the Borrower,
certifying to the best of such officer's knowledge, compliance with the
requirements of this paragraph and containing the calculations (in reasonable
detail) required by this paragraph. For purposes of determining the amount of
any Capital Expenditures, Hotel Acquisitions and Hotel Investments made at any
time, (x) such amount shall include the amount of any Indebtedness assumed by
the Borrower or any of its Subsidiaries in connection therewith and (y) any cash
Investments made by the Borrower or a Subsidiary Guarantor in any other
Subsidiary the proceeds of which are to be promptly utilized by such other
Subsidiary to make Capital Expenditures, Hotel Acquisitions and/or Hotel
Investments shall be treated as a single investment.
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<PAGE> 96
9.08 Consolidated Fixed Charge Coverage Ratio. The Borrower
will not permit the Consolidated Fixed Charge Coverage Ratio for the Test Period
ending on June 30, 1997 and for each Test Period ending thereafter to be less
than 1.00:1:00.
9.09 Consolidated Interest Coverage Ratio. The Borrower will
not permit the Consolidated Interest Coverage Ratio for any Test Period ending
on the last day of a fiscal quarter set forth below to be less than the ratio
set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- -----
<S> <C>
March 31, 1997 2.50:1.00
June 30, 1997 2.75:1.00
September 30, 1997 2.75:1.00
December 31, 1997 3.00:1.00
March 31, 1998 3.00:1.00
June 30, 1998 3.00:1.00
September 30, 1998 3.00:1.00
December 31, 1998 3.50:1.00
March 31, 1999 3.50:1.00
June 30, 1999 3.50:1.00
September 30, 1999 3.50:1.00
December 31, 1999
and thereafter 4.00:1.00
</TABLE>
9.10 Maximum Leverage Ratio. The Borrower will not permit the
Leverage Ratio at any time during a period set forth below to be greater than
the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Initial Borrowing Date through and including
December 30, 1997 4.75:1.00
December 31, 1997 through and including
December 30, 1998 4.50:1.00
December 31, 1998 through and including
December 30, 1999 4.00:1.00
December 31, 1999 through and including
December 30, 2000 3.50:1.00
December 31, 2000 and thereafter 3.00:1.00
</TABLE>
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9.11 Minimum Consolidated Net Worth. The Borrower will not
permit Consolidated Net Worth at any time to be less than the Minimum
Consolidated Net Worth at such time.
9.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements; etc. The Borrower will not, and will not permit any of its
Subsidiaries to, (i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of, or
make any prepayment or redemption as a result of any asset sale, change of
control or similar event of (including, in each case, without limitation, by way
of depositing with the trustee with respect thereto or any other Person, money
or securities before due for the purpose of paying when due) any New
Subordinated Notes or the Existing Glendale Debt, except that the Existing
Glendale Debt may be refinanced as part of the Refinancing or as otherwise
permitted under Section 9.04, (ii) amend or modify, or permit the amendment or
modification of, any provision of the New Subordinated Notes or any New
Subordinated Note Documents or any provision of the Existing Glendale Debt,
except for any amendments or modifications to the documentation for the Existing
Glendale Debt which could not reasonably be expected to be adverse to the
interests of the Banks in any material respect, (iii) amend, modify or change
its certificate of incorporation (including, without limitation, by the filing
or modification of any certificate of designation) or by-laws (or the equivalent
organizational documents) or any agreement entered into by it with respect to
its capital stock (including any Shareholders' Agreement), or enter into any new
agreement with respect to its capital stock, unless such amendment,
modification, change or other action contemplated by this clause (iii) could not
reasonably be expected to be adverse to the interests of the Banks in any
material respect, (iv) amend, modify or change any provision of any Tax Sharing
Agreement or enter into any new tax sharing agreement, tax allocation agreement
or similar agreement, unless such amendment, modification, change or other
action contemplated by this clause (iv) cannot reasonably be expected to be
adverse to the interests of the Banks in any material respect, (v) amend, modify
or change any Joint Venture Agreement, unless such amendment, modification or
change could not reasonably be expected to be adverse to the interests of the
Banks in any material respect, (vi) amend, modify, change or terminate the Red
Lion Master Lease or the Doubletree Master REIT Lease, unless such amendment,
modification or change could not reasonably be expected to be adverse to the
interests of the Banks in any material respect (it being understood that
amendments may be made to the Doubletree Master REIT Lease to effectuate the
transfers described in Section 9.05(xi)) or (vii) amend, modify, change or
terminate the Red Lion Master Property Management Agreement, unless such
amendment, modification or change could not reasonably be expected to be adverse
to the interests of the Banks in any material respect.
9.13 Limitation on Certain Restrictions on Subsidiaries. The
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise
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cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any such Subsidiary to (a) pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the Borrower or any Subsidiary the Borrower, or pay any
Indebtedness owed to the Borrower or any Subsidiary of the Borrower, (b) make
loans or advances to the Borrower or any Subsidiary of the Borrower or (c)
transfer any of its properties or assets to the Borrower or any Subsidiary of
the Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Borrower or any Subsidiary of
the Borrower, (iv) customary provisions restricting assignment of any licensing
agreement, management agreement or franchise agreement entered into by the
Borrower or any Subsidiary of the Borrower in the ordinary course of
business, (v) restrictions on the transfer of any asset subject to a Lien
permitted by this Agreement, (vi) restrictions on the assignment or transfer of
any stock or partnership interests in a Subsidiary (other than a Subsidiary
Guarantor which is a Significant Subsidiary) or Joint Venture of the Borrower to
the extent such restrictions are imposed by any stockholders' agreement,
partnership agreement, joint venture agreement or similar agreement and (vii)
restrictions set forth on Schedule XV and similar net worth restrictions imposed
on RFS Sub and any other Subsidiary of the Borrower of the type described in
clause (v) of the definition of Subsidiary Guarantor.
9.14 Limitation on Issuance of Capital Stock. (a) The Borrower
will not, and will not permit any of its Subsidiaries to, issue (i) any
preferred stock (other than Qualified Preferred Stock issued by the Borrower) or
(ii) any redeemable common stock (other than common stock redeemable at the sole
option of the Borrower).
(b) The Borrower will not permit any of its Subsidiaries to
issue any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then outstanding shares of capital
stock, (ii) for stock splits, stock dividends and issuances which do not
decrease the percentage ownership of the Borrower or any of its Subsidiaries in
any class of the capital stock of such Subsidiary, (iii) to qualify directors to
the extent required by applicable law or (iv) for issuances by newly created or
acquired Subsidiaries in accordance with the terms of this Agreement.
9.15 Business. The Borrower will not, and will not permit any
of its Subsidiaries to, engage (directly or indirectly) in any business other
than the businesses in which the Borrower and its Subsidiaries are engaged on
the Initial Borrowing Date and reasonable extensions thereof and those
reasonably related thereto.
9.16 Limitation on Creation of Subsidiaries and Joint
Ventures. (a) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower will not, and
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will not permit any of its Subsidiaries to, establish, create or acquire after
the Initial Borrowing Date any Subsidiary, Unrestricted Subsidiary or Joint
Venture, provided that the Borrower and its Wholly-Owned Subsidiaries shall be
permitted to establish or create (x) non-Wholly-Owned Subsidiaries, Unrestricted
Subsidiaries and Joint Ventures as provided in Section 9.16(b) and (y)
Wholly-Owned Subsidiaries so long as (i) the capital stock of such new
Wholly-Owned Subsidiary that is owned by any Credit Party is pledged pursuant
to, and to the extent required by, the Pledge Agreement and the certificates
representing such stock, together with stock powers duly executed in blank, are
delivered to the Collateral Administrative Agent for the benefit of the Secured
Creditors, (ii) the partnership interests of such new Wholly-Owned Subsidiary
(to the extent that same is a partnership) are pledged and assigned pursuant to,
and to the extent required by, the Pledge Agreement, (iii) such new Wholly-Owned
Subsidiary (to the extent that same constitutes a Subsidiary Guarantor as
described in the definition thereof) executes a counterpart of the Subsidiaries
Guaranty, the Pledge Agreement and the Security Agreement, and (iv) such new
Wholly-Owned Subsidiary (to the extent that same constitutes a Subsidiary
Guarantor as described in the definition thereof), to the extent requested by
the Agents or the Required Banks, takes all actions required pursuant to Section
8.12. In addition, each new Subsidiary Guarantor shall execute and deliver, or
cause to be executed and delivered, all other relevant documentation of the type
described in Section 5 as such new Subsidiary Guarantor would have had to
deliver if such new Subsidiary Guarantor were a Credit Party on the Initial
Borrowing Date.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, establish, create or acquire any non-Wholly-Owned Subsidiaries,
Unrestricted Subsidiaries or Joint Ventures after the Initial Borrowing Date,
except that the Borrower or any Wholly-Owned Subsidiary of the Borrower may
establish, create or acquire non-Wholly-Owned Subsidiaries, Unrestricted
Subsidiaries and Joint Ventures to the extent that the Investment in such Person
is permitted by Section 9.07 from time to time, in each case so long as (x) no
Default or Event of Default exists at the time of the establishment, creation or
acquisition of the respective non-Wholly-Owned Subsidiary, Unrestricted
Subsidiary or Joint Venture or shall exist immediately after giving effect
thereto, (y) all Hotel Investments therein are permitted pursuant to Section
9.07 and (z) all equity interests of such non-Wholly-Owned Subsidiary,
Unrestricted Subsidiary or Joint Venture, to the extent owned by any Credit
Party, are pledged pursuant to, and to the extent required by, the Pledge
Agreement.
SECTION 10. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more Business Days, in the
payment when due of any interest on any Loan or Note, any Unpaid Drawing or any
Fees or any other amounts owing hereunder or thereunder; or
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<PAGE> 100
10.02 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
certificate delivered to any Agent or any Bank pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(f)(i), 8.08 or 8.11 or Section 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement or any other Credit Document (other than those set
forth in Sections 10.01 and 10.02) and such default shall continue unremedied
for a period of 30 days after written notice thereof to the defaulting party by
any Agent or the Required Banks; or
10.04 Default Under Other Agreements. (i) The Borrower or any of its
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Notes and/or the Austin Obligations) beyond the period of grace or cure, if
any, provided in the instrument or agreement under which such Indebtedness was
created or (y) default in the observance or performance of any agreement or
condition relating to any Indebtedness (other than the Notes and/or the Austin
Obligations) or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause (determined without regard to whether any notice is
required, but beyond the period of grace or cure, if any, provided in the
instrument or agreement under which such Indebtedness was created), any such
Indebtedness to become due prior to its stated maturity, or (ii) any
Indebtedness (other than the Notes and/or the Austin Obligations) of the
Borrower or any of its Subsidiaries shall be declared to be (or shall become)
due and payable, or required to be prepaid other than by a regularly scheduled
required pre-payment, prior to the stated maturity thereof, provided that it
shall not be a Default or an Event of Default under this Section 10.04 unless
the aggregate principal amount of all Indebtedness as described in preceding
clauses (i) and (ii) is at least $10,000,000; or
10.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries
(excluding Immaterial Subsidiaries) shall commence a voluntary case concerning
itself under Title 11 of the United States Code entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the Borrower or any of its Subsidiaries
(excluding Immaterial Subsidiaries), and the petition is not controverted within
15 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Borrower or any of
its Subsidiaries (excluding Immaterial Subsidiaries), or the Borrower or any of
its Subsidiaries (excluding Immaterial Subsidiaries) commences any other
proceeding under any reorganization, arrange-
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<PAGE> 101
ment, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Subsidiaries (excluding Immaterial
Subsidiaries), or there is commenced against the Borrower or any of its
Subsidiaries (excluding Immaterial Subsidiaries) any such proceeding which
remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries (excluding Immaterial Subsidiaries) is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any of its Subsidiaries (excluding
Immaterial Subsidiaries) suffers any appointment of any custodian or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Borrower or any of its Subsidiaries
(excluding Immaterial Subsidiaries) makes a general assignment for the benefit
of creditors; or any corporate action is taken by the Borrower or any of its
Subsidiaries (excluding Immaterial Subsidiaries) for the purpose of effecting
any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan or
Multiemployer Plan which is subject to Title IV of ERISA shall have had or is
likely to have a trustee appointed to administer such Plan or Multiemployer
Plan, any Plan or Multiemployer Plan which is subject to Title IV of ERISA is,
shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan or Multiemployer Plan shall have
an Unfunded Current Liability, a contribution required to be made with respect
to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been timely
made, the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate has
incurred or is likely to incur any liability to or on account of a Plan or
Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code or on account of a group health plan (as defined in Section 607(1) of ERISA
or Section 4980B(g)(2) of the Code) under Section 4980B(a) of the Code, or the
Borrower or any Subsidiary of the Borrower has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) that provide benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or Plans or
Foreign Pension Plans; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) such lien, security interest or
liability, individually, and/or in the aggregate, in the opinion of the Required
Banks, has had, or could reasonably be expected to have, a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole; or
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<PAGE> 102
10.07 Security Documents. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Collateral Administrative Agent for the
benefit of the Secured Creditors the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a perfected
security interest in, and Lien on, all of the Collateral, in favor of the
Collateral Administrative Agent, superior to and prior to the rights of all
third Persons (except as permitted by Section 9.01), and subject to no other
Liens (except as permitted by Section 9.01); or
10.08 Subsidiaries Guaranty. At any time after the execution and
delivery thereof, the Subsidiaries Guaranty or any provision thereof shall cease
to be in full force or effect as to any Subsidiary Guarantor, or any Subsidiary
Guarantor or any Person acting by or on behalf of such Subsidiary Guarantor
shall deny or disaffirm such Subsidiary Guarantor's obligations under the
Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any Subsidiary of the Borrower (excluding any Immaterial
Subsidiary) involving in the aggregate for the Borrower and its Subsidiaries
(excluding Immaterial Subsidiaries) a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 30 consecutive days, and the
aggregate amount of all such judgments exceeds $10,000,000; or
10.10 Change of Control. A Change of Control shall occur; or
10.11 Certain Master Leases. An Event of Default under, and as defined
in, the Red Lion Master Lease or the Doubletree Master REIT Lease shall occur
and be continuing (after giving effect to any applicable cure and grace
periods), or the Red Lion Master Lease or the Doubletree Master REIT Lease (or
any material provision thereof) shall cease to be in full force and effect; or
10.12 The Red Lion Master Property Management Agreement. The Red Lion
Master Property Management Agreement shall terminate or any material provision
thereof shall cease to be in full force and effect or the Borrower or any of its
Subsidiaries shall default in a due performance or observance by it of any term,
covenant or condition required to be performed by it after the expiration of any
applicable cure and grace periods;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice
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to the rights of any Agent, any Bank or the holder of any Note to enforce its
claims against any Credit Party (provided, that, if an Event of Default
specified in Section 10.05 shall occur with respect to the Borrower, the result
which would occur upon the giving of written notice by the Administrative Agent
as specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitments terminated,
whereupon all Commitments of each Bank shall forthwith terminate immediately and
any Commitment Commission shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit
which may be terminated in accordance with its terms; (iv) direct the Borrower
to pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.05 with respect to the
Borrower, it will pay) to the Collateral Administrative Agent at the Payment
Office such additional amount of cash, to be held as security by the Collateral
Administrative Agent, as is equal to the aggregate Stated Amount of all Letters
of Credit issued for the account of the Borrower and then outstanding; (v)
enforce, as Collateral Administrative Agent, all of the Liens and security
interests created pursuant to the Security Documents; and (vi) apply any cash
collateral held by the Administrative Agent pursuant to Section 4.02 to the
repayment of the Obligations.
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition" shall mean the merger of Merger Sub with and into Red
Lion pursuant to, and in accordance with the terms of, the Acquisition Documents
and as a result of which Red Lion shall be a Wholly-Owned Subsidiary of the
Borrower.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger,
dated as of September 12, 1996, by and among the Borrower, Merger Sub and Red
Lion.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other agreements and documents entered into in connection with the Acquisition.
"Additional Security Documents" shall have the meaning provided in
Section 8.12.
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"Adjusted Consolidated Cash Income" shall mean, for any period,
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense) and
net non-cash losses which were included in arriving at Consolidated Net Income
for such period less the sum of the amount of all net non-cash gains which were
included in arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities at such time.
"Adjusted RL Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's RL Percentage and (y) at a time when a Bank
Default exists, (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Loan Commitment at such time by the Adjusted Total
Revolving Loan Commitment at such time, it being understood that all references
herein to Revolving Loan Commitments and the Adjusted Total Revolving Loan
Commitment at a time when the Total Revolving Loan Commitment or Adjusted Total
Revolving Loan Commitment, as the case may be, has been terminated shall be
references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
provided that (A) a Bank's Adjusted RL Percentage shall only change upon the
occurrence of a Bank Default from that in effect immediately prior to such Bank
Default to the extent that after giving effect to such Bank Default, and any
repayment of Revolving Loans and Swingline Loans at such time pursuant to
Section 4.02(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of such Bank plus (ii) such Bank's new Adjusted RL
Percentage of the aggregate outstanding principal amount of Swingline Loans and
the Letter of Credit Outstandings, would not exceed the Revolving Loan
Commitment of such Bank at such time; (B) the changes to the Adjusted RL
Percentage that would have become effective upon the occurrence of a Bank
Default but that did not become effective as a result of the preceding clause
(A) shall become effective on the first date after the occurrence of the
relevant Bank Default on which the sum of (i) the aggregate outstanding
principal amount of the Revolving Loans of all Non-Defaulting Banks, plus (ii)
the aggregate outstanding principal amount of Swingline Loans, plus (iii) the
Letter of Credit Outstandings, is equal to or less than the Adjusted Total
Revolving Loan Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted RL
Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Revolving Loans or of Unpaid Drawings or of Swingline
Loans that were made during the period commencing after the date of the relevant
Bank Default and ending on the date of such change to its Adjusted RL Percentage
must be returned to the Borrower as a preferential or similar payment in any
bankruptcy or similar proceeding of the Borrower, then the change to such
Non-Defaulting Bank's Adjusted RL Percentage effected pursuant to said clause
(B) shall be reduced to that positive change, if
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any, as would have been made to its Adjusted RL Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted RL
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted RL Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equalling such Bank's Revolving Loan Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks.
"Administrative Agent" shall mean Scotiabank, in its capacity as
Administrative Agent for the Banks hereunder, and shall include any successor to
the Administrative Agent appointed pursuant to Section 12.09.
"Affected Eurodollar Loans" shall have the meaning provided in Section
4.02(j).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean and include the Administrative Agent and the
Syndication Agent.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
hereof), extended, renewed, refinanced or replaced from time to time.
"Allocable Share" shall mean, for any Person with respect to any Joint
Venture and event or circumstance under this Agreement that requires the
determination thereof, that percentage of such Joint Venture's equity interests
that are owned (directly or indirectly) by such Person.
"Applicable Commitment Commission Percentage" shall mean a percentage
per annum equal to 1/2 of 1%, provided that so long as no Default of the type
described in Section 10.01 or 10.05 shall exist and no Event of Default shall
exist, the Applicable Commitment Commission Percentage shall be 3/8 of 1% at any
time (and for so long as) the
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Interest Reduction Discount is determined by clauses (C), (D), (E) or (F) of
clause (i) of the definition thereof.
"Applicable Margin" shall mean a percentage per annum equal to (i) in
the case of Tranche A Term Loans and Revolving Loans which (in either case) are
maintained as Base Rate Loans and in the case of Swingline Loans, 1.125%, less
the then applicable Interest Reduction Discount, if any, (ii) in the case of
Tranche A Term Loans and Revolving Loans which are maintained as Eurodollar
Loans, 2.125%, less the then applicable Interest Reduction Discount, if any,
(iii) in the case of Tranche B Term Loans which are maintained as Base Rate
Loans, 1.500%, less the then applicable Interest Reduction Discount, if any, and
(iv) in the case of Tranche B Term Loans which are maintained as Eurodollar
Loans, 2.500%, less the then applicable Interest Reduction Discount, if any.
Notwithstanding the foregoing, (x) in the event that the Borrower receives gross
cash proceeds in excess of $350,000,000 from the Equity Financing and 100% of
the Net Equity Proceeds therefrom in excess of $319,800,000 are applied within
30 days after the Initial Borrowing Date to reduce the Total Term Loan
Commitment and/or repay outstanding Term Loans pursuant to Section 4.02(d)
(whether or not such proceeds are otherwise required to be applied pursuant to
such Section 4.02(d)), the Applicable Margin for Tranche A Term Loans, Revolving
Loans and Swingline Loans set forth in clauses (i) and (ii) above shall be
permanently decreased, on a prospective basis only from and after the date such
proceeds are so applied, by 0.125% and (y) in the event that the Borrower issues
any New Subordinated Notes, the Applicable Margin for Tranche A Term Loans,
Tranche B Term Loans, Revolving Loans and Swingline Loans set forth above shall
be permanently increased by 0.125% (after giving effect to any decrease thereof
as provided in preceding clause (x)).
"Applicable Recapture Percentage" shall mean 100%, provided that if on
the date of any Asset Sale (other than an Asset Sale under Section 9.02(xiv)) or
on the date of any Specified Red Lion Event, (x) no Default under Section 10.01
or 10.05 then exists and no Event of Default then exists, and (y) the Leverage
Ratio for the Test Period then most recently ended calculated on a Pro Forma
Basis shall be less than 3.00:1.00 (as evidenced (in reasonable detail) by a
certificate of the Chief Financial Officer of the Borrower submitted to the
Agents on such date), the Borrower shall be entitled to retain 50% of the Net
Sale Proceeds from such Asset Sale and 50% of the Specified Red Lion Proceeds
from such Specified Red Lion Event up to an aggregate retained amount (for all
such Asset Sales and Specified Red Lion Events) of $250,000,000.
"Asset Sale" shall mean any sale, transfer or other disposition by the
Borrower or any of its Wholly-Owned Subsidiaries or Joint Ventures to any Person
(including by way of redemption by such Person) other than to the Borrower or a
Wholly-Owned Subsidiary of the Borrower of any asset (including, without
limitation, any capital stock or other securities of, or equity interests in,
another Person) of the Borrower or any of its Wholly-Owned Subsidiaries or Joint
Ventures other than any sale, transfer or disposition per-
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mitted by Sections 9.02(ii), (v), (vii), (viii), (xi), (xvi), (xvii) and
(xviii), provided that in no event shall a Designated Event constitute an Asset
Sale.
"Assignment and Assumption Agreement" shall mean an Assignment and
Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
"Austin Obligations" shall mean the Indebtedness outstanding on the
Initial Borrowing Date relating to, and only secured by, the Borrower's Hotel
Property in Austin, Texas, but only so long as recourse in respect of such
Indebtedness is limited solely to such Hotel Property and not to the Borrower or
any of its Subsidiaries or any of the other assets of the Borrower or any of its
Subsidiaries.
"Bank" shall mean each Person listed on Schedule I, as well as any
Person which becomes a "Bank" hereunder pursuant to Section 1.13 or 13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Bank to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified in
writing the Borrower and/or the Administrative Agent that such Bank does not
intend to comply with its obligations under Section 1.01(a), 1.01(b), 1.01(c),
1.01(e) or 2, in the case of either clause (i) or (ii) as a result of any
take-over or control (including, without limitation, as a result of the
occurrence of any event of the type described in Section 10.05 with respect to
such Bank) of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Case EBITDA" shall mean, with respect to any Test Period set
forth on Schedule XII, the number set forth opposite such Test Period on such
Schedule XII.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1% in
excess of the Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each other
Loan designated or deemed designated as such by the Borrower at the time of the
incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche (or from
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Scotiabank in the case of Swingline Loans) on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar Loans
the same Interest Period, provided that Base Rate Loans incurred pursuant to
Section 1.10(b) shall be considered part of the related Borrowing of Eurodollar
Loans.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day except Saturday, Sunday and any day which shall be in
New York City, New York and Atlanta, Georgia a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) above and which is also
a day for trading by and between banks in the New York interbank Eurodollar
market.
"Calculation Period" shall mean the period of four consecutive fiscal
quarters of the Borrower last ended before the date of the respective Hotel
Acquisition, Hotel Investment, Asset Sale, Redesignation Event and/or incurrence
of New Subordinated Notes or Non-Recourse Indebtedness which requires
calculations to be made on a Pro Forma Basis.
"Candlewood" shall mean Candlewood Hotel Company, L.L.C.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or will
be required to be capitalized on the books of such Person, in each case taken at
the amount thereof accounted for as indebtedness in accordance with such
principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition, (ii) Dollar denominated time deposits and
certificates of deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company having, a long-term unsecured debt
rating of at least "A" or the equivalent thereof from Standard & Poor's Ratings
Services or "A2" or the equivalent thereof from Moody's Investors Service, Inc.
with maturities of not more than one year from the date of acquisition by such
Person, (iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
commercial paper issued by any Person incorporated in the
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United States rated at least A-1 or the equivalent thereof by Standard & Poor's
Ratings Services or at least P-1 or the equivalent thereof by Moody's Investors
Service, Inc. and in each case maturing not more than 270 days after the date of
acquisition by such Person and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 et seq.
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Rules 13d-3 or 13d-5 under the Securities Exchange Act (as in effect
on the Effective Date)), other than the Permitted Holders, shall (A) have
acquired beneficial ownership of 25% or more on a fully diluted basis of the
voting and/or economic interest in the Borrower's capital stock or (B) have
obtained the power (whether or not exercised) to elect a majority of the
Borrowers' directors or (ii) the Board of Directors of the Borrower shall cease
to consist of a majority of Continuing Directors.
"Clean-Down Period" shall mean a period of 30 consecutive days during
which no more than $50,000,000 in aggregate principal amount of the sum of
Revolving Loans and Swingline Loans is outstanding at any time during such
period.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purport to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, the Mortgaged
Properties, all Collateral Assignment Collateral and all cash and Cash
Equivalents delivered as collateral pursuant to Section 4.02 or 10.
"Collateral Administrative Agent" shall mean the Administrative Agent
acting as collateral administrative agent for the Secured Creditors pursuant to
the Security Documents.
"Collateral Assignment" shall mean each Collateral Assignment of
Mortgage and other Loan Documents pursuant to which any Credit Party shall have
granted to the Collateral Administrative Agent a security interest in the
Collateral Assignment Collateral described therein.
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"Collateral Assignment Collateral" shall mean all of the applicable
Credit Party's right, title and interest in and to the "Pledged Loan Documents"
as defined in the respective Collateral Assignment.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.05.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
whether the Tranche A Term Loan Commitment, the Tranche B Term Loan Commitment
or the Revolving Loan Commitment.
"Commitment Commission" shall mean the Revolving Loan Commitment
Commission and the Term Loan Commitment Commission.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum, dated October 1996, prepared by the Agents and
distributed to the Banks prior to the Initial Borrowing Date.
"Consolidated Current Assets" shall mean, at any time, the consolidated
current assets of the Borrower and its Subsidiaries at such time.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of the Borrower and its Subsidiaries at such
time, but excluding the current portion of and accrued but unpaid interest on
any Indebtedness under this Agreement and any other long-term Indebtedness which
would otherwise be included therein.
"Consolidated EBIT" shall mean, for any period, Consolidated Net Income
before Consolidated Interest Expense and before provision for taxes for such
period and without giving effect (w) to any extraordinary gains or losses, (x)
to any gains or losses from sales of assets other than from (i) sales of
inventory sold in the ordinary course of business and (ii) sales or liquidations
of equity interests in Joint Ventures in the ordinary course of business
(provided that no more than $5,000,000 of net gains or losses shall be included
in Consolidated EBIT for any Test Period in connection with such sales or
liquidations referred to in this clause (ii)), (y) to any reduction in a reserve
account liability which was originally established with cash proceeds from the
sale or liquidation of an equity interest in a Joint Venture to the extent that
the gain or loss from such sale or liquidation was already included pursuant to
clause (x)(ii) above whether in the current period or from a prior period and
(z) to any expenses related to or incurred by the Borrower in connection with
the Transaction.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT for
such period, adjusted by adding thereto the amount of all amortization and
depreciation expense of the Borrower and its Subsidiaries that was deducted in
arriving at Consolidated
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EBIT for such period, it being understood and agreed, however, that for purposes
of determining compliance with Sections 9.09 and 9.10 and for purposes of
calculating the Interest Reduction Discount, Consolidated EBITDA for the
Borrower's fiscal quarter ended on (i) March 31, 1996 shall be $28,163,000, (ii)
June 30, 1996 shall be $42,687,000, (iii) September 30, 1996 shall be
$53,157,000 and (iv) December 31, 1996 shall be based on the financial
statements delivered pursuant to Section 8.01(i).
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period
the ratio of (x) Consolidated EBITDA for such period less the amount of all
Capital Expenditures, Hotel Acquisitions and Hotel Investments made by the
Borrower and its Subsidiaries during such period pursuant to Sections 9.07(a),
(b) and (g) to (y) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" for any period shall mean the sum, without
duplication, of (i) Consolidated Interest Expense for such period, (ii) the
amount of all cash payments made by the Borrower and its Subsidiaries in respect
of taxes or tax liabilities during such period (net of any cash refunds actually
received during such period), and (iii) the scheduled principal amount (after
giving effect to any refinancing thereof other than with proceeds of Loans) of
all amortization payments made (or required to be made and not made) on all
Indebtedness (including, without limitation, the principal component of all
Capitalized Lease Obligations) of the Borrower and its Subsidiaries for such
period plus the amount of all voluntary repayments of such Indebtedness during
such period to the extent that any such repayment reduced the amount of any such
scheduled amortization payment.
"Consolidated Indebtedness" shall mean, at any time, the principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such time
determined on a consolidated basis to the extent that such Indebtedness would be
accounted for as debt in accordance with generally accepted accounting
principles plus, without duplication, (i) the maximum amount available to be
drawn under all letters of credit (including any Letters of Credit) issued for
the account of the Borrower and its Subsidiaries and all unpaid drawings
(including any Unpaid Drawings) in respect of such letters of credit, (ii) the
principal amount of all bonds issued by the Borrower and its Subsidiaries in
connection with workers' compensation obligations, lease obligations and similar
obligations, (iii) all Indebtedness set forth on Schedule VII designated as
being part of Consolidated Indebtedness and (iv) the amount of all Contingent
Obligations of the Borrower and its Subsidiaries determined on a consolidated
basis in respect of Indebtedness of other Persons of the type described above in
this definition.
"Consolidated Interest Coverage Ratio" shall mean, for any period the
ratio of (x) Consolidated EBITDA for such period to (y) (i) in the case of the
Test Period ending on March 31, 1997, Consolidated Interest Expense for such
Test Period multiplied by 4, (ii) in the case of the Test Period ending on June
30, 1997, Consolidated Interest Expense for
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such Test Period multiplied by 2, (iii) in the case of the Test Period ending on
September 30, 1997, Consolidated Interest Expense for such Test Period
multiplied by a fraction the numerator of which is 4 and the denominator of
which is 3 and (iv) in the case of each Test Period ending thereafter,
Consolidated Interest Expense for the Test Period then most recently ended (in
each case taken as one accounting period).
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, that portion of Capitalized Lease Obligations of the
Borrower and its Subsidiaries representing the interest factor for such period;
provided that the amortization of deferred financing costs with respect to this
Agreement or the Indebtedness incurred hereunder shall be excluded from
Consolidated Interest Expense to the extent same would otherwise have been
included therein.
"Consolidated Net Income" shall mean, for any Person and period, the
net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis (after deduction for minority interests),
provided that (i) in determining Consolidated Net Income of the Borrower, the
net income (or loss) of any other Person which is not a Subsidiary of the
Borrower (including any Unrestricted Subsidiary) or is accounted for by the
Borrower by the equity method of accounting shall be included only to the extent
of the payment of dividends or distributions by such other Person to the
Borrower or a Subsidiary thereof during such period and (ii) the net income (or
loss) of any other Person acquired by such specified Person or a Subsidiary of
such Person in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded.
"Consolidated Net Worth" shall mean on any date of determination
thereof the consolidated net worth of the Borrower and its Subsidiaries
determined as of such date of determination.
"Consolidated Non-Subsidiary Joint Venture" shall mean any Joint
Venture in which the Borrower, either directly or through one or more
Wholly-Owned Subsidiaries, has a 50% equity interest and whose debt is included,
in accordance with generally accepted accounting principles, on the consolidated
balance sheet of the Borrower (whether or not directly assumed or guaranteed by
the Borrower of any of its other Subsidiaries).
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner, and any obligation of such Person guaranteeing or intended
to guarantee any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
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obligation of such Person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the Borrower on the
Initial Borrowing Date, the two directors of the Borrower selected by KKR within
sixty days following the Initial Borrowing Date and each other director, if such
other director's nomination for election to the Board of Directors of the
Borrower is recommended by a majority of the then Continuing Directors or is
recommended by a committee of the Board of Directors a majority of which is
composed of the then Continuing Directors.
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Subsidiaries Guaranty and each Security Document.
"Credit Event" shall mean the making of any Loan or the issuance of any
Letter of Credit.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated Event" shall mean the receipt of cash proceeds by the
Borrower or any of its Wholly-Owned Subsidiaries from (i) any termination
payment or liquidated damages under, or in connection with, the termination of
any lease, management contract or franchise agreement, (ii) any sale or
liquidation by the Borrower or a Wholly-Owned
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Subsidiary thereof of any Existing Doubletree Investment, (iii) any sale or
liquidation by the Borrower or a Wholly-Owned Subsidiary thereof of any Hotel
Investment made after the Initial Borrowing Date, (iv) any principal repayment
of any loan or advance made by the Borrower or a Wholly-Owned Subsidiary thereof
to any Joint Venture or other Person (other than the Borrower or a Subsidiary
Guarantor) (except for regularly occurring repayments made in the ordinary
course of business and except to the extent that same constitutes a Specified
Red Lion Event), or (v) any redemptions, distributions or dividends made by a
Joint Venture to the Borrower or a Wholly-Owned Subsidiary thereof (other than
regularly occurring distributions or dividends made in the ordinary course of
business);
"Designated Hotel Properties" shall mean the Hotel Properties owned by
the Borrower and its Wholly-Owned Subsidiaries as set forth on Schedule XIII,
and any replacement Hotel Properties purchased by the Borrower and its
Wholly-Owned Subsidiaries with the Net Sale Proceeds from any sale of one or
more of the Hotel Properties set forth on such Schedule XIII and/or from the
sale of one or more of such replacement Hotel Properties.
"Determination Date" shall have the meaning provided in the definition
of "Pro Forma Basis."
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or partners or authorized or made any other distribution, payment or delivery of
property (other than common stock of such Person) or cash to its stockholders or
partners as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock or any partnership interests outstanding on or after the Initial
Borrowing Date (or any options or warrants issued by such Person with respect to
its capital stock), or set aside any funds for any of the foregoing purposes, or
shall have permitted any of its Subsidiaries to purchase or otherwise acquire
for a consideration any shares of any class of the capital stock or any
partnership interests of such Person outstanding on or after the Initial
Borrowing Date (or any options or warrants issued by such Person with respect to
its capital stock). Without limiting the foregoing, "Dividends" with respect to
any Person shall also include all payments made or required to be made by such
Person with respect to any stock appreciation rights, plans, equity incentive or
achievement plans or any similar plans or setting aside of any funds for the
foregoing purposes.
"Documents" shall mean the Credit Documents, the Equity Financing
Documents, the Acquisition Documents and the Refinancing Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
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"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in the United States or any State or territory
thereof.
"Doubletree Master REIT Lease" shall mean the Consolidated Lease
Amendment, dated as of February 27, 1996, between RFS Partnership, L.P., as
lessor, and RFS, Inc., as lessee.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank,
insurance company, financial institution, fund or other Person which regularly
purchases interests in loans or extensions of credit of the types made pursuant
to this Agreement, any other Person which would constitute a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act as
in effect on the Effective Date or other "accredited investor" (as defined in
Regulation D of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in Section
5.05.
"End Date" shall mean, for any Margin Reduction Period, the last day of
such Margin Reduction Period.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of non-compliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 3803 et seq.; the
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Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et
seq.; the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 et seq.
and the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; and
any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.
"Equity Financing" shall mean, collectively, (i) the Public Equity
Offering and (ii) the Private Equity Offering.
"Equity Financing Documents" shall mean each of the documents and other
agreements entered into in connection with the Equity Financing.
"Equity Rollover" shall mean the issuance by the Borrower of shares of
its common stock for the account of the selling shareholders of Red Lion as part
of the Acquisition.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
there- under. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded upward
to the nearest 1/100th of 1%) of the offered quotation to first-class banks in
the New York interbank Eurodollar market determined by each Reference Bank for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of such Reference Bank with
maturities comparable to the Interest Period applicable to such Eurodollar Loan
commencing two Business Days thereafter as of 11:00 A.M. (New York time) on the
date which is two Business Days prior to the commencement of such Interest
Period, divided (and rounded upward to the nearest 1/16 of 1%) by (b) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in respect of Eurocurrency
funding or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D); provided that if one or more
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of the Reference Banks fail to provide the Administrative Agent with its
aforesaid rate, then the Eurodollar Rate shall be determined based on the rate
or rates provided to the Administrative Agent by the other Reference Bank or
Reference Banks.
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (i)
Adjusted Consolidated Cash Income for such period minus (ii) the sum of (a) the
amount of all Capital Expenditures, Hotel Acquisitions and Hotel Investments
made by the Borrower and its Subsidiaries pursuant to Sections 9.07(a), (b), (e)
and (g) during such period, (b) the aggregate principal amount of permanent
principal payments of Indebtedness for borrowed money of the Borrower and its
Subsidiaries (other than repayments pursuant to which any other Indebtedness is
being refinanced with proceeds of Indebtedness, equity issuances, asset sales or
insurance proceeds, and repayments of Loans, provided that repayments of Loans
shall be deducted in determining Excess Cash Flow if such repayments were (x)
required as a result of a Scheduled Repayment under Section 4.02(b) or (c) or
(y) made as a voluntary prepayment (other than a voluntary prepayment made
pursuant to the proviso in Section 4.01(a)(v)) (but in the case of a voluntary
prepayment of Revolving Loans or Swingline Loans, only to the extent accompanied
by a voluntary reduction to the Total Revolving Loan Commitment)) during such
period and (c) any amount by which Adjusted Consolidated Cash Income was
increased during such period as a result of the portion of any Designated Event
that required a repayment pursuant to Section 4.02(i).
"Excess Cash Payment Date" shall mean the date occurring 100 days after
the last day of each fiscal year of the Borrower (beginning with its fiscal year
ending December 31, 1997).
"Excess Cash Payment Period" shall mean, with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of the Borrower.
"Existing Doubletree Investments" shall mean those Investments of the
Borrower and its Subsidiaries (other than Red Lion and its Subsidiaries)
existing on the Initial Borrowing Date and set forth on Schedule XVI.
"Existing Glendale Debt" shall mean the $40,000,000 in aggregate
principal amount of loans that remain outstanding to the Borrower's Joint
Venture in Glendale, California on the Initial Borrowing Date.
"Existing Indebtedness" shall have the meaning provided in Section
7.22.
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"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.05.
"Existing Red Lion Investments" shall mean those Investments of Red
Lion and its Subsidiaries existing on the Initial Borrowing Date and set forth
on Schedule XVII.
"Existing Red Lion Joint Ventures" shall mean the eight Red Lion Joint
Ventures designated as such on Schedule VI.
"Facing Fee" shall have the meaning provided in Section 3.01(d).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of the Borrower
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower other
than a Domestic Subsidiary.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import,
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under any applicable Environmental Law; and (c) any other chemical, material or
substance, the Release of which is prohibited, limited or regulated by any
governmental authority.
"Hotel Acquisition" shall mean an acquisition of a fee or leasehold
interest in a Hotel Property.
"Hotel Investment" shall mean an Investment by means of (i) the
acquisition of all or portion of the equity interest of a Person that directly
or indirectly owns, leases, manages or franchises one or more hotel or motel
properties or is otherwise engaged in the hotel or hospitality business, (ii)
the making of a loan, capital contribution or other advance or investment in, to
or for the benefit of a Subsidiary, an Unrestricted Subsidiary or a Joint
Venture of the Borrower that owns, leases, manages or franchises one or more
Hotel Properties, (iii) the making of an Investment in any Person in
consideration for the obtaining or retaining by Borrower or a Subsidiary of the
Borrower of the right to manage, lease or franchise one or more hotel or motel
properties, or in the reasonable expectation that such Investment will
materially enhance the ability of the Borrower or a Subsidiary of the Borrower
to obtain or to retain the right to manage, lease or franchise one or more hotel
or motel properties, (iv) the acquisition by the Borrower or a Subsidiary of the
Borrower of one or more existing management agreements, leases or licensing or
franchise rights with respect to a hotel or motel property or properties, (v)
any cash consideration paid by the Borrower or a Subsidiary thereof to any
Person (other than to the Borrower or a Wholly-Owned Subsidiary thereof) in
connection with any transaction permitted under Section 9.02(xv), (vi) any
drawing under a letter of credit (including any Letter of Credit) issued for the
account of the Borrower or any Subsidiary thereof and for the benefit of any
Person other than the Borrower or a Subsidiary Guarantor or (vii) the payment by
the Borrower or a Subsidiary thereof in respect of any Contingent Obligation
incurred by the Borrower or such Subsidiary for the benefit of any Person not a
Subsidiary Guarantor.
"Hotel Property" shall mean each hotel or motel owned or leased by the
Borrower or any of its Subsidiaries or Joint Ventures (including the furniture,
fixtures and equipment thereon).
"Hotel Property Management Agreements" shall have the meaning provided
in Section 5.05.
"Immaterial Subsidiary" shall mean any Subsidiary of the Borrower which
(x) accounted for less than $2,500,000 of Consolidated EBITDA of the Borrower
for the four fiscal quarter period then last ended (or, to the extent such
Subsidiary was acquired during such four fiscal quarter period, would have
accounted for less than $2,500,000 of Consolidated EBITDA for such period if the
Borrower had owned such Subsidiary throughout such period) and which, if
aggregated with all other Subsidiaries of the Borrower with respect to which an
event described under Section 10.05 or 10.09 has occurred and is
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continuing, would have accounted for less than $2,500,000 of Consolidated EBITDA
of the Borrower for the four fiscal quarter period then last ended and (y) would
not constitute a Significant Subsidiary and which, if aggregated with all other
Subsidiaries of the Borrower with respect to which an event described under
Section 10.05 or 10.09 has occurred and is continuing, would not constitute a
Significant Subsidiary.
"Inactive Subsidiary" shall mean any Wholly-Owned Subsidiary of the
Borrower that does not conduct any business activities.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person (provided, that, if the Person has not assumed or
otherwise become liable in respect of such Indebtedness, such Indebtedness shall
be deemed to be in an amount equal to the fair market value of the property to
which such Lien relates as determined in good faith by such Person), (iv) the
aggregate amount required to be capitalized under leases under which such Person
is the lessee, (v) all obligations of such person to pay a specified purchase
price for goods or services, whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vi) all Contingent Obligations of such
Person and (vii) all obligations under any Interest Rate Protection Agreement,
any Other Hedging Agreement or under any similar type of agreement.
Notwithstanding the foregoing, Indebtedness shall not include trade payables and
accrued expenses incurred by any Person in accordance with customary practices
and in the ordinary course of business of such Person.
"Indebtedness to be Refinanced" shall mean all Indebtedness set forth
on Schedule IV which is to be repaid in full as part of the Refinancing.
"Initial Borrowing Date" shall mean the date occurring on or after the
Effective Date on which the initial Borrowing of Loans occurs.
"Intercompany Loan" shall have the meaning provided in Section
9.05(viii).
"Intercompany Note" shall mean a promissory note, in the form of
Exhibit L, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
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"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean (i) in the case of
Tranche A Term Loan, Revolving Loans and Swingline Loans, zero, and from and
after any Start Date occurring after the last day of the first fiscal quarter of
the Borrower ended after the Initial Borrowing Date to and including the
corresponding End Date:
(A) 1/4 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 4.50:1.00 and none of the conditions set forth in clauses (B),
(C), (D), (E) and (F) below are satisfied;
(B) 3/8 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 4.25:1.00 and none of the conditions set forth in clauses (C),
(D), (E) and (F) below are satisfied;
(C) 1/2 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 4.00:1.00 and none of the conditions set forth in clauses (D),
(E) and (F) below are satisfied;
(D) 5/8 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 3.75:1.00 and none of the conditions set forth in clauses (E)
and (F) below are satisfied;
(E) 3/4 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 3.50:1.00 and the condition set forth in clause (F) below is
not satisfied; or
(F) 7/8 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 3.25:1.00; and
(ii) in the case of Tranche B Term Loans, initially zero, and from and after any
Start Date occurring after the last day of the first fiscal quarter of the
Borrower ended after the Initial Borrowing Date to and including the
corresponding End Date:
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(A) 1/4 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than 4.50:1.00.
Notwithstanding anything to the contrary above in this definition, (i) for the
period from the Initial Borrowing Date to but not including the first Start Date
after the Initial Borrowing Date, the Interest Reduction Discount shall be (x)
in the case of Tranche A Term Loans, Revolving Loans and Swingline Loans, 1/2 of
1%, provided, in the event that the Applicable Margin is permanently decreased
by 0.125% pursuant to clause (x) of the last sentence of the definition of
Applicable Margin, the Borrower shall have the right to recalculate the Interest
Reduction Discount at the time such decrease is effective by calculating the
Leverage Ratio at such time (after giving effect to any repayment of Term Loans
at such time) (and (x) with the numerator of the Leverage Ratio to be based on
the amount of Consolidated Indebtedness at such time and (y) with the
denominator of the Leverage Ratio (i.e., Consolidated EBITDA) to be
$152,302,000), and with such recalculated Interest Reduction Discount to be
effective on a prospective basis only from and after the date of any delivery of
a certificate of the Chief Financial Officer of the Borrower or another senior
financial officer of the Borrower to the Agents certifying (in reasonable
detail) such Interest Reduction Discount and until the first Start Date after
the Initial Borrowing Date, and (y) in the case of Tranche B Term Loans, 1/4 of
1%, and (ii) the Interest Reduction Discount for all Loans shall be reduced to
zero at all times when a Default of the type described in Section 10.01 or 10.05
shall exist and any Event of Default shall exist.
"Investments" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean Scotiabank and any other Bank which at
the request of the Borrower and with the consent of the Agents (which consent
shall not be unreasonably withheld) agrees, in such Bank's sole discretion, to
become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to
Section 2. The sole Issuing Bank on the Initial Borrowing Date is Scotiabank.
"Joint Venture" shall mean any Person in which the Borrower or any
Subsidiary of the Borrower owns, directly or indirectly, more than .1% but less
than 100% of the voting or equity interests or in which the Borrower or a
Subsidiary of the Borrower has general partnership liability.
"Joint Venture Agreements" shall have the meaning provided in
Section 5.05.
"KKR" shall mean Kohlberg Kravis Roberts & Co., L.P., a Delaware
limited partnership.
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"Leaseholds" of any Person shall mean all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower or any of its Subsidiaries or Joint Ventures with respect to workers
compensation, surety bonds and other similar statutory obligations and (ii) such
other obligations of the Borrower or any of its Subsidiaries or Joint Ventures
as are otherwise permitted to exist pursuant to (or otherwise not restricted by)
the terms of this Agreement.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the sum
of (i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Leverage Ratio" shall mean, at any time, the ratio of (x)
Consolidated Indebtedness at such time to (y) Consolidated EBITDA for the then
most recently ended Test Period.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Liquor License Subsidiary" shall mean any Wholly-Owned Subsidiary
of the Borrower the only business of which is to hold one or more liquor
licenses for hotels owned or leased by the Borrower and/or any of its
Subsidiaries.
"Loan" shall mean each Tranche A Term Loan, each Tranche B Term
Loan, each Revolving Loan and each Swingline Loan.
"Majority Banks" of any Tranche shall mean those Non-Defaulting
Banks which would constitute the Required Banks under, and as defined in, this
Agreement if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
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"Management Agreements" shall have the meaning provided in Section
5.05.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(e).
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial statements are delivered pursuant to
Section 8.01(a) or (b), as the case may be, and which shall end on the earlier
of (i) the date of actual delivery of the next financial statements pursuant to
Section 8.01(a) or (b), as the case may be, and (ii) the latest date on which
the next financial statements are required to be delivered to Section 8.01(a) or
(b), as the case may be, provided that the first Margin Reduction Period shall
commence no earlier than the date of delivery of the first set of financial
statements pursuant to Section 8.01(b) after the Initial Borrowing Date.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Leases" shall have the meaning provided in Section 5.05.
"Maturity Date" shall mean, with respect to any Tranche of Loans,
the Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date,
the Revolving Loan Maturity Date or the Swingline Expiry Date, as the case may
be.
"Maximum Swingline Amount" shall mean $10,000,000.
"Merger Sub" shall mean RLH Acquisition Corp., a Delaware
corporation and a Wholly-Owned Subsidiary of the Borrower.
"Minimum Borrowing Amount" shall mean (i) for Term Loans,
$5,000,000, (ii) for Revolving Loans, $2,500,000 and (iii) for Swingline Loans,
$250,000.
"Minimum Consolidated Net Worth" shall mean, at any time, the sum
of (i) $680,000,000 plus (ii) 50% of Consolidated Net Income of the Borrower, if
positive, for each fiscal year of the Borrower (commencing with the fiscal year
ending on December 31, 1997) ended prior to the date of determination, it being
understood that any increase to Minimum Consolidated Net Worth shall be
effective as of the last day of each fiscal year of the Borrower.
"Mortgage" shall mean each mortgage, deed to secure debt or deed
of trust pursuant to which any Credit Party shall have granted to the Collateral
Agent a mortgage lien on such Credit Party's Mortgaged Property.
"Mortgage Policy" shall have the meaning provided in Section 5.14.
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"Mortgaged Property" shall mean each Real Property owned or leased
by any Credit Party and designated as a Mortgaged Property on Schedule III or
pursuant to Section 8.12.
"MSSF" shall mean Morgan Stanley Senior Funding, Inc., in its
individual capacity.
"Multiemployer Plan" shall mean a plan as defined in Section
4001(a)(3) of ERISA with respect to which the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has an obligation to contribute to or any
liability.
"NAIC" shall mean the National Association of Insurance
Commissioners.
"Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
received by the respective Person from the respective incurrence of such
Indebtedness for borrowed money.
"Net Equity Proceeds" shall mean, with respect to each issuance or
sale of any equity by any Person or any capital contribution to such Person, the
cash proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) received by such Person from the
respective sale or issuance of its equity or from the respective capital
contribution.
"Net Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds (net of reasonable costs and taxes incurred in
connection with such Recovery Event) received by the respective Person in
connection with the respective Recovery Event.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the reasonable costs of such sale
(including fees and commissions, payments of unassumed liabilities relating to
the assets sold and required payments of any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents or any Indebtedness owed
to the Borrower or a Subsidiary thereof) which is secured by the respective
assets which were sold), and the incremental taxes paid or payable as a result
of such Asset Sale.
"New Subordinated Note Documents" shall mean the New Subordinated
Notes, any indenture or purchase agreement related thereto and each of the other
documents entered into in connection therewith.
"New Subordinated Notes" shall have the meaning provided in
Section 9.04(x).
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"Non-Defaulting Bank" shall mean and include each Bank other than
a Defaulting Bank.
"Non-Recourse Indebtedness" shall mean, with respect to any
Specified Subsidiary, Indebtedness incurred by such Specified Subsidiary which
(i) is secured only by the Hotel Property being developed or acquired by such
Specified Subsidiary, including any fixtures, furniture and equipment related
thereto and (ii) is non-recourse to the Borrower and its other Subsidiaries and
in which neither the Borrower nor any of its other Subsidiaries have provided
any credit support.
"Non-Subsidiary Joint Venture" shall mean any Joint Venture of the
Borrower that is not also a Subsidiary of the Borrower.
"Note" shall mean each Tranche A Term Note, each Tranche B Term
Note, each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 600 Peachtree Street, N.E., Suite 2700, Atlanta, Georgia 30308,
Attention: Eudia Smith, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to any Agent, the
Collateral Administrative Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Other Creditor" shall have the meaning provided in the Security
Documents.
"Other Hedging Agreement" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at 600 Peachtree Street, N.E., Suite 2700, Atlanta, Georgia 30308, or
such other office as the Administrative Agent may hereafter designate in writing
as such to the other parties hereto.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agents in their reasonable
discretion.
"Permitted Holders" shall mean GE Investment Management
Incorporated and its Affiliates and KKR, its general partners and/or its
Affiliates.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, limited liability company, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate or with respect to which any such entity has liability.
"Pledge Agreement" shall have the meaning provided in Section
5.11.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.
"Pledged Notes" shall have the meaning provided in the Pledge
Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as
defined in the Pledge Agreement.
"Prime Lending Rate" shall mean the rate which the Administrative
Agent announces from time to time as its prime lending rate, the Prime Lending
Rate to change when and as such prime lending rate changes. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
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"Private Equity Offering" shall mean the issuance by the Borrower
of shares of its common stock to General Electric Pension Trust or an affiliate
thereof pursuant to the respective Equity Financing Documents.
"Pro Forma Basis" shall mean, with respect to any Hotel
Acquisition, Hotel Investment, Asset Sale, Redesignation Event or incurrence of
Indebtedness, the calculation of the consolidated results of the Borrower and
its Subsidiaries otherwise determined in accordance with this Agreement as if
the respective Hotel Acquisition, Hotel Investment, Asset Sale, Redesignation
Event or Indebtedness (and all other Indebtedness incurred or Hotel
Acquisitions, Hotel Investments, Redesignation Event and/or Asset Sales effected
during the respective Calculation Period or thereafter and on or prior to the
date of determination) (each such date, a "Determination Date") had been
effected on the first day of the respective Calculation Period; provided that
all such calculations shall be made on a basis consistent with the requirements
of Regulation S-X under the Securities Act and the Securities Exchange Act and
shall take into account the following assumptions:
(i) interest expense attributable to interest on any
Indebtedness (whether existing or being incurred) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection
Agreement has a remaining term in excess of 12 months) had been the
applicable rate for the entire period; and
(ii) pro forma effect shall be given to all Asset Sales,
Redesignation Events, Hotel Acquisitions and Hotel Investments (by
excluding or including, as the case may be, the historical financial
results for the respective Hotel Properties) that occur during such
Calculation Period or thereafter and on or prior to the Determination
Date (including any Indebtedness assumed or acquired in connection
therewith) as if they had occurred on the first day of such Calculation
Period, in each case to the extent that the occurrence of any such
event required the financial covenants contained in Sections 9.08
through 9.11, inclusive, to be recalculated on a Pro Forma Basis.
"Projections" shall mean the projections prepared by the Borrower
and set forth in the Confidential Information Memorandum.
"Public Equity Offering" shall mean the issuance by the Borrower
of shares of its common stock through a registered public offering pursuant to
the respective Equity Financing Documents (including as a result of the exercise
by the respective underwriters of their over-allotment option).
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"Qualified Preferred Stock" shall mean any preferred stock of the
Borrower, the express terms of which shall provide that Dividends thereon shall
not be required to be paid in cash at any time that such cash payment would be
prohibited by the terms of this Agreement (and any refinancings, replacements or
extensions hereof) and in either case which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event (including an event which would constitute a
Change of Control), cannot mature (excluding any maturity as the result of an
optional redemption by the issuer thereof) and is not mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, and is not redeemable, or
required to be repurchased (including, without limitation, upon the occurrence
of an event which would constitute a Change of Control), in whole or in part, on
or prior to the first anniversary of the Tranche B Term Loan Maturity Date.
"Quarterly Payment Date" shall mean each March 31, June 30,
September 30 and December 31 occurring after the Initial Borrowing Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of
its Subsidiaries or Joint Ventures of any cash insurance proceeds or
condemnation awards payable (i) by reason of theft, loss, physical destruction,
damage, taking or any other similar event with respect to any property or assets
of the Borrower or any of its Subsidiaries or Joint Ventures and (ii) under any
policy of insurance required to be maintained under Section 8.03.
"Redesignation Event" shall mean the designation by the Borrower
of a Specified Subsidiary as an Unrestricted Subsidiary in accordance with the
definition of Unrestricted Subsidiary and so long as (i) the Borrower gives the
Agents prior written notice thereof, (ii) no Default or Event of Default then
exists or would result therefrom, (iii) all transactions between the Specified
Subsidiary to be so designated and its Affiliates remaining in effect are
permitted pursuant to Section 9.06, (iv) any Investment made by the Borrower or
any Subsidiary thereof to such Specified Subsidiary shall thereafter be
considered as having been a Hotel Investment (to the extent not previously
included as a Hotel Investment) made on the day such Specified Subsidiary is
designated an Unrestricted Subsidiary in the amount of the greater of (x) the
fair market value (as determined by the Board of Directors of the Borrower in
good faith) of the equity interests of such Specified Subsidiary held by the
Borrower and its Subsidiaries on such date, and (y) the amount of the
Investments made by the Borrower and any of its Subsidiaries in such Specified
Subsidiary and (v) (I) based on calculations made by the Borrower on a Pro Forma
Basis after giving effect to the respective
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designation, no Default or Event of Default will exist under, or would have
existed during the Test Period last reported (or required to be reported
pursuant to Section 8.01(a) or (b), as the case may be) prior to the date of the
respective designation pursuant to, the financial covenants contained in
Sections 9.08 through 9.11, inclusive (provided that for purposes of determining
pro forma compliance with any such Section for any period during which the
covenants contained therein are not yet required to be tested pursuant to the
terms thereof, the Borrower shall instead use the historical financial results
of the Borrower and its Subsidiaries for the most recently ended four fiscal
quarter period (but calculated as if the Transaction, the related financing
thereof and the other transactions contemplated hereby had been consummated on
the first day of such period and (x) assuming that the amount of Capital
Expenditures, Hotel Investments and/or Hotel Acquisitions made during any
portion of such period prior to the Initial Borrowing Date is at an assumed per
annum rate of $40,000,000 and (y) with Consolidated EBITDA for such period to be
determined in accordance with the definition thereof) and the Borrower shall be
required to demonstrate, on a Pro Forma Basis, that no Default or Event of
Default will exist under, or would have existed during such period prior to the
date of the respective designation pursuant to, the financial covenants
contained in any of such Sections 9.08 through 9.11, inclusive (but assuming,
for this purpose, that the level of financial performance required to be
satisfied is the level applicable to any such Section the first time compliance
with such Section is required to be tested pursuant to the terms thereof)), and
(II) the Borrower shall have delivered to the Agents an officer's certificate
executed by the Chief Financial Officer of the Borrower or another senior
financial officer of the Borrower, certifying to the best of such officer's
knowledge, compliance with the requirements of this definition and containing
the calculations (in reasonable detail) required by this definition.
"Red Lion" shall mean Red Lion Hotels, Inc., a Delaware
corporation.
"Red Lion Master Lease" shall mean the Lease, dated as of August
1, 1995, between RLH Partnership, L.P., as landlord, and Red Lion, as tenant.
"Red Lion Master Property Management Agreement" shall mean the
Management Agreement, dated April 6, 1987, between Red Lion Inns Operating L.P.
and Red Lion.
"Red Lion Properties" shall mean Red Lion Properties, Inc., a
Delaware corporation.
"Reference Banks" shall mean Scotiabank, Bankers Trust Company and
Societe Generale so long as each such Bank remains a Bank party to this
Agreement. In the event that one or more Reference Banks no longer constitute a
Bank under this Agreement, the Borrower and the Administrative Agent shall
designate another Bank (with the consent of such Bank) to act as a Reference
Bank hereunder.
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"Refinancing" shall mean the repayment in full of, and the
termination of all commitments in respect of, the Indebtedness to be Refinanced.
"Refinancing Documents" shall mean all of the documents and
agreements entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 13.15.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Release" shall mean the disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying,
pouring or migrating, into or upon any land or water or air, or otherwise
entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA
other than those events as to which the 30-day notice period is waived under
subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 4043.
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"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans (and, if prior to the termination thereof, Term Loan
Commitments) and Revolving Loan Commitments (or after the termination thereof,
outstanding Revolving Loans and Adjusted RL Percentage of Swingline Loans and
Letter of Credit Outstandings) represent an amount greater than 50% of the sum
of all outstanding Term Loans (and, if prior to the termination thereof, the
Term Loan Commitments) of Non-Defaulting Banks and the Adjusted Total Revolving
Loan Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks, and the aggregate Adjusted
RL Percentages of all Non-Defaulting Banks of the total outstanding Swingline
Loans and Letter of Credit Outstandings at such time).
"Retained Excess Cash Flow Amount" shall mean, for each fiscal
year of the Borrower (commencing with the fiscal year beginning January 1,
1998), an amount equal to 50% of Excess Cash Flow for the immediately preceding
fiscal year of the Borrower, (i) less the amount of all Capital Expenditures,
Hotel Acquisitions and Hotel Investments previously made pursuant to Section
9.07(f) utilizing such Retained Excess Cash Flow Amount and (ii) the amount of
all voluntary prepayments of Term Loans made pursuant to the proviso of Section
4.01(a)(v) utilizing such Retained Excess Cash Flow Amount.
"Retained Net Equity Proceeds" shall mean the 50% of all Net
Equity Proceeds not required to be applied pursuant to Section 4.02(d).
"Retained Net Equity Proceeds Amount" shall mean, at any time, an
amount equal to 50% of all Net Equity Proceeds theretofore received (other than
the first $319,800,000 of Net Equity Proceeds received from the Equity
Financing) less (i) the amount of all voluntary prepayments previously made
pursuant to the proviso of Section 4.01(a)(v) utilizing the Retained Net Equity
Proceeds Amount, (ii) the amount of all Retained Net Equity Proceeds from the
Equity Financing used to make payments owing in connection with the Transaction
(and/or to reduce the Total Term Loan Commitment or repay outstanding Term Loans
as contemplated in clause (x) of the second sentence of the definition of
Applicable Margin) and (iii) the amount of all Capital Expenditures, Hotel
Acquisitions and Hotel Investments previously made pursuant to Section 9.07(d).
"Revolving Loan" shall have the meaning provided in Section
1.01(c).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time to
time pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to Section 1.13 or
13.04(b).
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"Revolving Loan Commitment Commission" shall have the meaning
provided in Section 3.01(b).
"Revolving Loan Maturity Date" shall mean November 15, 2002.
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"RFS" shall mean RFS, Inc., a Tennessee corporation.
"RFS REIT" shall mean RFS Hotel Investors, Inc., a Tennessee
corporation.
"RFS REIT Equity" shall mean the 973,684 shares of convertible
preferred stock in the RFS REIT, 35,000 shares of common stock in the RFS REIT
and the limited partnership interests (less than 1%) in RFS Partnership, L.P.,
in each case owned by RFS on the Initial Borrowing Date.
"RFS REIT Leases" shall mean the master lease arrangement pursuant
to which RFS leases, as tenant, 49 hotels from RFS REIT, as landlord.
"RFS Sub" shall have the meaning provided in Section 9.05(xi).
"RL Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that if the RL Percentage of
any Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Scheduled Repayments" shall have the meaning provided in Section
4.02(c).
"Scotiabank" shall mean The Bank of Nova Scotia, in its individual
capacity.
"SEC" shall have the meaning provided in Section 8.01(g).
"Second Term Loan Borrowing Date" shall mean a single date
occurring after the Initial Borrowing Date and on or prior to the Tranche A Term
Loan Commitment Termination Date on which Tranche A Term Loans are incurred to
refinance the outstanding Existing Glendale Debt to the extent that same
constitutes Indebtedness to be Refinanced.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided
in Section 4.04(b)(ii).
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"Secured Creditors" shall have the meaning assigned that term in
the respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section
5.12.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Document" shall mean and include each of the Security
Agreement, the Pledge Agreement and each Mortgage and, after the execution and
delivery thereof, each Additional Security Document.
"Shareholders' Agreements" shall have the meaning provided in
Section 5.05.
"Significant Subsidiary" shall mean each Subsidiary of the
Borrower that is a "significant subsidiary" as defined in Rule 1-02(v) of
Regulation S-X under the Securities Act and the Securities Exchange Act (as such
regulation is in effect on the Initial Borrowing Date).
"Specified Red Lion Event" shall mean (i) any sale or liquidation
of an Existing Red Lion Investment, (ii) any principal repayment of any loan or
advance in respect of an Existing Red Lion Investment (except for regularly
occurring repayments made in the ordinary course of business), (iii) any
redemption, distribution or dividend made in respect of an Existing Red Lion
Investment (other than any regularly occurring distribution or dividend made in
the ordinary course of business) or (iv) any repayment of principal of any loan
or advance made by the Borrower or a Subsidiary thereof to the Joint Venture
holding the Existing Glendale Debt to the extent that the proceeds of the
original loan or advance were used to refinance the Existing Glendale Debt and
were made with proceeds of Loans.
"Specified Red Lion Proceeds" shall mean cash proceeds received by
the Borrower or a Subsidiary thereof from a Specified Red Lion Event.
"Specified Subsidiary" shall mean any Subsidiary of the Borrower
created after the Initial Borrowing Date, so long as such Subsidiary has no
assets other than a single Hotel Property to be developed and/or acquired by
such Subsidiary with Non-Recourse Indebtedness incurred pursuant to Section
9.04(xi).
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"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Start Date" shall mean, with respect to any Margin Reduction
Period, the first day of such Margin Reduction Period.
"Stated Amount" of each Letter of Credit shall, at any time, mean
the maximum amount available to be drawn thereunder (in each case determined
without regard to whether any conditions to drawing could then be met).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person, (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time and (iii) any
Consolidated Non-Subsidiary Joint Venture. Notwithstanding the foregoing (x)
(and except for purposes of the definition of Unrestricted Subsidiary contained
herein), an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of
the Borrower or any of its other Subsidiaries for purposes of this Agreement and
(y) Arlington Hotel Corp. shall not be considered a Subsidiary of the Borrower
for purposes of this Agreement so long as neither the Borrower nor any of its
Subsidiaries own directly (and not by pledge), in the aggregate, more than 30%
of the total equity interest in Arlington Hotel Corp. and at least 70% of the
voting rights in Arlington Hotel Corp. reside with the existing lender to
Arlington Hotel Corp. or an assignee of such lender.
"Subsidiary Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary of the Borrower and, to the extent required by Section 8.13, each
Wholly-Owned Foreign Subsidiary of the Borrower, in either case other than (i)
any Liquor License Subsidiary, (ii) any Inactive Subsidiary, (iii) any Specified
Subsidiary that has incurred (or intends to incur) Non-Recourse Indebtedness,
(iv) any Wholly-Owned Subsidiary designated as not being a Subsidiary Guarantor
on Schedule VI so long as such Wholly-Owned Subsidiary does not have any
additional material assets other than those assets held by it on the Initial
Borrowing Date, (v) any Wholly-Owned Subsidiary of the Borrower established
after the Initial Borrowing Date for the sole purpose of holding a joint venture
interest in a Joint Venture to the extent that (and for so long as) such
Wholly-Owned Subsidiary is contractually required to maintain a minimum net
worth that would be violated by the entering into of the Subsidiaries Guaranty
and (vi) Red Lion Properties, RFS and RFS Sub, so long as such Subsidiaries are
subject to the minimum net worth requirements set forth on Schedule XV.
"Subsidiaries Guaranty" shall have the meaning provided in
Section 5.13.
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"Supermajority Banks" of any Tranche shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement if (x) all outstanding Obligations of the other
Tranches under this Agreement were repaid in full and all Commitments with
respect thereto were terminated and (y) the percentage "50%" contained therein
were changed to "66-2/3%."
"Swingline Bank" shall mean Scotiabank.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(d).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Syndication Agent" shall mean MSSF, in its capacity as
Syndication Agent and Arranger for the Banks hereunder.
"Syndication Date" shall have the meaning provided in Section
1.01(a).
"Tax Sharing Agreements" shall have the meaning provided in
Section 5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Temporary Hotel Acquisition Transaction" shall mean the
acquisition by the Borrower or a Wholly-Owned Subsidiary thereof of a Hotel
Property with the intention of selling such Hotel Property to a third Person
(other than to the Borrower or a Subsidiary thereof) within 120 days following
the date of such acquisition, so long as (i) at the time of such acquisition,
the Borrower delivers a certificate to the Agents stating that the Borrower or
such Wholly-Owned Subsidiary is entering into a Temporary Hotel Acquisition
Transaction and setting forth in such certificate all material information
relating thereto (including the purchase price of such Hotel Property) and (ii)
the sale to such third Person occurs within 120 days of the initial acquisition
of such Hotel Property and for a purchase price at least equal to the original
purchase price paid by the Borrower or the respective Wholly-Owned Subsidiary
for such Hotel Property.
"Term Loan" shall mean each Tranche A Term Loan and each Tranche B
Term Loan.
"Term Loan Borrowing Date" shall mean the Initial Borrowing Date
and the Second Term Loan Borrowing Date.
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"Term Loan Commitment" shall mean each Tranche A Term Loan
Commitment and each Tranche B Term Loan Commitment, with the Term Loan
Commitment of any Bank at any time to equal the sum of its Tranche A Term Loan
Commitment and Tranche B Term Loan Commitment as then in effect.
"Term Loan Commitment Commission" shall have the meaning provided
in Section 3.01(a).
"Term Loan Percentage" shall mean the Tranche A Term Loan
Percentage or the Tranche B Term Loan Percentage, as applicable.
"Test Date" shall mean, with respect to any Start Date, the last
day of the most recent fiscal quarter or year, as the case may be, of the
Borrower ended immediately prior to such Start Date.
"Test Period" shall mean (i) for purposes of calculating
Consolidated EBITDA under Sections 9.09 and 9.10 and under the definition of
Interest Reduction Discount, the period of four consecutive fiscal quarters of
the Borrower then last ended (in each case taken as one accounting period), and
(ii) for all other purposes of this Agreement, (x) for any determination made on
and prior to December 30, 1997, the period from January 1, 1997 to the last day
of the fiscal quarter of the Borrower then last ended (in each case taken as one
accounting period) and (y) for any determination made thereafter, the period of
four consecutive fiscal quarters of the Borrower then last ended (in each case
taken as one accounting period).
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of
the Total Tranche A Term Loan Commitment and the Total Tranche B Term Loan
Commitment.
"Total Tranche A Term Loan Commitment" shall mean, at any time,
the sum of the Tranche A Term Loan Commitments of each of the Banks.
"Total Tranche B Term Loan Commitment" shall mean, at any time,
the sum of the Tranche B Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the Total Revolving Loan
Commitment then in effect,
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less (y) the sum of the aggregate principal amount of Revolving Loans and
Swingline Loans then outstanding plus the then aggregate amount of Letter of
Credit Outstandings.
"Trade Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being four separate Tranches,
i.e., Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and Swingline
Loans.
"Tranche A Term Loan" shall have the meaning provided in Section
1.01(a).
"Tranche A Term Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I directly below the
column entitled "Tranche A Term Loan Commitment," as same may be (x) reduced
from time to time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 13.04(b).
"Tranche A Term Loan Commitment Termination Date" shall mean the
earlier of (x) June 30, 1997 and (y) the Second Term Loan Borrowing Date.
"Tranche A Term Loan Maturity Date" shall mean November 15, 2002.
"Tranche A Term Loan Percentage" shall mean, at any time, a
fraction (expressed as a percentage) the numerator of which is equal to the sum
of the aggregate principal amount of all Tranche A Term Loans outstanding at
such time plus the Total Tranche A Term Loan Commitment at such time and the
denominator of which is equal to the sum of the aggregate principal amount of
all Term Loans outstanding at such time plus the Total Term Loan Commitment at
such time.
"Tranche A Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b).
"Tranche A Term Loan Scheduled Repayment Date" shall have the
meaning provided in Section 4.02(b).
"Tranche A Term Note" shall have the meaning provided in Section
1.05(a).
"Tranche B Term Loan" shall have the meaning provided in Section
1.01(b).
"Tranche B Term Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I directly below the
column entitled "Tranche B Term Loan Commitment," as same may be (x) reduced
from time to time
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pursuant to Sections 3.03, 4.02 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Tranche B Term Loan Maturity Date" shall mean May 15, 2004.
"Tranche B Term Loan Percentage" shall mean, at any time, a
fraction (expressed as a percentage) the numerator of which is equal to the
aggregate principal amount of all B Term Loans outstanding at such time (or
prior to the Initial Borrowing Date, the Total Tranche B Term Loan Commitment at
such time) and the denominator of which is equal to the sum of the aggregate
principal amount of all Term Loans outstanding at such time plus the Total Term
Loan Commitment at such time.
"Tranche B Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(c).
"Tranche B Term Loan Scheduled Repayment Date" shall have the
meaning provided in Section 4.02(c).
"Tranche B Term Note" shall have the meaning provided in Section
1.05(a).
"Transaction" shall mean, collectively, (i) the Acquisition, (ii)
the Equity Financing, (iii) the Equity Rollover, (iv) the incurrence of Loans on
the Initial Borrowing Date, (v) the Refinancing and (vi) the payment of fees and
expenses owing in connection with the foregoing.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount,
$5,000,000 or greater, by which the actuarial present value of the accumulated
plan benefits under the Plan as of the close of its most recent plan year
exceeds the fair market value of the assets allocable thereto, each determined
in accordance with Statement of Financial Accounting Standards No. 87, based
upon the actuarial assumptions used by the Plan's actuary in the most recent
annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
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"Unutilized Revolving Loan Commitment" with respect to any Bank,
at any time, shall mean such Bank's Revolving Loan Commitment at such time less
the sum of (i) the aggregate outstanding principal amount of Revolving Loans
made by such Bank and (ii) such Bank's Adjusted RL Percentage of the Letter of
Credit Outstandings.
"Unrestricted Subsidiary" shall mean any Subsidiary of the
Borrower that is acquired or created after the Initial Borrowing Date and is
designated by the Borrower at the time of the acquisition or creation thereof as
an Unrestricted Subsidiary hereunder by written notice to the Agents and shall
include any Subsidiary of such Unrestricted Subsidiary; provided that the
Borrower shall only be permitted to designate a Subsidiary as an Unrestricted
Subsidiary so long as (i) no Default or Event of Default then exists or would
result therefrom, (ii) such Unrestricted Subsidiary shall be capitalized (to the
extent capitalized by the Borrower or any of its Subsidiaries) through cash
Hotel Investments as permitted by, and in compliance with, Section 9.07, (iii)
such Unrestricted Subsidiary does not own any capital stock of or other equity
interests in, or have any Lien on any property of, the Borrower or any
Subsidiary of the Borrower other than a Subsidiary of the Unrestricted
Subsidiary and (iv) any Indebtedness of such Unrestricted Subsidiary is
non-recourse to the Borrower or any of its other Subsidiaries. Notwithstanding
the foregoing, the Borrower may designate any Specified Subsidiary that has
incurred Non-Recourse Indebtedness as an Unrestricted Subsidiary so long as (x)
clauses (iii) and (iv) of the proviso in the preceding sentence are satisfied
with respect to such Specified Subsidiary and (y) the conditions in the
definition of Redesignation Event are satisfied.
"U.S. Internal Revenue Service Forms" shall have the meaning
provided in Section 4.04(b).
"Waivable Mandatory Repayment" shall have the meaning provided in
Section 4.02(m).
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person,
any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person,
any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
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SECTION 12. The Administrative Agent and the Syndication Agent.
12.01 Appointment. The Banks hereby designate Scotiabank as
Administrative Agent (for purposes of this Section 12, the term "Administrative
Agent" also shall include Scotiabank in its capacity as Collateral
Administrative Agent pursuant to the Security Documents) to act as specified
herein and in the other Credit Documents. The Banks hereby designate MSSF as
Syndication Agent (for purposes of this Section 12, the term "Syndication Agent"
also shall include MSSF in its capacity as Arranger) to act as specified herein
and in the other Credit Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall be deemed
irrevocably to authorize, the Administrative Agent and the Syndication Agent to
take such action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent and the Syndication Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Administrative Agent and the
Syndication Agent may perform any of their duties hereunder by or through its
respective officers, directors, agents, employees or affiliates.
12.02 Nature of Duties. Neither the Administrative Agent nor the
Syndication Agent in their capacity as such shall have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Credit Documents. Neither the Administrative Agent, the Syndication Agent
in their capacity as such nor any of their respective officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by it or them hereunder or under any other Credit Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Administrative Agent and the Syndication Agent
shall be mechanical and administrative in nature; neither the Administrative
Agent nor the Syndication Agent shall have by reason of this Agreement or any
other Credit Document a fiduciary relationship in respect of any Bank or the
holder of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent or the Syndication Agent any obligations in respect of
this Agreement or any other Credit Document except as expressly set forth herein
or therein.
12.03 Lack of Reliance on the Administrative Agent and the
Syndication Agent. Independently and without reliance upon the Administrative
Agent or the Syndication Agent, each Bank and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries and Joint Ventures in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of the
Borrower and its
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Subsidiaries and Joint Ventures and, except as expressly provided in this
Agreement, neither the Administrative Agent nor the Syndication Agent shall have
any duty or responsibility, either initially or on a continuing basis, to
provide any Bank or the holder of any Note with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. Neither the Administrative Agent
nor the Syndication Agent shall be responsible to any Bank or the holder of any
Note for any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of the
Borrower or any of its Subsidiaries or Joint Ventures or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of the Borrower or any of its Subsidiaries or Joint Ventures
or the existence or possible existence of any Default or Event of Default.
12.04 Certain Rights of the Agents. If any Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Banks; and such Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or the holder of any
Note shall have any right of action whatsoever against any Agent as a result of
such Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent and the Syndication Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that the Administrative Agent or the
Syndication Agent believed to be the proper Person, and, with respect to all
legal matters pertaining to this Agreement and any other Credit Document and its
duties hereunder and thereunder, upon advice of counsel selected by the
Administrative Agent or the Syndication Agent, as the case may be.
12.06 Indemnification. To the extent the Administrative Agent or
the Syndication Agent is not reimbursed and indemnified by the Borrower or any
of its Subsidiaries, the Banks will reimburse and indemnify the Administrative
Agent and the Syndication Agent, in proportion to their respective "percentages"
as used in determining the Required Banks, for and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Administrative Agent
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or the Syndication Agent in performing its respective duties hereunder or under
any other Credit Document, in any way relating to or arising out of this
Agreement or any other Credit Document; provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or the Syndication Agent's gross negligence or willful
misconduct.
12.07 The Administrative Agent and the Syndication Agent in their
Individual Capacity. With respect to its obligation to make Loans, or issue or
participate in Letters of Credit, under this Agreement, the Administrative Agent
and the Syndication Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"Majority Banks," "Supermajority Banks," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the
Administrative Agent and the Syndication Agent in their individual capacity. The
Administrative Agent and the Syndication Agent and their affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to, any
Credit Party or any Affiliate of any Credit Party (or any Person engaged in a
similar business with any Credit Party or any Affiliate thereof) as if they were
not performing the duties specified herein, and may accept fees and other
consideration from any Credit Party or any Affiliate of any Credit Party for
services in connection with this Agreement and otherwise without having to
account for the same to the Banks.
12.08 Holders. Any Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment, transfer or endorsement thereof, as the case may be, shall
have been filed with the Administrative Agent. Any request, authority or consent
of any Person who, at the time of making such request or giving such authority
or consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent and the Syndication
Agent. (a) The Administrative Agent and/or the Syndication Agent may resign from
the performance of all their respective functions and duties hereunder and/or
under the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Banks and the Borrower (provided that no such notice shall
be required to be given to the Borrower if a Default or an Event of Default of
the type described in Section 10.05 exists with respect to the Borrower). Such
resignation, in the case of the Administrative Agent, shall take effect upon the
appointment of a successor Administrative Agent pursuant to clauses (b) and (c)
below or as otherwise provided below, and such resignation, in the case of the
Syndication Agent, shall take effect immediately.
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(b) Upon any such notice of resignation by the Administrative
Agent, the Required Banks shall appoint a successor Administrative Agent
hereunder or thereunder who shall be a commercial bank or trust company
reasonably acceptable to the Borrower (it being understood and agreed that any
Non-Defaulting Bank is deemed to be acceptable to the Borrower).
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent with the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 60th day after the date such notice
of resignation was given by the Administrative Agent, Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
12.10 Managing Agent. No Managing Agent shall have any duties or
responsibilities under this Agreement in its capacity as such and Credit
Lyonnais New York Branch shall not have any duties or responsibilities in its
capacity as Collateral Agent.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrower shall: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents (including, without limitation,
the reasonable fees and disbursements of White & Case and of the Agents's local
counsel and consultants) in connection with the preparation, execution and
delivery of this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of the Agents in connection with its syndication
efforts with respect to this Agreement and of the Agents and, after the
occurrence of an Event of Default, each of the Banks in connection with the
enforcement of this Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Agents and, after the
occurrence of an Event of Default, for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp, excise and other similar documentary taxes with respect to the foregoing
matters and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Bank) to pay such
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taxes; and (iii) indemnify each Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not any Agent or any Bank is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of the Transaction or any other transactions
contemplated herein or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Real Property owned
or at any time operated by the Borrower or any of its Subsidiaries or Joint
Ventures, the generation, storage, transportation, handling or disposal of
Hazardous Materials at any location, whether or not owned or operated by the
Borrower or any of its Subsidiaries or Joint Ventures, the non-compliance of any
Real Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against the Borrower, any of its
Subsidiaries or Joint Ventures or any Real Property owned or at any time
operated by the Borrower or any of its Subsidiaries or Joint Ventures,
including, in each case, without limitation, the reasonable fees and
disbursements of counsel and other consultants incurred in connection with any
such investigation, litigation or other proceeding (but excluding any losses,
liabilities, claims, damages or expenses to the extent incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified). To the
extent that the undertaking to indemnify, pay or hold harmless any Agent or any
Bank set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
13.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized (to the extent not prohibited by applicable law) at any time or from
time to time, without presentment, demand, protest or other notice of any kind
to the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of the Credit Parties to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased
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by such Bank pursuant to Section 13.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured. Notwithstanding anything to the contrary
contained in this Section 13.02, no Bank shall exercise any such right of
set-off without the prior consent of the Agents or the Required Banks so long as
the Obligations shall be secured by any Real Property located in the State of
California, it being understood and agreed, however, that this sentence is for
the sole benefit of the Banks and (notwithstanding anything to the contrary
contained in Section 13.12) may be amended, modified or waived in any respect by
the Required Banks without the requirement of prior notice to or consent by any
Credit Party and does not constitute a waiver of any right against any Credit
Party or against any Collateral.
13.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents; if to any Bank, at its address specified on Schedule II; if to
the Syndication Agent, at the address specified on Schedule II; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit Party or any
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to any Agent or any Credit
Party shall not be effective until received by such Agent or such Credit Party.
13.04 Benefit of Agreement; Assignments; Participations. (a) This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto; provided,
however, the Borrower may not assign or transfer any of its rights, obligations
or interest hereunder without the prior written consent of the Banks and,
provided further, that, although any Bank may transfer, assign or grant
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitments hereunder except as provided in Sections 1.13 and 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond
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the Revolving Loan Maturity Date) in which such participant is participating, or
reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default or
of a mandatory reduction in the Total Commitment, shall not constitute a change
in the terms of such participation, and that an increase in any Commitment or
Loan shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof), (ii) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (except as expressly provided
in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Commitments
and related outstanding Obligations hereunder to its parent company and/or any
affiliate of such Bank which is at least 50% owned by such Bank or its parent
company or to one or more Banks or (y) assign all, or if less than all, a
portion equal to at least $5,000,000 in the aggregate for the assigning Bank or
assigning Banks, of such Commitments and related outstanding Obligations
hereunder to one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement, provided that, (i) at such time Schedule I shall be deemed
modified to reflect the Commitments (or outstanding Term Loans, as the case may
be) of such new Bank and of the existing Banks, (ii) upon the surrender of the
relevant Notes by the assigning Bank (or, upon such assigning Bank's
indemnifying the Borrower for any lost Note pursuant to a customary
indemnification agreement) new Notes will be issued, at the Borrower's expense,
to such new Bank and to the assigning Bank upon the request of such new Bank or
assigning Bank, such new Notes to be in conformity with the requirements of
Section 1.05 (with appropriate modifications) to the extent needed to reflect
the revised Commitments (or outstanding Term Loans, as the case may be), (iii)
the consent of each Agent shall be required in connection with any assignment to
an Eligible Transferee pursuant to clause (y) above (which consent shall not be
unreasonably withheld or delayed), (iv) so long as no Default or Event of
Default exists, the consent of the Borrower shall be required in connection with
any assignment to an Eligible Transferee pursuant to clause (y) above (which
consent shall not be unreasonably withheld or delayed), (v) the Administrative
Agent shall receive at the time of each such assignment, from the assigning or
assignee Bank, the payment of a non-refundable assignment fee of $3,500 and (vi)
no such transfer or assignment will be effective until
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recorded by the Administrative Agent on the Register pursuant to Section 13.15.
To the extent of any assignment pursuant to this Section 13.04(b), the assigning
Bank shall be relieved of its obligations hereunder with respect to its assigned
Commitments. At the time of each assignment pursuant to this Section 13.04(b) to
a Person which is not already a Bank hereunder and which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Bank shall, to the extent legally
entitled to do so, provide to the Borrower the appropriate Internal Revenue
Service Forms (and, if applicable, a Section 4.04(b) (ii) Certificate) described
in Section 4.04(b). To the extent that an assignment of all or any portion of a
Bank's Commitments and related outstanding Obligations pursuant to Section 1.13
or this Section 13.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 2.06 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the Borrower, in accordance
with and pursuant to the other provisions of this Agreement, shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Administrative Agent, the Syndication Agent, the Collateral Agent or
any Bank in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower or any other
Credit Party and the Administrative Agent, the Syndication Agent, the Collateral
Agent or any Bank shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights,
powers and remedies herein or in any other Credit Document expressly provided
are cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent, the Syndication Agent, the Collateral Agent or any Bank
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Syndication Agent, the Collateral Agent or any Bank to
any other or further action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its
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pro rata share of any such payment) pro rata based upon their respective shares,
if any, of the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations; Accounting Terms. (a) The
financial statements to be furnished to the Banks pursuant hereto shall be made
and prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Banks); provided that, (i) except as otherwise specifically
provided herein, all computations of Excess Cash Flow and Interest Reduction
Discount, and all computations and all definitions used in determining
compliance with Sections 9.08 through 9.11, inclusive, shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements of the Borrower delivered to the Banks pursuant to Section
7.05(a), but adjusted for periods after the Initial Borrowing Date to give
effect to purchase accounting adjustments required under generally accepted
accounting principles in the United States as a result of the Acquisition (and
the valuation of the assets being acquired pursuant to the Acquisition as a
result thereof), (ii) except as expressly provided herein, the financial results
of Unrestricted Subsidiaries shall be ignored, (iii) notwithstanding anything to
the contrary contained above, for each Test Period which ends on or prior to
September 30, 1997, the calculation of Consolidated EBITDA will be based on, and
in accordance with, the relevant pro forma income statements delivered pursuant
to Section 8.01(i) and (iv) so long as recourse in respect of the Austin
Obligations is limited solely to the Borrower's Hotel Property in Austin, Texas,
for purposes
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of the computations described in preceding clause (i), the Austin Obligations
shall be treated as if same did not exist and as if there were no interest
expense applicable thereto.
(b) All computations of interest in respect of Eurodollar Loans,
and all computation of Commitment Commission and other Fees hereunder, shall be
made on the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day, except that in the case of Letter of
Credit Fees, the last day shall be included) occurring in the period for which
such interest, Commitment Commission or Fees are payable. All computations of
interest in respect of Base Rate Loans hereunder shall be made on the basis of a
year of 365/366 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (A) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT,
THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER, AND AGREES NOT TO PLEAD OR
CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH
COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY
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INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY
BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER
IN ANY OTHER JURISDICTION.
(B) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS
OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(C) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") on which the Borrower, the Administrative Agent, the
Syndication Agent and each of the Banks shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the same
to the Administrative Agent at its Notice Office or, in the case of the Banks,
shall have given to the Administrative Agent telephonic (confirmed in writing),
written or telex notice (actually received) at such office that the same has
been signed and mailed to it. The Administrative Agent will give the Borrower
and each Bank prompt written notice of the occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
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13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected in the case of following clause (i)), (i)
extend the final scheduled maturity of any Loan or Note or extend the stated
expiration date of any Letter of Credit beyond the Revolving Loan Maturity Date,
or reduce the rate of interest or Fees or extend the time of payment of interest
or Fees, or reduce the principal amount thereof (except to the extent repaid in
cash) (it being understood that any amendment or modification to the financial
definitions in this Agreement or to Section 13.07(a) shall not constitute a
reduction in the rate of interest or any Fees for purposes of this clause (i)),
(ii) release all or substantially all of the Collateral (except as expressly
provided in the Credit Documents) under all the Security Documents, (iii)
release a Subsidiary Guarantor which is a Significant Subsidiary from the
Subsidiaries Guaranty (except as expressly provided in the Subsidiaries Guaranty
or in connection with the sale of such Subsidiary Guarantor in accordance with
the terms of this Agreement), (iv) amend, modify or waive any provision of this
Section 13.12, (v) reduce the percentage specified in the definition of Required
Banks (it being understood that, with the consent of the Required Banks,
additional extensions of credit pursuant to this Agreement may be included in
the determination of the Required Banks on substantially the same basis as the
extensions of Term Loans and Revolving Loan Commitments are included on the
Effective Date) or (vi) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement; provided further, that
no such change, waiver, discharge or termination shall (u) increase the
Commitments of any Bank over the amount thereof then in effect without the
consent of such Bank (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
reduction in the Total Commitments shall not constitute an increase of the
Commitment of any Bank, and that an increase in the available portion of any
Commitment of any Bank shall not constitute an increase of the Commitment of
such Bank), (v) without the consent of each Issuing Bank, amend, modify or waive
any provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit, (w) without the consent of each Agent, amend, modify or waive
any provision of Section 12 or any other provision as same relates to the rights
or obligations of the Agents, (x) without the consent of the Collateral
Administrative Agent, amend, modify or waive any provision relating to the
rights or obligations of the Collateral Administrative Agent, (y) without the
consent of the Majority Banks of each Tranche which is being allocated a lesser
prepayment, repayment or commitment reduction as a result of the actions
described below (or without the consent of the Majority Banks of each Tranche in
the case of an amendment to the definition of Majority Banks), amend the
definition of Majority Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement may
be included in the determination of the Majority Banks on substantially the same
basis as the extensions of Term Loans and Revolving Loan Commit-
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<PAGE> 153
ments are included on the Effective Date) or alter the required application of
any prepayments or repayments (or commitment reductions), as between the various
Tranches, pursuant to Section 4.01(a) or 4.02 (excluding Sections 4.02(b) and
(c)) (although the Required Banks may waive, in whole or in part, any such
prepayment, repayment or commitment reduction, so long as the application, as
amongst the various Tranches, of any such prepayment, repayment or commitment
reduction which is still required to be made is not altered) or (z) without the
consent of the Supermajority Banks of the respective Tranche, reduce the amount
of, or extend the date of, any Tranche A Term Loan Scheduled Repayment or
Tranche B Term Loan Scheduled Repayment, as the case may be, or without the
consent of the Supermajority Banks of each Tranche, amend the definition of
Supermajority Banks (it being understood that, with the consent of the Required
Banks, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Supermajority Banks on substantially the
same basis as the extensions of Term Loans and Revolving Loan Commitments are
included on the Effective Date).
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (vi), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks (or, at the option
of the Borrower if the respective Bank's consent is required with respect to
less than all Tranches of Loans (or related Commitments), to replace only the
respective Tranche or Tranches of Commitments and/or Loans of the respective
non-consenting Bank which gave rise to the need to obtain such Bank's individual
consent) with one or more Replacement Banks pursuant to Section 1.13 so long as
at the time of such replacement, each such Replacement Bank consents to the
proposed change, waiver, discharge or termination or (B) terminate such
non-consenting Bank's Commitments (if such Bank's consent is required as a
result of its Commitments) and/or repay each Tranche of outstanding Term Loans
of such Bank which gave rise to the need to obtain such Bank's consent, in
accordance with Sections 3.02(c) and/or 4.01(b), provided that, unless the
Commitments that are terminated, and Loans repaid, pursuant to preceding clause
(B) are immediately replaced in full at such time through the addition of new
Banks or the increase of the Commitments and/or outstanding Loans of existing
Banks (who in each case must specifically consent thereto), then in the case of
any action pursuant to preceding clause (B) the Required Banks (determined after
giving effect to the proposed action) shall specifically consent thereto,
provided further, that in any event the Borrower shall not have the right to
replace a Bank, terminate its Commitments or repay its Loans solely as a result
of the exercise of such Bank's rights (and the withholding of any required
consent by such Bank) pursuant to the second proviso to Section 13.12(a).
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<PAGE> 154
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01 shall
survive the execution, delivery and termination of this Agreement and the Notes
and the making and repayment of the Obligations.
13.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any office, Subsidiary or Affiliate of such
Bank. Notwithstanding anything to the contrary contained herein, to the extent
that a transfer of Loans pursuant to this Section 13.14 would, at the time of
such transfer, result in increased costs under Section 1.10, 1.11, 2.06 or 4.04
from those being charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
13.15 Register. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.15, to maintain a register (the "Register") on which it will record the name
and address of each Bank, the Commitments from time to time of each of the
Banks, the Loans made by each of the Banks and each repayment in respect of the
principal amount of the Loans of each Bank. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Bank, the transfer of
the Commitments of such Bank and the rights to the principal of, and interest
on, any Loan made pursuant to such Commitments shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 13.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Bank shall
surrender the Note evidencing such Loan, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. The Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Agent in performing its duties under this Section 13.15.
13.16 Confidentiality. (a) Subject to the provisions of clause (b)
of this Section 13.16, each Bank agrees that it will use its reasonable best
efforts not to disclose without the prior consent of the Borrower (other than to
its employees, auditors, advisors or counsel
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<PAGE> 155
or to another Bank if the Bank or such Bank's holding or parent company in its
sole discretion determines that any such party should have access to such
information, provided such Persons shall be subject to the provisions of this
Section 13.16 to the same extent as such Bank) any information with respect to
the Borrower or any of its Subsidiaries or Joint Ventures which is now or in the
future furnished pursuant to this Agreement or any other Credit Document and
which is designated by the Borrower to the Banks in writing as confidential,
provided that any Bank may disclose any such information (a) as has become
generally available to the public other than by virtue of a breach of this
Section 13.16(a) by the respective Bank, (b) as may be required or reasonably
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Bank or to the Federal Reserve Board, the Federal Deposit Insurance
Corporation, the NAIC or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or reasonably appropriate
in respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Bank, (e) to the Agents or the Collateral Agent, (f) to any rating agency to the
extent required in connection with any rating to be assigned to such Bank and
(g) to any prospective or actual transferee or participant in connection with
any contemplated transfer or participation of any of the Notes or Commitments or
any interest therein by such Bank and to any direct or indirect contractual
counterparties in Interest Rate Protection Agreements or Other Hedging
Agreements entered into by any Bank, provided that such prospective transferee
and each such contractual counterparty agrees to be bound by the confidentiality
provisions contained in this Section 13.16.
(b) The Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to the Borrower or any
of its Subsidiaries or Joint Ventures (including, without limitation, any
nonpublic customer information regarding the creditworthiness of the Borrower
and its Subsidiaries and Joint Ventures, provided such Persons shall be subject
to the provisions of this Section 13.16 to the same extent as such Bank).
13.17 Limitation on Increased Costs. Notwithstanding anything to
the contrary contained in Section 1.10, 1.11, 2.06 or 4.04, unless a Bank gives
notice to the Borrower that it is obligated to pay an amount under any such
Section within 180 days after the later of (x) the date such Bank incurs the
respective increased costs, Taxes, loss, expense or liability, or reduction in
amounts received or receivable or reduction in return on capital or (y) the date
such Bank has actual knowledge of its incurrence of the respective increased
costs, Taxes, loss, expense or liability, or reductions in amounts received or
receivable or reduction in return on capital, then such Bank shall only be
entitled to be compensated for such amount by the Borrower pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be, to the extent the costs,
Taxes, loss, expense or liability, or reduction in amounts received or
receivable or reduction in return on capital are incurred or suffered on or
after
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<PAGE> 156
the date which occurs 180 days prior to such Bank giving notice to the Borrower
that it is obligated to pay the respective amounts pursuant to said Section
1.10, 1.11, 2.06 or 4.04, as the case may be. This Section 13.17 shall have no
applicability to any Section of this Agreement or any other Credit Document
other than said Sections 1.10, 1.11, 2.06 and 4.04.
13.18 Certain Post-Closing Actions. Notwithstanding anything to
the contrary contained in the Credit Agreement or in any other Credit Document,
the Borrower and each other Credit Party shall have until the 60th day after the
Initial Borrowing Date to deliver to the Collateral Administrative Agent
pursuant to the Pledge Agreement the capital stock of any Liquor License
Subsidiary owned by the Borrower or such other Credit Party (but only to the
extent that the capital stock of such Liquor License Subsidiary is permitted to
be so pledged under applicable law).
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<PAGE> 157
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
410 North 44th Street DOUBLETREE CORPORATION
Suite 700
Phoenix, Arizona 85008
Telephone No.: (602) 220-6666
Telecopier No.: (602) 220-6753 By__________________________________________
Attention: Chief Financial Officer Title:
MORGAN STANLEY SENIOR FUNDING,
INC., Individually and as Syndication Agent
and Arranger
By__________________________________________
Title:
THE BANK OF NOVA SCOTIA,
Individually and as Administrative Agent
By__________________________________________
Title:
<PAGE> 158
CIBC, INC.,
Individually and as a Managing Agent
By__________________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
Individually and as a Managing Agent
and as Collateral Agent
By__________________________________________
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, Individually and as a
Managing Agent
By__________________________________________
Title:
SOCIETE GENERALE, Individually and as
a Managing Agent
By__________________________________________
Title:
<PAGE> 159
ALLIED IRISH BANKS PLC acting through its CAYMAN
ISLAND BRANCH
By:_________________________________
Title
By:_________________________________
Title
ALLSTATE LIFE INSURANCE COMPANY
By:_________________________________
Title
By:_________________________________
Title
<PAGE> 160
BANKERS TRUST COMPANY
By:_________________________________
Title
BANK OF HAWAII
By:_________________________________
Title
THE BANK OF NEW YORK
By:_________________________________
Title
BANQUE NATIONALE DE PARIS
By:_________________________________
Title
<PAGE> 161
CHL HIGH YIELD LOAN PORTFOLIO
(a unit of Chase Manhattan Bank)
By:_________________________________
Title
CHANG HWA COMMERCIAL BANK,
LTD., NEW YORK BRANCH
By:_________________________________
Title
CITIBANK, N.A.
By:_________________________________
Title
CRESCENT/MACH I PARTNERS, L.P.,
by TCW Asset Management Company
its Investment Manager
By:_________________________________
Title
<PAGE> 162
DLJ CAPITAL FUNDING, INC.
By:_________________________________
Title
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
By:_________________________________
Title
By:_________________________________
Title
FIRST HAWAIIAN BANK
By:_________________________________
Title
THE FIRST NATIONAL BANK OF BOSTON
By:_________________________________
Title
<PAGE> 163
THE FUJI BANK LIMITED, LOS ANGELES
AGENCY
By:_________________________________
Title
GIROCREDIT BANK AG DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH
By:_________________________________
Title
HARCH CAPITAL MANAGEMENT
By:_________________________________
Title
HIBERNIA NATIONAL BANK
By:_________________________________
Title
<PAGE> 164
IMPERIAL BANK
By:_________________________________
Title
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:_________________________________
Title
ING CAPITAL ADVISORS, INC., as agent
for bank syndication account
By:_________________________________
Title
KEY BANK OF COLORADO
By:_________________________________
Title
KZH HOLDING CORPORATION
By:_________________________________
Title
<PAGE> 165
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY
By:_________________________________
Title
MARINE MIDLAND BANK
By:_________________________________
Title
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By:_________________________________
Title
MELLON BANK, N.A.
By:_________________________________
Title
<PAGE> 166
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By:_________________________________
Title
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:_________________________________
Title
MITSUI LEASING (U.S.A.) INC.
By:_________________________________
Title
NATIONSBANK OF TEXAS, N.A.
By:_________________________________
Title
<PAGE> 167
THE NIPPON CREDIT BANK, LTD., LOS ANGELES
AGENCY
By:_________________________________
Title
NORTHERN LIFE INSURANCE COMPANY
By:_________________________________
Title
OAK HILL SECURITIES FUND, L.P.,
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By:_________________________________
Scott Krase
Vice President
ORIX USA CORPORATION
By:_________________________________
Title
<PAGE> 168
PPM AMERICA, INC., as attorney-in-fact
on behalf of Jackson National Life
Insurance Company
By:_________________________________
Title
PRIME INCOME TRUST
By:_________________________________
Title
PROTECTIVE LIFE INSURANCE COMPANY
By:_________________________________
Title
THE ROYAL BANK OF SCOTLAND PLC
By:_________________________________
Title
<PAGE> 169
THE SAKURA BANK, LIMITED
By:_________________________________
Title
THE SANWA BANK, LIMITED
By:_________________________________
Title
SOUTHERN PACIFIC THRIFT & LOAN ASSOCIATION
By:_________________________________
Title
THE SUMITOMO BANK, LIMITED
By:_________________________________
Title
<PAGE> 170
THE TOYO TRUST & BANKING CO.,
LTD., LOS ANGELES AGENCY
By:_________________________________
Title
THE TRAVELERS INSURANCE COMPANY
By:_________________________________
Title
WELLS FARGO BANK, N.A.
By:_________________________________
Title
<PAGE> 171
EXHIBIT A
FORM OF NOTICE OF BORROWING
[Date]
The Bank of Nova Scotia,
as Administrative Agent
for the Banks party to the
Credit Agreement referred
to below
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention:
Ladies and Gentlemen:
The undersigned, Doubletree Corporation (the "Borrower"), refers
to the Credit Agreement, dated as of November 8, 1996 (as amended from time to
time, the "Credit Agreement," the terms defined therein being used herein as
therein defined), among the Borrower, certain lenders from time to time party
thereto (the "Banks"), Morgan Stanley Senior Funding, Inc., as Syndication Agent
and as Arranger and you, as Administrative Agent for such Banks, and hereby
gives you notice, irrevocably, pursuant to Section 1.03(a) of the Credit
Agreement, that the undersigned hereby requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by Section 1.03(a) of the
Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________.
(1)
(ii) The aggregate principal amount of the Proposed Borrowing is
$____________.
(iii) The Proposed Borrowing shall consist of [Tranche A Term
Loans] [Tranche B Term Loans] [Revolving Loans].
(iv) The Loans to be made pursuant to the Proposed Borrowing
shall be initially maintained as [Base Rate Loans] [Eurodollar Loans].
[(v) The initial Interest Period for the Proposed Borrowing is
_____ month(s).](2)
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing:
- --------------
(1) Shall be a Business Day at least one Business Day in the case of Base
Rate Loans and three Business Days in the case of Eurodollar Loans, in
each case, after the date hereof.
(2) To be included for a Proposed Borrowing of Eurodollar Loans.
(A-1)
<PAGE> 172
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect
to the Proposed Borrowing and to the application of the proceeds
thereof, as though made on such date, unless stated to relate to a
specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date; and
(B) no Default or Event of Default has occurred and is continuing,
or would result from such Proposed Borrowing or from the application of
the proceeds thereof.
Very truly yours,
DOUBLETREE CORPORATION
By:________________________________
Title:
(A-2)
<PAGE> 173
EXHIBIT B-1
TRANCHE A TERM NOTE
$ New York, New York
[Date]
FOR VALUE RECEIVED, DOUBLETREE CORPORATION (the "Borrower"), a
Delaware corporation, hereby promises to pay to ________________ or its
registered assigns (the "Bank"), in lawful money of the United States of America
in immediately available funds, at the office of The Bank of Nova Scotia (the
"Administrative Agent") located at 600 Peachtree Street, N.E., Suite 2700,
Atlanta, Georgia 30308 on the Tranche A Term Loan Maturity Date (as defined in
the Agreement referred to below) the principal sum of ___________ DOLLARS
($______) or, if less, the unpaid principal amount of all Tranche A Term Loans
(as defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the
Credit Agreement, dated as of November 8, 1996, among the Borrower, the lenders
from time to time party thereto (including the Bank), Morgan Stanley Senior
Funding, Inc., as Syndication Agent and as Arranger, and the Administrative
Agent (as amended, modified or supplemented from time to time, the "Agreement")
and is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured by the Security Documents (as
defined in the Agreement) and is entitled to the benefits of the Subsidiaries
Guaranty (as defined in the Agreement). This Note is subject to voluntary
prepayment and mandatory repayment prior to the Tranche A Term Loan Maturity
Date, in whole or in part, as provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
DOUBLETREE CORPORATION
By:_____________________________________
Title:
(B-1-1)
<PAGE> 174
EXHIBIT B-2
TRANCHE B TERM NOTE
$ New York, New York
[Date]
FOR VALUE RECEIVED, DOUBLETREE CORPORATION (the "Borrower"), a
Delaware corporation, hereby promises to pay to ________________ or its
registered assigns (the "Bank"), in lawful money of the United States of America
in immediately available funds, at the office of The Bank of Nova Scotia (the
"Administrative Agent") located at 600 Peachtree Street, N.E., Suite 2700,
Atlanta, Georgia 30308 on the Tranche B Term Loan Maturity Date (as defined in
the Agreement referred to below) the principal sum of ____________ DOLLARS
($______) or, if less, the unpaid principal amount of all Tranche B Term Loans
(as defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the
Credit Agreement, dated as of November 8, 1996, among the Borrower, the lenders
from time to time party thereto (including the Bank), Morgan Stanley Senior
Funding, Inc., as Syndication Agent and as Arranger, and the Administrative
Agent (as amended, modified or supplemented from time to time, the "Agreement")
and is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured by the Security Documents (as
defined in the Agreement) and is entitled to the benefits of the Subsidiaries
Guaranty (as defined in the Agreement). This Note is subject to voluntary
prepayment and mandatory repayment prior to the Tranche B Term Loan Maturity
Date, in whole or in part, as provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
DOUBLETREE CORPORATION
By:_________________________________
Title:
(B-2-1)
<PAGE> 175
EXHIBIT B-3
REVOLVING NOTE
$ New York, New York
[Date]
FOR VALUE RECEIVED, DOUBLETREE CORPORATION (the "Borrower"), a
Delaware corporation, hereby promises to pay to _______________ or its
registered assigns (the "Bank"), in lawful money of the United States of America
in immediately available funds, at the office of The Bank of Nova Scotia (the
"Administrative Agent") located at 600 Peachtree Street, N.E., Suite 2700,
Atlanta, Georgia 30308 on the Revolving Loan Maturity Date (as defined in the
Agreement referred to below) the principal sum of ______________ DOLLARS
($_______) or, if less, the unpaid principal amount of all Revolving Loans (as
defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of November 8, 1996, among the Borrower, the lenders from
time to time party thereto (including the Bank), Morgan Stanley Senior Funding,
Inc., as Syndication Agent and as Arranger, and the Administrative Agent (as
amended, modified or supplemented from time to time, the "Agreement") and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined in
the Agreement) and is entitled to the benefits of the Subsidiaries Guaranty (as
defined in the Agreement). This Note is subject to voluntary prepayment and
mandatory repayment prior to the Revolving Loan Maturity Date, in whole or in
part, as provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
DOUBLETREE CORPORATION
By:___________________________________
Title:
(B-3-1)
<PAGE> 176
EXHIBIT C
LETTER OF CREDIT REQUEST
No. (3) Dated (4)
----- -----
The Bank of Nova Scotia,
as Administrative Agent under the
Credit Agreement (the "Credit
Agreement"), dated as of November 8,
1996 among Doubletree
Corporation, the lenders from
time to time party thereto,
Morgan Stanley Senior Funding, Inc.,
as Syndication Agent and as
Arrangers, and The Bank of Nova
Scotia, as Administrative Agent
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
[Name and address of applicable Issuing Bank]
Dear Sirs:
We hereby request that [name of proposed Issuing Bank], in its
individual capacity, issue a [Standby][Trade] Letter of Credit for the account
of the undersigned on (5) (the "Date of Issuance") in the aggregate stated
amount of (6) .
For purposes of this Letter of Credit Request, unless otherwise
defined herein, all capitalized terms used herein which are defined in the
Credit Agreement shall have the respective meaning provided therein.
- --------
(3) Letter of Credit Request Number.
(4) Date of Letter of Credit Request.
(5) Date of Issuance which shall be at least five Business Days from the date
hereof (or such shorter period as is acceptable to the respective Issuing Bank).
(6) Aggregate initial Stated Amount of Letter of Credit.
(C-1)
<PAGE> 177
The beneficiary of the requested Letter of Credit will be (7) ,
and such Letter of Credit will be in support of (8) and will have a stated
expiration date of (9) .
We hereby certify that:
(1) The representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect
to the issuance of the Letter of Credit requested hereby, on the Date
of Issuance (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of
such specified date).
(2) No Default or Event of Default has occurred and is continuing
nor, after giving effect to the issuance of the Letter of Credit
requested hereby, would such a Default or an Event of Default occur.
Copies of all documentation with respect to the supported
transaction are attached hereto.
DOUBLETREE CORPORATION
By_______________________________________
Title:
____________________
(7) Insert name and address of beneficiary.
(8) Insert description of L/C Supportable Obligation in the case of Standby
Letters of Credit and a description of the commercial transaction which is being
supported in the case of Trade Letters of Credit.
(9) Insert last date upon which drafts may be presented which may not be later
than (i) 12 months after the Date of Issuance or, if earlier, the third Business
Day prior to the Revolving Loan Maturity Date for Standby Letters of Credit or
(ii) 360 days after the Date of Issuance or, if earlier, 30 days prior to the
Revolving Loan Maturity Date in the case of Trade Letters of Credit.
(C-2)
<PAGE> 178
EXHIBIT D
SECTION 4.04(b)(ii) CERTIFICATE
Reference is hereby made to the Credit Agreement, dated as
November 8, 1996, among Doubletree Corporation, the lenders from time to time
party thereto, Morgan Stanley Senior Funding, Inc., as Syndication Agent and as
Arranger, and The Bank of Nova Scotia, as Administrative Agent (as amended from
time to time, the "Credit Agreement"). Pursuant to the provisions of Section
4.04(b)(ii) of the Credit Agreement, the undersigned hereby certifies that it is
not a "bank" as such term is used in Section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended.
[NAME OF BANK]
By ____________________________
Title:
Date: _______________, ____
(D-1)
<PAGE> 179
EXHIBIT E
[OPINION LETTER]
[Initial Borrowing Date]
To the Administrative Agent,
the Syndication Agent,
the Collateral Administrative
Agent and each of
the Banks party to the Credit
Agreement referred to below
Ladies and Gentlemen:
We have acted as special counsel to Doubletree Corporation, a
Delaware corporation (the "Borrower"), RLH Acquisition Corp., a Delaware
corporation ("Merger Sub"), and each of the Subsidiary Guarantors (together with
the Borrower and Merger Sub, the "Credit Parties" and each, a "Credit Party"),
in connection with the preparation, execution and delivery of the Credit
Agreement, dated as of November __, 1996 (the "Credit Agreement"), among the
Borrower, the lenders party thereto from time to time (the "Banks"), Morgan
Stanley Senior Funding, Inc., as Syndication Agent and as Arranger (the
"Syndication Agent"), and The Bank of Nova Scotia, as Collateral Administrative
Agent (the "Administrative Agent"), and the transactions contemplated thereby.
Unless otherwise defined herein, capitalized terms used herein shall have the
respective meanings set forth in the Credit Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of such records,
certificates and documents as we have deemed necessary or appropriate as a basis
for the opinions set forth herein, including, without limitation, the following:
(a) the Credit Documents, (b) the Acquisition Documents, (c) the Equity
Financing Documents, (d) the Refinancing Documents and (e) such other public,
corporate documents and records as we have deemed necessary or appropriate in
connection with this opinion.
This opinion is delivered to you pursuant to Section 5.03(i) of
the Credit Agreement.
As to questions of fact not independently verified by us we have
relied upon, to the extent we have deemed appropriate, (1) certificates of
public officials, (2) searches of public records and other documents, and (3)
representations, as to factual matters, made by the Credit Parties in response
to our inquiries and in the Documents. We have (without any investigation or
independent confirmation) relied upon, and assumed the accuracy of, such factual
representations and such certificates, corporate records, searches and other
documents with respect to factual matters.
Whenever our opinion with respect to the existence or the absence
of facts is indicated to be based on our knowledge or awareness, we are
referring to the actual knowledge of Dewey Ballantine attorneys who have
represented such parties. Except as expressly set forth herein, we have not
undertaken any independent investigation to determine the existence or absence
of any facts and no inference as to our knowledge concerning any facts should be
drawn as a result of the limited representation undertaken by us.
(E-1)
<PAGE> 180
In rendering the opinions expressed below, we have also assumed,
with your permission and without independent verification, that: (1) the
signatures of persons (other than persons signing on behalf of the Credit
Parties) signing all documents in connection with which the opinions are
rendered are genuine and authorized; (2) all documents submitted to us as
originals or duplicate originals are authentic; (3) all documents submitted to
us as copies, whether certified or not, conform to authentic original documents;
(4) all parties to the documents reviewed by us, other than the Borrower, are
duly organized, validly existing and in good standing under the laws of all
jurisdictions where they are conducting their businesses or otherwise required
to be so qualified, and have full power and authority to execute, deliver and
perform under such documents and all such documents have been duly authorized by
all necessary corporate or other action on the part of such parties, have been
duly executed by such parties and have been duly delivered by such parties; and
(5) each Credit Document constitutes the valid and binding obligation of each
party thereto (other than the Borrower) enforceable against such party in
accordance with its terms.
Based upon the foregoing, and subject to the qualifications noted
below, we are of the opinion that:
1. The Borrower (i) is a duly incorporated and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction listed on Schedule __ hereto.
2. The Borrower has the corporate power and authority to execute,
deliver and perform the terms and provisions of each of the Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Documents to which it is a party. The
Borrower has duly executed and delivered each of the Documents to which it is a
party. Each of the Documents to which a Credit Party is a party constitutes the
legal, valid and binding obligation of such Credit Party enforceable in
accordance with its terms.
3. Neither the execution, delivery or performance by any Credit
Party of the Documents to which it is a party, nor compliance by it with the
terms and provisions thereof, will contravene any provision of any federal law,
statute, rule or regulation (including, without limitation, Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System).
4. Neither the execution, delivery or performance by the Borrower
of the Documents to which it is a party, nor compliance by it with the terms and
provisions thereof, will violate any provision of the certificate of
incorporation, or by-laws (or similar organizational documents) of the Borrower.
5. With respect to the Borrower, all necessary shareholder and
board of director approvals [and/or consents], in each case in connection with
the Transaction and the execution, delivery and performance of any Document have
been obtained and remain in full force and effect on the Initial Borrowing Date.
6. The Borrower is not an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
7. The Borrower is not a "holding company," or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(E-2)
<PAGE> 181
8. The Transaction has been consummated in all material respects
in accordance with the terms and conditions of the respective Documents and all
applicable laws. All material consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to consummate each
part of the Transaction have been obtained, given, filed or taken and are in
full force and effect (other than (x) those required to effect the transfer of
liquor licenses as part of the Acquisition, and (y) to the extent not required
to be obtained prior to the date hereof) (or effective judicial relief with
respect thereto has been obtained). All applicable waiting periods with respect
thereto have expired without, in all such cases, any action being taken by any
competent authority which restrains, prevents, or imposes material adverse
conditions upon the consummation of the Transaction. Additionally, to our
knowledge, there does not exist any judgment, order or injunction prohibiting or
imposing material adverse conditions on the consummation of the Transaction and,
to our knowledge, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the occurrence of any
Credit Event or the performance by the Borrower of its obligations under the
Documents.
9. On the date hereof and after giving effect to the Transaction
and the other transactions contemplated thereby, the authorized capital stock of
the Borrower consists of (i) ______ shares of common stock, $.01 par value per
share, and (ii) ______ shares of preferred stock, $____ par value per share, of
which no shares of such preferred stock are issued and outstanding.
10. After giving effect to the delivery to the Collateral
Administrative Agent of the Pledged Stock and Pledged Notes listed on Annex A
and Annex B to the Pledge Agreement, respectively, the security interest created
in favor of the Collateral Administrative Agent under the Pledge Agreement in
such Pledged Securities and constitutes a valid and enforceable perfected
security interest in such Pledged Securities in favor of the Collateral
Administrative Agent for the benefit of the Secured Creditors.
11. We have examined the Trademark Assignments (the "Trademark
Filings") and the Copyright Assignments (the "Copyright Filings") attached
hereto as Annexes C and D, respectively. The recordation of the Trademark
Filings in the United States Patent and Trademark Offices and assuming the
filing of the Financing Statements with the Filing Offices will be effective,
under law, to perfect the security interest granted to the Collateral
Administrative Agent in the trademarks covered by the Security Agreement. The
filing of the Copyright Filing with the United States Copyright Office and
assuming the filing of the Financing Statements with the Filing Offices will be
effective under federal law to perfect the security interest granted to the
Collateral Administrative Agent in the copyrights specified on Annex D.
12. We have been advised by the SEC that the Registration
Statements on Forms S-3 and S-4 filed in connection with the Transaction (the
"Registration Statements") were declared effective under the Securities Act on
____________, 1996 and ____________, 1996, respectively, and, to the best of our
knowledge and information, no stop order suspending the effectiveness of such
Registration Statements has been issued under the Securities Act or proceedings
therefor initiated or threatened by the SEC.
Our opinions as hereinafter expressed are subject to the following
further qualifications:
1. our opinions as to the enforceability of the Documents are
subject to the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other similar laws from time to time in
effect affecting or relating to the rights of creditors or secured creditors
generally and of general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law);
2. no opinion is expressed herein with regard to the availability
of the remedies of specific performance and injunctive and other forms of
equitable relief, or the availability of attorney's fees, or any
(E-3)
<PAGE> 182
provisions in the Documents which purport to exculpate the Collateral
Administrative Agent from the duty to exercise reasonable diligence and care
with regard to the Collateral;
3. our opinions are subject to limitations imposed by laws and
judicial decisions relating to or affecting the rights of creditors or secured
creditors generally, particularly where (a) the breach of such covenants or
provisions imposes restrictions or burdens upon a debtor and it cannot be
demonstrated that the enforcement of such remedies, restrictions or burdens is
reasonably necessary for the protection of a creditor, (b) a creditor's
enforcement of such remedies, covenants or provisions under the circumstances,
or the manner of such enforcement, would violate such creditor's implied
covenant of good faith and fair dealing, or would be commercially unreasonable,
or (c) a court having competent personal and subject matter jurisdiction finds
that such remedies, covenants or provisions were at the time made, or are in
application, unconscionable as a matter of law or public policy;
4. we express no opinion as to the enforceability of cumulative
remedies to the extent such cumulative remedies purport to or would have the
effect of compensating the party entitled to the benefits thereof in amounts in
excess of the actual loss suffered by such party;
5. the rights of debtors, guarantors and other secured parties to
receive notices under Sections 9-504 and 9-505 of the Uniform Commercial Code as
in effect in the State of New York may not be waived prior to default and the
failure to comply with such notice requirements may bar or limit the recovery of
any deficiency remaining after the retention or sale of repossessed collateral;
6. notwithstanding certain language of the Documents, you may be
limited to recovering only reasonable expenses with respect to the retaking,
holding, preparing for sale or lease, selling, leasing and the like of
collateral and reasonable attorneys' fees and legal expenses;
7. requirements in the Documents specifying that the provisions
thereof may only be waived in writing may not be valid, binding or enforceable
to the extent that an oral agreement or an implied agreement by trade practice
or course of conduct has been created modifying any provisions of such
documents;
8. we express no opinion as to the accuracy of the description of
the Collateral, or that Collateral Administrative Agent can enforce its rights
against the Collateral prior to acceleration of the Obligations;
9. certain other rights, remedies and waivers contained in the
Documents may be rendered ineffective, or limited by, applicable laws or
judicial decisions governing such provisions, but such laws and judicial
decisions do not, in our opinion, make the Documents inadequate for the
practical realization of the benefits provided by such Documents;
10. we express no opinion as to the enforceability of the
indemnification provisions of the Documents insofar as said provisions might
require indemnification with respect to any litigation against the Credit
Parties determined adversely to the indemnitee, or any loss, cost or expense
arising out of the indemnitee's gross negligence or willful misconduct or any
violations of the statutory duties, general principles of equity or public
policy;
11. in rendering the opinions set forth above we express no
opinion as to the priority of a security interest in any Collateral or as to the
creation of any security interest in (or other lien on) any Collateral to the
extent that, pursuant to Section 9-104 of the Uniform Commercial Code, Article 9
of the Uniform Commercial Code does not apply thereto;
(E-4)
<PAGE> 183
12. we express no opinion as to the right, title or interest of
the Credit Parties to any Collateral or the value given therefor;
13. except as set forth above, we express no opinion as to the
perfection of any security interest or lien;
14. we express no opinion as to the effect (if any) of any law of
any jurisdiction (except the State of New York) in which any Lender is located
that may limit the rate of interest that such Lender may charge or collect; and
15. we express no opinion as to any events, facts, circumstances
or developments subsequent to the date hereof.
We also note that (1) a security interest will continue in
Collateral after its sale, exchange or other disposition only to the extent
provided in Sections 9-306 and 9-307 of the UCC and (2) the security interest in
Collateral in which the Credit Parties acquired rights after the commencement of
a case involving the Credit Parties under the United States Bankruptcy Code may
be limited by Section 552 of such Code.
We are members of the Bar of the State of New York, and we do not
hold ourselves out as being conversant with, and, except as set forth in the
following sentence, express no opinion as to, the laws of any jurisdiction other
than those of the United States of America, the State of New York and the
general corporate law of the State of Delaware. Also, our opinions are based
upon a review only of those statutes, rules and regulations which, in our
experience, are normally applicable to transactions which are similar to the
transactions contemplated by the Documents.
This opinion letter is solely for your benefit and for the benefit
of your participants and assigns. This opinion may not be relied upon for any
other purpose, or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
Very truly yours,
(E-5)
<PAGE> 184
EXHIBIT F
OFFICERS' CERTIFICATE
I, the undersigned, [Title] of [Name of Credit Party], a
[corporation] [partnership] organized and existing under the laws of the State
of ________ (the "Company"), do hereby certify on behalf of the Company that:
1. This Certificate is furnished pursuant to Section 5 of the
Credit Agreement, dated as November 8, 1996, among [Doubletree Corporation] [the
Company] the lenders from time to time party thereto, Morgan Stanley Senior
Funding, Inc., as Syndication Agent and as Arranger, and The Bank of Nova
Scotia, as Administrative Agent (such Credit Agreement, as in effect on the date
of this Certificate, being herein called the "Credit Agreement"). Unless
otherwise defined herein, capitalized terms used in this Certificate shall have
the meanings set forth in the Credit Agreement.
2. The following named individuals are elected officers of the
Company, each holds the office of the Company set forth opposite his name and
has held such office since _________ __, 19__.(10) The signature written
opposite the name and title of each such officer is his genuine signature.
Name(11) Office Signature
-------------- ----------- -------------
-------------- ----------- -------------
-------------- ----------- -------------
3. Attached hereto as Exhibit A is a certified copy of the
[Certificate of Incorporation] [Describe applicable Partnership Documents] of
the Company, as filed in the Office of the Secretary of State of the State of
________ on ___________, 19__, together with all amendments thereto adopted
through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of the
By-Laws of the Company which were duly adopted, are in full force and effect on
the date hereof, and have been in effect since _____________, 19__.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, 19__ [by unanimous written
consent of the [Board of Directors of the Company] [by a meeting of the Board of
Directors of the Company at which a quorum was present and acting throughout],
[Describe appropriate Partnership actions] and said resolutions have not been
rescinded, amended or modified. Except as attached hereto as Exhibit C, no
resolutions have been adopted by the
____________________
(10) Insert a date prior to the time of any corporate action relating to
the Credit Documents or related documentation.
(11) Include name, office and signature of each officer who will sign any
Credit Document, including the officer who will sign the certification at
the end of this Certificate or related documentation.
(F-1)
<PAGE> 185
[Board of Directors] [Describe Partnership body] of the Company which deal with
the execution, delivery or performance of any of the Documents to which the
Company is party.
[6. On the date hereof, all of the applicable conditions set forth
in Sections 5.05, 5.06, 5.07, 5.08, 5.09, 5.10 and 6.01 have been satisfied.
7. Attached hereto as Exhibit D are true and correct copies of all
Acquisition Documents and Equity Financing Documents.](12)
[6][8.] On the date hereof, the representations and warranties
contained in the Credit Agreement and in the other Credit Documents are true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date hereof, both before and
after giving effect to the incurrence of Loans on the date hereof and the
application of the proceeds thereof, unless stated to relate to a specific
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date.
[7][9.] On the date hereof, no Default or Event of Default has
occurred and is continuing or would result from the Borrowing to occur on the
date hereof or from the application of the proceeds thereof.
[8][10.] There is no proceeding for the dissolution or liquidation
of the Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
__________, 1996.
[NAME OF CREDIT PARTY]
______________________________
Name:
Title:
___________________
(12) Insert in Officers' Certificate of the Borrower.
(F-2)
<PAGE> 186
I, the undersigned, [Secretary/Assistant Secretary] of the Company, do hereby
certify on behalf of the Company that:
1. [Name of Person making above certifications] is the duly
elected and qualified [President/Vice President] of the Company and the
signature above is his genuine signature.
2. The certifications made by [name of Person making above
certifications] on behalf of the Company in Items 2, 3, 4, 5 and [8][10] above
are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_________, 1996.
[NAME OF CREDIT PARTY]
______________________________
Name:
Title:
(F-3)
<PAGE> 187
EXHIBIT G
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of November 8, 1996, made by each of the
undersigned pledgors (each a "Pledgor" and, together with any other entity that
becomes a pledgor hereunder pursuant to Section 24 hereof, the "Pledgors"), to
THE BANK OF NOVA SCOTIA, as Collateral Administrative Agent (the "Pledgee"), for
the benefit of the Secured Creditors (as defined below). Except as otherwise
defined herein, capitalized terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.
WITNESSETH:
WHEREAS, Doubletree Corporation (the "Borrower"), the lenders from
time to time party thereto (the "Banks"), Morgan Stanley Senior Funding, Inc.,
as Syndication Agent and as Arranger (the "Syndication Agent"), and The Bank of
Nova Scotia, as Administrative Agent (together with any successor administrative
agent, the "Administrative Agent"), have entered into a Credit Agreement, dated
as of November 8, 1996 (as amended, modified or supplemented from time to time,
the "Credit Agreement"), providing for the making of Loans and the issuance of,
and participation in, Letters of Credit as contemplated therein (the Banks, the
Syndication Agent, the Administrative Agent and the Pledgee are herein called
the "Bank Creditors");
WHEREAS, the Borrower and one or more of its Subsidiaries may at
any time and from time to time enter into one or more Interest Rate Protection
Agreements or Other Hedging Agreements with one or more Banks or any affiliate
thereof (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, if any, collectively, the
"Other Creditors," and together with the Bank Creditors, the "Secured
Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor has jointly and severally guaranteed to the Secured Creditors the
payment when due of all Guaranteed Obligations as described therein;
WHEREAS, it is a condition to the making of Loans and the issuance
of Letters of Credit under the Credit Agreement that each Pledgor shall have
executed and delivered to the Pledgor this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of
Loans and the issuance of Letters of Credit under the Credit Agreement and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
and, accordingly, each Pledgor desires to enter into this Agreement in order to
satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Pledgor, the receipt and sufficiency of which are
hereby acknowledged, each Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
(G-1)
<PAGE> 188
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, Fees and
interest thereon (including any interest accruing after the
commencement of any bankruptcy, insolvency, receivership or similar
proceeding, whether or not such interest is an allowed claim against
the debtor in any such proceeding)) of such Pledgor to the Bank
Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with the Credit Agreement and the other Credit
Documents to which such Pledgor is a party (including, in the case of
the Subsidiary Guarantors, all such obligations and indebtedness of
such Subsidiary Guarantors under the Subsidiaries Guaranty) and the due
performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained in the Credit Agreement and such
other Credit Documents (all such obligations and liabilities under this
clause (i), except to the extent consisting of obligations or
indebtedness with respect to Interest Rate Protection Agreements or
Other Hedging Agreements, being herein collectively called the "Credit
Document Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities owing by such Pledgor to the Other Creditors under, or with
respect to (including by reason of the Subsidiaries Guaranty), any
Interest Rate Protection Agreement or Other Hedging Agreement, whether
such Interest Rate Protection Agreement or Other Hedging Agreement is
now in existence or hereafter arising, and the due performance and
compliance by such Pledgor with all of the terms, conditions and
agreements contained therein (all such obligations and liabilities
described in this clause (ii) being herein collectively called the
"Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of such
Pledgor referred to in clauses (i) and (ii) above, after an Event of
Default (which term to mean and include any Event of Default under, and
as defined in, the Credit Agreement or any payment default under any
Interest Rate Protection Agreement or Other Hedging Agreement) shall
have occurred and be continuing, the reasonable expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing of
or realizing on the Collateral, or of any exercise by the Pledgee of
its rights hereunder, together with reasonable attorneys' fees and
court costs; and
(v) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of
this Agreement.
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, PARTNERSHIP INTEREST, ETC.
(a) As used herein, (i) the term "Stock" shall mean (x) with respect to
corporations incorporated under the laws of the United States or any State or
territory thereof (each a "Domestic Corporation"), all of the issued and
outstanding shares of capital stock, and all warrants and options to purchase
any such capital stock, of any Domestic Corporation at any time owned by any
Pledgor, provided that the term "Stock" shall not include any capital stock to
the extent that same constitutes RFS REIT Equity, and (y)
(G-2)
<PAGE> 189
with respect to corporations not Domestic Corporations (each a "Foreign
Corporation"), all of the issued and outstanding shares of capital stock, and
all warrants and options to purchase any such capital stock, at any time owned
by any Pledgor of any Foreign Corporation, provided that, except as set forth in
Section 8.13 of the Credit Agreement, no Pledgor shall be required to pledge
hereunder, and nothing herein shall be deemed to constitute a pledge hereunder
of, more than 65% of the total combined voting power of all classes of capital
stock of any Foreign Corporation entitled to vote, (ii) the term "Notes" shall
mean all Intercompany Notes and all other promissory notes or other evidences of
indebtedness (other than Excluded Notes) from time to time issued to, or held
by, any Pledgor and (iii) the term "Securities" shall mean all of the Stock and
Notes. Each Pledgor represents and warrants, that on the date hereof, (a) the
Stock held by such Pledgor consists of the number and type of shares of the
stock of the corporations as described in Annex A hereto for such Pledgor, (b)
such Stock constitutes that percentage of the issued and outstanding capital
stock of the issuing corporation as is set forth in Annex A hereto, (c) the
Notes held by such Pledgor consist of the promissory notes described in Annex B
hereto for such Pledgor, (d) such Pledgor is the holder of record and sole
beneficial owner of the Stock and the Notes held by such Pledgor and (e) on the
date hereof, such Pledgor owns no other Securities. As used herein, the term
"Excluded Notes" shall mean (i) promissory notes that are in a principal amount
of less than $1,000,000, (ii) the promissory note in the principal amount of
$2,575,000 made by Columbus/Front Ltd. in favor of Doubletree Partners, (iii)
the promissory note in the principal amount of $4,500,000 made by Boston HSR
Ltd. Partnership in favor of Doubletree Partners, (iv) the promissory note in
the principal amount of $2,500,000 made by Washington Park Hotel Assoc., L.P. in
favor of DT Management, Inc. and (v) the promissory note in the principal amount
of $1,300,000 made by Hotel Roanoke, LLC in favor of DT Management, Inc.
(b) As used herein, the term "Partnership Interest" shall mean the
entire partnership interests (whether general and/or limited partnership
interests) at any time owned by each Pledgor in any Person (each a "Pledged
Partnership"), provided that the term "Partnership Interest" shall not include
the partnership units to the extent that same constitute RFS REIT Equity. Each
Pledgor represents and warrants that, on the date hereof, (x) the Partnership
Interests held by such Pledgor constitutes that percentage of the entire
partnership interest of the respective Pledged Partnership as is set forth on
Annex C hereto for such Pledgor and (y) such Pledgor owns no other Partnership
Interests.
(c) Notwithstanding anything to the contrary contained in clause
(a) or (b) above, the terms "Stock" and "Partnership Interest" shall not include
any equity interests in any Subsidiary (other than a Subsidiary Guarantor which
is a Significant Subsidiary) or Joint Venture (whether such equity interests are
in the form of partnership interests, capital stock or otherwise) to the extent
that the equity interests in such Subsidiary or Joint Venture are not permitted
to be assigned or a security interest therein granted (x) without the consent of
(or the granting of a first offer or right of first refusal to) the other joint
venture partner (but only to the extent that such other joint venture partner is
not a Subsidiary of a Pledgor) or (y) without the consent of any existing lender
to such Subsidiary or Joint Venture on the Initial Borrowing Date (or any
refinancing of such lender).
(d) All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock;" all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes;" all Pledged Stock and Pledged Notes together are called the "Pledged
Securities;" all Partnership Interests at any time pledged or required to be
pledged hereunder are hereinafter called the "Pledged Partnership Interests",
and the Pledged Securities and the Pledged Partnership Interests, together with
all proceeds thereof, including any securities and moneys received and at the
time held by the Pledgee hereunder, are hereinafter called the "Collateral."
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. (a) To secure the Obligations of such Pledgor and for
the purposes set forth in Section 1 hereof, each Pledgor hereby (i) grants to
the Pledgee a security interest in all of the Collateral
(G-3)
<PAGE> 190
owned by such Pledgor, (ii) pledges and deposits as security with the Pledgee,
the Securities owned by such Pledgor on the date hereof, and delivers to the
Pledgee certificates or instruments therefor, duly endorsed in blank by such
Pledgor in the case of Notes and accompanied by undated stock powers duly
executed in blank by such Pledgor (and accompanied by any transfer tax stamps
required in connection with the pledge of such Securities) in the case of Stock,
or such other instruments of transfer as are reasonably acceptable to the
Pledgee, (iii) assigns, transfers, hypothecates, mortgages, charges and sets
over to the Pledgee a continuing security interest in all of such Pledgor's
right, title and interest in and to such Securities (and in and to the
certificates or instruments evidencing such Securities), to be held by the
Pledgee upon the terms and conditions set forth in this Agreement and (iv)
transfers and assigns to the Pledgee such Pledgor's Partnership Interests (and
delivers any certificates or instruments evidencing such partnership interests,
duly endorsed in blank) and all of such Pledgor's right, title and interest in
each Pledged Partnership including, without limitation:
(i) all of the capital thereof and its interest in all profits,
losses, Partnership Assets (as defined below) and other distributions
to which such Pledgor shall at any time be entitled in respect of any
such Collateral;
(ii) all other payments due or to become due to such Pledgor in
respect of any such Collateral, whether under any partnership agreement
or otherwise, whether as contractual obligations, damages, insurance
proceeds or otherwise;
(iii) all of its claims, rights, powers, privileges, authority,
options, security interest, liens and remedies, if any, under any
partnership or other agreement or at law or otherwise in respect of any
such Collateral;
(iv) all present and future claims, if any, of such Pledgor
against any Pledged Partnership for moneys loaned or advanced, for
services rendered or otherwise;
(v) all of such Pledgor's rights under any partnership
agreement or at law to exercise and enforce every right, power, remedy,
authority, option and privilege of such Pledgor relating to any
Partnership Interest, including any power, if any, to terminate, cancel
or modify any general or limited partnership agreement, to execute any
instruments and to take any and all other action on behalf of and in
the name of such Pledgor in respect of such Partnership Interest and
any Pledged Partnership, to make determinations, to exercise any
election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment, waiver or
approval, together with full power and authority to demand, receive,
enforce, collect, or receipt for any of the foregoing or for any
Partnership Asset, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of any
or all of the foregoing.
(b) As used herein, the term "Partnership Assets" shall mean all
assets, whether tangible or intangible and whether real, personal or mixed
(including, without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership or represented by
any Partnership Interest.
(G-4)
<PAGE> 191
3.2. Subsequently Acquired Securities and/or Partnership
Interests. (a) If any Pledgor shall acquire (by purchase, stock dividend or
otherwise) any additional Securities at any time or from time to time after the
date hereof, such Pledgor will promptly thereafter deposit such Securities (or
certificates or instruments representing such Securities) as security with the
Pledgee and deliver to the Pledgee certificates or instruments therefor, duly
endorsed in blank in the case of such Notes, and accompanied by undated stock
powers duly executed in blank by such Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) in the
case of such Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee, and will promptly thereafter deliver to the Pledgee a
certificate executed by a principal executive officer of such Pledgor describing
such Securities and certifying that the same has been duly pledged with the
Pledgee hereunder.
(b) If any Pledgor shall acquire (by purchase, distribution or
otherwise) any additional Partnership Interest at any time or from time to time
after the date hereof, and, to the extent such Partnership Interest is
certificated, forthwith deliver to the Pledgee certificates therefor,
accompanied by such instruments of transfer as are acceptable to the Pledgee,
and shall promptly thereafter deliver to the Pledgee a certificate executed by a
principal executive officer of such Pledgor describing such Partnership Interest
and certifying that the same has been duly pledged with the Pledgee hereunder.
3.3. Uncertificated Securities and Partnership Interests.
Notwithstanding anything to the contrary contained in Sections 3.1 and 3.2
hereof, if any Securities (whether now owned or hereafter acquired) or
Partnership Interests are uncertificated securities, the relevant Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York Uniform
Commercial Code, if applicable). Each Pledgor further agrees to take such
actions as the Pledgee deems necessary or reasonably desirable to effect the
foregoing and to permit the Pledgee to exercise any of its rights and remedies
hereunder, and agrees to provide an opinion of counsel reasonably satisfactory
to the Pledgee with respect to any such pledge of uncertificated Securities
promptly upon the reasonable request of the Pledgee.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right, upon written notice to the Borrower (although no such notice
shall be required upon the occurrence of an Event of Default of the type
described in Section 10.05 of the Credit Agreement), to appoint one or more
sub-agents for the purpose of retaining physical possession of the Pledged
Securities or Pledged Partnership Interests, which may be held (in the
discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default, each Pledgor shall be
entitled to exercise any and all (i) voting and other consensual rights
pertaining to the Pledged Securities owned by it, and to give consents, waivers
or ratifications in respect thereof, and (ii) voting, consent, administration,
management, amendment and other rights and remedies under any partnership
agreement or otherwise with respect to the Pledged Partnership Interests of such
Pledgor. All such rights of each Pledgor to vote and to give consents, waivers
and ratifications shall cease in case an Event of Default has occurred and is
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall
have occurred and be continuing an Event of Default, (i) all cash dividends and
distributions payable in respect of the Pledged Stock and all payments in
respect of the Pledged Notes shall be paid to the respective Pledgor, (ii) all
cash distributions and other payments in respect of the Pledged Partnership
Interests shall be paid to the respective Pledgor and (iii) all cash payments
for moneys loaned or advanced, for services rendered or otherwise in respect of
the Pledged Partnership Interests shall be paid to the respective Pledgor
(G-5)
<PAGE> 192
(although the respective Pledgor may be required to apply any such payments so
received as described in preceding clauses (i), (ii) and (iii) in the manner
provided in the Credit Agreement). The Pledgee shall be entitled to receive
directly, and to retain as part of the Collateral:
(i) all other or additional stock or other securities or
partnership interests (other than cash) paid or distributed by way of
dividend or otherwise in respect of the Collateral;
(ii) all other or additional stock or other securities or
partnership interests paid or distributed in respect of the Collateral
by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement;
(iii) all other property (other than cash) paid or distributed by
way of dividend or distribution in respect of the Collateral; and
(iv) all other property or additional stock or other securities
or partnership interests or property which may be paid in respect of
the Collateral by reason of any consolidation, merger, exchange of
stock, conveyance of assets, liquidation or similar reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other payments
which are received by any Pledgor contrary to the provisions of this Section 6
and Section 7 hereof shall be received in trust for the benefit of the Pledgee,
shall be segregated from other property or funds of such Pledgor and shall be
forthwith paid over to the Pledgee as Collateral in the same form as so received
(with any necessary endorsement).
7. REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there shall
have occurred and be continuing an Event of Default, then and in every such
case, the Pledgee shall be entitled, upon written notice to the Borrower
(although no such notice shall be required upon the occurrence of any Event of
Default of the type described in Section 10.05 of the Credit Agreement), to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, the Credit Agreement, any other Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements") or by law) for the protection and enforcement of its rights in
respect of the Collateral, and the Pledgee shall be entitled to exercise all the
rights and remedies of a secured party under the Uniform Commercial Code and
also shall be entitled, without limitation, to exercise the following rights,
which each Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 hereof to the Pledgor;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any
demand for payment thereon);
(d) to vote all or any part of the Pledged Stock or Pledged
Partnership Interests (whether or not transferred into the name of the
Pledgee) and give all consents, waivers and ratifications in respect of
the Collateral and otherwise act with respect thereto as though it were
the outright owner thereof (each Pledgor hereby irrevocably
constituting and appointing the Pledgee the proxy and attorney-in-fact
of such Pledgor, with full power of substitution to do so); and
(G-6)
<PAGE> 193
(e) at any time and from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least 10 days' written notice of the time
and place of any such sale shall be given to such Pledgor. The Pledgee
shall not be obligated to make any such sale of Collateral regardless
of whether any such notice of sale has theretofore been given. Each
Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Obligations
or otherwise. At any such sale, unless prohibited by applicable law,
the Pledgee on behalf of the Secured Creditors may bid for and purchase
all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Pledgee nor any other Secured
Creditor shall be liable for failure to collect or realize upon any or
all of the Collateral or for any delay in so doing nor shall any of
them be under any obligation to take any action whatsoever with regard
thereto.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and
remedy of the Pledgee provided for in this Agreement or in any other Secured
Debt Agreement, or now or hereafter existing at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the Pledgee
or any other Secured Creditor of any one or more of the rights, powers or
remedies provided for in this Agreement or in any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by the Pledgee or any
other Secured Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any other Secured Creditor to
exercise any such right, power or remedy shall operate as a waiver thereof. No
notice to or demand on any Pledgor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Pledgee or any other Secured Creditor to any
other or further action in any circumstances without notice or demand. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Administrative Agent or the Pledgee, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least the
majority of the outstanding Other Obligations) and that no other Secured
Creditor shall have any right individually to seek to enforce or to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Administrative Agent or the Pledgee or the holders of at least a majority of the
outstanding Other Obligations, as the case may be, for the benefit of the
Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated
(G-7)
<PAGE> 194
to see to the application of any part of the purchase money paid over to the
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor and their respective successors, assigns, employees, agents and
servants (individually an "Indemnitee," and collectively the "Indemnitees") from
and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, in each case growing out of or resulting from this Agreement or
the exercise by any Indemnitee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement (but excluding any claims, demands,
losses, judgments and liabilities or expenses to the extent incurred by reason
of gross negligence or willful misconduct of such Indemnitee). In no event shall
the Pledgee be liable, in the absence of gross negligence or willful misconduct
on its part, for any matter or thing in connection with this Agreement other
than to account for monies actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of any Pledgor under this
Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
12. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed to
make the Pledgee or any other Secured Creditor liable as a general partner or
limited partner of any Pledged Partnership and the Pledgee or any other Secured
Creditor by virtue of this Agreement or otherwise (except as referred to in the
following sentence) shall not have any of the duties, obligations or liabilities
of a general partner or limited partner of any Pledged Partnership. The parties
hereto expressly agree that, unless the Pledgee shall become the absolute owner
of a Pledged Partnership Interest pursuant hereto, this Agreement shall not be
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of
this Section , the Pledgee, by accepting this Agreement, did not intend to
become a general partner or limited partner of any Pledged Partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
Pledged Partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and shall
assume none of the duties, obligations or liabilities of a general partner or
limited partner of any Pledged Partnership or of any Pledgor.
(c) The Pledgee shall not be obligated to perform or discharge any
obligation of any Pledgor as a result of the collateral assignment hereby
effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the Uniform Commercial Code or other applicable
law such financing statements, continuation statements and other documents in
such offices as the Pledgee may deem necessary and wherever required by law in
order to perfect and preserve the Pledgee's security interest in the Collateral
and hereby authorizes the Pledgee to file financing statements and amendments
thereto relative to all or any part of the Collateral without the signature of
such Pledgor where permitted by law, and agrees to do such further acts and
things and to execute and deliver to the Pledgee such additional conveyances,
assignments, agreements and instruments
(G-8)
<PAGE> 195
as the Pledgee may reasonably require or deem necessary to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, to act from time to time solely after
the occurrence and during the continuance of an Event of Default in the
Pledgee's reasonable discretion to take any action and to execute any instrument
which the Pledgee may deem necessary or advisable to accomplish the purposes of
this Agreement.
14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by each Secured Creditor that
by accepting the benefits of this Agreement each such Secured Creditor
acknowledges and agrees that the obligations of the Pledgee as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Pledgee shall act hereunder on the terms and conditions set forth
herein and in Section 12 of the Credit Agreement.
15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except as may be
permitted in accordance with the terms of the Credit Agreement).
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
Each Pledgor represents, warrants and covenants that (i) it is the legal, record
and beneficial owner of all Pledged Securities and Pledged Partnership Interests
pledged by it hereunder, subject to no Lien (except the Lien created by this
Agreement and Liens permitted under Section 9.01(i) of the Credit Agreement);
(ii) it has full corporate or partnership power, authority and legal right to
pledge all the Pledged Securities and Pledged Partnership Interests pledged by
it pursuant to this Agreement; (iii) this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable in accordance with its terms
except to the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) except as have been
obtained by the Pledgors as of the date hereof, no consent of any other party
(including, without limitation, any stockholder, partner or creditor of such
Pledgor or any of its Subsidiaries or any Pledged Partnership) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required to be obtained by such Pledgor in connection with the execution,
delivery or performance of this Agreement, the validity or enforceability of
this Agreement, the perfection or enforceability of the Pledgee's security
interest in the Collateral or, except for compliance with or as may be required
by applicable securities or other laws, the exercise by the Pledgee of any of
its rights or remedies provided herein; (v) the execution, delivery and
performance of this Agreement by such Pledgor will not violate any provision of
any applicable law or regulation or of any order, judgment, writ, award or
decree of any court, arbitrator or governmental authority, domestic or foreign,
applicable to such Pledgor, or of the certificate of incorporation or by-laws
(or equivalent organizational documents) of such Pledgor or of any securities
issued by such Pledgor or any of its Subsidiaries, or of any mortgage,
indenture, lease, deed of trust, loan agreement, credit agreement or other
material contract, agreement or instrument or undertaking to which such Pledgor
or any of its Subsidiaries is a party or which purports to be binding upon such
Pledgor or any of its Subsidiaries or upon any of their respective assets and
will not result in the creation or imposition of (or the obligation to create or
impose) any lien or encumbrance on any of the assets of such Pledgor or any of
its Subsidiaries except as contemplated by this Agreement; (vi) all the shares
of Stock have been duly and validly issued, are fully paid and non-assessable
and are subject to no options to purchase or similar rights, provided that with
respect to shares of Stock of corporations other than Subsidiaries or Joint
Ventures of any Pledgor, such representation or warranty is made to the
(G-9)
<PAGE> 196
best of such Pledgor's knowledge; (vii) each of the Intercompany Notes
constituting Pledged Notes constitutes, or when executed by the obligor thereof
will constitute, the legal, valid and binding obligation of such obligor,
enforceable in accordance with its terms except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); (viii) the pledge, assignment and delivery to the Pledgee
of the Securities (other than uncertificated securities) pursuant to this
Agreement creates a valid and perfected first priority Lien in the Securities,
and the proceeds thereof, subject to no other Lien or to any agreement
purporting to grant to any third party a Lien on the property or assets of the
Pledgor which would include the Securities; (ix) each such Pledged Partnership
Interest has been validly acquired and is fully paid for (to the extent
applicable) and is duly and validly pledged hereunder; (x) each general or
limited partnership agreement delivered to the Pledgee is an original signed
counterpart (or a copy thereof) of the complete and entire such partnership
agreement in effect on the date hereof; (xi) each partnership agreement is the
legal, valid and binding obligation of each Pledgor, and to each Pledgor's
knowledge, the other parties thereto, enforceable in accordance with its terms
and, together with this Agreement, contains the entire agreement between the
Pledgors relating to the subject matter thereof; (xii) no Pledgor is in default
in the material payment of any portion of any mandatory capital contribution, if
any, required to be made under any material general or limited partnership
agreement to which such Pledgor is a party, and no Pledgor is in violation of
any other material provisions of any material partnership agreement to which
such Pledgor is a party, or otherwise in default or violation thereunder; (xiii)
to the best of each Pledgor's knowledge, no Pledged Partnership Interest is
subject to any defense, offset or counterclaim, nor have any of the foregoing
been asserted or alleged against such Pledgor by any Person with respect
thereto; (xiv) as of the Initial Borrowing Date, there are no certificates,
instruments, documents or other writings (other than the general or limited
partnership agreements and certificates delivered to the Collateral
Administrative Agent) which evidence any Partnership Interest of such Pledgor;
(xv) the pledge and assignment of the Pledged Partnership Interests pursuant to
this Agreement, together with the relevant filings or recordings under the UCC
(which filings and recordings have been or will be made), creates a valid,
perfected and continuing first priority security interest in such Partnership
Interests and the proceeds thereof, subject to no prior lien or encumbrance or
to any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Collateral; (xvi)
there are no currently effective financing statements under the UCC covering any
property which is now or hereafter may be included in the Collateral and such
Pledgor will not, without the prior written consent of the Pledgee, execute and,
until the Termination Date (as hereinafter defined), there will not ever be on
file in any public office any enforceable financing statement or statements
covering any or all of the Collateral, except financing statements filed or to
be filed in favor of the Pledgee as secured party; (xvii) each Pledgor shall
give the Pledgee prompt notice of any written claim it receives relating to the
Collateral; (xviii) each Pledgor shall deliver to the Pledgee a copy of each
other demand, notice or document received by it which may adversely affect the
Pledgee's interest in the Collateral promptly upon, but in any event within 10
days after, such Pledgor's receipt thereof; (xix) a notice in the form set forth
in Annex D attached hereto and by this reference made a part hereof (such notice
the "Partnership Notice"), appropriately completed, notifying each Pledged
Partnership of the existence of this Agreement and a certified copy of this
Agreement have been delivered by each Pledgor to the relevant Pledged
Partnership, and each such Pledgor has received and delivered to the Collateral
Administrative Agent an acknowledgment in the form set forth in Annex E attached
hereto (such acknowledgement, the "Partnership Acknowledgement"), duly executed
by the relevant Pledged Partnership, in each case within the time period
required by Section 25 of this Agreement; and (xx) the chief executive office of
such Pledgor is set forth on Annex F hereto or such other office as such Pledgor
may establish in accordance with the terms of the Security Agreement. Each
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Collateral against the claims and demands of all
persons whomsoever; and such Pledgor covenants and agrees that it will have like
title to and right to pledge any other property at any time hereafter pledged to
the Pledgee as Collateral hereunder and will likewise defend the right thereto
and security interest therein of the Pledgee and the other Secured Creditors.
(G-10)
<PAGE> 197
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (except the indefeasible payment in full in cash of all
Obligations), including, without limitation: (i) any renewal, extension,
amendment or modification of or addition or supplement to or deletion from any
Secured Debt Agreement or any other instrument or agreement referred to therein,
or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument including, without limitation, this Agreement;
(iii) any furnishing of any additional security to the Pledgee or its assignee
or any acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any Pledgor or any Subsidiary
of any Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
18. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by any
Pledgor from the Pledgee of a written request or requests that such Pledgor
cause any registration, qualification or compliance under any Federal or state
securities law or laws to be effected with respect to all or any part of the
Pledged Stock, such Pledgor as soon as practicable and at its expense will cause
such registration to be effected (and be kept effective) and will cause such
qualification and compliance to be declared effected (and be kept effective) as
may be so requested and as would permit or facilitate the sale and distribution
of such Pledged Stock, including, without limitation, registration under the
Securities Act of 1933, as then in effect (or any similar statute then in
effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other government
requirements, provided, that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may reasonably request in
writing and as shall be required in connection with any such registration,
qualification or compliance. Such Pledgor will cause the Pledgee to be kept
advised in writing as to the progress of each such registration, qualification
or compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise
its right to sell all or any part of the Pledged Securities or Pledged
Partnership Interests pursuant to Section 7 hereof, and such Pledged Securities
or Pledged Partnership Interests or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or Pledged Partnership Interests, as the case may
be, or part thereof by private sale in such manner and under such circumstances
as the Pledgee may deem necessary or advisable in order that such sale may
legally be effected without such registration. Without limiting the generality
of the foregoing, in any such event the Pledgee, in its sole and absolute
discretion (i) may proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Securities or
Pledged Partnership Interests or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible purchaser
to
(G-11)
<PAGE> 198
effect such sale, and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Securities or Pledged Partnership Interests or part thereof. In the event of any
such sale, the Pledgee shall incur no responsibility or liability for selling
all or any part of the Pledged Securities or Pledged Partnership Interests at a
price which the Pledgee, in its sole and absolute discretion, in good faith
deems reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
19. TERMINATION; RELEASE. (a) After the Termination Date, this
Agreement and the security interest created hereby shall terminate (provided
that all indemnities set forth herein including, without limitation, in Section
11 hereof shall survive any such termination), and the Pledgee, at the request
and expense of any Pledgor, will execute and deliver to such Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
has not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder. As used in this Agreement, "Termination Date" shall
mean the date upon which the Total Commitments and all Interest Rate Protection
Agreements or Other Hedging Agreements have been terminated, no Note under the
Credit Agreement is outstanding (and all Loans have been repaid in full), all
Letters of Credit have been terminated and all Obligations then owing have been
paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed in connection with a sale or other disposition permitted by
the Credit Agreement (other than a sale to any Pledgor or any Subsidiary
thereof) or is otherwise released at the direction of the Required Banks (or all
Banks if required by Section 13.12 of the Credit Agreement) and the proceeds of
such sale or sales or such disposition or dispositions or from such release are
applied in accordance with the provisions of Section 4.02(f) or (i) of the
Credit Agreement, as the case may be, to the extent required to be so applied,
the Pledgee, at the request and expense of any Pledgor, will duly assign,
transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral (and releases therefor) as is
then being (or has been) so sold or released and has not theretofore been
released pursuant to this Agreement.
(c) At any time that a Pledgor desires that the Pledgee assign,
transfer and deliver Collateral (and releases therefor) as provided in Section
19(a) or (b) hereof, it shall deliver to the Pledgee a certificate signed by a
principal executive officer of such Pledgor stating that the release of the
respective Collateral is permitted pursuant to such Section 19(a) or (b).
(d) If any Pledgor which is a Subsidiary of the Borrower is
released from its obligations under the Subsidiaries Guaranty, then such Pledgor
shall also be concurrently released from its obligations hereunder.
(e) The Pledgee shall have no liability whatsoever to any other
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 19.
20. NOTICES, ETC. All such notices and communications hereunder
shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when delivered to the telegraph company, cable company or
overnight courier, as the case may be, or sent by telex or telecopier and when
mailed shall be effective three Business Days following deposit in the mail with
proper postage, except that notices and communications to the Pledgee shall not
be effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
(G-12)
<PAGE> 199
(a) if to any Pledgor, at the chief executive office of such
Pledgor as set forth on Annex F hereto;
(b) if to the Pledgee, at:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Eudia Smith
Tel: (404) 877-1500
Fax: (404) 888-8998
with a copy to:
The Bank of Nova Scotia
San Francisco Agency
580 California Street, Suite 2100
San Francisco, California 94104
Attention: John Quick
Tel: (415) 986-1100
Fax: (415) 397-0791
(c) if to any Bank Creditor, either (x) to the
Administrative Agent, at the address of the Administrative Agent
specified in the Credit Agreement or (y) at such address as such Bank
Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other
Creditor shall have specified in writing to the Pledgors and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor directly affected
thereby and the Pledgee (with the written consent of either (x) the Required
Banks (or all of the Banks, to the extent required by Section 13.12 of the
Credit Agreement) at all times prior to the time on which all Credit Document
Obligations have been paid in full or (y) the holders of at least a majority of
the outstanding Other Obligations at all times after the time on which all
Credit Document Obligations have been paid in full); provided, that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall also require the written consent of the
Requisite Creditors (as defined below) of such affected Class. For the purpose
of this Agreement, the term "Class" shall mean each class of Secured Creditors,
i.e., whether (i) the Bank Creditors as holders of the Credit Document
Obligations or (ii) the Other Creditors as the holders of the Other Obligations.
For the purpose of this Agreement, the term "Requisite Creditors" of any Class
shall mean each of (i) with respect to the Credit Document Obligations, the
Required Banks and (ii) with respect to the Other Obligations, the holders of at
least a majority of all obligations outstanding from time to time under the
Interest Rate Protection Agreements or Other Hedging Agreements.
22. MISCELLANEOUS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the
(G-13)
<PAGE> 200
parties hereto and its successors and assigns. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF
NEW YORK. The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain binding on all parties hereto.
23. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgors contained herein and in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
24. ADDITIONAL PLEDGORS. It is understood and agreed that any
Wholly-Owned Subsidiary of the Borrower that is required to execute a
counterpart of this Agreement after the date hereof pursuant to the Credit
Agreement shall automatically become a Pledgor hereunder by executing a
counterpart hereof and delivering the same to the Pledgee.
25. MISCELLANEOUS. Notwithstanding anything to the contrary
contained herein or in the Credit Agreement, each Pledgor hereby covenants and
agrees that with respect to any Pledged Partnership Interest pledged by it
hereunder, such Pledgor will use its reasonable best efforts to deliver to the
respective Pledged Partnerships (with copies to the Pledgee) a Partnership
Notice (appropriately completed) and such Pledgor will use its reasonable best
efforts to deliver to the Pledgee a Partnership Acknowledgement signed by the
respective Pledged Partnerships, in each case within forty-five days following
the date of any pledge of any Pledged Partnership Interests hereunder.
* * *
(G-14)
<PAGE> 201
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
PLEDGORS
DOUBLETREE CORPORATION
By:
------------------------------
Title:
SAMANTHA HOTEL CORPORATION
By
------------------------------
Title:
HARBOR HOTEL CORPORATION
By
------------------------------
Title:
DOUBLETREE PARTNERS
By
------------------------------
Title:
INNCO CORPORATION
By
------------------------------
Title:
DOUBLETREE HOTELS CORPORATION
By
------------------------------
Title:
DT MANAGEMENT, INC.
By
------------------------------
(G-15)
<PAGE> 202
Title:
(G-16)
<PAGE> 203
ARIZONA DTM PASADENA, INC.
By
------------------------------
Title:
DTM BURLINGAME, INC.
By
------------------------------
Title:
DTM CAMBRIDGE, INC.
By
------------------------------
Title:
DTM PALM SPRINGS, INC.
By
------------------------------
Title:
DTM WALNUT CREEK, INC.
By
------------------------------
Title:
DTM COCONUT GROVE, INC.
By
------------------------------
Title:
DTM NASHVILLE, INC.
By
------------------------------
Title:
(G-17)
<PAGE> 204
DTM SANTA CLARA, INC.
By
------------------------------
Title:
DTM VENTURA, INC.
By
------------------------------
Title:
DTM ST. LOUIS, INC.
By
------------------------------
Title:
DTM OKLAHOMA, INC.
By
------------------------------
Title:
DTM TULSA, INC.
By
------------------------------
Title:
DOUBLETREE OF PHOENIX, INC.
By
------------------------------
Title:
HOSCO CORPORATION
By
------------------------------
Title:
(G-18)
<PAGE> 205
DOUBLETREE HOTEL SYSTEMS, INC.
By
------------------------------
Title:
COMPRIS HOTEL CORPORATION
By
------------------------------
Title:
DT REAL ESTATE, INC.
By
------------------------------
Title:
DTR PAH HOLDING, INC.
By
------------------------------
Title:
DTR CAMBRIDGE, INC.
By
------------------------------
Title:
DTR SONORAN HOLDING, INC.
By
------------------------------
Title:
DTM ATLANTIC CITY, INC.
By
------------------------------
Title:
(G-19)
<PAGE> 206
DTR WEST MONTROSE, INC.
By
------------------------------
Title:
RED LION HOTELS, INC.
By
------------------------------
Title:
Accepted and Agreed to:
THE BANK OF NOVA SCOTIA,
as Collateral Administrative Agent
By:
----------------------------------
Title:
(G-20)
<PAGE> 207
ANNEX A
to
PLEDGE AGREEMENT
LIST OF STOCK
I. Doubletree Corporation
<TABLE>
<CAPTION>
================================================================================
<S> <C> <C> <C> <C>
Percentage of
Number Outstanding
Name of Issuing Certificate Type of of Shares of
Corporation Number Shares Shares Capital Stock
- --------------------------------------------------------------------------------
================================================================================
II. Each Subsidiary Guarantor
================================================================================
Percentage of
Number Outstanding
Name of Issuing Certificate Type of of Shares of
Corporation Number Shares Shares Capital Stock
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
(G-21)
<PAGE> 208
ANNEX B
to
PLEDGE AGREEMENT
LIST OF NOTES
I. Doubletree Corporation
Principal Amount Maturity Date
Obligor (if any) (if any)
- ------- -------- --------
II. [List Each Subsidiary Guarantor Individually]
Principal Amount Maturity Date
Obligor (if any) (if any)
- ------- -------- --------
(G-22)
<PAGE> 209
ANNEX C
to
PLEDGE AGREEMENT
PARTNERSHIP INTERESTS
A. Doubletree Corporation
Type of
Percentage Partnership
Pledged Entities Owned Interest
---------------- ----- --------
[TO BE PROVIDED BY PLEDGOR]
B. [List Each Subsidiary Guarantor Individually]
Type of
Percentage Partnership
Pledged Entities Owned Interest
---------------- ----- --------
(G-23)
<PAGE> 210
ANNEX F
to
PLEDGE AGREEMENT
OFFICE LOCATIONS
A. Doubletree Corporation
Office Locations County
---------------- ------
B. [List Each Subsidiary Guarantor Individually]
Office Locations County
---------------- ------
(G-24)
<PAGE> 211
ANNEX D
to
PLEDGE AGREEMENT
FORM OF PARTNERSHIP NOTICE
[Letterhead of Pledgor]
[Date]
TO: [Name of Pledged Partnership]
Notice is hereby given that, pursuant to a Pledge Agreement (a
true and correct copy of which is attached hereto), dated as of November 8, 1996
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Pledge Agreement"), among [NAME OF PLEDGOR] (the "Pledgor"),
the other pledgors from time to time party thereto and The Bank of Nova Scotia
(the "Pledgee"), as Collateral Administrative Agent on behalf of the Secured
Creditors described therein, the Pledgor has pledged and assigned to the Pledgee
for the benefit of the Secured Creditors, and granted to the Pledgee for the
benefit of the Secured Creditors, a continuing security interest in, all right,
title and interest of the Pledgor, whether now existing or hereafter arising or
acquired, as a [limited] [general] partner in [NAME OF PLEDGED PARTNERSHIP] (the
"Partnership"), and in, to and under the [TITLE OF APPLICABLE PARTNERSHIP
AGREEMENT] (the "Partnership Agreement"), including, without limitation:
(i) the Pledgor's interest in all of the capital of the
Partnership and the Pledgor's interest in all profits, losses, Partnership
Assets (as defined in the Pledge Agreement) and other distributions to
which the Pledgor shall at any time be entitled in respect of such
partnership interest;
(ii) all other payments due or to become due to the Pledgor in
respect of such partnership interest, whether under the Partnership
Agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(iii) all of the Pledgor's claims, rights, powers, privileges,
authority, options, security interest, liens and remedies, if any, under
the Partnership Agreement or at law or otherwise in respect of such
partnership interest;
(iv) all present and future claims, if any, of the Pledgor
against the Partnership for moneys loaned or advanced, for services
rendered or otherwise;
(v) all of the Pledgor's rights under the Partnership Agreement
or at law to exercise and enforce every right, power, remedy, authority,
option and privilege of the Pledgor relating to the partnership interest,
including any power to terminate, cancel or modify the Partnership
Agreement, to execute any instruments and to take any and all other action
on behalf of and in the name of the Pledgor in respect of the Partnership
Interest and the Partnership, to make determinations, to exercise any
election (including, but not limited, election of remedies) or option or
to give or receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive, enforce,
collect or receipt for any of the foregoing or for any Partnership Asset,
to enforce or execute any checks, or other
(G-25)
<PAGE> 212
instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered to the Pledgor in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of any
or all of the foregoing.
Pursuant to the Pledge Agreement, the Partnership is hereby
authorized and directed to register the Pledgor's pledge to the Pledgee on
behalf of the Secured Creditors of the interest of the Pledgor on the
Partnership's books.
The Pledgor hereby requests the Partnership to indicate the
Partnership's acceptance of this Notice and consent to and confirmation of its
terms and provisions by signing a copy hereof where indicated on the attached
page and returning the same to the Pledgee on behalf of the Secured Creditors.
[NAME OF PLEDGOR]
By_________________________________
Title:
(G-26)
<PAGE> 213
ANNEX E
to
PLEDGE AGREEMENT
FORM OF ACKNOWLEDGMENT
[NAME OF PLEDGED PARTNERSHIP] (the "Partnership") hereby acknowledges
receipt of a copy of the assignment by [NAME OF PLEDGOR] ("Pledgor") of its
interest under the [TITLE OF APPLICABLE PARTNERSHIP AGREEMENT] (the "Partnership
Agreement") pursuant to the terms of the Pledge Agreement, dated as of November
8, 1996 (as amended, modified or supplemented from time to time in accordance
with the terms thereof, the "Pledge Agreement"), among the Pledgor, the other
pledgors from time to time party thereto and The Bank of Nova Scotia (the
"Pledgee"), or Collateral Administrative Agent on behalf of the Secured
Creditors described therein. The undersigned hereby further confirms the
registration of the Pledgor's pledge of its interest to the Pledgee on behalf of
the Secured Creditors on the Partnership's books.
Dated: ______________ __, ____
[NAME OF PLEDGED PARTNERSHIP]
By:____________________________
Title:
(G-27)
<PAGE> 214
EXHIBIT H
SECURITY AGREEMENT
among
DOUBLETREE CORPORATION,
CERTAIN OF ITS SUBSIDIARIES
and
THE BANK OF NOVA SCOTIA,
as Collateral Administrative Agent
Dated as of November 8, 1996
(H-1)
<PAGE> 215
TABLE OF CONTENTS
Page
----
ARTICLE I SECURITY INTERESTS..................................... 2
1.1. Grant of Security Interests................................... 2
1.2. Power of Attorney............................................. 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS........................................... 4
2.1. Necessary Filings............................................. 4
2.2. No Liens...................................................... 4
2.3. Other Financing Statements.................................... 4
2.4. Chief Executive Office; Records............................... 5
2.5. Location of Inventory and Equipment........................... 5
2.6. Recourse...................................................... 5
2.7. Trade Names; Change of Name................................... 6
ARTICLE III SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER......... 6
3.1. Additional Representations and Warranties..................... 6
3.2. Maintenance of Records........................................ 6
3.3. Direction to Account Debtors; Contracting Parties; etc........ 7
3.4. Modification of Terms; etc.................................... 7
3.5. Collection.................................................... 8
3.6. Instruments................................................... 8
3.7. Assignors Remain Liable Under Receivables..................... 8
3.8. Assignors Remain Liable Under Contracts....................... 9
3.9. Further Actions............................................... 9
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS............... 9
4.1. Additional Representations and Warranties..................... 9
4.2. Licenses and Assignments...................................... 10
4.3. Infringements................................................. 10
4.4. Preservation of Marks......................................... 10
4.5. Maintenance of Registration................................... 11
4.6. Future Registered Marks....................................... 11
4.7. Remedies...................................................... 11
ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS,
COPYRIGHTS AND TRADE SECRETS........................ 12
5.1. Additional Representations and Warranties..................... 12
5.2. Licenses and Assignments...................................... 12
5.3. Infringements................................................. 12
5.4. Maintenance of Patents or Copyright........................... 13
(H-2)
<PAGE> 216
Page
----
5.5. Prosecution of Patent Applications............................ 13
5.6. Other Patents and Copyrights.................................. 13
5.7. Remedies...................................................... 13
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL................... 14
6.1. Protection of Collateral Administrative Agent's Security...... 14
6.2. Further Actions............................................... 14
6.3. Financing Statements.......................................... 15
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF
DEFAULT............................................. 15
7.1. Remedies; Obtaining the Collateral Upon Default............... 15
7.2. Remedies; Disposition of the Collateral....................... 17
7.3. Waiver of Claims.............................................. 18
7.4. Application of Proceeds....................................... 18
7.5. Remedies Cumulative........................................... 21
7.6. Discontinuance of Proceedings................................. 22
ARTICLE VIII INDEMNITY.............................................. 22
8.1. Indemnity..................................................... 22
8.2. Indemnity Obligations Secured by Collateral; Survival......... 23
ARTICLE IX DEFINITIONS............................................ 24
ARTICLE X MISCELLANEOUS.......................................... 30
10.1. Notices...................................................... 30
10.2. Waiver; Amendment............................................ 31
10.3. Obligations Absolute......................................... 31
10.4. Successors and Assigns....................................... 31
10.5. Headings Descriptive......................................... 32
10.6. Governing Law................................................ 32
10.7. Assignor's Duties............................................ 32
10.8. Termination; Release......................................... 32
10.9. Counterparts................................................. 33
10.13. Additional Assignors........................................ 34
ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patents
ANNEX F Schedule of Copyrights
ANNEX G Form of Assignment of Security Interest in Certain United
States Trademarks and Patents
ANNEX H Form of Assignment of Security Interest in United States
Copyrights
(H-3)
<PAGE> 217
EXHIBIT H
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 8, 1996, made by each
of the undersigned assignors (each an "Assignor" and, together with any other
entity that becomes an assignor hereunder pursuant to Section 10.13 hereof, the
"Assignors") in favor of The Bank of Nova Scotia, as Collateral Administrative
Agent (the "Collateral Administrative Agent"), for the benefit of the Secured
Creditors (as defined below). Except as otherwise defined herein, capitalized
terms used herein and defined in the Credit Agreement (as defined below) shall
be used herein as so defined.
W I T N E S S E T H :
WHEREAS, Doubletree Corporation, the lenders party from time
to time party thereto (the "Banks"), Morgan Stanley Senior Funding, Inc., as
Syndication Agent and as Arranger (the "Syndication Agent"), and The Bank of
Nova Scotia, as Administrative Agent (together with any successor administrative
agent, the "Administrative Agent"), have entered into a Credit Agreement, dated
as of November 8, 1996, providing for the making of Loans and the issuance of,
and participations in, Letters of Credit as contemplated therein (as amended,
modified or supplemented from time to time, the "Credit Agreement") (the Banks,
the Administrative Agent, the Syndication Agent and the Collateral
Administrative Agent are herein called the "Bank Creditors");
WHEREAS, the Borrower and one or more of its Subsidiaries may
at any time and from time to time enter into one or more Interest Rate
Protection Agreements or Other Hedging Agreements with one or more Banks or any
affiliate thereof (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason,
together with such Bank's or affiliate's successors and assigns, if any,
collectively, the "Other Creditors," and together with the Bank Creditors, are
herein called the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each
Subsidiary Guarantor has jointly and severally guaranteed to the Secured
Creditors the payment when due of all Guaranteed Obligations as described
therein;
WHEREAS, it is a condition precedent to the making of Loans
and the issuance of Letters of Credit under the Credit Agreement that each
Assignor shall have executed and delivered to the Collateral Administrative
Agent this Agreement;
WHEREAS, each Assignor will obtain benefits from the
incurrence of Loans and the issuance of Letters of Credit under the Credit
Agreement and the entering into of Interest Rate Protection Agreements as Other
Hedging Agreements and, accordingly, each Assignor desires to enter into this
Agreement in order to satisfy the condition described in the preceding
paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to the
Collateral Administrative Agent for the benefit of the Secured Creditors and
hereby covenants and agrees with the Collateral Administrative Agent for the
benefit of the Secured Creditors as follows:
(H-4)
<PAGE> 218
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of its Obligations,
each Assignor does hereby assign and transfer unto the Collateral Administrative
Agent, and does hereby pledge and grant to the Collateral Administrative Agent
for the benefit of the Secured Creditors, a continuing security interest in, all
of the right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired: (i)
each and every Receivable, (ii) all Contracts, together with all Contract Rights
arising thereunder, (iii) all Inventory, (iv) all Equipment, (v) all Marks,
together with the registrations and right to all renewals thereof, and the
goodwill of the business of such Assignor symbolized by the Marks, (vi) all
Patents and Copyrights, (vii) all computer programs of such Assignor and all
intellectual property rights therein and all other proprietary information of
such Assignor, including, but not limited to, Trade Secret Rights, (viii) all
other Goods, General Intangibles, Permits, Chattel Paper, Documents and
Instruments, (ix) the Cash Collateral Account and all monies, securities,
instruments and other investments deposited or required to be deposited in such
Cash Collateral Account, (x) all revenues, receipts, income, accounts, and other
Receivables derived or to be derived from the ownership or operation of any
Hotel Property and related facilities located thereon, including, without
limitation of the generality of the foregoing, all room revenues and room
charges and charges for hotel services (including advance deposits therefor) and
other revenues and income derived or to be derived from the sale or rental of
hotel rooms and meeting rooms, the provision of hotel services, the sale of
food, beverages and merchandise, the rental of shops, leasing of commercial or
residential spaces, the granting of concessions (including taxi concessions and
concessions for the installation of coin-operated machines to the extent of such
Assignor's interest therein) within or about any Hotel Property and related
facilities, the rental or operation of travel desks, the rental or operation of
parking facilities and the provision of services to guests of any Hotel Property
and related facilities located thereon and any other items of revenue, receipts
or other income, (xi) all books and records of each Assignor with respect to any
and all of the foregoing and (xii) all Proceeds and products of any and all of
the foregoing (all of each Assignor's right, title and interest in the above,
collectively, the "Collateral").
(b) Notwithstanding any thing to the contrary contained in
clause (a) above, the Collateral shall not include any asset that any Assignor
owns, as agent, for the benefit of a third party (other than a Subsidiary of
such Assignor) rather than for its own benefit.
(c) The security interest of the Collateral Administrative
Agent under this Agreement extends to all Collateral of the kind which is the
subject of this Agreement which any Assignor may acquire at any time during the
term of this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Administrative Agent its true and lawful attorney,
irrevocably, with full power after the occurrence of and during the continuance
of an Event of Default (in the name of such Assignor or otherwise) to act,
require, demand, receive, compound and give acquittance for any and all moneys
and claims for moneys due or to become due to such Assignor under or arising out
of the Collateral, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which the Collateral Administrative Agent may deem to be necessary
or advisable to protect the interests of the Secured Creditors, which
appointment as attorney is coupled with an interest.
(H-5)
<PAGE> 219
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve and perfect the security
interest granted by such Assignor to the Collateral Administrative Agent hereby
in respect of the Collateral have been accomplished and the security interest
granted to the Collateral Administrative Agent pursuant to this Agreement in and
to the Collateral creates a perfected security interest therein subject to no
other Liens (other than Permitted Liens) and is entitled to all the rights,
priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests, in each case to the extent that the Collateral consists of the type
of property in which a security interest may be perfected by filing a financing
statement under the Uniform Commercial Code as enacted in any relevant
jurisdiction or in the United States Patent and Trademark Office or in the
United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired
by it from time to time after the date hereof such Assignor will be, the owner
of all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens), and such
Assignor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Administrative Agent.
2.3. Other Financing Statements. As of the date hereof, there
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to cover any interest
of any kind in the Collateral (other than financing statements filed in respect
of Permitted Liens), and so long as the Termination Date has not occurred, such
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by such Assignor or in connection with
Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive
office of such Assignor is located at the address indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office except
to such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. The originals of all documents evidencing all
Receivables and Contract Rights of such Assignor and the only original books of
account and records of such Assignor relating thereto are, and will continue to
be, kept at such chief executive office, at one or more of the other locations
set forth on Annex A hereto or at such new locations as such Assignor may
establish in accordance with the last sentence of this Section 2.4. All
Receivables and Contract Rights of such Assignor are, and will continue to be,
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, the office locations described above or such
new location established in accordance with the last sentence of this Section
2.4. No Assignor shall establish new locations for such offices until (i) it
shall have given to the Collateral Administrative Agent not less than 15 days'
prior written notice of its intention to do so, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Administrative Agent may reasonably request, (ii) with respect to
such new location, it shall have taken all action, reasonably satisfactory to
the Collateral Administrative Agent, to maintain the security interest of the
Collateral Administrative Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
(H-6)
<PAGE> 220
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor. Each Assignor agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations shown on Annex B
hereto, or such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.5. Any Assignor may establish a new location
for Inventory and Equipment only if (i) it shall have given to the Collateral
Administrative Agent not less than 15 days' prior written notice of its
intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Collateral Administrative Agent
may request, (ii) with respect to such new location, it shall have taken all
action reasonably satisfactory to the Collateral Administrative Agent to
maintain the security interest of the Collateral Administrative Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.6. Recourse. This Agreement is made with full recourse to
each Assignor (including, without limitation, with full recourse to all assets
of such Assignor) and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
other Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates
in any jurisdiction under, or in the preceding 12 months has had or has operated
in any jurisdiction under, any trade names, fictitious names or other names
except its legal name and such other trade or fictitious names as are listed on
Annex E hereto for such Assignor. No Assignor shall change its legal name or
assume or operate in any jurisdiction under any trade, fictitious or other name
except those names listed on Annex C hereto for such Assignor and new names
established in accordance with the last sentence of this Section 2.7. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral
Administrative Agent not less than 15 days' prior written notice of its
intention so to do, clearly describing such new name and the jurisdictions in
which such new name shall be used and providing such other information in
connection therewith as the Collateral Administrative Agent may reasonably
request, and (ii) with respect to such new name, it shall have taken all action
reasonably requested by the Collateral Administrative Agent to maintain the
security interest of the Collateral Administrative Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER
3.1. Additional Representations and Warranties. As of the time
when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and such
Receivable will evidence true and valid obligations of the account debtor named
therein.
3.2. Maintenance of Records. Each Assignor will keep and
maintain at its own cost and expense accurate records of its Receivables and
Contracts, including, but not limited to, originals or copies of all
documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Administrative Agent for inspection, at
such Assignor's own cost and expense, at any and all reasonable times upon prior
notice to such Assignor. Upon the occurrence and during the continuance of an
Event of Default and at the request of the Collateral Administrative Agent, such
Assignor shall, at its own cost and expense, deliver all tangible
(H-7)
<PAGE> 221
evidence of its Receivables and Contract Rights (including, without limitation,
all documents evidencing the Receivables and all Contracts) and such books and
records to the Collateral Administrative Agent or to its representatives (copies
of which evidence and books and records may be retained by such Assignor). Upon
the occurrence and during the continuance of an Event of Default and if the
Collateral Administrative Agent so directs, such Assignor shall legend, in form
and manner satisfactory to the Collateral Administrative Agent, the Receivables
and the Contracts, as well as books, records and documents (if any) of such
Assignor evidencing or pertaining to such Receivables and Contracts with an
appropriate reference to the fact that such Receivables and Contracts have been
assigned to the Collateral Administrative Agent and that the Collateral
Administrative Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Administrative Agent so directs any Assignor, such Assignor
agrees (x) to cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account, (y) that the Collateral
Administrative Agent may, at its option, directly notify the obligors with
respect to any Receivables and/or under any Contracts to make payments with
respect thereto as provided in the preceding clause (x) and (z) that the
Collateral Administrative Agent may enforce collection of any such Receivables
and Contracts and may adjust, settle or compromise the amount of payment
thereof, in the same manner and to the same extent as such Assignor. Without
notice to or assent by any Assignor, the Collateral Administrative Agent may
apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account which application shall be effected in the manner provided in
Section 7.4 of this Agreement. The costs and expenses (including reasonable
attorneys' fees) of collection, whether incurred by an Assignor or the
Collateral Administrative Agent, shall be borne by the relevant Assignor. The
Collateral Administrative Agent shall deliver a copy of each notice referred to
in the preceding clause (y) to the relevant Assignor (although no such notice
shall be required upon the occurrence of an Event of Default of the type
described in Section 10.05 of the Credit Agreement).
3.4. Modification of Terms; etc. Except in the ordinary course of
business, no Assignor shall rescind or cancel any indebtedness evidenced by any
Receivable or under any Contract, or modify any term thereof or make any
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or sell any Receivable or Contract, or interest therein, without the prior
written consent of the Collateral Administrative Agent. Each Assignor will duly
fulfill all obligations on its part to be fulfilled under or in connection with
the Receivables and Contracts (except to the extent that the failure to so
perform, either individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole) and will do nothing to
impair the security interest of the Collateral Administrative Agent in the
Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
prior to the occurrence of an Event of Default, any Assignor may allow in the
ordinary course of business adjustments to amounts owing under its Receivables
and Contracts. The reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees) of collection, whether incurred by an Assignor or
the Collateral Administrative Agent, shall be borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any
Instruments constituting Collateral and having a face value of $1,000,000 or
greater, such Assignor will within 10 Business Days notify the
(H-8)
<PAGE> 222
Collateral Administrative Agent thereof, and upon request by the Collateral
Administrative Agent will promptly deliver such Instrument (other than checks
payable to any Assignor and processed in the ordinary course of business) to the
Collateral Administrative Agent appropriately endorsed to the order of the
Collateral Administrative Agent as further security hereunder.
3.7. Assignors Remain Liable Under Receivables. Anything herein
to the contrary notwithstanding, the Assignors shall remain liable under each of
the Receivables to observe and perform all of the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to such Receivables. Neither the Collateral
Administrative Agent nor any other Secured Creditor shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason
of or arising out of this Agreement or the receipt by the Collateral
Administrative Agent or any other Secured Creditor of any payment relating to
such Receivable pursuant hereto, nor shall the Collateral Administrative Agent
or any other Secured Creditor be obligated in any manner to perform any of the
obligations of any Assignor under or pursuant to any Receivable (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by them or as to the
sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto), to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to them or to which they may be entitled at any time or
times.
3.8. Assignors Remain Liable Under Contracts. Anything herein to
the contrary notwithstanding, the Assignors shall remain liable under each of
the Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral
Administrative Agent nor any other Secured Creditor shall have any obligation or
liability under any Contract by reason of or arising out of this Agreement or
the receipt by the Collateral Administrative Agent or any other Secured Creditor
of any payment relating to such contract pursuant hereto, nor shall the
Collateral Administrative Agent or any other Secured Creditor be obligated in
any manner to perform any of the obligations of any Assignor under or pursuant
to any Contract, to make any payment, to make any inquiry as to the nature or
the sufficiency of any performance by any party under any Contract, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to them or to which they
may be entitled at any time or times.
3.9. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral
Administrative Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, certificates, reports and other assurances or instruments and take
such further steps relating to its Receivables, Contracts, Instruments and other
property or rights covered by the security interest hereby granted, as the
Collateral Administrative Agent may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the registered Marks listed in Annex D hereto for such Assignor
and that said listed Marks include all material United States marks and
applications for United States marks registered in the United States Patent and
Trademark Office that such Assignor owns or uses in connection with its business
as of the date hereof. Each Assignor represents and warrants that it owns, is
licensed to use or otherwise has the right to use all material Marks that it
uses. Each Assignor further warrants that it has no knowledge of any third party
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any trademark, service
(H-9)
<PAGE> 223
mark or trade name (other than such infringements which, either individually or
in the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole). Each Assignor represents and warrants that it is the true and
lawful owner of or otherwise has the right to use all U.S. trademark
registrations and applications listed in Annex D hereto and that said
registrations are valid, subsisting, have not been cancelled and that such
Assignor is not aware of any third-party claim that any of said registrations is
invalid or unenforceable, or is not aware that there is any reason that any of
said registrations is invalid or unenforceable, or is not aware that there is
any reason that any of said material applications will not pass to registration.
Each Assignor hereby grants to the Collateral Administrative Agent an absolute
power of attorney to sign, upon the occurrence and during the continuance of an
Event of Default, any document which may be required by the United States Patent
and Trademark Office in order to effect an absolute assignment of all right,
title and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by
the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of
any right under any Mark acquired after the date hereof absent prior written
approval of the Collateral Administrative Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Administrative Agent in writing of the name
and address of, and to furnish such pertinent information that may be available
with respect to, any party who such Assignor believes is infringing or diluting
or otherwise violating in any material respect any of such Assignor's rights in
and to any material Mark, or with respect to any party claiming that such
Assignor's use of any material Mark violates in any material respect any
property right of that party. Each Assignor further agrees, unless otherwise
agreed by the Collateral Administrative Agent, to prosecute any Person
infringing any Mark in accordance with reasonable business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks
in interstate commerce during the time in which this Agreement is in effect and
to take all such other actions as are necessary to preserve such Marks as
trademarks or service marks under the laws of the United States; provided, that
no Assignor shall be obligated to preserve any such Mark in the event such
Assignor determines, in its reasonable business judgment, that the preservation
of such Mark is no longer desirable in the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office
for all of its registered Marks, and shall pay all fees and disbursements in
connection therewith and shall not abandon any such filing of affidavit of use
or any such application of renewal prior to the exhaustion of all administrative
and judicial remedies without prior written consent of the Collateral
Administrative Agent; provided, that no Assignor shall be obligated to maintain
any Mark in the event that such Assignor determines, in its reasonable business
judgment, that the maintenance of such Mark is no longer necessary or material
to or desirable in the conduct of its business.
4.6. Future Registered Marks. If any Mark registration is issued
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral
Administrative Agent a copy of such certificate, and an assignment for security
in such Mark, to the Collateral Administrative Agent and at the expense of such
Assignor, confirming the assignment for security in such Mark to the Collateral
Administrative Agent hereunder, the form of such security to be substantially
the same as the form hereof or in such other form as may be reasonably
satisfactory to the Collateral Administrative Agent.
(H-10)
<PAGE> 224
4.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Administrative Agent may, by written notice to the
relevant Assignor, take any or all of the following actions: (i) declare the
entire right, title and interest of such Assignor in and to each of the Marks,
together with all trademark rights and rights of protection to the same, vested
in the Collateral Administrative Agent for the benefit of the Secured Creditors,
in which event such rights, title and interest shall immediately vest, in the
Collateral Administrative Agent for the benefit of the Secured Creditors, and
the Collateral Administrative Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged
and notarized and record said absolute assignment with the applicable agency;
(ii) take and use or sell the Marks and the goodwill of such Assignor's business
symbolized by the Marks and the right to carry on the business and use the
assets of such Assignor in connection with which the Marks have been used; and
(iii) direct such Assignor to refrain, in which event such Assignor shall
refrain, from using the Marks in any manner whatsoever, directly or indirectly,
and such Assignor shall execute such further documents that the Collateral
Administrative Agent may reasonably request to further confirm this and to
transfer ownership of the Marks and registrations and any pending trademark
application in the United States Patent and Trademark Office to the Collateral
Administrative Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of all rights in
(i) all United States trade secrets and proprietary information necessary to
operate the business of the Assignor (the "Trade Secret Rights"), (ii) the
Patents listed in Annex E hereto for such Assignor and that said Patents include
all the material United States patents and applications for United States
patents that such Assignor owns as of the date hereof and (iii) the Copyrights
listed in Annex F hereto for such Assignor and that said Copyrights constitute
all the material United States copyrights registered with the United States
Copyright Office and applications to United States copyrights that such Assignor
owns as of the date hereof. Each Assignor further warrants that it has no
knowledge of any third party claim that any aspect of such Assignor's present or
contemplated business operations infringes or will infringe any patent or such
Assignor has misappropriated any trade secret or proprietary information (other
than such infringements which, either individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole). Each Assignor
hereby grants to the Collateral Administrative Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of any Event of
Default, any document which may be required by the United States Patent and
Trademark Office in order to effect an absolute assignment of all right, title
and interest in each Patent, and to record the same.
5.2. Licenses and Assignments. Except as otherwise permitted by
the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of
any right under any Patent or Copyright acquired after the date hereof absent
prior written approval of the Collateral Administrative Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Administrative Agent in writing with all
pertinent information available to such Assignor with respect to any
infringement, contributing infringement or active inducement to infringe in any
material Patent or material Copyright or to any claim that the practice of any
material Patent or use of any material Copyright violates any property right of
a third party, or with respect to any misappropriation of any Trade Secret Right
or any claim that practice of any Trade Secret Right violates any property right
of a third party. Each Assignor further agrees, absent direction of the
Collateral Administrative Agent to the contrary, diligently to prosecute any
Person infringing any Patent or Copyright or any Person
(H-11)
<PAGE> 225
misappropriating any Trade Secret Right in accordance with such Assignor's
reasonable business judgment; provided, that any litigation in connection with
any such infringement shall be commenced, prosecuted or settled in accordance
with such Assignor's reasonable business judgment.
5.4. Maintenance of Patents or Copyright. At its own expense,
each Assignor shall make timely payment of all post-issuance fees required to
maintain in force rights under each material Patent or Copyright, absent prior
written consent of the Collateral Administrative Agent.
5.5. Prosecution of Patent Applications. At its own expense, each
Assignor shall, except as otherwise permitted by the Credit Agreement,
diligently prosecute all applications for (i) United States Patents listed in
Annex E hereto and (ii) Copyrights listed on Annex F hereto, in each case for
such Assignor and shall not abandon any such application prior to exhaustion of
all administrative and judicial remedies, absent written consent of the
Collateral Administrative Agent.
5.6. Other Patents and Copyrights. Within 30 days of the
acquisition or issuance of a United States Patent, registration of a Copyright,
or acquisition of a registered copyright, or of filing of an application for a
United States Patent or Copyright, the relevant Assignor shall deliver to the
Collateral Administrative Agent a copy of said Copyright or certificate or
registration of, or application therefor, said patents, as the case may be, with
an assignment for security as to such Patent or Copyright, as the case may be,
to the Collateral Administrative Agent and at the expense of such Assignor,
confirming the assignment for security, the form of such assignment for security
to be substantially the same as the form hereof or in such other form as may be
reasonably satisfactory to the Collateral Administrative Agent.
5.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Administrative Agent may by written notice to the
relevant Assignor, take any or all of the following actions: (i) declare the
entire right, title, and interest of such Assignor in each of the Patents and
Copyrights vested in the Collateral Administrative Agent for the benefit of the
Secured Creditors, in which event such right, title, and interest shall
immediately vest in the Collateral Administrative Agent for the benefit of the
Secured Creditors, in which case the Collateral Administrative Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such further
documents as the Collateral Administrative Agent may reasonably request further
to confirm this and to transfer ownership of the Patents and Copyrights to the
Collateral Administrative Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Administrative Agent's Security.
Each Assignor will do nothing to impair the rights of the Collateral
Administrative Agent in the Collateral. Each Assignor will at all times keep its
Inventory and Equipment insured in favor of the Collateral Administrative Agent,
at such Assignor's own expense to the extent and in the manner provided in the
Credit Agreement. Except to the extent otherwise permitted to be retained by
such Assignor or applied by such Assignor pursuant to the terms of the Credit
Agreement, the Collateral Administrative Agent shall, at the time any proceeds
of such insurance are distributed to the Secured Creditors, apply such proceeds
in accordance with Section 7.4 hereof. Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of such Assignor to pay the Obligations shall in no way be affected or
diminished by
(H-12)
<PAGE> 226
reason of the fact that such Collateral may be lost, destroyed, stolen, damaged
or for any reason whatsoever unavailable to such Assignor.
6.2. Further Actions. Each Assignor will, at its own expense and
upon the request of the Collateral Administrative Agent, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Administrative Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements,
certificates, reports and other assurances or instruments and take such further
steps relating to the Collateral and other property or rights covered by the
security interest hereby granted, which the Collateral Administrative Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
6.3. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Administrative Agent such financing statements, in
form reasonably acceptable to the Collateral Administrative Agent, as the
Collateral Administrative Agent may from time to time reasonably request or as
are necessary or desirable in the opinion of the Collateral Administrative Agent
to establish and maintain a valid, enforceable, first priority perfected
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby all in accordance with the UCC as enacted in any
and all relevant jurisdictions or any other relevant law. Each Assignor will pay
any applicable filing fees, recordation taxes and related expenses relating to
its Collateral. Each Assignor hereby authorizes the Collateral Administrative
Agent to file any such financing statements without the signature of such
Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Administrative Agent, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured creditor under any UCC, and such additional rights
and remedies to which a secured creditor is entitled under the laws in effect,
in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts) constituting the Collateral to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Administrative Agent and may
exercise any and all remedies of such Assignor in respect of such
Collateral;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof, or
direct the relevant Assignor to sell, assign or otherwise liqui-
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date any or all of the Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Administrative Agent at any place or places designated by the
Collateral Administrative Agent, in which event such Assignor shall at its
own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Administrative Agent and
there delivered to the Collateral Administrative Agent;
(y) store and keep any Collateral so delivered to the
Collateral Administrative Agent at such place or places pending
further action by the Collateral Administrative Agent as provided
in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them
in good condition; and
(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such manner as the
Collateral Administrative Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Administrative Agent shall
be entitled to a decree requiring specific performance by such Assignor of said
obligation. By accepting the benefits of this Agreement, the Secured Creditors
agree that this Agreement may be enforced only by the action of the Collateral
Administrative Agent acting upon the instructions of the Required Secured
Creditors and that no other Secured Creditor shall have any right individually
to seek to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Collateral Administrative Agent for the benefit of the Secured
Creditors upon the terms of this Agreement and the Credit Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Administrative Agent under or pursuant to Section
7.1 hereof and any other Collateral whether or not so repossessed by the
Collateral Administrative Agent, may be sold, assigned, leased or otherwise
disposed of under one or more contracts or as an entirety, and without the
necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the Collateral Administrative Agent may, in compliance with any
mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Collateral
Administrative Agent or after any overhaul or repair at the expense of the
relevant Assignor which the Collateral Administrative Agent shall determine to
be commercially reasonable. Any such disposition which shall be a private sale
or other private proceedings permitted by such requirements shall be made upon
not less than 10 days' prior written notice to the relevant Assignor specifying
the time at which such disposition is to be made and the intended sale price or
other consideration therefor, and shall be subject, for the 10 days after the
giving of such notice, to the right of the relevant Assignor or any nominee of
such Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than 10 days' prior written notice
to the relevant Assignor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the Collateral Administrative Agent's option, be subject to reserve),
after publication of notice of such auction (where required by applicable law)
not less than 10
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days prior thereto. The Collateral Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned. To the extent permitted by any such requirement of law, the
Collateral Administrative Agent may bid for and become the purchaser of the
Collateral or any item thereof, offered for sale in accordance with this Section
without accountability to the relevant Assignor. If, under mandatory
requirements of applicable law, the Collateral Administrative Agent shall be
required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to the relevant Assignor as hereinabove
specified, the Collateral Administrative Agent need give such Assignor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. Each Assignor agrees to do or cause to
be done all such other acts and things as may be reasonably necessary to make
such sale or sales of all or any portion of the Collateral valid and binding and
in compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
ADMINISTRATIVE AGENT'S TAKING POSSESSION OR THE COLLATERAL ADMINISTRATIVE
AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY
AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and
each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Administrative
Agent's gross negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Administrative Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Administrative Agent (or, to the extent the Pledge Agreement, any
Mortgage or any Additional Security Document require proceeds of collateral
under such Security Document to be applied in accordance with the provisions of
this Agreement, the Pledgee or Mortgagee under such other Security Document)
upon any sale or other disposition of the Collateral, together with all other
moneys received by the Collateral Administrative Agent hereunder, shall be
applied as follows.
(i) first, to the payment of all amounts owing the Collateral
Administrative Agent of the type described in clauses (iii) and (iv) of
the definition of "Obligations";
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(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations shall be paid to the Secured Creditors as provided in
Section 7.4(e) hereof, with each Secured Creditor receiving an amount
equal to such outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors
as provided in Section 7.4(e) hereof, with each Secured Creditor receiving
an amount equal to its outstanding Secondary Obligations or, if the
proceeds are insufficient to pay in full all such Secondary Obligations,
its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 10.8(a)
hereof, to the relevant Assignor or to whoever may be lawfully entitled to
receive such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the
case of the Credit Document Obligations, all principal of, and interest on, all
Loans, all Unpaid Drawings and all Fees and (ii) in the case of the Other
Obligations that are secured by this Agreement or any other Security Document,
all amounts due under such Interest Rate Protection Agreements or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (z) "Secondary
Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) Each of the Secured Creditors, by their acceptance of the
benefits hereof, agrees and acknowledges that if the Bank Creditors are to
receive a distribution on account of undrawn amounts with respect to Letters of
Credit issued under the Credit Agreement (which shall only occur after all
outstanding Loans and Unpaid Drawings with respect to such Letters of Credit
have been paid in full), such amounts shall be paid to the Administrative Agent
under the Credit Agreement and held by it, for the equal and ratable benefit of
the Bank Creditors, as cash security for the repayment of Obligations owing to
the Bank Creditors as such. If any amounts are held as cash security pursuant to
the immediately preceding sentence, then upon the termination of all outstanding
Letters of Credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Bank Creditors after giving effect to
the termination of all such Letters of Credit, if there remains any excess cash,
such excess cash shall be
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returned by the Administrative Agent to the Collateral
Administrative Agent for distribution in accordance with Section 7.4(a) hereof.
(e) All payments required to be made hereunder shall be made (x)
if to the Bank Creditors, to the Administrative Agent under the Credit Agreement
for the account of the Bank Creditors, and (y) if to the Other Creditors, to the
trustee, paying agent or other similar representative (each a "Representative")
for the Other Creditors or, in the absence of such a Representative, directly to
the Other Creditors.
(f) For purposes of applying payments received in accordance
with this Section 7.4, the Collateral Administrative Agent shall be entitled to
rely upon (i) the Administrative Agent under the Credit Agreement and (ii) the
Representative for the Other Creditors or, in the absence of such a
Representative, upon the Other Creditors for a determination (which the
Administrative Agent, each Representative for any Other Creditors and the
Secured Creditors agree (or shall agree) to provide upon request of the
Collateral Administrative Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors, as the
case may be. Unless it has actual knowledge (including by way of written notice
from a Bank Creditor or an Other Creditor) to the contrary, the Administrative
Agent and each Representative, in furnishing information pursuant to the
preceding sentence, and the Collateral Administrative Agent, in acting
hereunder, shall be entitled to assume that no Secondary Obligations are
outstanding. Unless it has actual knowledge (including by way of written notice
from an Other Creditor) to the contrary, the Collateral Administrative Agent, in
acting hereunder, shall be entitled to assume that no Interest Rate Protection
Agreements or Other Hedging Agreements are in existence.
(g) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the Obligations.
7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Administrative Agent shall be in
addition to every other right, power and remedy specifically given under this
Agreement, the other Secured Debt Agreements or now or hereafter existing at
law, in equity or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed expedient
by the Collateral Administrative Agent. All such rights, powers and remedies
shall be cumulative and the exercise or the beginning of the exercise of one
shall not be deemed a waiver of the right to exercise any other or others. No
delay or omission of the Collateral Administrative Agent in the exercise of any
such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein. No
notice to or demand on any Assignor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Administrative Agent to any other
or further action in any circumstances without notice or demand. In the event
that the Collateral Administrative Agent shall bring any suit to enforce any of
its rights hereunder and shall be entitled to judgment, then in such suit the
Collateral Administrative Agent may recover reasonable expenses, including
reasonable attorneys' fees, and the amounts thereof shall be included in such
judgment.
7.6. Discontinuance of Proceedings. In case the Collateral
Administrative Agent shall have instituted any proceeding to enforce any right,
power or remedy under this Agreement by foreclosure, sale, entry or otherwise,
and such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Collateral Administrative Agent,
then and in every such case the relevant Assignor, the Collateral Administrative
Agent and each holder of any of the Obligations shall be restored to their
former positions and rights hereunder with respect to the Collateral subject to
the security
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interest created under this Agreement, and all rights, remedies and powers of
the Collateral Administrative Agent shall continue as if no such proceeding had
been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Administrative Agent, each other
Secured Creditor and their respective successors, permitted assigns, employees,
agents and servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called "expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement, any other Secured Debt
Agreement or any other document executed in connection herewith or therewith or
in any other way connected with the administration of the transactions
contemplated hereby or thereby or the enforcement of any of the terms of, or the
preservation of any rights under any thereof, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or unit, any tort
(including, without limitation, claims arising or imposed under the doctrine of
strict liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. Each Assignor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Assignor shall assume full responsibility for the defense thereof. Each
Indemnitee agrees to use its best efforts to promptly notify the relevant
Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof,
each Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Administrative Agent for any and all reasonable fees, costs and expenses of
whatever kind or nature incurred in connection with the creation, preservation
or protection of the Collateral Administrative Agent's Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Administrative Agent's interest
therein, whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by any Assignor in this Agreement, any Interest
Rate Protection Agreement or Currency Hedging Agreement, any other Credit
Document or in any writing contemplated by or made or delivered pursuant to or
in connection with this Agreement, any Interest Rate Protection Agreement or
Currency Hedging Agreement or any other Credit Document.
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(d) If and to the extent that the obligations of any Assignor
under this Section 8.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all of the
other Obligations and notwithstanding the full payment of all the Notes issued
under the Credit Agreement, the termination of all Interest Rate Protection
Agreements or Other Hedging Agreements and the payment of all other Obligations
and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Administrative Agent" shall have the meaning provided in the
recitals of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph
of this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals
of this Agreement.
"Banks" shall have the meaning provided in the recitals of this
Agreement.
"Borrower" shall have the meaning provided in the recitals of
this Agreement.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral
Administrative Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Administrative Agent" shall have the meaning provided
in the first paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor under
each Contract, including, without limitation, (i) any and all rights to receive
and demand payments under any or all Contracts, (ii) any and all rights to
receive and compel performance under any or all Contracts and (iii) any and all
other rights, interests and claims now existing or in the future arising in
connection with any or all Contracts.
(H-19)
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"Contracts" shall mean all contracts between any Assignor and one
or more additional parties (including, without limitation, each Management
Agreement, Joint Venture Agreement, partnership agreement, franchise agreement
and any Interest Rate Protection Agreements or Other Hedging Agreements), but
excluding any contract to the extent that the terms thereof prohibit (after
giving effect to any approvals or waivers) the assignment of, or granting a
security interest in, such contract (it being understood and agreed, however,
that notwithstanding the foregoing, all rights to payment for money due
or to become due pursuant to any such excluded contract shall be subject to the
security interests created by this Agreement).
"Copyrights" shall mean any United States copyright owned by any
Assignor, including any registrations of any Copyrights, in the United States
Copyright Office, as well as any application for a United States copyright
registration now or hereafter made with the United States Copyright Office by
any Assignor.
"Credit Agreement" shall have the meaning provided in the
recitals of this Agreement.
"Credit Document Obligations" shall have the meaning provided in
the definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all machinery, equipment, furnishings,
movable trade fixtures and vehicles now or hereafter owned by any Assignor and
any and all additions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Other Obligations (to the extent
secured hereby) after the expiration of any applicable grace period.
"General Intangibles" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of New York
and shall in any event include all of any Assignor's claims, rights, powers,
privileges, authority, options, security interests, liens and remedies under any
partnership agreement to which such Assignor is a party or with respect to any
partnership of which such Assignor is a partner.
"Goods" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of
this Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials,
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labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same, in all stages of production -- from raw
materials through work-in-process to finished goods -- and all products and
proceeds of whatever sort and wherever located and any portion thereof which may
be returned, rejected, reclaimed or repossessed by the Collateral Administrative
Agent from any Assignor's customers, and shall specifically include all
"inventory" as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York, now or hereafter owned by any
Assignor, provided that the term inventory shall not include any liquor located
in any jurisdiction to the extent that the laws of such jurisdiction prohibit
the creation of a security interest in liquor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any
United States trademarks, service marks and trade names now held or hereafter
acquired by any Assignor, including any registration of any trademarks and
service marks in the United States Patent and Trademark Office and any trade
dress including logos and/or designs used by any Assignor in the United States.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, Fees
and interest thereon (including any interest accruing after the commencement of
any bankruptcy, insolvency, receivership or similar proceeding, whether or not
such interest is an allowed claim against the debtor in any such proceeding)) of
each Assignor to the Bank Creditors, whether now existing or hereafter incurred
under, arising out of, or in connection with the Credit Agreement and the other
Credit Documents to which such Assignor is a party (including, in the case of
the Subsidiary Guarantors, all such obligations and indebtedness of such
Subsidiary Guarantors under the Subsidiaries Guaranty) and the due performance
and compliance by such Assignor with all of the terms, conditions and agreements
contained in the Credit Agreement and such other Credit Documents (all such
obligations and liabilities under this clause (i), except to the extent
consisting of obligations or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein collectively
called the "Credit Document Obligations"); (ii) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of all
obligations and liabilities owing by such Assignor to the Other Creditors under,
or with respect to (including by reason of the Subsidiaries Guaranty), any
Interest Rate Protection Agreement or Other Hedging Agreement, whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereafter arising, and the due performance and compliance by such
Assignor with all of the terms, conditions and agreements contained therein (all
such obligations and liabilities described in this clause (ii) being herein
collectively called the "Other Obligations"); (iii) any and all sums advanced by
the Assignee in order to preserve the Collateral or preserve its security
interest in the Collateral; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
such Assignor referred to in clauses (i) and (ii) above, after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Assignee of its
rights hereunder, together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such Secured Creditor
has the right to reimbursement under Section 11 of this Agreement; it being
acknowledged and agreed that the "Obligations" shall include extensions of
credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the recitals
of this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
(H-21)
<PAGE> 235
"Patents" shall mean any United States patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a United States patent now or hereafter made by
any Assignor.
"Permits" shall mean, to the extent permitted to be assigned by
the terms thereof or by applicable law, all licenses, permits, rights, orders,
variances, franchises or authorizations of or from any governmental authority or
agency in connection with the maintenance or operation of any Hotel Property.
"Primary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Administrative Agent or any Assignor from time to time
with respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to any Assignor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing.
"Representative shall have the meaning provided in Section 7.4(e)
of this Agreement.
"Required Secured Creditors" shall mean (i) the Required Banks
(or, to the extent required by Section 13.12 of the Credit Agreement, each of
the Banks) under the Credit Agreement so long as any Credit Document Obligations
remain outstanding and (ii) in any situation not covered by preceding clause
(i), the holders of a majority of the outstanding principal amount of the Other
Obligations that are secured by this Agreement.
"Requisite Creditors" shall have the meaning provided in Section
10.2 of this Agreement.
"Secondary Obligations" shall have the meaning provided in
Section 7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the
recitals of this Agreement.
(H-22)
<PAGE> 236
"Secured Debt Agreements" shall mean and include this Agreement,
the other Credit Documents and, to the extent entitled to the benefits of this
Agreement, the Interest Rate Protection Agreements and Other Hedging Agreements.
"Termination Date" shall have the meaning provided in Section
10.8 of this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section
5.1 of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed as follows:
(a) if to any Assignor, at the chief executive office of such
Assignor as set forth on Annex A hereto;
(b) if to the Collateral Administrative Agent, at:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Eudia Smith
Tel. No.: (404) 877-1500
Fax. No.: (404) 888-8998
with a copy to:
The Bank of Nova Scotia
San Francisco Agency
580 California Street, Suite 2100
San Francisco, CA 94104
Attention: John Quick
Tel. No.: (415) 986-1100
Fax. No.: (415) 397-0791
(c) if to any Bank Creditor, at such address as such Bank
Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Assignor and the
Collateral Administrative Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each
(H-23)
<PAGE> 237
Assignor directly effected thereby and the Collateral Administrative Agent (with
the written consent of the Required Secured Creditors); provided, however, that
any change, waiver, modification or variance affecting the rights and benefits
of a single Class of Secured Creditors (and not all Secured Creditors in a like
or similar manner) shall require the written consent of the Requisite Creditors
of such affected Class. For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Creditors, i.e., whether (x) the Bank Creditors
as holders of the Credit Document Obligations or (y) if applicable, the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to the Credit Document Obligations, the Required Banks and (y) with
respect to the Other Obligations that are secured by this Agreement, the holders
of at least a majority of all obligations outstanding from time to time under
the respective Interest Rate Protection Agreements or Other Hedging Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement; or (c) any amendment to or modification of any Secured Debt Agreement
or any security for any of the Obligations; whether or not any Assignor shall
have notice or knowledge of any of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding
upon each Assignor and its successors and assigns (although no Assignor may
assign its rights and obligations hereunder except in accordance with the
provisions of the Secured Debt Agreements) and shall inure to the benefit of the
Collateral Administrative Agent and the Secured Creditors and their respective
successors and assigns. All agreements, statements, representations and
warranties made by each Assignor herein or in any certificate or other
instrument delivered by such Assignor or on its behalf under this Agreement
shall be considered to have been relied upon by the Secured Creditors and shall
survive the execution and delivery of this Agreement and the other Secured Debt
Agreements regardless of any investigation made by the Secured Creditors or on
their behalf.
10.5. Headings Descriptive. The headings of the several sections
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Administrative Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Administrative Agent be
required or obligated in any manner to perform or fulfill any of the obligations
of each Assignor under or with respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Administrative Agent, at the request and expense
of the respective Assignor, will promptly execute and deliver to such Assignor a
proper instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the
(H-24)
<PAGE> 238
possession of the Collateral Administrative Agent and as has not theretofore
been sold or otherwise applied or released pursuant to this Agreement. As used
in this Agreement, "Termination Date" shall mean the date upon which the Total
Commitments and, to the extent entitled to the benefits of this Agreement, all
Interest Rate Protection Agreements or Other Hedging Agreements have been
terminated, no Note is outstanding (and all Loans have been repaid in full), all
Letters of Credit have been terminated and all Obligations then owing have been
paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed in connection with a sale or other disposition permitted by
the Credit Agreement (other than a sale to any Assignor or a Subsidiary thereof)
or otherwise released at the direction of the Required Secured Creditors and the
proceeds of such sale or sales or such disposition or dispositions or from such
release are applied in accordance with the provisions of the Credit Agreement,
to the extent required to be so applied, such Collateral will be sold free and
clear of the Liens created by this Agreement and the Collateral Administrative
Agent, at the request and expense of the relevant Assignor, will duly assign,
transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Administrative Agent and has not theretofore been released pursuant to this
Agreement.
(c) At any time that an Assignor desires that the Collateral
Administrative Agent take any action to acknowledge or give effect to any
release of Collateral pursuant to the foregoing Section 10.8(a) or (b), such
Assignor shall deliver to the Collateral Administrative Agent a certificate
signed by a principal executive officer of such Assignor stating that the
release of the respective Collateral is permitted pursuant to Section 10.8(a) or
(b).
10.9. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with each
Assignor and the Collateral Administrative Agent.
10.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11. The Collateral Administrative Agent. The Collateral
Administrative Agent will hold in accordance with this Agreement all items of
the Collateral at any time received under this Agreement. It is expressly
understood and agreed that the obligations of the Collateral Administrative
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement and in Section 12 of the Credit Agreement.
The Collateral Administrative Agent shall act hereunder and thereunder on the
terms and conditions set forth herein and in Section 12 of the Credit Agreement.
10.12. Benefit of Agreement. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns and shall
inure to the benefit of and be enforceable by each of the parties hereto and its
successors and assigns.
10.13. Additional Assignors. It is understood and agreed that any
Wholly-Owned Subsidiary of the Borrower that is required to execute a
counterpart of this Agreement after the date hereof pursuant to the Credit
Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Administrative
Agent.
(H-25)
<PAGE> 239
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their duly authorized officers as of the date
first above written.
ASSIGNORS
DOUBLETREE CORPORATION
By
-------------------------------
Title:
SAMANTHA HOTEL CORPORATION
By
-------------------------------
Title:
HARBOR HOTEL CORPORATION
By
-------------------------------
Title:
DOUBLETREE PARTNERS
By
-------------------------------
Title:
(H-26)
<PAGE> 240
INNCO CORPORATION
By
-------------------------------
Title:
DOUBLETREE HOTELS CORPORATION
By
-------------------------------
Title:
DT MANAGEMENT, INC.
By
-------------------------------
Title:
ARIZONA DTM PASADENA, INC.
By
-------------------------------
Title:
DTM BURLINGAME, INC.
By
-------------------------------
Title:
(H-27)
<PAGE> 241
DTM CAMBRIDGE, INC.
By
-------------------------------
Title:
DTM PALM SPRINGS, INC.
By
-------------------------------
Title:
DTM WALNUT CREEK, INC.
By
-------------------------------
Title:
DTM COCONUT GROVE, INC.
By
-------------------------------
Title:
DTM NASHVILLE, INC.
By
-------------------------------
Title:
DTM SANTA CLARA, INC.
By
-------------------------------
Title:
(H-28)
<PAGE> 242
DTM VENTURA, INC.
By
-------------------------------
Title:
DTM ST. LOUIS, INC.
By
-------------------------------
Title:
DTM OKLAHOMA, INC.
By
-------------------------------
Title:
DTM TULSA, INC.
By
-------------------------------
Title:
DOUBLETREE OF PHOENIX, INC.
By
-------------------------------
Title:
HOSCO CORPORATION
By
-------------------------------
Title:
DOUBLETREE HOTEL SYSTEMS, INC.
By
-------------------------------
Title:
(H-29)
<PAGE> 243
COMPRIS HOTEL CORPORATION
By
-------------------------------
Title:
DT REAL ESTATE, INC.
By
-------------------------------
Title:
DTR PAH HOLDING, INC.
By
-------------------------------
Title:
DTR CAMBRIDGE, INC.
By
-------------------------------
Title:
(H-30)
<PAGE> 244
DTR SONORAN HOLDING, INC.
By
-------------------------------
Title:
DTM ATLANTIC CITY, INC.
By
-------------------------------
Title:
DTR WEST MONTROSE, INC.
By
-------------------------------
Title:
RED LION HOTELS, INC.
By
-------------------------------
Title:
Accepted and Agreed to:
THE BANK OF NOVA SCOTIA,
as Collateral Administrative Agent
By:
----------------------------------
Title:
(H-31)
<PAGE> 245
ANNEX A
to
SECURITY
AGREEMENT
---------
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
(H-32)
<PAGE> 246
ANNEX B
to
SECURITY
AGREEMENT
---------
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location
-------- --------
(H-33)
<PAGE> 247
ANNEX C
to
SECURITY
AGREEMENT
---------
SCHEDULE OF TRADE AND FICTITIOUS NAMES
(H-34)
<PAGE> 248
ANNEX D
to
SECURITY
AGREEMENT
---------
SCHEDULE OF MARKS
(H-35)
<PAGE> 249
ANNEX E
to
SECURITY
AGREEMENT
---------
SCHEDULE OF PATENTS
(H-36)
<PAGE> 250
ANNEX F
to
SECURITY
AGREEMENT
---------
SCHEDULE OF COPYRIGHTS
(H-37)
<PAGE> 251
ANNEX G
to
SECURITY
AGREEMENT
---------
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, [Name of Assignor], a __________ [partnership]
[corporation] ("the Assignor") with principal offices at
____________________________, hereby assigns and grants to The Bank of Nova
Scotia, as Collateral Administrative Agent, with principal offices at 600
Peachtree Street, N.E., Suite 2700, Atlanta, Georgia 30308 (the "Assignee"), a
security interest in (i) all of the Assignor's right, title and interest in and
to the United States trademarks, trademark registrations and trademark
applications (the "Marks") set forth on Schedule A attached hereto, (ii) all of
the Assignor's rights, title and interest in and to the United States patents
(the "Patents") set forth on Schedule B attached hereto, in each case together
with (iii) all Proceeds (as such term is defined in the Security Agreement
referred to below) and products of the Marks and Patents, (iv) the goodwill of
the businesses with which the Marks are associated and (v) all causes of action
arising prior to or after the date hereof for infringement of any of the Marks
and Patents or unfair competition regarding the same.
THIS ASSIGNMENT is made to secure the satisfactory performance and
payment of all the Obligations of the Assignor, as such term is defined in the
Security Agreement among the Assignor, the other assignors from time to time
party thereto and the Assignee, dated as November 8, 1996 (as amended from time
to time, the "Security Agreement"). Upon the occurrence of the Termination Date
(as defined in the Security Agreement), the Assignee shall, upon such
satisfaction, execute, acknowledge, and deliver to the Assignor an instrument in
writing releasing the security interest in the Marks and Patents acquired under
this Assignment.
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the
(H-38)
<PAGE> 252
Security Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the ____ day of _________, 199__.
[NAME OF ASSIGNOR],
Assignor
By______________________________________
Title:
THE BANK OF NOVA SCOTIA,
as Collateral Administrative Agent, Assignee
By______________________________________
Title:
(H-39)
<PAGE> 253
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 199_, before me personally came
________ _________________ who, being by me duly sworn, did state as follows:
that [s]he is _______________ of [Name of Assignor], that [s]he is authorized to
execute the foregoing Assignment on behalf of said [partnership] [corporation]
and that [s]he did so by authority of the [Executive Committee] [Board of
Directors] of said [partnership] [corporation].
___________________________
Notary Public
(H-40)
<PAGE> 254
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 199_, before me personally came
________ _____________________ who, being by me duly sworn, did state as
follows: that he is __________________ of The Bank of Nova Scotia that he is
authorized to execute the foregoing Assignment on behalf of said corporation and
that he did so by authority of the Board of Directors of said corporation.
___________________________
Notary Public
(H-41)
<PAGE> 255
SCHEDULE A
MARK REG. NO. REG. DATE
- ---- -------- ---------
(H-42)
<PAGE> 256
SCHEDULE B
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
(H-43)
<PAGE> 257
ANNEX H
to
SECURITY
AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Name of Assignor], a _______________ [corporation]
[partnership] (the "Assignor"), having its chief executive office at
________________________, _______________, is the owner of all right, title and
interest in and to the United States copyrights and associated United States
copyright registrations and applications for registration set forth in Schedule
A attached hereto;
WHEREAS, THE BANK OF NOVA SCOTIA, as Collateral Administrative Agent,
having its principal offices at 600 Peachtree Street, N.E., Suite 2700, Atlanta,
Georgia 30308 (the "Assignee"), desires to acquire a security interest in said
copyrights and copyright registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign to the Assignee, and to
grant to the Assignee a security interest in and lien upon the copyrights and
copyright registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of November 8, 1996, made by the Assignor, the
other assignors from time to time party thereto and the Assignee (as amended
from time to time, the "Security Agreement"), the Assignor hereby assigns to the
Assignee, and grants to the Assignee a security interest in the copyrights and
copyright registrations and applications therefor set forth in Schedule A
attached hereto.
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
(H-44)
<PAGE> 258
Executed at New York, New York, the __ day of _________, 199_.
[NAME OF ASSIGNOR], as Assignor
By_______________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA, as
Collateral Administrative Agent, Assignee
By_______________________________________
Name:
Title:
(H-45)
<PAGE> 259
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _________, 199_, before me personally came
___________ _______________, who being duly sworn, did depose and say that [s]he
is ___________________ of [Name of Assignor], that [s]he is authorized to
execute the foregoing Assignment on behalf of said [partnership] [corporation]
and that [s]he did so by authority of the [Executive Committee] [Board of
Directors] of said [partnership] [corporation].
___________________________
Notary Public
(H-46)
<PAGE> 260
SCHEDULE A
U.S. COPYRIGHTS
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
------- ---- ---------------
(H-47)
<PAGE> 261
EXHIBIT I
SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY, dated as of November 8, 1996 (as
amended, modified or supplemented from time to time, this "Guaranty"), made by
each of the undersigned guarantors (each a "Guarantor," and together with any
other entity that becomes a guarantor hereunder pursuant to Section 25 hereof,
the "Guarantors"). Except as otherwise defined herein, capitalized terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Doubletree Corporation (the "Borrower"), the lenders
from time to time party thereto (the "Banks"), Morgan Stanley Senior Funding,
Inc., as Syndication Agent and as Arranger (the "Syndication Agent"), and The
Bank of Nova Scotia, as Administrative Agent (together with any successor
administrative agent, the "Administrative Agent"), have entered into a Credit
Agreement, dated as of November 8, 1996 (as amended, modified, or supplemented
from time to time, the "Credit Agreement"), providing for the making of Loans
and the issuance of, and participation in, Letters of Credit, as contemplated
therein (the Banks, the Syndication Agent, the Collateral Administrative Agent
and the Administrative Agent are herein called the "Bank Creditors");
WHEREAS, the Borrower and one or more of its respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the Credit Agreement for
any reason, together with such Bank's or affiliate's successors and assigns, if
any, collectively, the "Other Creditors," and together with the Bank Creditors,
the "Secured Creditors");
WHEREAS, each Guarantor is a direct or indirect Wholly-Owned
Subsidiary of the Borrower;
WHEREAS, it is a condition to the making of Loans and the
issuance of Letters of Credit under the Credit Agreement that each Guarantor
shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans and the issuance of Letters of Credit under the Credit
Agreement and the entering into of Interest Rate Protection Agreements or Other
Hedging Agreements and, accordingly, desires to execute this Guaranty in order
to satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Secured Creditors and hereby covenants and agrees with
each Secured Creditor as follows:
I. Each Guarantor, jointly and severally, irrevocably,
absolutely and unconditionally guarantees: (i) to the Bank Creditors the full
and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of (x) the principal of and interest on the Notes issued by, and the
(I-1)
<PAGE> 262
Loans made to, the Borrower under the Credit Agreement, and all reimbursement
obligations and Unpaid Drawings with respect to Letters of Credit issued under
the Credit Agreement and (y) all other obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due), liabilities and indebtedness owing by the Borrower to the Bank
Creditors under the Credit Agreement or any other Credit Document to which the
Borrower is a party (including, without limitation, indemnities, Fees and
interest thereon (including any interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding, whether or not such
interest is an allowed claim against the debtor in any such proceeding)),
whether now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement or any such other Credit Document and the
due performance and compliance by the Borrower with all of the terms, conditions
and agreements contained in the Credit Documents (all such principal, interest,
liabilities, indebtedness and obligations being herein collectively called the
"Credit Document Obligations"); and (ii) to each Other Creditor the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due),
liabilities and indebtedness owing by the Borrower or any other Subsidiary of
the Borrower under any Interest Rate Protection Agreement or Other Hedging
Agreement, whether now in existence or hereafter arising, and the due
performance and compliance by the Borrower or such Subsidiary with all of the
terms, conditions and agreements contained in the Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations, liabilities and
indebtedness being herein collectively called the "Other Obligations," and
together with the Credit Document Obligations, the "Guaranteed Obligations").
Each Guarantor understands, agrees and confirms that the Secured Creditors may
enforce this Guaranty up to the full amount of the Guaranteed Obligations
against such Guarantor without proceeding against any other Guarantor, the
Borrower, against any security for the Guaranteed Obligations, or under any
other guaranty covering all or a portion of the Guaranteed Obligations.
II. Additionally, each Guarantor, jointly and severally,
unconditionally, absolutely and irrevocably, guarantees the payment of any and
all Guaranteed Obligations whether or not due or payable by the Borrower or any
Subsidiary thereof upon the occurrence in respect of the Borrower or any such
Subsidiary of any of the events specified in Section 10.05 of the Credit
Agreement, and unconditionally and irrevocably, jointly and severally, promises
to pay such Guaranteed Obligations to the Secured Creditors, or order, on
demand, in legal tender of the United States. This Guaranty shall constitute a
guaranty of payment, and not of collection.
III. The liability of each Guarantor hereunder is primary,
absolute and unconditional and is exclusive and independent of any security for
or other guaranty of the indebtedness of the Borrower or any Subsidiary thereof
whether executed by such Guarantor, any other Guarantor, any other guarantor or
by any other party, and the liability of each Guarantor hereunder shall not be
affected or impaired by any circumstance or occurrence whatsoever (other than
the indefeasible satisfaction in full in cash of the Guaranteed Obligations),
including, without limitation: (a) any direction as to application of payment by
the Borrower or any Subsidiary thereof or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution,
termination or increase, decrease or change in personnel by the Borrower or any
Subsidiary thereof, (e) any payment made to any Secured Creditor on the
indebtedness which any Secured Creditor repays the Borrower or any Subsidiary
thereof pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding, (f) any action or inaction by the Secured Creditors as
contemplated in Section 6 hereof or (g) any invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations or of any
security therefor.
IV. The obligations of each Guarantor hereunder are
independent of the obligations of any other Guarantor, any other guarantor, the
Borrower or any Subsidiary thereof, and a separate action or
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actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other Guarantor, any other guarantor, the Borrower
or any Subsidiary thereof and whether or not any other Guarantor, any other
guarantor, the Borrower or any Subsidiary thereof be joined in any such action
or actions. Each Guarantor waives, to the fullest extent permitted by law, the
benefits of any statute of limitations affecting its liability hereunder or the
enforcement thereof. To the extent permitted by law, any payment by the Borrower
or any Subsidiary thereof or other circumstance which operates to toll any
statute of limitations as to the Borrower or any such Subsidiary shall operate
to toll the statute of limitations as to each Guarantor.
V. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by the Administrative Agent, the Collateral Administrative Agent or any other
Secured Creditor against, and any other notice to, any party liable thereon
(including such Guarantor, any other Guarantor, any other guarantor, the
Borrower or any Subsidiary thereof).
VI. Any Secured Creditor may at any time and from time to time
without the consent of, or notice to, any Guarantor, without incurring
responsibility to such Guarantor, without impairing or releasing the obligations
of such Guarantor hereunder, upon or without any terms or conditions and in
whole or in part:
A. change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
B. take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
C. exercise or refrain from exercising any rights against the
Borrower, any other Credit Party, any Subsidiary thereof or otherwise
act or refrain from acting;
D. release or substitute any one or more endorsers,
Guarantors, other guarantors, the Borrower, any Subsidiary thereof or
other obligors;
E. settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower or
any Subsidiary thereof to creditors of the Borrower or such Subsidiary
other than the Secured Creditors;
F. apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower or any Subsidiary thereof
to the Secured Creditors regardless of what liabilities of the Borrower
or such Subsidiary remain unpaid;
G. consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement
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any of the Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of such other instruments or
agreements;
H. act or fail to act in any manner referred to in this
Guaranty which may deprive such Guarantor of its right to subrogation
against the Borrower or any Subsidiary thereof to recover full
indemnity for any payments made pursuant to this Guaranty; and/or
I. take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of such Guarantor from its liabilities under this Guaranty.
VII. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Secured Creditor in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which any Secured Creditor would otherwise
have. No notice to or demand on any Guarantor in any case shall entitle such
Guarantor to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of any Secured Creditor to
any other or further action in any circumstances without notice or demand. It is
not necessary for any Secured Creditor to inquire into the capacity or powers of
the Borrower or any Subsidiary thereof or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
VIII. Any indebtedness of the Borrower or any Subsidiary
thereof now or hereafter held by any Guarantor is hereby subordinated to the
indebtedness of the Borrower or such Subsidiary to the Secured Creditors, and
such indebtedness of the Borrower or such Subsidiary to any Guarantor, if the
Administrative Agent or the Collateral Administrative Agent, after the
occurrence and during the continuance of an Event of Default, so requests, shall
be collected, enforced and received by such Guarantor as trustee for the Secured
Creditors and be paid over to the Secured Creditors on account of the
indebtedness of the Borrower or such Subsidiary to the Secured Creditors, but
without affecting or impairing in any manner the liability of such Guarantor
under the other provisions of this Guaranty. Without limiting the generality of
the foregoing, each Guarantor hereby agrees with the Secured Creditors that it
will not exercise any right of subrogation which it may at any time otherwise
have as a result of this Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
IX. A. Each Guarantor waives any right (except as shall be
required by applicable law and cannot be waived) to require the Secured
Creditors to: (i) proceed against the Borrower, any Subsidiary thereof, any
other Guarantor, any other guarantor of the Guaranteed Obligations or any other
party; (ii) proceed against or exhaust any security held from the Borrower, any
Subsidiary thereof, any other Guarantor, any other guarantor of the Guaranteed
Obligations or any other party; or (iii) pursue any other remedy in the Secured
Creditors' power whatsoever. Each Guarantor waives any defense based on or
arising out of any defense of the Borrower, any Subsidiary thereof, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party
other than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any Subsidiary thereof, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower or any Subsidiary thereof other than
payment in full of the Guaranteed Obligations. The Secured Creditors may, at
their election, foreclose on any security held by the Administrative Agent, the
Collateral Administrative Agent or the other Secured
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Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable, or exercise any other right
or remedy the Secured Creditors may have against the Borrower or any Subsidiary
thereof or any other party, or any security, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full. Each Guarantor waives any defense
arising out of any such election by the Secured Creditors, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any Subsidiary thereof or any other party or any security.
B. Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's and each of its Subsidiary's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which such Guarantor assumes and incurs hereunder, and agrees that the
Secured Creditors shall have no duty to advise any Guarantor of information
known to them regarding such circumstances or risks.
(c) Each Guarantor understands, is aware and hereby
acknowledges that to the extent the Guaranteed Obligations are secured by real
property located in the State of California, such Guarantor shall be liable for
the full amount of its liability hereunder notwithstanding foreclosure on such
real property by trustee sale or any other reason impairing such Guarantor's or
any Secured Creditors' right to proceed against the Borrower or any Subsidiary
thereof. Each Guarantor hereby waives, to the fullest extent permitted by law,
all rights and benefits under Section 2809 of the California Civil Code
purporting to reduce a guarantor's obligation in proportion to the principal
obligation. Each Guarantor hereby waives (to the fullest extent permitted by
applicable law) all rights and benefits under Section 580a of the California
Code of Civil Procedure purporting to limit the amount of any deficiency
judgment which might be recoverable following the occurrence of a trustee's sale
under a deed of trust and all rights and benefits under Section 580b of the
California Code of Civil Procedure stating that no deficiency may be recovered
on a real property purchase money obligation. Each Guarantor further
understands, is aware and hereby acknowledges that if the Secured Creditors
elect to nonjudicially foreclose on any real property security located in the
State of California any right of subrogation of such Guarantor against the
Secured Creditors may be impaired or extinguished and that as a result of such
impairment or extinguishment of subrogation rights, such Guarantor will have a
defense to a deficiency judgment arising out of the operation of (i) Section
580d of the California Code of Civil Procedure which states that no deficiency
may be recovered on a note secured by a deed of trust on real property in case
such real property is sold under the power of sale contained in such deed of
trust, and (ii) related principles of estoppel. To the fullest extent permitted
by law, each Guarantor waives all rights and benefits and any defense arising
out of the operation of Section 580d of the California Code of Civil Procedure
and related principles of estoppel, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of such Guarantor against the Borrower or the Subsidiary thereof or any other
party or any security. In addition, each Guarantor hereby waives, to the fullest
extent permitted by applicable laws, without limiting the generality of the
foregoing or any other provision hereof, all rights and benefits which might
otherwise be available to such Guarantor under Section 726 of the California
Code of Civil Procedure and all rights and benefits which might otherwise be
available to such Guarantor under California Civil Code Sections 2809, 2810,
2815, 2819, 2821, 2839, 2845, 2848, 2849, 2850, 2899 and 3433.
(d) Each Guarantor hereby further waives (to the fullest
extent permitted by applicable law): (i) all rights and defenses arising out of
an election of remedies by the Secured Creditors, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
Guaranteed Obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise; (ii) such
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Guarantor's rights of subrogation and reimbursement and any other rights and
defenses available to such Guarantor by reason of the California Civil Code
Sections 2787 to 2855, inclusive, including, without limitation, (x) any
defenses such Guarantor may have to the Guaranteed Obligations by reason of an
election of remedies by the Secured Creditors and (y) any rights or defenses
such Guarantor may have by reason of protection afforded to the principal
borrower with respect to the obligation so guaranteed pursuant to the
antideficiency or other laws of the State of California limiting or discharging
the borrower's indebtedness, including, without limitation, California Code of
Civil Procedure Sections 580a, 580b, 580d or 726.
X. The Secured Creditors agree that this Guaranty may be
enforced only by the action of the Administrative Agent or the Collateral
Administrative Agent, in each case acting upon the instructions of the Required
Banks (or, after the date on which all Credit Document Obligations have been
paid in full, the holders of at least a majority of the outstanding Other
Obligations) and that no other Secured Creditors shall have any right
individually to seek to enforce or to enforce this Guaranty or to realize upon
the security to be granted by the Security Documents, it being understood and
agreed that such rights and remedies may be exercised by the Administrative
Agent or the Collateral Administrative Agent or the holders of at least a
majority of the outstanding Other Obligations, as the case may be, for the
benefit of the Secured Creditors upon the terms of this Guaranty and the
Security Documents. The Secured Creditors further agree that this Guaranty may
not be enforced against any director, officer, employee, partner or stockholder
of any Guarantor (except to the extent such partner or stockholder is also a
Guarantor hereunder).
XI. In order to induce the Banks to make Loans and issue or
participate in Letters of Credit pursuant to the Credit Agreement, and in order
to induce the Other Creditors to execute, deliver and perform the Interest Rate
Protection Agreements or Other Hedging Agreements, each Guarantor represents,
warrants and covenants that:
A. Such Guarantor (i) is a duly organized and validly
existing corporation or partnership in good standing under the laws of
the jurisdiction of its organization, (ii) has the corporate or
partnership power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to
engage and (iii) is duly qualified and is authorized to do business and
is in good standing in each jurisdiction where the conduct of its
business requires such qualification except for failures to be so
qualified which, individually or in the aggregate, could not reasonably
be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or of the Borrower and its
Subsidiaries taken as a whole.
B. Such Guarantor has the corporate or partnership power and
authority to execute, deliver and perform the terms and provisions of
this Guaranty and each other Document to which it is a party and has
taken all necessary corporate or partnership action to authorize the
execution, delivery and performance by it of this Guaranty and each
such other Document. Such Guarantor has duly executed and delivered
this Guaranty and each other Document to which it is a party, and this
Guaranty and each such other Document constitutes the legal, valid and
binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof or thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is
sought in equity or at law).
C. Neither the execution, delivery or performance by such
Guarantor of this Guaranty or any other Document to which it is a
party, nor compliance by it with the terms and provisions hereof and
thereof, will (i) contravene any provision of any applicable law,
statute, rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality
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(other than contraventions relating to an Acquisition Document which,
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect (x) on the Acquisition or the
Transaction or (y) on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole), (ii) conflict with or
result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation
or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the property or
assets of such Guarantor or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or
loan agreement, or any other material agreement, contract or instrument
to which such Guarantor or any of its Subsidiaries is a party or by
which it or any of its property or assets is bound or to which it may
be subject or (iii) violate any provision of the certificate of
incorporation, by-laws or partnership agreement (or equivalent
organizational documents) of such Guarantor or any of its Subsidiaries
(other than violations of immaterial partnership agreements existing on
the Initial Borrowing Date by reason of the Acquisition).
D. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as
have been obtained or made), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to
authorize, or is required for, (i) the execution, delivery and
performance of this Guaranty by such Guarantor or any other Document to
which such Guarantor is a party or (ii) the legality, validity, binding
effect or enforceability of this Guaranty or any other Document to
which such Guarantor is a party.
E. There are no actions, suits or proceedings pending or, to
the best knowledge of such Guarantor, threatened (i) with respect to
this Guaranty or any other Document to which such Guarantor is a party
or (ii) with respect to such Guarantor that are reasonably likely to
materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries taken as a whole.
XII. Each Guarantor covenants and agrees that on and after
the Effective Date and until the termination of the Total Commitments and all
Interest Rate Protection Agreements or Other Hedging Agreements and when no Note
or Letter of Credit remains outstanding and all Guaranteed Obligations have been
paid in full, such Guarantor will comply, and will cause each of its
Subsidiaries to comply, with all of the applicable provisions, covenants and
agreements contained in Sections 8 and 9 of the Credit Agreement, and will take,
or will refrain from taking, as the case may be, all actions that are necessary
to be taken or not taken so that it is not in violation of any provision,
covenant or agreement contained in Section 8 or 9 of the Credit Agreement, and
so that no Default or Event of Default, is caused by the actions of such
Guarantor or any of its Subsidiaries.
XIII. The Guarantors hereby jointly and severally agree to pay
all reasonable out-of-pocket costs and expenses of each Secured Creditor in
connection with the enforcement of this Guaranty and of each Agent in connection
with any amendment, waiver or consent relating hereto (including in each case,
without limitation, the reasonable fees and disbursements of counsel employed by
each Secured Creditor).
XIV. This Guaranty shall be binding upon each Guarantor and
its successors and assigns and shall inure to the benefit of the Secured
Creditors and their successors and assigns.
XV. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and with the written consent of either
(x) the Required Banks (or to the extent required by Section 13.12 of the Credit
Agreement, with the written consent of each Bank) at all times prior to the time
on which all Credit Document Obligations have been paid in full or (y) the
holders of at least a majority of the outstanding
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Other Obligations at all times after the time on which all Credit Document
Obligations have been paid in full; provided, that any change, waiver,
modification or variance affecting the rights and benefits of a single Class (as
defined below) of Secured Creditors (and not all Secured Creditors in a like or
similar manner) shall also require the written consent of the Requisite
Creditors (as defined below) of such Class of Secured Creditors (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released). For the purpose of this
Guaranty, the term "Class" shall mean each class of Secured Creditors, i.e.,
whether (x) the Bank Creditors as holders of the Credit Document Obligations or
(y) the Other Creditors as the holders of the Other Obligations. For the purpose
of this Guaranty, the term "Requisite Creditors" of any Class shall mean (x)
with respect to the Credit Document Obligations, the Required Banks (or to the
extent required by Section 13.12 of the Credit Agreement, each Bank) and (y)
with respect to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection or
Other Hedging Agreements.
XVI. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents and Interest Rate Protection
Agreements or Other Hedging Agreements has been made available to its principal
executive officers and such officers are familiar with the contents thereof.
XVII. In addition to any rights now or hereafter granted
under applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement continuing after any applicable grace period), each Secured
Creditor is hereby authorized, at any time or from time to time, without notice
to any Guarantor or to any other Person, any such notice being expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Secured
Creditor to or for the credit or the account of such Guarantor, against and on
account of the obligations and liabilities of such Guarantor to such Secured
Creditor under this Guaranty, irrespective of whether or not such Secured
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Notwithstanding anything to the contrary contained in this Section
17, no Secured Creditor shall exercise any such right of set-off without the
prior written consent of the Agents or the Required Banks so long as the
Guaranteed Obligations shall be secured by any real property located in the
State of California, it being understood and agreed, however, that this sentence
is for the sole benefit of the Secured Creditors and may be amended, modified or
waived in any respect by the Required Banks without the requirement of prior
notice to or consent by any Credit Party and does not constitute a waiver of any
rights against any Credit Party or against any Collateral.
XVIII. Each Guarantor hereby confirms that it is its intention
that this Guaranty not constitute a fraudulent transfer or conveyance for
purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act or any
similar Federal or state law. To effectuate the foregoing intention, each
Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed
by such Guarantor shall be limited to such amount as will, after giving effect
to such maximum amount and all other (contingent or otherwise) liabilities of
such Guarantor that are relevant under such laws, and after giving effect to any
rights to contribution pursuant to any agreement providing for an equitable
contribution among such Guarantor and the other Guarantors, result in the
Guaranteed Obligations of such Guarantor in respect of such maximum amount not
constituting a fraudulent transfer or conveyance.
XIX. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement, (ii)
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in the case of any Guarantor, at the chief executive office of such Guarantor as
set forth in the Security Agreement and (iii) in the case of any Other Creditor,
at such address as such Other Creditor shall have specified in writing to the
Guarantors; or in any case at such other address as any of the Persons listed
above may hereafter notify the others in writing.
XX. If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including the Borrower or any Subsidiary thereof),
then and in such event each Guarantor agrees that any such judgment, decree,
order, settlement or compromise shall be binding upon such Guarantor,
notwithstanding any revocation hereof or other instrument evidencing any
liability of the Borrower or any Subsidiary thereof, and such Guarantor shall be
and remain liable to the aforesaid payees hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee.
XXI. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action
or proceeding with respect to this Guaranty or any other Credit Document to
which any Guarantor is a party may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, each
Guarantor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
Guarantor hereby further irrevocably waives any claim that any such court lacks
personal jurisdiction over such Guarantor, and agrees not to plead or claim in
any legal action or proceeding with respect to this Guaranty or any other Credit
Document to which such Guarantor is a party brought in any of the aforesaid
courts that any such court lacks personal jurisdiction over such Guarantor. Each
Guarantor further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such
Guarantor at its address set forth opposite its signature below, such service to
become effective 30 days after such mailing. Each Guarantor hereby irrevocably
waives any objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any action or proceeding commenced hereunder
or under any other Credit Document to which such Guarantor is a party that such
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any of the Secured Creditors to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest
extent permitted by applicable law) any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Guaranty or any other Credit Document
to which such Guarantor is a party brought in the courts referred to in clause
(a) above and hereby further irrevocably waives and agrees not to plead or claim
in any such court that such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(C) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS
ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH
GUARANTOR IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(I-9)
<PAGE> 270
XXII. In the event that all of the capital stock of one or
more Guarantors is sold or otherwise disposed of or liquidated in compliance
with the requirements of Section 9.02 of the Credit Agreement (or such sale or
other disposition has been approved in writing by the Required Banks (or all
Banks if required by Section 13.12 of the Credit Agreement)) and the proceeds of
such sale, disposition or liquidation are applied in accordance with the
provisions of the Credit Agreement, to the extent applicable, such Guarantor
shall upon consummation of such sale or other disposition (except to the extent
that such sale or disposition is to the Borrower or another Subsidiary thereof)
be released from this Guaranty automatically and without further action and this
Guaranty shall, as to each such Guarantor or Guarantors, terminate, and have no
further force or effect (it being understood and agreed that the sale of one or
more Persons that own, directly or indirectly, all of the capital stock or
partnership interests of any Guarantor shall be deemed to be a sale of such
Guarantor for the purposes of this Section 22).
XXIII. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantors and the
Administrative Agent.
XXIV. All payments made by any Guarantor hereunder will be
made without setoff, counterclaim or other defense.
XXV. It is understood and agreed that any Wholly-Owned
Subsidiary of the Borrower that is required to execute a counterpart of this
Guaranty after the date hereof pursuant to the Credit Agreement shall
automatically become a Guarantor hereunder by executing a counterpart hereof and
delivering the same to the Administrative Agent.
XXVI. At any time a payment in respect of the Guaranteed
Obligations is made under this Guaranty, the right of contribution of each
Guarantor against each other Guarantor shall be determined as provided in the
immediately following sentence, with the right of contribution of each Guarantor
to be revised and restated as of each date on which a payment (a "Relevant
Payment") is made on the Guaranteed Obligations under this Guaranty. At any time
that a Relevant Payment is made by a Guarantor that results in the aggregate
payments made by such Guarantor in respect of the Guaranteed Obligations to and
including the date of the Relevant Payment exceeding such Guarantor's
Contribution Percentage (as defined below) of the aggregate payments made by all
Guarantors in respect of the Guaranteed Obligations to and including the date of
the Relevant Payment (such excess, the "Aggregate Excess Amount"), each such
Guarantor shall have a right of contribution against each other Guarantor who
has made payments in respect of the Guaranteed Obligations to and including the
date of the Relevant Payment in an aggregate amount less than such other
Guarantor's Contribution Percentage of the aggregate payments made to and
including the date of the Relevant Payment by all Guarantors in respect of the
Guaranteed Obligations (the aggregate amount of such deficit, the "Aggregate
Deficit Amount") in an amount equal to (x) a fraction the numerator of which is
the Aggregate Excess Amount of such Guarantor and the denominator of which is
the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate
Deficit Amount of such other Guarantor. A Guarantor's right of contribution
pursuant to the preceding sentences shall arise at the time of each computation,
subject to adjustment to the time of any subsequent computation; provided, that
no Guarantor may take any action to enforce such right until the Guaranteed
Obligations have been paid in full and the Total Commitments have been
terminated, it being expressly recognized and agreed by all parties hereto that
any Guarantor's right of contribution arising pursuant to this Contribution
Agreement against any other Guarantor shall be expressly junior and subordinate
to such other Guarantor's obligations and liabilities in respect of the
Guaranteed Obligations and any other obligations owing under this Guaranty. As
used in this Section 27: (i) each Guarantor's "Contribution Percentage" shall
mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined
below) of such Guarantor by (y) the aggregate Adjusted Net Worth of all
Guarantors; (ii) the "Adjusted Net Worth" of each Guarantor shall mean the
greater of (x) the Net Worth (as defined below) of such Guarantor and (y) zero;
and (iii) the "Net
(I-10)
<PAGE> 271
Worth" of each Guarantor shall mean the amount by which the fair salable value
of such Guarantor's assets on the date of any Relevant Payment exceeds its
existing debts and other liabilities (including contingent liabilities, but
without giving effect to any Guaranteed Obligations arising under this Guaranty)
on such date. All parties hereto recognize and agree that, except for any right
of contribution arising pursuant to this Section 27, each Guarantor who makes
any payment in respect of the Guaranteed Obligations shall have no right of
contribution or subrogation against any other Guarantor in respect of such
payment. Each of the Guarantors recognizes and acknowledges that the rights to
contribution arising hereunder shall constitute an asset in favor of the party
entitled to such contribution. In this connection, each Guarantor has the right
to waive its contribution right against any Guarantor to the extent that after
giving effect to such waiver such Guarantor would remain solvent, in the
determination of the Required Banks.
* * *
(I-11)
<PAGE> 272
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
GUARANTORS
SAMANTHA HOTEL CORPORATION
By
----------------------------------
Title:
HARBOR HOTEL CORPORATION
By
----------------------------------
Title:
DOUBLETREE PARTNERS
By
----------------------------------
Title:
INNCO CORPORATION
By
----------------------------------
Title:
DOUBLETREE HOTELS CORPORATION
By
----------------------------------
Title:
(I-12)
<PAGE> 273
DT MANAGEMENT, INC.
By
---------------------------------
Title:
ARIZONA DTM PASADENA, INC.
By
---------------------------------
Title:
DTM BURLINGAME, INC.
By
---------------------------------
Title:
DTM CAMBRIDGE, INC.
By
---------------------------------
Title:
DTM PALM SPRINGS, INC.
By
---------------------------------
Title:
DTM WALNUT CREEK, INC.
By
---------------------------------
Title:
(I-13)
<PAGE> 274
DTM COCONUT GROVE, INC.
By
---------------------------------
Title:
DTM NASHVILLE, INC.
By
---------------------------------
Title:
DTM SANTA CLARA, INC.
By
---------------------------------
Title:
DTM VENTURA, INC.
By
---------------------------------
Title:
DTM ST. LOUIS, INC.
By
---------------------------------
Title:
DTM OKLAHOMA, INC.
By
---------------------------------
Title:
(I-14)
<PAGE> 275
DTM TULSA, INC.
By
---------------------------------
Title:
DOUBLETREE OF PHOENIX, INC.
By
---------------------------------
Title:
HOSCO CORPORATION
By
---------------------------------
Title:
DOUBLETREE HOTEL SYSTEMS, INC.
By
---------------------------------
Title:
COMPRIS HOTEL CORPORATION
By
---------------------------------
Title:
DT REAL ESTATE, INC.
By
---------------------------------
Title:
DTR PAH HOLDING, INC.
By
---------------------------------
Title:
(I-15)
<PAGE> 276
DTR CAMBRIDGE, INC.
By
---------------------------------
Title:
DTR SONORAN HOLDING, INC.
By
---------------------------------
Title:
DTM ATLANTIC CITY, INC.
By
---------------------------------
Title:
DTR WEST MONTROSE, INC.
By
---------------------------------
Title:
RED LION HOTELS, INC.
By
---------------------------------
Title:
Accepted and Agreed to:
THE BANK OF NOVA SCOTIA,
as Collateral Administrative Agent
By:__________________________________
Title:
(I-16)
<PAGE> 277
EXHIBIT J
SOLVENCY CERTIFICATE
I, the undersigned, the Chief Financial Officer of Doubletree
Corporation (the "Borrower"), do hereby certify on behalf of the Borrower that:
1. This Certificate is furnished to the Agents and each of the
Banks pursuant to Section 5.16(i) of the Credit Agreement, dated as of November
8, 1996, among the Borrower, the Banks party thereto from time to time, Morgan
Stanley Senior Funding, Inc., as Syndication Agent and as Arranger, and The Bank
of Nova Scotia, as Administrative Agent (such Credit Agreement, as in effect on
the date of this Certificate, being herein called the "Credit Agreement").
Unless otherwise defined herein, capitalized terms used in this Certificate
shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall
have the following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, of the
Borrower and its Subsidiaries (on a consolidated basis) and
the Borrower (on a stand-alone basis) would change hands
between a willing buyer and a willing seller, within a
commercially reasonable period of time, each having reasonable
knowledge of the relevant facts, with neither being under any
compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing
seller from an independent willing buyer if the assets of the
Borrower and its Subsidiaries (on a consolidated basis) and
the Borrower (on a stand-alone basis) are sold with reasonable
promptness under normal selling conditions in a current
market.
(c) "New Financing"
The Indebtedness incurred or to be incurred by the Borrower
and its Subsidiaries under the Credit Documents (assuming the
full utilization by the Borrower of the Revolving Loan
Commitments under the Credit Agreement) and the other
Documents and all other financings contemplated by the
Documents, in each case after giving effect to the Transaction
and the incurrence of all financings contemplated therewith.
(d) "Stated Liabilities"
The recorded liabilities (including contingent liabilities)
that would be recorded in accordance with generally accepted
accounting principles ("GAAP") of the Borrower and its
Subsidiaries (on a consolidated basis) and the Borrower (on a
stand-alone basis), in each case, at November __, 1996 after
giving effect to the Transaction, determined in accordance
with GAAP consistently applied, together with, (i) the net
change in long-term debt (including current maturities)
between December 31, 1995 and the date hereof and (ii) without
duplication, the amount of all New Financing.
(e) "Identified Contingent Liabilities"
(J-1)
<PAGE> 278
The maximum estimated amount of liabilities reasonably likely
to result from pending litigation, asserted claims and
assessments, guaranties, uninsured risks and other contingent
liabilities of each of the Borrower and its Subsidiaries (on a
consolidated basis) and the Borrower (on a stand-alone basis)
after giving effect to the Transaction (exclusive of such
contingent liabilities to the extent reflected in Stated
Liabilities).
(f) "Will be able to pay its Stated Liabilities and Identified
Contingent Liabilities, as they mature"
For the period from the date hereof through the Tranche B Term
Loan Maturity Date, each of the Borrower and its Subsidiaries
(on a consolidated basis) and the Borrower (on a stand-alone
basis) will have sufficient assets and cash flow to pay their
respective Stated Liabilities and Identified Contingent
Liabilities as those liabilities mature or otherwise become
payable.
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the Tranche B Term
Loan Maturity Date, each of the Borrower and its Subsidiaries
(on a consolidated basis) and the Borrower (on a stand-alone
basis), after consummation of the Transaction and all
Indebtedness (including the Loans) being incurred or assumed
and Liens created by the Borrower and its Subsidiaries in
connection therewith, is a going concern and has sufficient
capital to ensure that it will continue to be a going concern
for such period and to remain a going concern.
3. For purposes of this Certificate, I, or other officers of
the Borrower under my direction and supervision, have performed the following
procedures as of and for the periods set forth below.
(a) I have reviewed the financial statements (including the pro
forma financial statements) referred to in Section 7.05(a) of
the Credit Agreement.
(b) I have made inquiries of certain officials of the Borrower and
its Subsidiaries, who have responsibility for financial and
accounting matters regarding (i) the existence and amount of
Identified Contingent Liabilities associated with the business
of the Borrower and its Subsidiaries and (ii) whether the
unaudited pro forma consolidated financial statements referred
to in paragraph (a) above are in conformity with GAAP applied
on a basis substantially consistent with that of the audited
financial statements as at December 31, 1995.
(c) I have knowledge of and have reviewed to my satisfaction the
Credit Documents and the other Documents, and the respective
Schedules and Exhibits thereto.
(d) With respect to Identified Contingent Liabilities, I:
1. inquired of certain officials of the Borrower and its
Subsidiaries, who have responsibility for legal,
financial and accounting matters as to the existence
and estimated liability with respect to all
contingent liabilities known to them;
2. confirmed with officers of the Borrower and its
Subsidiaries, that, to the best of such officers'
knowledge, (i) all appropriate items were included in
Stated Liabilities or the listing of Identified
Contingent Liabilities and that (ii) the amounts
relating thereto were the maximum estimated amount of
liabilities reasonably likely to result therefrom as
of the date hereof; and
(J-2)
<PAGE> 279
(e) I have examined the Projections which have been delivered to
the Banks and considered the effect thereon of any changes
since the date of the preparation thereof on the results
projected therein. After such review, I hereby certify that in
my opinion the Projections are reasonable and the Projections
support the conclusions contained in paragraph 4 below.
(f) I have made inquiries of certain officers of the Borrower and
its Subsidiaries who have responsibility for financial
reporting and accounting matters regarding whether they were
aware of any events or conditions that, as of the date hereof,
would cause the Borrower and its Subsidiaries (on a
consolidated basis) and the Borrower (on a stand-alone basis),
after giving effect to the Transaction and the related
financing transactions (including the incurrence of the New
Financing), to (i) have assets with a Fair Value or Present
Fair Salable Value that are less than the sum of Stated
Liabilities and Identified Contingent Liabilities; (ii) have
Unreasonably Small Capital; or (iii) not be able to pay its
Stated Liabilities and Identified Contingent Liabilities as
they mature or otherwise become payable.
4. Based on and subject to the foregoing, I hereby certify on
behalf of the Borrower that, after giving effect to the Transaction and the
related financing transactions (including the incurrence of the New Financing),
it is my informed opinion that (i) the Fair Value and Present Fair Salable Value
of the assets of each of the Borrower and its Subsidiaries (on a consolidated
basis) and the Borrower (on a stand-alone basis) exceed its Stated Liabilities
and Identified Contingent Liabilities; (ii) each of the Borrower and its
Subsidiaries (on a consolidated basis) and the Borrower (on a stand-alone basis)
does not have Unreasonably Small Capital; and (iii) each of the Borrower and its
Subsidiaries (on a consolidated basis) and the Borrower (on a stand-alone basis)
will be able to pay its Stated Liabilities and Identified Contingent
Liabilities, as they mature or otherwise become payable.
IN WITNESS WHEREOF, I have hereto set my hand this 8th day of
November, 1996.
DOUBLETREE CORPORATION
By ____________________________________
Name:
Title: Chief Financial Officer
(J-3)
<PAGE> 280
EXHIBIT K
ASSIGNMENT AND ASSUMPTION AGREEMENT
DATE: ________ __, 19__
Reference is made to the Credit Agreement described in Item 2
of Annex I annexed hereto (as such Credit Agreement may hereafter be amended,
modified or supplemented from time to time, the "Credit Agreement"). Unless
defined in Annex I attached hereto, terms defined in the Credit Agreement are
used herein as therein defined. _____________ (the "Assignor") and
______________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I (the "Assigned Share") of all of the
outstanding rights and obligations under the Credit Agreement relating to the
facilities listed in Item 4 of Annex I, including, without limitation, [(x) in
the case of any assignment of all or any portion of the Total Term Loan
Commitment, all rights and obligations with respect to the Assigned Share of
such Total Term Loan Commitment,]1 (y) in the case of any assignment of all or
any portion of the Assignor's outstanding Tranche A Term Loans and/or Tranche B
Term Loans, all rights and obligations with respect to the Assigned Share of
such outstanding Tranche A Term Loans and/or Tranche B Term Loans and (z) in the
case of any assignment of all or any portion of the Assignor's Revolving Loan
Commitment, all rights and obligations with respect to the Assigned Share of the
Total Revolving Loan Commitment and all outstanding Revolving Loans, Swingline
Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claims; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of its Subsidiaries of any of their respective obligations under
the Credit Agreement or the other Credit Documents or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon any Agent, the Assignor or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent and the Syndication Agent to take such action as agents on
its behalf and to exercise such powers under the Credit
- -----------------------------
(1) Delete bracketed language in Assignment and Assumption Agreements
executed after the termination of the Total Term Loan Commitment.
(K-1)
<PAGE> 281
Agreement and the other Credit Documents as are delegated to the Administrative
Agent and the Syndication Agent by the terms thereof, together with such powers
as are reasonably incidental thereto; [and] (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank[; and (v) attaches
the forms and/or Certificate set forth in the penultimate sentence of section
13.04(b) of the Credit Agreement.(2)
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative Agent.
The effective date of this Assignment and Assumption Agreement shall be the date
of execution hereof by the Assignor and the Assignee, to the extent required by
the Credit Agreement, the receipt of the consent of each Agent and the Borrower,
receipt by the Administrative Agent of the assignment fee referred to in Section
13.04(b) of the Credit Agreement, and the recordation by the Administrative
Agent of the assignment effected hereby in the Register, unless otherwise
specified in Item 5 of Annex I (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to
the Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement and the other Credit
Documents.
6. It is agreed that upon the effectiveness hereof, the
Assignee shall be entitled to (x) all interest on the Assigned Share of the
Loans at the rates specified in Item 6 of Annex I, (y) all Commitment Commission
(if applicable) on the Assigned Share of the respective Commitments at the rate
specified in Item 7 of Annex I and (z) all Letter of Credit Fees (if applicable)
on the Assignee's participation in all Letters of Credit at the rate specified
in Item 8 of Annex I, which, in each case, accrue on and after the Settlement
Date, such interest and, if applicable, Commitment Commission and Letter of
Credit Fees, to be paid by the Administrative Agent directly to the Assignee. It
is further agreed that all payments of principal made on the Assigned Share of
the Loans which occur on and after the Settlement Date will be paid directly by
the Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing which
represents the Assigned Share of the principal amount of the respective Loans
made by the Assignor pursuant to the Credit Agreement which are outstanding on
the Settlement Date, net of any closing costs, and which are being assigned
hereunder. The Assignor and the Assignee shall make all appropriate adjustments
in payments under the Credit Agreement for periods prior to the Settlement Date
directly between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
- -------------------------
(2) If the Assignee is organized under the laws of a jurisdiction outside the
United States.
(K-2)
<PAGE> 282
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Assumption Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written, such execution
also being made on Annex I hereto.
[NAME OF ASSIGNOR],
as Assignor
By____________________________
Title:
[NAME OF ASSIGNEE],
as Assignee
By____________________________
Title:
[Acknowledged and Agreed:
MORGAN STANLEY SENIOR
FUNDING, INC., as Syndication Agent and as Arranger
By____________________________
Title:
THE BANK OF NOVA SCOTIA, as Administrative Agent
By____________________________
Title:
DOUBLETREE CORPORATION
By____________________________
Title:](3)
- ---------------------
(3) The consent of each Agent and the Borrower is required for assignments made
as (and to the extent) provided in Section 13.04(b)(y) of the Credit Agreement.
(K-3)
<PAGE> 283
ANNEX I
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. The Borrower: Doubletree Corporation.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of November 8, 1996, among Doubletree
Corporation, the lenders from time to time party thereto, Morgan
Stanley Senior Funding, Inc., as Syndication Agent and as Arranger, and
The Bank of Nova Scotia, as Administrative Agent.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
[Total [Total [Outstanding [Outstanding
Tranche Tranche Principal Principal Revolving
A Term Loan B Term Loan of A Term of B Term Loan
Commitment] Commitment] Loans] Loans] Commitment
----------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
a. Aggregate
Amount for
all Banks $_______ $_______ $________ $________ $________
b. Assigned Share _______% _______% ________% ________% ________%
c. Amount of
Assigned Share $_______(4) $_______(5) $_______(6) $________(7) $________
</TABLE>
5. Settlement Date:
6. Rate of Interest
to the Assignee: As set forth in Section 1.08 of the Credit
Agreement (unless otherwise agreed to by the
Assignor and the Assignee).(8)
7. Term Loan Commitment
Commission to the
- ---------------------------------
(4) Insert for assignments made before the termination of the Total Tranche A
Term Loan Commitment.
(5) Insert for assignments made before the Initial Borrowing Date.
(6) Insert for assignments made after the Initial Borrowing Date.
(7) Insert for assignments made after the Initial Borrowing Date.
(8) Each of the Borrowers and the Administrative Agent shall, following
recordation of such assignment by the Administrative Agent on the Register,
direct the entire amount of interest to the Assignee at the rate set forth in
Section 1.08 of the Credit Agreement, with the Assignor and Assignee effecting
any agreed upon sharing of interest through payments by the Assignee to the
Assignor.
(K-4)
<PAGE> 284
Assignee; As set forth in Section 3.01(a) of the Credit
Agreement (unless otherwise agreed to by the
Assignor and the Assignee).(9)
8. Revolving Loan
Commitment
Commission to
the Assignee: As set forth in Section 3.01(b) of the Credit
Agreement; (unless otherwise agreed to by the
Assignor and the Assignee).(10)
9. Letter of Credit
Fee to the
Assignee: As set forth in Section 3.01(c) of the Credit
Agreement (unless otherwise agreed to by the
Assignor and the Assignee).(11)
10. Notice:
ASSIGNEE:
__________________
__________________
__________________
__________________
Attention:
Telephone:
Telecopier:
Reference:
- --------------------------
(9) Insert "Not Applicable" in lieu of text if no portion of the Total Term Loan
Commitment is being assigned or for assignments made after the termination of
the Total Term Loan Commitment. The Borrower and the Administrative Agent shall,
following recordation of such assignment by the Administrative Agent on the
Register, direct the entire amount of the Term Loan Commitment Commission to the
Assignee at the rate set forth in Section 3.01(a) of the Credit Agreement, with
the Assignor and the Assignee effecting any agreed upon sharing of the Term Loan
Commitment Commission through payment by the Assignee to the Assignor.
(10) Insert "Not Applicable" in lieu of text if no portion of the Total
Revolving Loan Commitment is being assigned. The Borrower and the Administrative
Agent shall, following recordation of such assignment by the Administrative
Agent on the Register, direct the entire amount of the Revolving Loan Commitment
Commission to the Assignee at the rate set forth in Section 3.01(b) of the
Credit Agreement, with the Assignor and the Assignee effecting any agreed upon
sharing of the Revolving Loan Commitment Commission through payment by the
Assignee to the Assignor.
(11) Insert "Not Applicable" in lieu of text if no portion of the Total
Revolving Loan Commitment is being assigned. The Borrower and the Administrative
Agent shall, following recordation of such assignment by the Administrative
Agent on the Register, direct the entire amount of the Letter of Credit Fee to
the Assignee at the rate set forth in Section 3.01(c) of the Credit Agreement,
with the Assignor and the Assignee effecting any agreed upon sharing of the
Letter of Credit Fee through payment by the Assignee to the Assignor.
(K-5)
<PAGE> 285
Payment Instructions:
ASSIGNEE:
__________________
__________________
__________________
__________________
Attention:
Reference:
(K-6)
<PAGE> 286
Accepted and Agreed:
[NAME OF ASSIGNEE]
[NAME OF ASSIGNOR]
By________________________
By__________________________
- --------------------------------------------------------------------------------
__________________________
(Print Name and Title)
(Print Name and Title)
(K-7)
<PAGE> 287
EXHIBIT L
INTERCOMPANY NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, [NAME OF PAYOR] (the "Payor"),
hereby promises to pay on demand to the order of _____________ or its assigns
(the "Payee"), in lawful money of the United States of America in immediately
available funds, at such location in the United States of America as the Payee
shall from time to time designate, the unpaid principal amount of all loans and
advances made by the Payee to the Payor.
The Payor promises also to pay interest on the
unpaid principal amount hereof in like money at said office from the date hereof
until paid at such rate per annum as shall be agreed upon from time to time by
the Payor and Payee.
Upon the commencement of any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar proceeding of any jurisdiction relating to
the Payor, the unpaid principal amount hereof shall become immediately due the
payable without presentment, demand, protest or notice of any kind in connection
with this Note.
This Note evidences certain permitted intercompany
Indebtedness referred to in the Credit Agreement, dated as of November 8, 1996,
among Doubletree Corporation, the lenders party thereto from time to time,
Morgan Stanley Senior Funding, Inc., as Syndication Agent and as Arranger, and
The Bank of Nova Scotia, as Administrative Agent (as amended, modified or
supplemented from time to time, the "Credit Agreement"), and is subject to the
terms thereof, and shall be pledged by the Payee pursuant to the Pledge
Agreement (as defined in the Credit Agreement). The Payor hereby acknowledges
and agrees that the Collateral Administrative Agent pursuant to and as defined
in the Pledge Agreement, as in effect from time to time, may exercise all rights
provided therein with respect to this Note.
The Payee is hereby authorized to record all loans
and advances made by it to the Payor (all of which shall be evidenced by this
Note), and all repayments or prepayments thereof, in its books and records, such
books and records constituting prima facie evidence of the accuracy of the
information contained therein.
All payments under this Note shall be made without
offset, counterclaim or deduction of any kind.
(L-1)
<PAGE> 288
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
By___________________________________
Title:
[NAME OF PAYEE]
By____________________________
Title:
Pay to the order of
______________________________
(L-2)
<PAGE> 289
SCHEDULE I
To Credit Agreement
Commitments
<TABLE>
<CAPTION>
Tranche A Tranche B
Term Loan Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
Morgan Stanley $ 21,628,559.12 $55,000,000 $ 5,971,440.89
Senior Funding, Inc.
The Bank of Nova Scotia $ 21,628,559.13 $ 9,000,000 $ 5,971,440.90
Allied Irish Bank plc acting
through its Cayman Island Branch $ 2,163,565.56 $ 7,836,434.44 $ 0
Allstate Life Insurance Company $ 0 $ 5,000,000 $ 0
Bankers Trust Company $ 10,579,186.50 $ 0 $ 2,920,813.50
Bank of Hawaii $ 9,795,543.06 $ 0 $ 2,704,456.95
The Bank of New York $ 9,795,543.06 $ 0 $ 2,704,456.95
Banque Nationale de Paris $ 9,403,721.34 $ 0 $ 2,596,278.67
CHL High Yield Loan Portfolio $ 0 $ 9,000,000 $ 0
(a unit of Chase Manhattan Bank)
</TABLE>
(1 of 6)
<PAGE> 290
<TABLE>
<CAPTION>
Tranche A Tranche B
Term Loan Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
Chang Hwa Commercial Bank, Ltd., $ 9,795,543.06 $ 0 $ 2,704,456.95
New York Branch
CIBC Inc. $ 12,146,473.38 $ 0 $ 3,353,526.61
Citibank, N.A $ 0 $ 5,000,000 $ 0
Credit Lyonnais New York Branch $ 12,146,473.38 $ 0 $ 3,353,526.61
Crescent/Mach I Partners, L.P.
by TCW Asset Management Company
its Investment Manager $ 0 $ 5,000,000 $ 0
DLJ Capital Funding, Inc. $ 3,918,217.22 $ 0 $ 1,081,782.78
Dresdner Bank AG, New York
Branch and Grand Cayman Branch $ 10,579,186.50 $ 0 $ 2,920,813.50
First Hawaiian Bank $ 9,403,721.34 $ 0 $ 2,596,278.67
The First National Bank of Boston $ 7,836,434.44 $ 0 $ 2,163,565.56
First Union National Bank of $ 12,146,473.38 $ 0 $ 3,353,526.61
North Carolina
</TABLE>
(2 of 6)
<PAGE> 291
<TABLE>
<CAPTION>
Tranche A Tranche B
Term Loan Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
The Fuji Bank Limited,
Los Angeles Agency $ 9,795,543.06 $ 0 $ 2,704,456.95
GiroCredit Bank Ag Der Sparkassen,
Grand Cayman Island Branch $ 7,836,434.44 $ 0 $ 2,163,565.56
Hibernia National Bank $ 9,403,721.34 $ 0 $ 2,596,278.67
Imperial Bank $ 9,403,721.34 $ 0 $ 2,596,278.67
The Industrial Bank of Japan,
Limited, Los Angeles Agency $ 9,795,543.06 $ 0 $ 2,704,456.95
ING Capital Advisors, Inc., as
agent for bank syndication account $ 0 $ 5,000,000 $ 0
Key Bank of Colorado $ 9,795,543.06 $ 0 $ 2,704,456.95
KZH Holding Corporation $ 0 $ 5,000,000 $ 0
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency $ 10,579,186.50 $ 0 $ 2,920,813.50
Marine Midland Bank $ 9,403,721.34 $ 0 $ 2,596,278.67
</TABLE>
(3 of 6)
<PAGE> 292
<TABLE>
<CAPTION>
Tranche A Tranche B
Term Loan Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
Massachusetts Mutual Life
Insurance Company $ 0 $11,000,000 $ 0
Mellon Bank, N.A $ 9,795,543.06 $ 0 $ 2,704,456.95
Merrill Lynch Senior Floating
Rate Fund, Inc. $ 0 $ 6,000,000 $ 0
The Mitsubishi Trust and
Banking Corporation $ 10,579,186.50 $ 0 $ 2,920,813.50
Mitsui Leasing (U.S.A.) Inc. $ 9,403,721.34 $ 0 $ 2,596,278.67
NationsBank of Texas, N.A $ 9,795,543.06 $ 0 $ 2,704,456.95
The Nippon Credit Bank, Ltd.,
Los Angeles Agency $ 10,579,186.50 $ 0 $ 2,920,813.50
Northern Life Insurance Company $ 0 $ 5,000,000 $ 0
Oak Hill Securities Fund, L.P. $ 0 $ 9,000,000 $ 0
ORIX USA Corporation $ 0 $ 5,000,000 $ 0
</TABLE>
(4 of 6)
<PAGE> 293
<TABLE>
<CAPTION>
Tranche A Tranche B
Term Loan Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
PPM America, Inc., as attorney-
in-fact on behalf of Jackson
National Life Insurance Company $ 0 $8,000,000 $ 0
Prime Income Trust $ 0 $7,000,000 $ 0
Protective Life Insurance Company $ 0 $9,000,000 $ 0
The Royal Bank of Scotland plc $ 9,403,721.34 $ 0 $ 2,596,278.67
The Sakura Bank, Limited $ 9,403,721.34 $ 0 $ 2,596,278.67
The Sanwa Bank, Limited $ 9,403,721.34 $ 0 $ 2,596,278.67
Societe Generale $12,146,473.38 $ 0 $ 3,353,526.61
Southern Pacific Thrift &
Loan Association $ 9,403,721.34 $ 0 $ 2,596,278.67
The Toyo Trust & Banking Co., Ltd,
Los Angeles Agency $ 9,795,543.06 $ 0 $ 2,704,456.95
The Travelers Insurance Company $ 7,836,434.44 $5,000,000 $ 2,163,565.56
Wells Fargo Bank, N.A $ 0 $8,000,000 $ 0
</TABLE>
(5 of 6)
<PAGE> 294
<TABLE>
<CAPTION>
Tranche A Tranche B
Term Loan Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
------------ ------------ ------------
TOTAL: $362,200,000 $171,000,000 $100,000,000
</TABLE>
(6 of 6)
<PAGE> 295
SCHEDULE II
To Credit Agreement
Bank Addresses
Morgan Stanley Senior 1585 Broadway
Funding, Inc. New York, NY 10036
Attn: Michael McLaughlin
Tel: (212) 761-4000
Fax: (212) 761-0587
The Bank of Nova Scotia 600 Peachtree Street, N.E.
Suite 2700
Atlanta, GA 30308
Attn: Eudia Smith
Tel: (404) 877-1500
Fax: (404) 888-8998
with a copy to:
San Francisco Agency
580 California Street,
Suite 2100
San Francisco, CA 94104
Attn: John Quick
Tel: (415) 986-1100
Fax: (415) 397-0791
Allied Irish Banks plc, 405 Park Avenue
acting through its Cayman New York, NY 10022
Island Branch Attn: William Murray
Tel: (212) 339-8021
Fax: (212) 339-8007
AllState Life Insurance 3075 Sanders Road, Suite
Company G3A
Northbrook, IL 60062-7127
Attn: Chris Guergen
Tel: (847) 402-3095
Fax: (847) 402-3092
(1 of 9)
<PAGE> 296
Bankers Trust Company One Bankers Trust Plaza
New York, NY 10006
Attn: Anthony LoGrippo
Tel: (212) 250-4886
Fax: (212) 250-7218
Bank of Hawaii 1850 North Central Avenue,
Suite 400
Phoenix, AZ 85004
Attn: Joseph Donalson
Tel: (602) 257-2432
Fax: (602) 257-2235
The Bank of New York 10990 Wilshire Boulevard,
Suite 1125
Los Angeles, CA 90024
Attn: Craig Rethmeyer
Tel: (310) 996-8650
Fax: (310) 996-8667
Banque Nationale de Paris 725 South Figueroa Street,
20th FL
Los Angeles, CA 90017
Attn: Margaret Mudd
Tel: (213) 688-6436
Fax: (213) 488-9120
CHL High Yield Loan 380 Madison Avenue
Portfolio (a unit of Chase New York, NY 10017
Manhattan Bank) Attn: Jim Ferguson
Tel: (212) 622-3070
Fax: (212) 622-3797
Chang Hwa Commercial Bank, One World Trade Center
Ltd., New York Branch Suite 3211, 32nd Floor
New York, NY 10048
Attn: Teddy Mou
Tel: (212) 390-7040
Fax: (212) 390-0120
(2 of 9)
<PAGE> 297
CIBC Inc. 350 South Grand Avenue,
Suite 2600
Los Angeles, CA 90071
Attn: Paul Chakmak
Tel: (213) 617-6226
Fax: (213) 346-0157
Citibank, N.A. 399 Park Avenue
New York, NY 10043
Attn: Ken Ostmann
Tel: (212) 559-0378
Fax: (212) 793-1871
Credit Lyonnais New York 1301 Avenue of Americas
Branch New York, NY 10019-6022
Attn: Joseph Asciolla
Tel: (212) 261-7834
Fax: (212) 261-7890
Crescent/Mach I Partners, 200 Park Avenue, Suite 220
L.P., by TCW Asset New York, NY 10166
Management Company its Attn: Justin Driscole
Investment Manager Tel: (212) 297-4137
Fax: (212) 297-4159
DLJ Capital Funding, Inc. c/o Donaldson Lufkin &
Jenrette
277 Park Avenue, 9th FL
New York, N.Y. 10172
Attn: Steve Hickey
Tel: (212) 892-2403
Fax: (212) 892-5286
Dresdner Bank AG, New York 233 South Grand Avenue
Branch and Grand Cayman Suite 1700
Branch Los Angeles, CA 90071
Attn: Sid Jordan
Tel: (213) 473-5420
Fax: (213) 473-5450
(3 of 9)
<PAGE> 298
First Union National Bank 301 South College Street,
of North Carolina DC-5
Charlotte, NC 28288-0737
Attn: Jorge Gonzalez
Tel: (704) 383-8461
Fax: (704) 374-3300
First Hawaiian Bank 999 Bishop Street, 11th FL
Honolulu, HI 96813
Attn: Robert Wheeler
Tel: (808) 525-6367
Fax: (808) 525-6372
The First National Bank of 100 Federal Street
Boston Boston, MA 02110
Attn: Timothy Barns
Tel: (617) 434-7976
Fax: (617) 434-4929
The Fuji Bank Limited, Los 333 South Hope Street, 39th
Angeles Agency FL
Los Angeles, CA 900071
Attn: Ching Lim
Tel: (213) 253-4179
Fax: (213) 253-4198
Girocredit Bank AG Der Park Avenue Tower
Sparkassen, Grand Cayman 65 East 55th Street, 29th
Island Branch Floor
New York, NY 10022
Attn: John Redding
Tel: (212) 909-0624
Fax: (212) 644-0644
Hibernia National Bank 313 Carondelet Street, 12th
FL
New Orleans, LA 70130
Attn: Troy Villafara
Tel: (504) 533-5490
Fax: (504) 533-5344
(4 of 9)
<PAGE> 299
The Industrial Bank of 350 South Grand Avenue,
Japan, Limited, Los Angeles Suite 1500
Agency Los Angeles, CA 90071
Attn: Mr. Sugano
Tel: (213) 893-6436
Fax: (213) 488-9840
Imperial Bank P.O. Box 92991
Los Angeles, CA 90090
Attn: Ray Valdama
Tel: (310) 417-5710
Fax: (310) 338-2612/2611
ING Capital Advisors, Inc., 333 South Grand Avenue
as agent for bank Suite 400
syndication account Los Angeles, CA 90071
Attn: Kathleen Lenarcic
Tel: (213) 621-9063
Fax: (213) 626-6552
KZH Holding Corporation c/o The Chase Manhattan
Bank
450 West 33rd Street, 15th
Floor
New York, NY 10001
Attn: Robert Goodwin
Tel: (212) 946-7544
Fax: (212) 946-7776
Key Bank of Colorado 3600 S. Yosemite Street
4th Floor
Denver, CO 80237
Attn: Mark Sunderland
Tel: (303) 804-8376
Fax: (303) 741-3958
The Long-Term Credit Bank 350 South Grand Avenue
of Japan, Ltd., Los Angeles Suite 3000
Agency Los Angeles, CA 90071
Attn: Bryan Read
Tel: (213) 689-6314
Fax: (213) 622-6908
(5 of 9)
<PAGE> 300
Massachusetts Mutual Life 1295 State Street, Mail
Insurance Company Suite F457
Springfield, MA 01111
Attn: John Wheeler
Tel: (413) 744-6228
Fax: (413) 744-6127
Mellon Bank, N.A. 300 South Grand Avenue
Suite 3800
Los Angeles, CA 90071
Attn: Mack Clapp
Tel: (213) 680-7351
Fax: (213) 626-3745
Merrill Lynch Senior 800 Scudders Mill Road
Floating Rate Fund, Inc. Plainsboro, NJ 08536
Attn: Gilles Marchand
Tel: (609) 282-2000
Fax: (609) 282-2756
Marine Midland Bank c/o HSBC-Midland
140 Broadway, 5th FL
New York, NY 10005
Attn: Karen Wold
Tel: (212) 658-2748
Fax: (212) 658-2586
The Mitsubishi Trust and 520 Madison Avenue
Banking Corporation New York, NY 10022
Attn: Susan LeFevre
Tel: (212) 891-8243
Fax: (212) 644-6825
Mitsui Leasing (U.S.A.) 200 Park Avenue, Suite 3214
Inc. New York, NY 10166
Attn: Jerry Parisi
Tel: (212) 883-3061
Fax: (212) 490-1684
(6 of 9)
<PAGE> 301
NationsBank of Texas, N.A. 901 Main Street, 67th Floor
Dallas, TX 75202
Attn: Kimberly Knop
Tel: (214) 508-3363
Fax: (214) 508-0980
The Nippon Credit Bank, 550 South Hope Street,
Ltd., Suite 2500
Los Angeles Agency Los Angeles, CA 90071
Attn: Julien Michaels
Tel: (213) 243-5720
Fax: (213) 892-0111
Northern Life Insurance c/o Reliastar Investment
Company Research
100 Washington Avenue South
Suite 800
Minneapolis, MN 55401
Attn: Jim Tobin
Tel: (612) 342-3204
Fax: (612) 372-5368
Oak Hill Securities Fund, 65 East 55th Street
L.P. New York, NY 10022
Attn: Scott Krase
Tel: (212) 326-1500
Fax: (212) 593-3596
ORIX USA Corporation 780 Third Avenue, 48th
Floor
New York, NY 10017
Attn: Hiroyuki Miyauchi
Tel: (212) 418-8300
Fax: (212) 418-8308
PPM America, Inc. as 225 West Wacker, Suite 1200
attorney-in-fact on behalf Chicago, IL 60606
of Jackson National Life Attn: Michael DiRe
Insurance Company Tel: (312) 634-2509
Fax: (312) 634-0054
(7 of 9)
<PAGE> 302
Prime Income Trust c/o Dean Witter
Intercapital, Inc.
2 World Trade Center, 72nd
Floor
New York, NY 10048
Attn: Peter Gewirtz
Tel: (212) 392-9034
Fax: (212) 392-5345
Protective Life Insurance 1150 Two Galleria Tower
Company 13455 Noel Road LB #45
Dallas, TX 75240
Attn: James Dondero
Tel: (972) 233-4300
Fax: (972) 233-4343
The Royal Bank of Scotland 88 Pine Street
plc Wall Street Plaza, 26th
Floor
New York, NY 10005
Attn: Shona Pryor/Derek
Bonnar
Tel: (212) 269-1718
Fax: (212) 480-0791
The Sakura Bank, Limited 515 South Figueroa Street,
Suite 400
Los Angeles, CA 90071
Attn: Mike Ross
Tel: (213) 489-6756
Fax: (213) 623-8692
The Sanwa Bank, Limited 601 South Figueroa Street
(W5-4)
Los Angeles, CA 90017
Attn: Steven Yamada
Tel: (213) 896-7547
Fax: (213) 896-7467
(8 of 9)
<PAGE> 303
Societe Generale 1221 Avenue of the Americas
New York, NY 10020
Attn: Catherine Scaillier-
Loiseau
Tel: (212) 278-6469
Fax: (212) 278-6178
Southern Pacific Thrift & 12300 Wilshire Boulevard
Loan Los Angeles, CA 90025
Association Attn: Chris Kelleher
Tel: (310) 442-3351
Fax: (310) 207-4067
The Toyo Trust & Banking 444 South Flower Street,
Co., Ltd., Los Angeles Suite 1550
Agency Los Angeles, CA 90071
Attn: Jeffrey King
Tel: (213) 236-1527
Fax: (213) 624-5874
The Travelers Insurance One Tower Square
Company Hartford, CT 06183-2030
Attn: Teresa M. Torrey
Tel: (860) 277-5952
Fax: (860) 954-5243
Wells Fargo Bank, N.A. 555 Montgomery Street, 17th
Floor
San Francisco, CA 94111
Attn: Sean Flannery
Tel: (415) 396-6764
Fax: (415) 788-9421
(9 of 9)
<PAGE> 304
================================================================================
SCHEDULE III
To Credit Agreement
Real Property -- Owned and Leased
================================================================================
RED LION GROUP
- --------------------------------------------------------------------------------
OWNED PROPERTIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
OWNER PROPERTY MORTGAGED PROPERTY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Red Lion Hotels, Inc. Red Lion Hotel -- Eureka, CA Yes
1929 Fourth Street
Eureka, CA 95501
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Modesto, CA Yes
1150 Ninth Street
Modesto, CA 95354
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Redding Yes
1830 Hilltop Drive
Redding, CA 96002
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- San Jose Yes
2050 Gateway Place
San Jose, CA 95110
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Bend South Yes
849 NE Third Street
Bend South, OR 97701
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Portland/Jantzen Beach Yes
909 North Hayden Island Drive
Portland/Jantzen Beach, OR 97217
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Klamath Falls Yes
3612 South Sixth Street
Klamath Falls, OR 97603
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Portland/Columbia River Yes
1401 North Hayden Island Drive
Portland/Columbia, OR 97217
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Houston Yes
2525 West Loop South
Houston, TX 77027
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- San Antonio Yes
37 NE Loop 410
San Antonio, TX 78218
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1 of 10)
<PAGE> 305
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Port Angeles Yes
221 North Lincoln Street
Port Angeles, WA 98362
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Bellevue Yes
300 112th Avenue SE
Bellevue, WA 98004
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Yakima Yes
1507 North First Street
Yakima, WA 98901
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Pasco Yes
2525 North 20th Street
Pasco, WA 99301
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Aberdeen Yes
521 West Wishah Street
Aberdeen, WA 98520
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Corporate Headquarters Yes
4001 Main Street
Vancouver, WA 98663
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Astro Gas Station No
Vancouver, WA
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotels -- Austin No
6121 I-35 North
Austin, TX 78752
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Excess Land No
Portland/Jantzen Beach, OR
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Properties, Inc. Red Lion Hotel -- Richland (Hanford House) No
802 George Washington Way
Richland, WA 99352
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Properties, Inc. Red Lion Hotel -- Kalispell No
1330 Highway Southwest
Kalispell, MT 59901
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LEASED PROPERTIES
- -----------------------------------------------------------------------------------------------------------------------
TENANT PROPERTY MORTGAGED PROPERTY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Red Lion Hotels, Inc. Red Lion Hotel -- Rohnert/Sonoma City Yes
1 Red Lion Drive
Rohnert Park, CA 94928
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Sacramento Inn Yes
2000 One Point West Way
Sacramento, CA 95815
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- San Diego Yes
7450 Hazard Center Drive
San Diego, CA 92108
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(2 of 10)
<PAGE> 306
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Durango Yes
501 Camino Delrio
Durango, CO 81301
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Boise Downtown Yes
2900 Shinden Boulevard
Boise, ID 83714
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Missoula Yes
700 West Broadway
Missoula, MT 59802
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Medford Yes
200 North Riverside Street
Medford, OR 97501
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Eugene Yes
205 Coburg Road
Eugene, OR 97401
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Pendleton Yes
304 SE Nye Avenue
Pendleton, OR 97801
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Astoria Yes
400 Industry Street
Astoria, OR 97103
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Bend North Yes
1415 Third Street
Bend North, OR 97701
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Coos Bay Yes
1313 North Bayshore Street
Coos Bay, OR 97420
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Salt Lake City Yes
255 West Temple Street
Salt Lake City, UT 84101
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Seattle (Airport) Yes
18740 Pacific Highway South
Seattle, WA 98188
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Kelso Yes
510 Kelso Drive
Kelso, WA 98626
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Vancouver Yes
100 Columbia Street
Vancouver, WA 98660
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Red Lion Hotel -- Wenatchee Yes
1225 North Wenatchee Avenue
Wenatchee, WA 98801
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(3 of 10)
<PAGE> 307
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Pizza Pub No
Portland Airport
Portland, OR
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Reds Restaurant and Theme Bar No
Portland Airport
Portland, OR
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Park Plaza One Office Building No
Vancouver, WA
- -----------------------------------------------------------------------------------------------------------------------
Red Lion Hotels, Inc. Stonemill Office Park No
Vancouver, WA
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DOUBLETREE GROUP
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
OWNED PROPERTIES
- -----------------------------------------------------------------------------------------------------------------------
OWNER PROPERTY MORTGAGED PROPERTY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DTM Burlingame, Inc. Doubletree Guest Suites Hotel Yes
28100 Franklin Road
Southfield, MI 48034
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LEASED PROPERTIES
- -----------------------------------------------------------------------------------------------------------------------
TENANT PROPERTY MORTGAGED PROPERTY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DTR Boston Heights, Inc. Doubletree Hotel at Coconut Grove No
2649 S. Bayshore Drive
Miami, FL 33133
- -----------------------------------------------------------------------------------------------------------------------
DTR Houston, Inc. Doubletree Hotel Tysons Corner No
7801 Leesburg Pike
Falls Church, VA 22043
- -----------------------------------------------------------------------------------------------------------------------
DTR Cambridge, Inc. Inn at Harvard No
1201 Massachusetts Avenue
Cambridge, MA 02138
- -----------------------------------------------------------------------------------------------------------------------
DTR Cambridge, Inc. Harvard Square Hotel No
110 Mount Auburn Street
Cambridge, MA 02138
- -----------------------------------------------------------------------------------------------------------------------
Doubletree of Phoenix, Inc. Doubletree Hotel Corporate Headquarters No
410 N. 44th Street, Suite 700
Phoenix, AZ 85008
- -----------------------------------------------------------------------------------------------------------------------
Doubletree of Phoenix, Inc. Doubletree General Office No
30 Rowes Wharf -- 4th Floor
Boston, MA 02110
- -----------------------------------------------------------------------------------------------------------------------
Doubletree Partners Cincinnati Accounting Office No
10234 Alliance Road
Blue Ash, OH 45242
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(4 of 10)
<PAGE> 308
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Doubletree Hotels Corporation Philadelphia National Sales Office No
101 Henderson Drive
Sharon Hill, PA 19079
- -----------------------------------------------------------------------------------------------------------------------
Doubletree of Phoenix, Inc. Chicago National Sales Office No
875 North Michigan Avenue
Suite 1534
Chicago, IL 60611
- -----------------------------------------------------------------------------------------------------------------------
Doubletree Hotels Corporation Los Angeles National Sales Office No
c/o Doubletree Hotel
Los Angeles Airport
5400 West Century Boulevard
Suite 449
Los Angeles, CA 90045
- -----------------------------------------------------------------------------------------------------------------------
Doubletree of Phoenix, Inc. Central Reservations Office No
1221 North College Avenue
Tempe, AZ
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
RFS GROUP
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LEASED PROPERTIES
- -----------------------------------------------------------------------------------------------------------------------
TENANT PROPERTY MORTGAGED PROPERTY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DTR RFS Lessee, Inc. Doubletree Hotel Del Mar No
11915 El Camino Real
San Diego, CA 92130
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. 889 Ridgelake Boulevard #100 No
Memphis, TN 38120
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Conyers No
(Comfort Inn)
1363 Klondike Road
Conyers, GA 30207
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Marietta No
(Comfort Inn)
2100 Northwest Parkway
Marietta, GA 30067
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Farmington Hills No
(Comfort Inn)
30715 W. Twelve Mile Road
Farmington Hills, MI 48334
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Grand Rapids No
(Comfort Inn)
4155 28th Street, S.E.
Grand Rapids, MI 49512
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(5 of 10)
<PAGE> 309
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Clemson No
(Comfort Inn)
1305 Tiger Boulevard Zip 29631
P.O. Box 1496
Clemson, SC 29633
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Ft. Mill No
(Comfort Inn)
3725 Avenue of the Carolinas
Ft. Mill, SC 29715
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Denver No
(Hampton Inn)
4685 Quebec Street
Denver, CO 80216
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Lakewood No
(Hampton Inn)
3605 So. Wadsworth Blvd.
Lakewood, CO 80235
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Ft. Lauderdale No
(Hampton Inn)
720 E. Cypress Creek
Ft. Lauderdale, FL 33334
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Indianapolis No
(Hampton Inn)
5601 Fortune Circle West
Indianapolis, IN 46241
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Lansing No
(Hampton Inn)
525 North Canal Rd.
Lansing, MI 48917
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Warren No
(Hampton Inn)
7447 Convention Blvd.
Warren, MI 48092
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Bloomington No
(Hampton Inn)
4201 West 80th St.
Bloomington, MN 55437
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Minnetonka No
(Hampton Inn)
10420 Wayzata Blvd.
Minnetonka, MN 55305
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Hattiesburg No
(Hampton Inn)
4301 Hardy Street
Hattiesburg, MS 39401
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(6 of 10)
<PAGE> 310
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Lincoln No
(Hampton Inn)
1301 W. Bond Circle
Lincoln, NE 68521-3636
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Omaha No
(Hampton Inn)
9720 West Dodge Rd.
Omaha, NE 68114
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Oklahoma City No
(Hampton Inn)
1905 S. Meridian Ave.
Oklahoma City, OK 73108
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Tulsa No
(Hampton Inn)
3209 S. 79th East Ave.
Tulsa, OK 74145
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Memphis No
(Hampton Inn)
33 Humphrey Center Dr.
Memphis, TN 38120
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Laredo No
(Hampton Inn)
7903 San Dario
Laredo, TX 78041
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Atlanta No
(Hawthorne Suites)
1500 Parkwood Circle
Atlanta, GA 30339
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Crystal Lake No
(Holiday Inn)
800 South Route 31
Crystal Lake, IL 60014
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Louisville No
(Holiday Inn)
4110 Dixie Highway
P.O. Box 16046
Louisville, KY 40216
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Lafayette No
(Holiday Inn)
2032 N.E. Evangeline Thruway
P.O. Box 91807
Lafayette, LA 70509
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Flint No
(Holiday Inn)
5353 Gateway Center
Flint, MI 48507
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(7 of 10)
<PAGE> 311
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Clayton No
(Holiday Inn)
7730 Bonhomme Ave.
Clayton, MO 63105
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Columbia No
(Holiday Inn)
630 Assembly St.
Columbia, SC 29201
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Arlington Heights No
(Holiday Inn Express)
2120 S. Arlington Heights Rd.
Arlington Heights, IL 60005
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Downers Grove No
(Holiday Inn Express)
3031 Finley Rd.
Downers Grove, IL 60515
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Bloomington No
(Holiday Inn Express)
814 East 79th St.
Bloomington, MN 55420
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Tupelo No
(Holiday Inn Express)
923 N. Gloster - Zip 38801
P.O. Box 1724
Tupelo, MS 38802
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Franklin No
(Holiday Inn Express)
1307 Murfreesboro Rd. Zip 37064
P.O. Box 906
Franklin, TN 37065-0906
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Austin No
(Holiday Inn Express)
7622 1-35 North
Austin, TX 78752
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Wauwatosa No
(Holiday Inn Express)
11111 West North Ave.
Wauwatosa, WI 53226-2233
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Sacramento No
(Residence Inn by Marriott)
1530 Howe Ave.
Sacramento, CA 95825-3358
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Torrance No
(Residence Inn by Marriott)
3701 Torrance Blvd.
Torrance, CA 90503
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(8 of 10)
<PAGE> 312
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Wilmington No
(Residence Inn by Marriott)
240 Chapman Rd.
Newark, DE 19702
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Orlando No
(Residence Inn by Marriott)
7975 Canada Ave.
Orlando, FL 32819-8262
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Atlanta No
(Residence Inn by Marriott)
6096 Barfield Rd.
Atlanta, GA 30328
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Ann Arbor No
(Residence Inn by Marriott)
800 Victors Way
Ann Arbor, Mi 48108
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Kansas City No
(Residence Inn by Marriott)
2975 Main St. - Union Hall
Kansas City, MO 64108
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Fishkill No
(Residence Inn by Marriott)
2481 Route 9
Fishkill, NY 12524
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Charlotte No
(Residence Inn by Marriott)
5800 West Park Dr.
Charlotte, NC 28217
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Providence (Warwick) No
(Residence Inn by Marriott)
500 Kilvert St.
Warwick, RI 02883
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Ft. Worth No
(Residence Inn by Marriott)
1701 S. University Dr.
Ft. Worth, TX 76107
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Tyler No
(Residence Inn by Marriott)
3303 Troup Highway
Tyler, TX 75701
- -----------------------------------------------------------------------------------------------------------------------
RFS, Inc. Tupelo No
(Executive Inn)
1011 N. Gloster
P.O. Box 1603
Tupelo, MS 38802
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(9 of 10)
<PAGE> 313
- --------------------------------------------------------------------------------
PATRIOT - AMERICAN GROUP
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LEASED PROPERTIES
- -----------------------------------------------------------------------------------------------------------------------
TENANT PROPERTY MORTGAGED PROPERTY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DTR North Canton, Inc. (soon Tallahassee No
to be DTM PAH Lessee, Inc.) (Capital Plaza Hotel)
101 South Adams Street
Tallahassee, FL 32301
- -----------------------------------------------------------------------------------------------------------------------
DTR North Canton, Inc. (soon Doubletree Denver at Boulder No
to be DTM PAH Lessee, Inc.) 8773 Yates Drive
Westminster, CO 80030
- -----------------------------------------------------------------------------------------------------------------------
DTR North Canton, Inc. (soon Miami No
to be DTM PAH Lessee, Inc.) (Holiday Inn Airport Lakes South)
101 Northwest 57th Ave.
Miami, Fl 33126
- -----------------------------------------------------------------------------------------------------------------------
DTR North Canton, Inc. (soon O'Hare Airport No
to be DTM PAH Lessee, Inc.) (Holiday Inn Des Plaines/O'Hare Airport)
1450 E. Touhy Avenue
Des Plaines, IL 60018
=======================================================================================================================
</TABLE>
(10 of 10)
<PAGE> 314
SCHEDULE IV
To Credit Agreement
Indebtedness to be Refinanced
1. Loans in the aggregate outstanding principal amount of $0.00 to
Doubletree Hotels Corporation and Doubletree Partners made by a
syndicate of banks led by The Bank of Nova Scotia upon which there is
no accrued and unpaid interest as of the date hereof.
2. Loans in the aggregate outstanding principal amount of $123,869,000
made by a syndicate of banks led by Credit Lyonnais to Red Lion Hotels,
Inc. upon which there is accrued and unpaid interest in the amount of
$9,479.17, fees of $9,479.17 due as of the date hereof and a reserve
for payment of expenses of $51,000.
3. Loan in the aggregate outstanding principal amount of $39,400,899 made
by Yasuda Trust & Banking Co., Ltd. to Glendale Red Lion Hotel, a
California limited partnership upon which there is accrued and unpaid
interest of $196,540 as of September 30, 1996.
<PAGE> 315
SCHEDULE V
To Credit Agreement
Convertible Securities/Options
1. Rights of the underwriters of the Public Equity Offering to purchase an
over allotment of 15% of the total number of Doubletree Corporation
shares for which they have a firm commitment to purchase, all pursuant
to the Equity Financing Documents.
2. Option to Purchase 20,000 shares (rights to 10,000 shares of which have
vested) of Doubletree Corporation common shares held by General
Electric Hotel Partners I, Limited Partnership.
3. The trustees of General Electric Pension Trust ("GEPT") (or an
affiliate thereof) shall receive five-year warrants to purchase 10% of
the number of shares of Doubletree Corporation stock purchased by GEPT
or such affiliate thereof in the Private Equity Offering.
<PAGE> 316
SCHEDULE VI
To Credit Agreement
Subsidiaries and Joint Ventures
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
I. WHOLLY-OWNED
RED LION
Subsidiary Guarantors
- ---------------------
1. Red Lion Hotels, Inc. ("Red Lion")(DE). Borrower owns 100% of common stock.
Other Wholly-Owned Subsidiaries (not guarantors)
- ------------------------------------------------
2. Boise-Red Lion/Downtowner, Inc. (ID) 100% of common stock owned by Red Lion
(liq. lic. only)
3. Red Lion Properties, Inc. (DE) ("RLP") 100% of common stock owned by Red Lion
(guaranty prohibited because of net worth
covenant)
4. SALC, Inc. (TX) (liq. lic. only) 100% of common stock owned by Red Lion
5. Santa Barbara Red Lion Hotel (has only RLP has a 1% g.p. interest and Red Lion owns a
0.1% interest in Fess Parker - Red Lion 99% g.p. interest
Hotel)1
DOUBLETREE
Subsidiary Guarantors
- ---------------------
6. Arizona DTM Pasadena, Inc. (CA) 100% of common stock owned by DTM
7. Compris Hotel Corporation (DE) 100% of common stock owned by DHC
("Compris")
8. Doubletree Hotel Systems, Inc. (AZ) ("DH 100% of common stock owned by DPI
Systems")
9. Doubletree Hotels Corporation (AZ) 100% of common stock owned by Borrower
("DHC")
10. Doubletree of Phoenix, Inc. (DE) ("DPI") 100% of common stock owned by DHC
11. Doubletree Partners (DE g.p.) ("DP") 60% interest owned by SHC; 40% interest owned
by Borrower
12. DT Management, Inc. (AZ) ("DTM") 100% of common stock owned by DPI
</TABLE>
(1 of 8)
<PAGE> 317
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
13. DT Real Estate Inc. (AZ) 100% of common stock owned by DPI
14. DTM Atlantic City, Inc. (AZ) 100% of common stock owned by DTR Sonoran
Holding, Inc.
15. DTM Burlingame, Inc. (AZ) 100% of common stock owned by DTM
16. DTM Cambridge, Inc. (MA) 100% of common stock owned by DTM
17. DTM Coconut Grove, Inc. (AZ) 100% of common stock owned by DTM
18. DTM Nashville, Inc. (AZ) 100% of common stock owned by DTM
19. DTM Oklahoma, Inc. (AZ) 100% of common stock owned by DTM
20. DTM Palm Springs, Inc. (AZ) 100% of common stock owned by DTM
21. DTM Santa Clara, Inc. (AZ) 100% of common stock owned by DTM
22. DTM St. Louis, Inc. (AZ) 100% of common stock owned by DTM
23. DTM Tulsa, Inc. (AZ) 100% of common stock owned by DTM
24. DTM Ventura, Inc. (AZ) 100% of common stock owned by DTM
25. DTM Walnut Creek, Inc. (AZ) 100% of common stock owned by DTM
26. DTR Cambridge, Inc. (AZ) 100% of common stock owned by DT Real Estate,
Inc.
27. DTR PAH Holding, Inc. (AZ)(1) 100% of common stock owned by DTR Sonoran
Holding, Inc.
28. DTR Sonoran Holding, Inc. (AZ) 100% of common stock owned by DT Real Estate,
Inc.
29. DTR West Montrose, Inc. (AZ) 100% of common stock owned by DTR Sonoran
Holding, Inc.
30. Harbor Hotel Corporation (DE) 100% of common stock owned by SHC
31. HOSCO Corporation (AZ) 100% of common stock owned by DHC
32. INNCO Corporation (AZ) 100% of common stock owned by DHC
33. Samantha Hotel Corporation (DE) ("SHC") 100% of common stock owned by Borrower
</TABLE>
(2 of 8)
<PAGE> 318
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
Other Wholly-Owned Subsidiaries (not guarantors)
- ------------------------------------------------
34. Arizona DTM Florida, Inc. (FL) (Inactive) 100% of common stock owned by DTM
35. Compris Realty Corporation No. 1 (AZ) 100% of common stock owned by DT Real Estate,
(Inactive) Inc.
36. Doubletree Hotel Ventures, Inc. (AZ) 100% of common stock owned by DT Real Estate,
(Inactive) Inc.
37. Doubletree Inc. of California (AZ) (owns 100% of common stock owned by DT Real Estate,
only a 2% l.p. interest in Custom House Inc.
Co., Ltd., which owns 2 hotels)
38. DT Investments, Inc. (AZ) (owns only 100% of common stock owned by DT Real Estate,
small interest in Southcenter Motor Hotel, Inc.
Ltd., which owns only one hotel)
39. DTCM Portland, Inc. (AZ) (Inactive) 100% of common stock owned by DTM
40. DTM Antlers Inc. (AZ) (Inactive) 100% of common stock owned by DTM
41. DTM Salt Lake City, Inc. (UT) (Inactive) 100% of common stock owned by DTM
42. DTM Tampa, Inc. (FL) (Inactive) 100% of common stock owned by DTM
43. DTM Vail, Inc. (AZ) (Inactive) 100% of common stock owned by DTM
44. DTR Independence, Inc. (AZ) (only leases 100% of common stock owned by DTR Sonoran
the "Doubletree System" to the Mexican Holding, Inc.
j.v.s)
45. DTR Limited Partnership (AZ) (owns only DT Real Estate, Inc. - 1% General Partner
minority joint venture interest) DT Management, Inc. - 53% Limited Partner
Compris Hotel Corporation - 20% Limited Partner
INNCO Corporation - 15% Limited Partner
DTM Santa Clara - 2% Limited Partner
DTM Coconut Grove, Inc. - 1% Limited Partner
DTM Nashville, Inc. - 1% Limited Partner
DTM Oklahoma, Inc. - 1% Limited Partner
DTM Tulsa, Inc. - 1% Limited Partner
DTM Tampa, Inc. - 1% Limited Partner
DTM Salt Lake City, Inc. - 1% Limited Partner
DTM St. Louis, Inc. - 1% Limited Partner
DTM Vail, Inc. - 1% Limited Partner
DTM Ventura, Inc. - 1% Limited Partner
</TABLE>
(3 of 8)
<PAGE> 319
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
46. DTR RFS Lessee, Inc. (CA) (only lessee 100% of common stock owned by Compris
of one hotel from RFS Partnership, L.P -
subject to same net worth covenant as
RFS, Inc.)1
47. DTR North Canton, Inc. (AZ) (name to be 100% of common stock owned by DTR Sonoran
changed to DTM PAH Lessee, Inc.) Holding, Inc.
(subject to net worth covenant)1
48. DTR San Antonio, Inc. (AZ) (holds 50% 100% of common stock owned by DTR Sonoran
interest in Mexican j.v. - j.v. prohibits Holding, Inc.
assignment of interest)
49. DTR Santa Clara, Inc. (AZ) (Inactive) 100% of common stock owned by DT Real Estate,
Inc.
50. Greenville Doubletree, Inc. (AZ) (Inactive) 100% of common stock owned by DT Real Estate,
Inc.
51. Guest Quarters Services Corporation (IL) 100% of common stock owned by DP
(liq. lic. only)
52. Hotel Clubs of Corporate Woods, Inc. 100% of common stock owned by DPI
(KS) (liq. lic. only)
53. Houston Airport Doubletree, Inc. (TX) 100% of common stock owned by DT Real Estate,
(Inactive) Inc.
54. Indiana Harbor Hospitality Corporation 100% of common stock owned by DP
(IN) (Inactive)
55. RFS, Inc. (TN) (guaranty prohibited 100% of common stock owned by Borrower
because of net worth covenant in Master
Agreement)1
56. Scottsdale Plaza Doubletree, Inc. (AZ) 100% of common stock owned by DT Real Estate,
(Inactive) Inc.
57. TUK Inns, Inc. (WA) (only owns 12.62% 100% of common stock owned by DT Real Estate,
equity in Southcenter j.v.) Inc.
II. NON-WHOLLY-OWNED SUBSIDIARIES
(50 less than X less than 100%)
RED LION
1. Bakersfield Red Lion Motor Inn (CA j.v.)(6) Red Lion owns a 66.7% joint venture interest
2. Glendale Red Lion Hotel (CA l.p.)(1,6) Red Lion owns a 75% interest
</TABLE>
(4 of 8)
<PAGE> 320
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
3. Ontario-Red Lion Motor Inn (j.v.)(1,6) Red Lion owns a 66.7% interest
4. Red Lion Orange County Partners, L.P. Red Lion owns a 51% interest
(CA)(1,6)
DOUBLETREE
5. BHH Management Associates (MA g.p.)(1) DP owns 99% interest
6. DTR Boston Heights, Inc. (AZ)(1) DTR Sonoran Holding, Inc. owns 80% of common
stock
7. DTR Houston, Inc. (AZ)(1) DTR Sonoran Holding, Inc. owns 80% of common
stock
8. Hotel Properties-Newport (AZ j.v.)(1) DTR Limited Partnership holds 45% interest, DT
(Inactive) Real Estate, Inc. holds 10% interest
9. Fess Parker-Red Lion Hotel (CA g.p.)(1,6) Red Lion directly owns a 49.401% interest, Santa
Barbara Red Lion owns a 0.1% interest and RLP
owns a 0.499% interest
III. NON-SUBSIDIARY JOINT VENTURES
(X less than or equal to 50)
RED LION
1. Betty MacWilliam & Company (TX Red Lion owns 490 shares of common stock (total
corp.)(2) outstanding 1,000 shares)
2. Red Lion La Posada (AZ j.v.)(1,6) Red Lion owns a 50% joint venture interest
3. Red Lion/Riverfront, L.L.C.(1,6) Red Lion owns a 10% interest
4. Village Motor Inn (MT j.v.)(1,6) Red Lion owns a 50% joint venture interest
DOUBLETREE Hotel Properties-Boise owns 99% of common
stock. DT Real Estate, Inc. owns 1% of common
5. Arlington Hotel Co. (AZ) stock and all voting rights have been assigned to
Sumitomo Bank
6. Boise Beverage, Inc. (ID)(2) 100% of common stock owned by Hotel Properties-
Boise
7. Campbell Beverages, Inc. (TX) (liq. lic. DPI holds 48% of common stock
only)(2)
8. Candlewood Hotel Company L.L.C. (DE)(1) Borrower holds 50% interest
</TABLE>
(5 of 8)
<PAGE> 321
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
9. Corporate Associates-Boise Limited DTR Limited Partnership holds 11.11% g.p.
Partnership (ID)(1) interest and 2.22% l.p. interest
10. Corporate Associates-Newport Limited D.T. Real Estate, Inc. holds 13.33% g.p. interest
Partnership (AZ)1
11. Custom House Hotel, L.P. (MO l.p.) Doubletree, Inc. of California holds 2.11% l.p.
(f/k/a Custom House Hotel Co., Ltd.)(3) interest, Hotel Equities Co. holds 10.75% l.p.
interest
12. Dallas DBLT, Inc. (TX)(2) DPI holds 45% of common stock
13. DDP Partners, L.P.(3) RFS, Inc. owns 5% g.p. interest
14. Devonshire Associates(3) RFS, Inc. owns 10% g.p. interest
15. Doubletree de Mexico, S.A. de C.V. DTR San Antonio, Inc. holds 50% of the stock
(Mexico variable capital corporation)(1)
16. D.T. Beverages, Inc. (TX) (liq. lic. Doubletree of Phoenix, Inc. holds 45% of common
only)(2,5) stock
17. D.T. Beverages One, Inc. (TX) (liq. lic. Doubletree of Phoenix, Inc. holds 45% of common
only)(2) stock
18. Highland Plaza Partners, Ltd.(3) RFS, Inc. owns 5% g.p. interest
19. Hotel Equities Co. (AZ g.p.)(3) DTR Limited Partnership holds 2.1% interest
20. Hotel Properties-Boise (AZ g.p.)(3) DTR Limited Partnership holds 27.5% interest,
Corporate Associates-Boise Limited Partnership
holds 22.5% interest
21. Hutton Centre Hotel Associates (CA j.v.) Hotel Properties-Newport holds 50% interest
(inactive to be liquidated)(3)
22. PAH DT Chicago O'Hare Airport DTR PAH Holdings owns 10% limited partnership
Partners, L.P.(1) interest
23. PAH DT Miami Airport Partners, L.P.(1) DTR PAH Holdings owns 10% limited partnership
interest
24. PAH DT Tallahassee Airport Partners, DTR PAH Holdings owns 10% limited partnership
L.P.(1) interest
25. PAH DT Westminster Airport Partners, DTR PAH Holdings owns 10% limited partnership
L.P.(1) interest
26. Post Oak Beverages, Inc. (TX) (liq. lic. Doubletree of Phoenix, Inc. hold 45% of common
only)(3) stock
</TABLE>
(6 of 8)
<PAGE> 322
<TABLE>
<CAPTION>
Name Borrower Ownership Interest
---- ---------------------------
<S> <C>
27. RFS Partnership, L.P. RFS, Inc. owns less than a 1% l.p. interest
28. RW Motels, Ltd. (AZ l.p.)(3) DTR Limited Partnership holds 25% interest
29. SF Partners RFS, Inc. owns 2.5% g.p. interest
30. Shelby Distribution Partners, Ltd. RFS, Inc. owns 46.63% g.p. interest
31. Southcenter Motor Hotel, Ltd. (WA l.p.)(3) Tuk Inns, Inc. holds 12.62% g.p. interest, DT
Investments, Inc. holds 7.57% l.p. interest
32. THI FQ L.P. (DE)(3) Thayer II holds 98.675845% interest
33. THI Austin L.P. (DE)(3) Thayer II holds 98.64424% interest
34. THI Metairie L.P. (DE)(3) Thayer II holds 98.58519% interest
35. THI Oceanfront L.P. (DE)(3) Thayer II holds 98.59659% interest
36. THI Rockville L.P. (DE)(3) Thayer II holds 98.33025% interest
37. THI Somerset L.P. (DE)(3) Thayer II holds 98.69213% interest
38. Thayer Hotel Investors II, L.P. (DE) Borrower holds 4.35388% interest
(Thayer II)(1)
39. Tucson Hotel Equity Limited Partnership DTM Oklahoma, Inc. has 33.34% g.p. interest,
(AZ) DTM St. Louis, Inc. has 8.28% g.p. interest,
DTM Tulsa, Inc. has 8.28% g.p. interest
40. Tapas Corp. (liq. lic. only)(2, 4)
41. VRLB Inc. (liq. lic. only)(2, 5)
</TABLE>
(7 of 8)
<PAGE> 323
<TABLE>
<S> <C>
Name Borrower Ownership Interest
---- ---------------------------
</TABLE>
- --------------------
(1) Joint venture agreement/shareholder agreements and/or existing credit
agreements restrict assignment without consent.
(2) Liquor license entities.
(3) No direct ownership by any Subsidiary Gruarantor.
(4) Tapas Corporation, a Utah non-profit corporation, is a social club
entitling members access to the restaurant/lounge at Red Lion Hotel
Salt Lake. There are no authorized or issued shares of stock.
(5) Red Lion controls VRLB, Inc., a Montana corporation, but does not have
an ownership interest sufficient to qualify it as a Subsidiary within
the meaning set forth in the Credit Agreement. VRLB, Inc. has an
authorized capitalization of 10,000 shares of common stock and there
are 11 shares of common stock issued and outstanding. Village Motor
Inn, a Montana joint venture, owns 1 share of the common stock and
pursuant to an irrevocable proxy Red Lion has the right to vote the
other 10 shares of issued and outstanding common stock.
(6) Entity indicated is an Existing Red Lion Joint Venture.
(8 of 8)
<PAGE> 324
SCHEDULE VII
Existing Indebtedness
*Items marked with an aserisk (*)
are part of Consolidated Indebtedness
PART A - LOANS
*1. Glendale Red Lion Hotel, a California limited partnership ("Glendale")
is indebted to The Yasuda Trust & Banking Co. in the outstanding
principal amount of $39,400,899.
*2. Glendale is indebted to the Glendale Redevelopment Agency in the
outstanding principal amount of $6,000,000.
3. Glendale is indebted to Red Lion in the outstanding principal amount of
$6,730,550. (INTERCOMPANY)
4. Bakersfield Red Lion Motor Inn, a California joint venture is indebted
to Red Lion in the outstanding principal amount of $18,573,684.
(INTERCOMPANY)
5. Red Lion Orange County Partners, L.P. is indebted to Red Lion in the
outstanding principal amount of $20,324,925. (INTERCOMPANY)
6. Ontario-Red Lion Motor Inn, a California general partnership is
indebted to Red Lion in the outstanding principal amount of
$24,504,253. (INTERCOMPANY)
7. Red Lion is indebted to Chequers Investment Associates II in the
outstanding principal amount of $17,000,000. This is the "Austin
Obligation".
8. Secured Promissory Note made by Red Lion Properties, Inc. in favor of
Red Lion in the outstanding principal amount of $3,343,401.
(INTERCOMPANY)
9. Demand note in the principal amount of $4,880,000 made by Red Lion
payable to Red Lion Properties, Inc. (INTERCOMPANY - relates to net
worth covenant)
*10. Fess Parker - Santa Barbara Hotel is indebted to Credit Lyonnais,
United States National Bank of Oregon and Banque
(1 of 9)
<PAGE> 325
Nationale de Paris in the outstanding principal amount of $45,000,000.
ALL OF THE ABOVE MAY BE REFINANCED PURSUANT TO SECTION 9.04(II).
(2 of 9)
<PAGE> 326
PART B - LETTERS OF CREDIT
*1. Irrevocable Letter of Credit in favor of Harvard Real Estate Inc. in
the face amount of $1,000,000 renewable annually for a period of one
year issued by the Bank of Nova Scotia (Collateral for lease of the two
Harvard properties).
*2. Irrevocable Letter of Credit in favor of Securities Reliance Surety
Company in the face amount of $1,860,000 expiring March, 1997 issued by
the Bank of Nova Scotia (Collateral for Roosevelt Hotel Corporation).
PART C - CAPITALIZED LEASES (LIST AMOUNT TO BE CAPITALIZED)
NONE
PART D - GUARANTIES AND OTHER CONTINGENT OBLIGATIONS
*1. Net Operating Deficient Guaranty of Red Lion made as of July 16, 1990
in favor of The Yasuda Trust & Banking Co., Ltd., Los Angeles Agency,
with respect to certain indebtedness of Glendale Red Lion Hotel. Total
liability under the guaranty limited to $7,000,000. Pursuant to the
Third Loan Modification Agreement, Red Lion has agreed that $20,000,000
of indebtedness of Glendale Red Lion Hotel will be recourse to Red
Lion. (Borrower may be required to assume such obligations of Red Lion
as a condition to the lenders consent to waive change in control)
*2. Guaranty of Red Lion made as of June 30, 1993 and Guaranty of Borrower
dated as of November 8, 1996, both in favor of Credit Lyonnais, etc.
with respect to indebtedness of Fess Parker-Red Lion Hotel, with an
outstanding principal amount of $45,000,000.
3. "Keepwell letter" obligation to contribute up to an additional $800,000
by DTR Boston Heights, Inc., the lessee of the Doubletree Miami Coconut
Grove hotel.
4. "Keepwell letter" obligation to contribute up to an additional $800,000
by DTR Houston, Inc., the lessee of the Doubletree Tyson's Corner
hotel.
(3 of 9)
<PAGE> 327
5. Obligation to fund an additional $200,000 loan by DT Management, Inc.
to the owner of the Doubletree Charlotte hotel.
6. Obligation to fund $6,300,000 permanent loan financing on the
Doubletree Somerset hotel to the owner, THI Somerset LP.
7. Termination Agreement for Mr. Jim Grier requires payment of $9,749 per
month until death - currently 61 years old.
8. Candlewood - obligation to fund balance of $15.0 million commitment.
Funding through October 15, 1996 amounted to $12,300,000.
9. Patriot/Doubletree Alliance - Commitment to invest up to $20,000,000
million of which $3,000,000 million has been funded as of September 30,
1996.
*10. A $2,000,000 portion of the Hotel Properties Boise debt in the original
amount of $7,000,000 (mortgage note payable, due 2006, secured by a
deed of trust on substantially land, building and equipment and
otherwise non-recourse) is guaranteed by Doubletree Hotels Corporation.
11. Guaranty of Renovation Completion and Performance made by Red Lion in
favor of Finova Capital Corporation, dated November 21, 1995, with
respect to Red Lion Spokane - City Center.
12. Guaranties by Red Lion of leases of real property entered into by RLH
Partnership, L.P. with respect to the Boise Downtowner and Eugene,
Oregon properties.
13. Doubletree Corporation is required to maintain a net worth of RFS, Inc.
of at least $15,000,000 pursuant to the Master Agreement with RFS Hotel
Investors, Inc.
14. DTR North Canton, Inc. (name to be changed to DTM PAH Lessee, Inc.) is
required to maintain a net worth of the greater of $400,000 or 20% of
the aggregate projected annual percentage rent deposit and percentage
rent under all leases with Patriot American Hospitality, Inc. pursuant
to each such lease agreement.
(4 of 9)
<PAGE> 328
15. Red Lion Properties, Inc. is required to maintain net assets of
$9,880,000 pursuant to Section6.14 of the partnership agreEMENT of Red
Lion Inns Limited Partnership.
PART E - INTEREST RATE PROTECTION AGREEMENTS AND OTHER HEDGING
AGREEMENTS
All three to be terminated on or about November 8, 1996.
1. Interest Rate and Currency Exchange Agreement dated October 1, 1990 by
Red Lion with United States National Bank of Oregon, as amended and
supplemented regarding debt in the notional amount of $25,000,000.
2. Interest Rate and Currency Exchange Agreement dated March 1, 1993 by
Red Lion with Societe Generale, as amended and supplemented regarding
debt in the notional amount of $25,000,000.
3. Master Agreement dated as of August 1, 1995 by Red Lion with The Bank
of Tokyo, Ltd., as amended and supplemented, regarding debt in the
notional amount of $25,000,000.
PART F - OTHER INDEBTEDNESS AS GENERAL PARTNER OF PRIMARY OBLIGOR
*1. Highland Plaza Partners, Ltd. (RFS, Inc. is a general partner)
unsecured promissory note in the original amount of $300,000.
*2. Red Lion is the general partner of Red Lion La Posada, an Arizona joint
venture and as such may be liable for such joint ventures loan payable
to Equitable Life Assurance Co. upon which there is $6,479,598 of
principal outstanding.
*3. Red Lion is the general partner of Village Motor Inn, a Montana joint
venture and as such may be liable for such joint venture's loan payable
to First Interstate Bank of Commerce upon which there is $2,634,773 of
principal outstanding.
(5 of 9)
<PAGE> 329
*4. Obligations as a general partner of a primary obligor arising in the
ordinary course of business except to the extent that the underlying
obligation would otherwise constitute Indebtedness.
(6 of 9)
<PAGE> 330
PART G - BOND OBLIGATIONS OUTSTANDING
BROKER: Sedgwick James & Company
SURETY: Continental Casualty Co./American Casualty of PA
Fireman's Inc. Co. of NJ
<TABLE>
<CAPTION>
BOND AMOUNT ANNUAL
NUMBER DESCRIPTION AT 9/30/96 PREMIUM
<S> <C> <C> <C>
*142-448-4888 AIG 94-95 $1,000,000 $10,000
*142-448-443 AIG 95-96 2,447,751 22,210
*142-448-457 AIG 96-97 202,698 13,176
*142-448-412 Liberty Northwest 92-93 116,158 538
*142-448-426 Liberty Northwest 93-94 242,143 2,002
*142-488-409 Liberty Mutual 92-93 436,672 4,985
*142-448-474 Liberty Mutual 93-94 280,199 2,776
*142-488-460 Port of Vancouver 200,000 2,000
BNS1296217-006 Roberta Pearson St Wash Notary Public Bond 10,000 50
BNS1296219-0016 Ella J. Lee 10,000 50
St. Wash Notary Public
BNS1320264 Red Lion Inns. L.P. 202,464 4,049
Supersedeas Appeal Bond
Patricia Fair vs. Red Lion
141886901 Red Lion Hotels, Inc. 107,500 1,613
Concessionaires Bond/Port of Portland
Portland Airport Red Lion Restaurant
141886929 Red Lion Hotels, Inc. 55,500 833
Concessionaires Bond/Port of Portland
Red Lion Pizza Restaurant - "Red's"
BNS1319865-0055 Red Lion Hotels, Inc. 4,029 100
License and Permit Bond
City of Los Angeles/Dept. of Airports
Los Angeles Airport & Ontario Red Lions
BNS1319865-0056 Red Lion Hotels, Inc. 2,000 100
Liquor and Beer License
State of Nebraska
Omaha Red Lion
141887031-0382 Red Lion Hotels, Inc. 750 50
Financial Guarantee Bond
City of Los Angeles/Dept. of Airports
Los Angeles Airport Red Lion
</TABLE>
(7 of 9)
<PAGE> 331
<TABLE>
<CAPTION>
BOND AMOUNT ANNUAL
NUMBER DESCRIPTION AT 9/30/96 PREMIUM
<S> <C> <C> <C>
BNS1319865-0400 Red Lion Hotels, Inc. 5,000 250
Restaurant Liquor Bond
State of Utah
Salt Lake City Red Lion
141887031-0411 Red Lion Hotels, Inc. 2,467 50
License & Permit Bond
John Wayne Airport
Orange County Red Lion
BNS1319865-0469 Red Lion Hotels, Inc. 1,000 100
Liquor Bond - Gift Shop
State of Utah
Salt Lake City Red Lion
BNS1319865-0477 St Wash Notary Bond 10,000 50
Howard J. Cohen
BNS1319865-0478 St Wash Notary Bond 10,000 50
Vicki Lynn Zimmerman-Williams
BNS1319865-0671 Tapas Corporation 10,000 50
Private Club Bond
St of Utah/Dept. of Alcoholic Bev. Control
Salt Lake City Red Lion
BNS1319865-0683 Notary Public St of Wash 10,000 50
Michelle Geschke/Seattle
141887031-0822 SALC, Inc. 5,000 50
St of Texas/Alcoholic Bev. Commission
San Antonio Red Lion
141887031-0858 SALC, Inc. 5,000 50
St of Texas/Alcoholic Bev. Commission
Houston Red Lion
141887031-0404 Betty MacWilliam & Co/dba: Club Max 20,000 200
St of Texas/Alcoholic Bev. Commission
Austin Red Lion
141887031-0859 SALC, Inc. 7,500 50
St of Texas/Mixed Bev. Gross Receipts Tax Bond
Houston & San Antonio Red Lions
141887031-0860 Red Lion Hotels, Inc. 32,800 590
City of Houston Utility Bond
Houston Red Lion
141887031-0876 Red Lion Hotels, Inc. 49,000 882
Houston Lighting & Power Co. Utility Bond
Houston Red Lion
</TABLE>
1. Indemnity Agreement Bond No. 142448488 by Red Lion, as principal, and
National Fire Insurance Company of Hartford, as Surety, dated July 23,
1996.
(8 of 9)
<PAGE> 332
2. Indemnity Agreement Bond No. 142448443 by Red Lion, as principal, and
National Fire Insurance Company of Hartford, as Surety, dated July 23,
1996.
3. Indemnity Agreement Bond No. 142448457 by Red Lion, as principal, and
National Fire Insurance Company of Hartford, as Surety, dated July 23,
1996.
The obligations of Red Lion under the preceding three (3) Indemnity
Agreements are in partial substitution for Red Lion's obligations with
respect to certain letters of credit in the aggregate amount of
approximately $5.6 million as disclosed on Red Lion's balance sheet
dated as of June 30, 1996.
(9 of 9)
<PAGE> 333
SCHEDULE VIII
To Credit Agreement
Insurance
Certificates of Insurance attached herein.
<PAGE> 334
SCHEDULE IX
To Credit Agreement
Existing Liens which will survive closing
<TABLE>
<CAPTION>
Property Subject Maturity Date of
to Lien Secured Party Amount of Lien Debt Secured Thereby
------- ------------- -------------- --------------------
<S> <C> <C> <C>
10 shares of common Sumitomo Bank, $55,125,000 02/10/00
stock of Arlington Hotel Limited
Co. which are owned by
DT Real Estate, Inc.,
an Arizona corporation
</TABLE>
Note: The remaining 990 shares of Arlington Hotel Co. which are owned by
Hotel Properties - Boise, an Arizona general partnership in which
Doubletree has an interest but which is not a Subsidiary, are also
pledged to Sumitomo as security for the note listed above.
<TABLE>
<S> <C> <C> <C>
Glendale Red Lion Hotel Yasuda Trust and $39,500,000 07/16/97
Banking Corp.
Glendale Red Lion Hotel Glendale Redevelopment $ 6,000,000 30 years after first to occur
Authority of hotel opening or 90 days
after certificate of occupancy
is issued
Fess Parker's Red Lion Santa Credit Lyonnais Cayman $45,000,000 06/29/98
Barbara Resort Islands Branch
U.S. National Bank of
Oregon
Banque Nationale De
Paris
Austin Red Lion Hotel Chequers Investment Approximately 12/31/97
Associates II $17,000,000
Bakersfield Red Lion Hotel Red Lion Hotels, Inc. $18,573,684 02/29/00
Costa Mesa (Orange County) Red Red Lion Hotels, Inc. $20,324,925 10/01/00
Lion Hotel
Ontario Red Lion Hotel Red Lion Hotels, Inc. $24,504,253 12/31/97
Richland Red Lion Hotel and Red Lion Hotels, Inc. $ 3,343,401 08/01/02
Kalispell Red Lion Hotel
</TABLE>
Note: Each of the above-listed liens is permitted to be refinanced.
(1 of 2)
<PAGE> 335
Additional Liens:
1) Liens under the Red Lion Master Lease in favor of the landlord
thereunder.
2) Furniture, fixtures and equipment located in Hotel Properties leased
under the Master Lease are subject to the right of Credit Lyonnais,
holder of the fee mortgage on these properties, to purchase such
furniture, fixtures and equipment upon foreclosure of the fee mortgage
held by Credit Lyonnais pursuant to the non-disturbance agreement among
Red Lion, Credit Lyonnais and the Master Landlord.
3) Liens on Red Lion's interest, in its capacity as manager, in (i) leases
of personal property entered into by Red Lion in connection with the
development, use, occupancy or operation of the properties owned by Red
Lion Inns Operating L.P. (the "MLP Properties"), and (ii)
authorizations, approvals, permits, variances and land use entitlements
required for the construction and maintenance of the MLP properties and
permits, licenses and agreements required for use, occupancy or
operation of the MLP Properties.
4) Furniture, fixtures and equipment located in the Hotel Properties
leased under the Master Lease are subject to the right of the Master
Landlord to purchase such furniture, fixtures and equipment upon
termination of the Master Lease.
(2 of 2)
<PAGE> 336
SCHEDULE X
To Credit Agreement
Existing Investments
1. All Investments set forth on Schedules VI, XVI and XVII to this Credit
Agreement.
2. All investments in hotel management agreements, hotel franchise
agreements and leases of hotels to which Borrower or any Subsidiaries
are a party on the date hereof.
<PAGE> 337
SCHEDULE XI
To Credit Agreement
Scheduled Capital Expenditures
BORROWER SHALL HAVE THE RIGHT TO REALLOCATE AMOUNTS PERMITTED AS CAPITAL
EXPENDITURES BY VIRTUE OF INCLUSION ON THIS SCHEDULE, SO LONG AS (I) THE TOTAL
OF SAME REMAINS $42,800,000 AND (II) THE AGGREGATE NET AMOUNTS OF SUCH
REALLOCATIONS SHALL NOT EXCEED $5,000,000.
<TABLE>
<CAPTION>
Description Amount
- ----------- ------
<S> <C>
Related to conversion of name and
acquisition integration $16,800,000
Related to existing arrangements
with Patriot American $10,000,000
Related to existing arrangements
with Candlewood Hotel Company, L.L.C $ 6,000,000
Related to existing arrangements with Red
Lion Hotels in Houston, San Antonio,
Modesto & Spokane $ 7,000,000
Related to existing arrangements with
Thayer Hotel Investors II, L.P. $ 3,000,000
-----------
Total $42,800,000
</TABLE>
<PAGE> 338
SCHEDULE XII
To Credit Agreement
Base Case EBITDA
<TABLE>
<CAPTION>
Test Period Ending Amount
- ------------------ ------
<S> <C>
December 31, 1997 $189,000,000
December 31, 1998 $215,000,000
December 31, 1999 $245,000,000
December 31, 2000 $279,000,000
December 31, 2001 $289,000,000
December 31, 2002 $300,000,000
December 31, 2003 $313,000,000
</TABLE>
<PAGE> 339
SCHEDULE XIII
To Credit Agreement
Designated Hotel Properties
Red Lion Eureka Red Lion Modesto
1929 Fourth Street 1150 Ninth Street
Eureka, CA 95501 Modesto, CA 95354
Red Lion Redding Red Lion San Jose
1830 Hilltop Drive 2050 Gateway Place
Redding, CA 96002 San Jose, CA 95110
Red Lion Portland/Jantzen Beach Red Lion Bend South
909 North Hayden Island Drive 849 NE 3rd Street
Portland/Jantzen Beach, OR Bend South, OR 97701
97217
Red Lion Klamath Falls Red Lion Portland/Columbia River
3612 South 6th Street 1401 North Hayden Island Drive
Klamath Falls, OR 97603 Portland/Columbia, OR 97217
Red Lion San Antonio Red Lion Houston
37 NE Loop 410 2525 West Loop South
San Antonio, TX 78218 Houston, TX 77027
Red Lion Bellevue Red Lion Port Angeles
300 112th Avenue SE 221 North Lincoln Street
Bellevue, WA 98004 Port Angeles, WA 98362
Red Lion Aberdeen Red Lion Yakima
521 West Wishah Street 1507 North 1st Street
Aberdeen, WA 98520 Yakima, WA 98901
Red Lion Pasco Doubletree Guest Suites
2525 North 20th Street Southfield
Pasco, WA 99301 28100 Franklin Road
Southfield, MI 48034
<PAGE> 340
SCHEDULE XIV
To Credit Agreement
ERISA
There is an application pending with the Internal Revenue
Service for the Employee Retirement Savings Plan maintained by Red Lion under
Revenue Procedure 94-62. It is anticipated that the liability in connection with
this application will not exceed $600,000.
Borrower has applied for a determination letter from the
Internal Revenue Service to the effect that the Employee Retirement Savings Plan
maintained by the Borrower is qualified.
<PAGE> 341
SCHEDULE XV
To Credit Agreement
Restrictions on Subsidiaries
1. RFS Inc. and DTR RFS Lessee, Inc. are required to maintain a net worth
of at least $15,000,000 pursuant to the Master Agreement with RFS Hotel
Investors, Inc.
2. DTR North Canton, Inc. (name to be changed to DTM PAH Lessee, Inc.) is
required to maintain a net worth of the greater of $400,000 or 20% of
the aggregate projected annual percentage rent deposit and percentage
rent under all leases with Patriot American Hospitality, Inc. pursuant
to each such lease agreement.
3. Red Lion Properties, Inc. is required to maintain net assets of
$9,880,000 pursuant to Section6.14 of the partnership agreement of Red
Lion Inns Limited Partnership.
<PAGE> 342
SCHEDULE XVI
To Credit Agreement
Existing Doubletree Investments
<TABLE>
<CAPTION>
GUARANTEED/
UNSECURED SECURED
INVESTMENT NAME EQUITY OWNERSHIP NOTEHOLDER ADVANCES/LOANS ADVANCES/LOANS
- --------------- ---------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Boston HSR Ltd. Partnership N/A Doubletree $ 0 $4,500,000
Partners
Arlington Hotel Co. DTR Real Estate owns 1% Compri Hotel Corp. $ 1,555,000(1) $3,500,000
Hotel Properties - Boise (DTR Limited
Partnership owns only 27.5% interest
therein;
Corporate Assocaties - Boise owns only
22.5% interest therein) owns 99%
Custom House Hotel, L.P. Doubletree, Inc. of California holds Doubletree Hotels $4,000,000 $ 0
2.11% l.p. interest; Corp.
Hotel Equities Co. (DTR Limited
Partnership holds only 2.19% interest
therein) holds 10.75% l.p. interest
THI Somerset L.P. Thayer Hotel Investors II, L.P. DT Management, $ 0 $ 3,647,000(2)
("Thayer II") (Borrower holds only Inc.
4.35388% l.p. interest therein) owns
98.69213% interest
Master Preferred Hotels L.P. N/A RFS, Inc. $3,000,000 $ 0
Grand Partners JV II N/A DT Management, $ 0 $2,850,000
Inc.
Columbus/Front Ltd. N/A Doubletree $ 0 $2,575,000
Partners
Washington Park Hotel Assoc., N/A DT Management, $ 0 $2,500,000
L.P. Inc.
</TABLE>
- --------
(1) There is also a $195,000 future funding obligation.
(2) There is also a $253,000 future funding obligation. Loan amount above
does not include $6,300,000 commitment to provide substitute first
mortgage financing is existing mortgage loan is not rolled over by
November 30, 1996.
(1 of 4)
<PAGE> 343
<TABLE>
<CAPTION>
GUARANTEED/
UNSECURED SECURED
INVESTMENT NAME EQUITY OWNERSHIP NOTEHOLDER ADVANCES/LOANS ADVANCES/LOANS
- --------------- ---------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Hotel Roanoke, LLC N/A DT Management, $ 0 $1,300,000
Inc.
LOF Plymouth Meeting, L.P. N/A Doubletree Hotels $ 0 $1,000,000
Corp.
THI Metairie L.P. Thayer II owns 98.58519% interest DT Management, $1,000,000 $ 0
Inc.
Bayside Resort, Inc. N/A DT Management, $ 900,000 $ 0
Inc.
NUHO Company N/A Doubletree $ 645,000 $ 0
Partners
PSH Master L.P. N/A Doubletree $ 0 $ 500,000
Partners
Tysons Corner PT Limited N/A DT Management, $ 500,000 $ 0
Partnership Inc.
Waltham HSR, L.P. N/A Doubletree $ 0 $ 300,000
Partners
Jacksonville PT Hotel Corp. N/A Doubletree Hotels $ 256,000 $ 0
Corp.
PH Hotel, Inc. N/A Doubletree $0 $ 500,000(3)
Partners
NCNB N/A DT Management, $ 200,000 $ 0
Inc.
The Villas of St. Paul, Inc. N/A DT Management, $0 $ 200,000
Inc.
(4)Pickett MLP N/A t/b/d $ 194,000 $ 0
</TABLE>
- --------
(3) Book Value is $250,000; Principal owed is $500,000.
(4) Proceeds out of bankruptcy proceeding.
(2 of 4)
<PAGE> 344
<TABLE>
<CAPTION>
GUARANTEED/
UNSECURED SECURED
INVESTMENT NAME EQUITY OWNERSHIP NOTEHOLDER ADVANCES/LOANS ADVANCES/LOANS
- --------------- ---------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Coconut Grove PT Limited N/A t/b/d $ 175,000 $ 0
Partnership
Canal 66 Partnership N/A Doubletree, Inc. $ 136,000 $ 0
Mayfair Assoc., L.P. N/A Doubletree, Inc. $ 0 $ 41,000
Novi Hotel Fund Ltd. N/A Doubletree Hotel $ 32,000 $ 0
Partnership Systems, Inc.
Louisville Lodging Assoc. of N/A Ltd./Doubletree $ 25,000 $ 0
Kentucky Hotel Systems,
Inc.
PSH Master, L.P. N/A Doubletree $ 0 $ 22,000
Partners
Hotel Properties Boise DTR Limited Partnership ("DTRLP") owns N/A N/A N/A
27.50%;
Corporate Associates - Boise owns 2.5%
RW Motels, Ltd. DTRLP owns 25% N/A N/A N/A
Southcenter Motor Hotel, Ltd. Tuk Inns, Inc. owns 12.626% N/A N/A N/A
Thayer II Doubletree Hotels Corporation owns N/A N/A N/A
4.353% l.p. interest
PAH DT Miami Airport Partners, DTR PAH Holdings owns 10% l.p. N/A N/A N/A
L.P. interest
PAH DT Tallahassee Partners, DTR PAH Holdings owns 10% l.p. N/A N/A N/A
L.P. interest
PAH Chicago O'hare Partners, DTR PAH Holdings owns 10% l.p. N/A N/A N/A
L.P. interest
PAH DT Westminster DTR PAH Holdings owns 10% l.p. N/A N/A N/A
Partners L.P. interest
Candlewood Hotel Company, LLC 50% LLC interest and by Doubletree N/A N/A N/A
Corporation
SF Partners RFS, Inc. owns 2.5% g.p. interest N/A N/A N/A
</TABLE>
(3 of 4)
<PAGE> 345
<TABLE>
<CAPTION>
GUARANTEED/
UNSECURED SECURED
INVESTMENT NAME EQUITY OWNERSHIP NOTEHOLDER ADVANCES/LOANS ADVANCES/LOANS
- --------------- ---------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
DDP Partners RFS, Inc. owns 5% g.p. interest N/A N/A N/A
Devonshire Associates RFS, Inc. owns 10% g.p. interest N/A N/A N/A
Highland Plaza Partners, Ltd. RFS, Inc. owns 5% g.p. interest N/A N/A N/A
Shelby Distribution Partners RFS, Inc. owns 46.63% g.p. interest N/A N/A N/A
RFS Partnership, L.P. less than 1% l.p. interest N/A N/A N/A
owned by RFS, Inc.
RFS Hotel Investors, Inc. RFS, Inc. owns 973,684 shares of N/A N/A N/A
convertible preferred stock and 35,000
shares of common stock
Tucson Hotel Equity Limited DTM Oklahoma owns 33.34% g.p. interest N/A N/A N/A
Partnership
Doubletree de Mexico, S.A. de DTR San Antonio Inc. holds 50% of N/A N/A N/A
C.V. stock
</TABLE>
(4 of 4)
<PAGE> 346
SCHEDULE XVII
To Credit Agreement
Existing Red Lion Investments
<TABLE>
<CAPTION>
GUARANTEED/
UNSECURED SECURED
INVESTMENT NAME EQUITY OWNERSHIP NOTEHOLDER ADVANCES/LOANS ADVANCES/LOANS
- --------------- ---------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Red Lion La Posada 50% owned by Red Lion ("RL") RL $27,720,403 $ 0
Bakersfield Red Lion Motor Inn 66.67& profit, loss and capital RL $ 4,381,017 $14,192,667
interest owned by RL
Red Lion Orange County Partners, 51% profit and loss interest owned by RL $ 824,925 $19,500,000
L.P. RL
Glendale Red Lion Hotel 75% owned by RL RL $ 6,730,550 $ 0
Ontario Red Lion Motor Inn 66.67% owned by RL RL $ 7,170,581 $17,333,672
Village Motor Inn 50% owned by RL RL $ 0 $ 0
Fess Parker Red Lion Hotel 49.401% owned by RL, RL $ 0 $ 0
0.499% owned by Red Lion Properties,
Inc. and 0.1% owned by Santa Barbara
Red Lion
Red Lion Inns L.P. 1% general partnership interest owned RL $ 0 $0
by Red Lion Properties, Inc.
Red Lion Inns Operating L.P. 1% general partnership interest owned RL $22,165,814 $0
by Red Lion Properties, Inc.
Red Lion/Riverfront L.L.C. 10% owned by RL RL $ 0 $ 7,007,413
Betty MacWilliam & Company 49% of common stock owned by Red Lion N/A N/A N/A
Red Lion Properties, Inc. 100% owned by RL RL $ 0 $ 3,343,401
</TABLE>
<PAGE> 1
Exhibit 10.4
AMENDMENT NO. 3
INCORPORATION AND
REGISTRATION RIGHTS AGREEMENT
This Third Amendment to Incorporation and Registration Rights
Agreement (this "Third Amendment") dated as of November 8, 1996 is made by and
among Doubletree Corporation, a Delaware corporation (the "Company"), GE
Investment Hotel Partners I, Limited Partnership, a Delaware limited
partnership ("GEHOP"), MetPark Funding, Inc., a Delaware corporation ("Met
Sub"), The Ueberroth Family Trust ("Ueberroth"), Ueberroth Investment Trust
("Investment"), Mr. Richard J. Ferris ("Ferris"), Ridge Partners, L.P., a
Delaware limited partnership ("Ridge"), Mr. Robert M. Solmson (the
"Representative"), for himself and as attorney-in-fact for the RFS Shareholders
(as defined in the Second Amendment referred to below), Canadian Pacific Hotels
Holdings (U.S.) Inc., a Delaware corporation ("CPPHUS"), and Red Lion, a
California Limited Partnership (the "RL Partnership").
This Third Amendment amends the Incorporation and Registration
Rights Agreement dated as of December 16, 1993 (the "Original Agreement"), by
and among Doubletree Partners, a Delaware general partnership, GQ Owners, L.P.,
a Delaware limited partnership, Canadian Pacific Hotels (U.S.) Inc., a Delaware
corporation ("CPHUS"), Met Sub, Ueberroth and Ferris, as first amended by
Amendment No. 1 to Incorporation and Registration Rights Agreement dated as of
June 30, 1994 (the "First
<PAGE> 2
Amendment"), by and among the parties to the Original Agreement, the Company,
GEHOP, Investment and Ridge, and as further amended by Amendment No. 2 to
Incorporation and Registration Rights Agreement dated as of February 27, 1996
(the "Second Amendment"), by and among CPPHUS, as successor in interest to
CPHUS under the Original Agreement and the First Amendment, and the parties
hereto other than the RL Partnership. Capitalized terms used and not otherwise
defined herein shall have the respective meanings assigned to such terms in the
Original Agreement, as amended by the First Amendment and the Second Amendment
(as so amended, the "Existing Agreement").
BACKGROUND
A. CPPHUS has sold all Eligible Securities beneficially
owned by it.
B. The RL Partnership owns of record and beneficially
20,900,000 shares of common stock, par value $.01 per share, of Red Lion
Hotels, Inc., a Delaware corporation ("Red Lion"). Pursuant to the Agreement
and Plan of Merger dated as of September 12, 1996 (the "Merger Agreement"), by
and among the Company, RLH Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Company, and Red Lion, at the Effective Time (as
defined in the Merger Agreement), such shares of Red Lion stock will be
converted into the right to receive, among other things, an aggregate of
4,836,260 shares (together with any additional shares issued as a result of any
stock split, stock dividend or subdivision or reclassification of such shares,
2
<PAGE> 3
the "Exchange Shares") of the Company's Common Stock. In order to induce the
RL Partnership, as a majority stockholder of Red Lion, to vote for approval and
adoption of the Merger Agreement and the Merger (as defined in the Merger
Agreement), the Parties wish to amend the Existing Agreement to include the RL
Partnership as a Party and to specify the relative rights and privileges of the
Partnership with respect to the subject matter thereof.
C. In connection with the Merger, an affiliate of GEHOP
will purchase from the Company 2,627,534 newly-issued shares of Common Stock
(the "New GEI Shares") and warrants to purchase up to 262,753 additional shares
of Common Stock, subject to adjustment (such additional shares of Common Stock
issuable upon exercise of such warrants, the "GEI Warrant Shares"). In order
to induce such affiliate of GEHOP to make such purchase, the Parties wish to
amend the Existing Agreement to include the New GEI Shares and, upon issuance,
the GEI Warrant Shares as Eligible Securities.
NOW THEREFORE, in consideration of the foregoing and intending
to be legally bound, the Parties agree as follows:
1. The RL Partnership. All references to "Holders" and
the "Parties" in the Existing Agreement shall be deemed to include the RL
Partnership, including, without limitation, references granting to Holders
certain "piggyback" registration rights pursuant to Section 3 of the Original
Agreement.
2. Additional Eligible Securities. All references to
"Eligible Securities" in the Existing Agreement shall be deemed
3
<PAGE> 4
to include, without limitation, all Exchange Shares and all New GEI Shares and,
upon issuance, all GEI Warrant Shares. For purposes of the Existing Agreement,
as amended hereby, but for no other purpose whatsoever (whether express or
implied), the New GEI Shares and the GEI Warrant Shares will be aggregated
together with shares of Common Stock owned by GEHOP in order to determine the
amount of Eligible Securities or shares of Common Stock which relate to GEHOP.
3. Demand Rights. (a) Section 2(a) of the Existing
Agreement is hereby amended to provide that in addition to the rights granted
therein to GEHOP, Met Sub and the Representative, the RL Partnership may, at
any time after the date which is 180 days following the date on which the
Effective Time occurs, deliver up to four Registration Requests to the Company,
subject to Section 2(b)(i) of the Existing Agreement as amended hereby. After
receipt of a Registration Request, the Company shall file and use its best
efforts to cause to become effective a registration statement under the
Securities Act with respect to the number of Exchange Shares specified in such
request, all within the time and in the manner specified in Section 2 of the
Original Agreement.
(b) Section 2(a) of the Existing Agreement is hereby
amended to replace the term "The Partner", which begins the fifth sentence of
such Section 2(a), with the term "The Holder."
(c) The first paragraph of Section 2(b)(i) of the Existing
Agreement is hereby amended and restated to read as follows:
4
<PAGE> 5
"(i) if the Requesting Holder shall be GEHOP and the
Registration Request is not the last to which such Holder is entitled
under Section 2(a) and this Section 2(b)(i), or if the Requesting
Holder shall be the Representative and the Registration Request is
made pursuant to Section 2(c) of Amendment No. 2 to this Agreement, or
if the Requesting Holder shall be the RL Partnership and the
Registration Request is made pursuant to Section 3(a) of Amendment No.
3 to this Agreement and is not the first or last such request to which
the RL Partnership is entitled pursuant to such Section 3(a):
(A) the number of shares of Eligible Securities to be
registered on behalf of each Holder shall be reduced
(to zero, if necesssary) pro rata according to the
number of shares requested to be registered by each
Holder; provided, however, that in the case of the
first Registration Request made by GQ Owners, any
Registration Request made by the RL Partnership
pursuant to Section 3(a) of Amendment No. 3 to this
Agreement (other than its first or last such
Registration Request) and the Registration Request
made by the Representative pursuant to Section 2(c)
of Amendment No. 2 to this Agreement, if the number
of shares of Eligible Securities requested to be
registered by GQ Owners, the RL Partnership or the
Representative, as the case may be, shall be
5
<PAGE> 6
reduced as a result of this Section 2(b)(i) by 20% or more, such
Requesting Holder shall be entitled to request one registration in
addition to (i) in the case of GQ Owners, the two registration
requests GQ Owners is entitled to under Section 2(a) of this
Agreement, (ii) in the case of the RL Partnership, the four
registration requests the RL Partnership is entitled to under Section
3(a) of Amendment No. 3 to this Agreement and (iii) in the case of the
Representative, the one registration request the Representative is
entitled to under Section 2(c) of Amendment No. 2 to this Agreement;
and"
(d) The first paragraph of Section 2(b)(ii) of the Existing
Agreement is hereby amended and restated to read as follows:
"(ii) if the Requesting Holder shall be Met Sub, or if the
Requesting Holder shall be GEHOP exercising the last Registration
Request to which it is entitled under Section 2(a) and Section 2(b)(i)
of the Existing Agreement, or if the Requesting Holder shall be the RL
Partnership exercising the first or last Registration Request to which
it is entitled under Section 3(a) of Amendment No. 3 to this
Agreement:"
(e) Section 2(b)(ii)(C) of the Existing Agreement is
hereby amended to replace the term "Common Stock" used therein with the term
"Eligible Securities."
6
<PAGE> 7
(f) Section 2 of the Existing Agreement is hereby amended
to include the following subsection (e):
"(e) A Holder shall be deemed not to have
exercised a Registration Request to which it is entitled under Section
2 if (i) the registration statement relating to such Registration
Request does not become effective, or after it has become effective,
is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court,
in each case by reason of an act or omission by the Company, or (ii)
the conditions to closing specified in the purchase agreement, or
underwriting agreement entered into in connection with such
registration statement are not satisfied, and the offering and sale of
Eligible Securities to which such Registration Request relates is not
consummated, because of an act or omission by the Company (other than
a failure of the Company or any of its representatives to execute or
deliver any closing certificate by reason of facts or circumstances
not within the control of the Company or such representatives) or
(iii) at any time after a Party delivers a Registration Request and
prior to the effectiveness of the registration statement relating
thereto, the preparation of such registration statement is
discontinued or such registration statement is withdrawn or abandoned,
in each case at the request of the Requesting Holder, and such
Requesting Holder has elected to pay and has paid to the Company in
full all of the
7
<PAGE> 8
registration expenses (including, without limitation, Company
registration expenses) referenced in Section 5 in connection with such
registration statement."
(g) Section 13(a) of the Existing Agreement is hereby
amended to provide that one or more transferees of Eligible Securities owned by
the RL Partnership may deliver a Registration Request pursuant to Section 2 if
(i) such transferees have received such Eligible Securities in compliance with
applicable Federal and state securities laws, (ii) such transferees have agreed
in a writing, in form and substance reasonably satisfactory to the Company, to
be bound by the Existing Agreement, as amended by this Third Amendment and as
amended or modified hereafter, with the same duties and obligations as a Holder
thereunder, and (iii) the transferee or transferees that so deliver such
Registration Request hold at least a majority of the then outstanding Exchange
Shares which have not been sold pursuant to a registered public offering. In
addition, Section 13(a) is amended so that the references to "permitted
assign(s)" or "permitted transferee" shall mean any assignee or transferee of a
Holder.
4. Piggyback Rights. The RL Partnership hereby agrees
that in the event that shares of Eligible Securities requested by the
Partnership to be registered pursuant to Section 3 of the Existing Agreement
are unable to be included in a registration pursuant to market conditions then
existing, as provided in the Existing Agreement, the shares to be registered
for the RL Partnership shall be reduced by a pro rata amount with
8
<PAGE> 9
respect to the number of shares requested to be registered by the RL
Partnership.
5. Notices. Section 13(b) of the Existing Agreement is
hereby amended to add subsection (viii) as follows:
"(viii) if to the RL Partnership to Red Lion, a California
Limited Partnership, c/o Kohlberg Kravis Roberts & Co., 2800
Sand Hill Road, Suite 200, Menlo Park, California 94025;
telephone (415) 233-6560; telecopier (415) 233-6561.
6. Amendments. The first sentence of Section 13(d) of
the Existing Agreement is hereby amended and restated in its entirety to read
as follows:
"This Agreement may not be amended or modified, and no
provision hereof may be waived, except in writing, and such
writing shall only be effective with respect to a Party who
has executed such writing; provided, however, that any such
amendment, modification or waiver shall only be required to be
so executed by a Party the rights of which under this
Agreement would be adversely affected in any material respect
by such amendment, modification or waiver."
7. Counterparts. This Third Amendment may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9
<PAGE> 10
IN WITNESS WHEREOF, the Parties hereto have executed this
Third Amendment as of the date first written above.
DOUBLETREE CORPORATION METPARK FUNDING, INC.
By: /s/ David L. Stivers By: /s/ Thomas C. Hoi
---------------------------------- --------------------------------
Name: David L. Stivers Name: Thomas C. Hoi
Title: Sr. V.P., Gen. Title: Vice-President
Counsel & Sec'y
RIDGE PARTNERS, L.P GE INVESTMENT HOTEL PARTNERS I,
LIMITED PARTNERSHIP
By: Kelrick, Inc., its general
partner By: GE Investment Management
Incorporated, its general
partner
By: /s/ Richard Ferris
----------------------------------
Name: Richard Ferris
Title: President By: /s/ Michael M. Pastore
-----------------------
Name: Michael M. Pastore
Title: Vice President
THE UEBERROTH FAMILY TRUST THE REPRESENTATIVE
By: /s/ Peter V. Ueberroth /s/ Robert M. Solmson
---------------------------------- ---------------------------------
Peter V. Ueberroth Robert M. Solmson
Trustee
/s/ Robert M. Solmson
-------------------------------------
Robert M. Solmson, as attorney-in-
fact for the RFS Shareholders
UEBERROTH INVESTMENT TRUST RED LION, a California Limited
Partnership
By: RLA-GP Inc., its general partner
By: /s/ Alice J. Saviez
----------------------------------
Alice J. Saviez
By: /s/ Beth A. Ugoretz
----------------------------
Not individually, but solely as Name: Beth A. Ugoretz
Trustee Title: V.P. and Sec'y
/s/ Richard J. Ferris
- --------------------------------------
Richard J. Ferris
10
<PAGE> 11
CANADIAN PACIFIC HOTELS
HOLDINGS (U.S.) INC.
By: /s/ William R. Fatt
------------------------------
Name: William R. Fatt
Title:
11
<PAGE> 1
Exhibit 10.5
PARTNERSHIP SERVICES AGREEMENT
This Partnership Services Agreement (this "Agreement") is made
and entered into as of November 8, 1996 by and among Doubletree Corporation, a
Delaware corporation ("Parent"), Red Lion Hotels, Inc., a Delaware corporation
("RLI") and Red Lion, a California Limited Partnership (the "Partnership") and
the undersigned affiliates of the Partnership (the "Affiliates" and together
with the Partnership, "Partnership Group").
RECITALS
WHEREAS, pursuant to a Contribution Agreement dated August 1,
1995 between the Partnership and RLI, the Partnership retained certain
interests in the hotels described in Exhibit A hereto (the "Retained Hotels");
WHEREAS, pursuant to the RLH Partnership, L.P. Contribution
Agreement dated August 1, 1995 between the Partnership and RLH Partnership,
L.P., a Delaware limited partnership ("Newpart"), the Partnership transferred
to Newpart certain interests in the Retained Hotels;
WHEREAS, pursuant to the Lease dated August 1, 1995 between
Newpart and RLI (the "Master Lease"), Newpart has leased the Retained Hotels to
RLI;
WHEREAS, RLI provides certain services to the Partnership
Group with respect to the Retained Hotels pursuant to that certain Service
Agreement dated August 1, 1995 (the "Service Agreement");
WHEREAS, the Partnership Group has guarantied performance and
payment of certain obligations of RLI to third parties set forth on Exhibit B
hereto; and
WHEREAS, as a result of the merger of RLH Acquisition Corp., a
wholly owned subsidiary of Parent ("Merger Sub") with and into RLI, effective
as of the date hereof, the parties to the Service Agreement now desire to
terminate the Service Agreement and replace it with this Agreement.
AGREEMENT
NOW, THEREFORE, in acknowledgement of the foregoing recitals
and in consideration of the mutual agreements expressed herein and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows.
1
<PAGE> 2
1. Termination of Services Agreement. RLI and the
Partnership Group agree to terminate the Service Agreement effective as of the
date hereof, without affecting RLI's right to be paid all sums due and owing
under the Service Agreement prior to the date hereof, all of which shall be
paid promptly after the date hereof. Notwithstanding the fact that the Service
Agreement provides for quarterly payouts of the fee due thereunder, for
purposes of calculating the amount due to RLI pursuant to this Section 1, if
the Service Agreement is terminated on any day other than the last day of the
quarter, then that portion of the fee that would be due for such quarter shall
be prorated based on the number of days that have lapsed in such quarter prior
to the date of the termination of the Service Agreement.
2. Support Services.
The Partnership Group may request that Parent provide
reasonable support services, including but not limited to, legal, accounting,
financial or tax services, and Parent agrees to provide such requested services
at such times and for such payments to Parent as the Partnership Group and
Parent shall mutually agree.
Parent shall, or shall cause RLI to, (i) make available to the
Partnership, RLI's agents and employees and its books, ledgers, files, reports,
plans, drawings and operating records of every kind maintained by RLI
pertaining to its business ("books and records") (and the assistance of RLI's
employees responsible for such books and records) during regular business hours
and (ii) maintain and preserve all such books and records for a period of 9
years after the date hereof. Upon Parent's request, the Partnership shall
reimburse Parent for any extraordinary costs or expenses incurred by RLI or
Parent in connection with complying with this paragraph.
3. Indemnities and Guaranties of Parent.
(a) Parent agrees to indemnify and hold harmless the
Partnership, Newpart, and each of their respective partners and affiliates, and
all of such person's officers, directors, employees, shareholders and agents,
and any of the foregoing's successors and assigns (collectively, the
"Indemnified Parties") from and against all liabilities, costs, losses, claims,
damages and expenses ("Damages") incurred in connection with, arising out of,
or resulting from any of the guaranties provided by any Indemnified Party for
the benefit of RLI as set forth on Exhibit B hereto.
(b) Parent agrees to guaranty the punctual payment and
performance of any and all liabilities and obligations of RLI and its
subsidiaries owed to the Indemnified Parties arising out of or related to (i)
any contract, agreement, instrument or document set forth on Section 3.17 of
the Disclosure Schedule to the Agreement and Plan of Merger dated September 12,
1996 by and among Parent, RLI and Merger Sub, other than RLI's liabilities and
obligations under the Master Lease which are guarantied by Parent pursuant to a
Guaranty of Lease Obligations dated of even date herewith, and (ii) RLI's
business (the
2
<PAGE> 3
"Obligations"). Parent hereby waives diligence, presentment, demand of
payment, notice of dishonor or nonpayment, protest and notice of protest of any
such Obligation, suit or taking other action by the Indemnified Parties
against, and giving any notice of default or other notice to, or making any
demand on, RLI or its subsidiaries with respect to the Obligations, except such
rights to diligence, presentment, demand of payment, notice of dishonor or
nonpayment, protest and notice of protest, notices and/or grace periods as are
available to RLI or its subsidiaries, as the case may be, in connection with
any such Obligation. Subject to this Section 3, Parent's guaranty is a
guarantee of payment and not of collection only, is a primary obligation and is
an absolute, unconditional, continuing and irrevocable guaranty of performance
and payment. In determining Parent's liability hereunder, Parent shall have
the right to assert or take advantage of any right or defense, and to assert
any right to offset or claimed offset related to such right or defense, in each
case then available to RLI or its subsidiaries, as the case may be, in
connection with the Obligation that is subject to such right or defense,
provided that Parent may not assert any right or defense of RLI or its
subsidiaries, as the case may be, that may arise in connection with any event
set forth in the last sentence of this paragraph. To the extent enforceable by
law, Parent will not assert, plead or enforce against the Indemnified Parties
any defense of waiver, release, discharge or disallowance in bankruptcy,
anti-deficiency statute, or unenforceability which may be available to Parent.
The liability of Parent under this guaranty shall not be affected or impaired
by any voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshalling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of, or
other similar event or proceeding affecting RLI or any of its subsidiaries or
any of their respective assets.
4. Management of Leased Properties.
Parent agrees not to, and agrees to cause RLI not to, take any
action which would result in the breach of Section 7.03 of the Credit Agreement
among RLH Partnership, L.P., various lending institutions and Credit Lyonnais
New York Branch as Administrative Agent dated as of July 31, 1995.
3
<PAGE> 4
5. Non-Recourse.
Notwithstanding any provisions hereof, none of the obligations
of the Partnership or Newpart under or contemplated by this Agreement shall be
an obligation of any officer, director, stockholder, limited partner, general
partner or owner of the Partnership or Newpart or any of their respective
officers, directors, stockholders, limited partners, general partners or
owners, or successors or assigns. Any monetary liability of the Partnership or
Newpart under this Agreement shall be satisfied solely out of the assets of the
Partnership. Each of the Partnership and Newpart hereby irrevocably waives any
right it may have against any such officer, director, stockholder, general
partner, owner, successor or assign identified above as a result of the
performance of the provisions under or contemplated by this Agreement. This
provision shall survive any termination of this Agreement.
6. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the parties.
7. Amendment.
This Agreement may be amended only by a written agreement
signed by the parties.
8. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
9. Specific Performance.
RLI and Parent agree that monetary damages would not be
adequate compensation for any loss incurred by the Partnership Group by reason
of a breach of the provisions of this Agreement by RLI or Parent. Therefore,
Partnership Group shall be entitled to specific performance of the provisions
of this Agreement and RLI and Parent each hereby waives the claim or defense
that there exists an adequate remedy at law to redress the nonperformance or
other breach of this Agreement.
10. Agreement to Perform Necessary Acts.
Each party agrees to perform any further acts and to execute
and deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement.
4
<PAGE> 5
11. Invalid Provision.
The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions, and this Agreement
shall be construed in all respects as if the invalid or unenforceable provision
were omitted.
12. No Waiver of Breach.
No failure by the Partnership Group to insist upon the strict
performance of any covenant, agreement, term or provision of this Agreement, or
to exercise any right or remedy consequent upon a breach thereof, shall
constitute a waiver of any such breach or subsequent breach of such covenant,
agreement, term or provision. No waiver of any breach shall affect or alter
this Agreement and this Agreement shall remain in full force and effect.
13. Entire Agreement.
This instrument evidences the entire agreement of the parties
with respect to the matters covered herein, and supersedes all prior oral or
written agreements or other understandings, including the Service Agreement.
14. Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
"Parent" Doubletree Corporation, a Delaware
corporation
-----------------------------------------
By:
Its:
"RLI" Red Lion Hotels, Inc., a Delaware
corporation
-----------------------------------------
By:
Its:
"Partnership" Red Lion, a California Limited
Partnership
By: RLA-GP, Inc., a Delaware
corporation
Its: General Partner
----------------------
By:
Its:
"Affiliate" Red Lion G.P., Inc., a Delaware
corporation
-----------------------------------------
By:
Its:
"Affiliate" RLH Partnership, L.P., a Delaware
limited partnership
By: Red Lion G.P., Inc., a
Delaware corporation
Its: General Partner
6
<PAGE> 7
______________________
By:
Its:
7
<PAGE> 8
EXHIBIT A: RETAINED HOTELS
Red Lion's Sacramento Inn
1401 Arden Way
Sacramento, California 95815
Red Lion Hotel, Sonoma County
One Red Lion Hotel Drive
Rohnert Park, California 94928
Red Lion Hotel
7450 Hazard Center Drive
San Diego, California 92108
Red Lion Inn
501 Camino Del Rio
Durango, Colorado 81301
Red Lion Hotel, Boise Downtowner
1800 Fairview
Boise, Idaho 83702
Red Lion Inn
700 West Broadway
Missoula, Montana 59802
Red Lion Inn
400 Industry Street
Astoria, Oregon 97103
Red Lion Inn/North
1415 N.E. Third Street
Bend, Oregon 97701
Red Lion Inn
1313 North Bayshore Drive
Coos Bay, Oregon 97420
Red Lion Inn
205 Coburg Road
Eugene, Oregon 97401
A-1
<PAGE> 9
Red Lion Inn
200 North Riverside
Medford, Oregon 97501
Red Lion Inn
304 S.E. Nye Avenue
Pendleton, Oregon 97801
Red Lion Hotel Salt Lake
255 South West Temple
Salt Lake City, Utah 84101
Red Lion Inn
510 Kelso Drive
Kelso, Washington 98626
Red Lion Hotel, Seattle Airport
18740 Pacific Highway South
Seattle, Washington 98188
Red Lion Inn At The Quay
100 Columbia Street
Vancouver, Washington 98660
Red Lion Inn
1225 North Wenatchee Avenue
Wenatchee, Washington 98801
A-2
<PAGE> 10
EXHIBIT B: THIRD PARTY GUARANTIES
1. Unconditional Guarantee of Payment and Performance, dated as of August 1,
1995, by and between Red Lion, a California Limited Partnership and La Posada
Resort Hotel Limited Partnership.
<PAGE> 1
Exhibit 10.6
GUARANTY OF LEASE OBLIGATIONS
This Guaranty of Lease Obligations (this "Guaranty") is made and
entered into as of November 8, 1996 by and among Doubletree Corporation, a
Delaware corporation ("Parent"), Red Lion Hotels, Inc., a Delaware corporation
("RLI"), and RLH Partnership, L.P., a Delaware limited partnership ("RLH
Partnership").
RECITALS
WHEREAS, pursuant to the RLH Partnership, L.P. Contribution Agreement
dated August 1, 1995 between Red Lion, a California Limited Partnership (the
"Partnership") and RLH Partnership, the Partnership transferred to RLH
Partnership certain interests in the hotels described in Exhibit A hereto (the
"Retained Hotels");
WHEREAS, pursuant to the Lease dated August 1, 1995 between RLH
Partnership and RLI, as supplemented by that certain Non-Disturbance and
Attornment Agreement dated concurrently therewith, and as further amended from
time to time (collectively, the "Master Lease"), RLH Partnership has leased the
Retained Hotels to RLI;
WHEREAS, in connection with the merger of RLH Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Parent, with and into RLI,
effective as of the date hereof, Parent, RLI, the Partnership and certain
affiliates of the Partnership, have executed a Partnership Services Agreement
(the "Partnership Services Agreement") providing for, among other things, the
Parent's guaranty of the liabilities and obligations of RLI and its
subsidiaries described in such agreement; and
WHEREAS, the parties desire to set forth the Parent's guaranty
obligations with respect to the Master Lease in this Guaranty.
AGREEMENT
NOW, THEREFORE, in acknowledgment of the foregoing recitals and in
consideration of the mutual agreements expressed herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. Guaranty of Lease Obligations
Parent agrees to guaranty the punctual payment and performance of any
and all liabilities and obligations of RLI and its subsidiaries owed to RLH
Partnership and its partners and affiliates, and all of such person's officers,
directors, employees, shareholders and agents, and any of the foregoing's
successors and assigns (collectively, the "Indemnified Parties"), arising out
of or related to the Master Lease (the "Obligations").
1
<PAGE> 2
Parent hereby waives diligence, presentment, demand of payment, notice of
dishonor or nonpayment, protest and notice of protest of any such Obligation,
suit or taking other action by the Indemnified Parties against, and giving any
notice of default or other notice to, or making any demand on, RLI or its
subsidiaries with respect to the Obligations, except such rights to diligence,
presentment, demand of payment, notice of dishonor or nonpayment, protest and
notice of protest, notices and/or grace periods as are available to RLI or its
subsidiaries, as the case may be, in connection with any such Obligation.
Subject to this Section 1, Parent's guaranty is a guarantee of payment and not
of collection only, is a primary obligation and is an absolute, unconditional,
continuing and irrevocable guaranty of performance and payment. In determining
Parent's liability hereunder, Parent shall have the right to assert or take
advantage of any right or defense, and to assert any right to offset or claimed
offset related to such right or defense, in each case then available to RLI or
its subsidiaries, as the case may be, in connection with the Obligation that is
subject to such right or defense, provided that Parent may not assert any right
or defense of RLI or its subsidiaries, as the case may be, that may arise in
connection with any event set forth in the last sentence of this paragraph. To
the extent enforceable by law, Parent will not assert, plead or enforce against
the Indemnified Parties any defense of waiver, release, discharge or
disallowance in bankruptcy, anti-deficiency statute, or unenforceability which
may be available to Parent. The liability of Parent under this Guaranty shall
not be affected or impaired by any voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all the assets,
marshalling of assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar event or proceeding affecting
RLI or any of its subsidiaries or any of their respective assets.
2. Anti-Deficiency Waivers
Parent hereby waives the rights set forth in Section 17 of the
Non-Disturbance and Attornment Agreement dated as of August 1, 1995 by and
among RLH Partnership, RLI and Credit Lyonnais New York Branch, as
Administrative Agent, to the same extent as Tenant (as defined in such
agreement) waives such rights.
3. Successors and Assigns
This Guaranty shall be binding upon and inure to the benefit of the
successors and assigns of the parties.
4. Amendment
This Guaranty may be amended only by a written agreement signed by the parties.
2
<PAGE> 3
5. Governing Law
This Guaranty shall be governed by and construed by the governing laws
determined in accordance with Section 22.11 of the Master Lease.
6. Specific Performance
RLH Partnership, RLI and Parent agree that monetary damages would not
be adequate compensation for any loss incurred by the Indemnified Parties by
reason of a breach of the provisions of this Guaranty by RLI or Parent.
Therefore, the Indemnified Parties shall be entitled to specific performance of
the provisions of this Guaranty and RLI and Parent each hereby waives the claim
or defense that there exists an adequate remedy at law to redress the
nonperformance or other breach of this Guaranty.
7. Agreement to Perform Necessary Acts
Each party agrees to perform any further acts and to execute and
deliver any documents that may be reasonably necessary to carry out the
provisions of this Guaranty.
8. Invalid Provision
The invalidity or unenforceability of any particular provision of this
Guaranty shall not affect the other provisions, and this Guaranty shall be
construed in all respects as if the invalid or unenforceable provision were
omitted.
9. No Waiver of Breach
No failure by any Indemnified Party to insist upon the strict
performance of any covenant, agreement, term or provision of this Guaranty, or
to exercise any right or remedy consequent upon a breach thereof, shall
constitute a waiver of any such breach or subsequent breach of such covenant,
agreement, term or provision. No waiver of any breach shall affect or alter
this Guaranty, and this Guaranty shall remain in full force and effect.
10. Entire Agreement
This Guaranty evidences the entire agreement of the parties with
respect to the matters covered herein and supersedes all prior oral or written
agreements or other understandings.
11. Counterparts
This Guaranty may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Guaranty as of the
date first written above.
"Parent" Doubletree Corporation,
a Delaware corporation
__________________________________________
By:
Its:
"RLI" Red Lion Hotels, Inc.,
a Delaware corporation
__________________________________________
By: Beth A. Ugoretz
Its: Senior Vice President
"RLH Partnership" RLH Partnership, L.P.,
a Delaware limited partnership
By: Red Lion G.P., Inc.,
a Delaware corporation
Its: General Partner
__________________________________________
By: Beth A. Ugoretz
Its: Vice President
4
<PAGE> 5
EXHIBIT A: RETAINED HOTELS
Red Lion's Sacramento Inn
1401 Arden Way
Sacramento, California 95815
Red Lion Hotel, Sonoma County
One Red Lion Hotel Drive
Rohnert Park, California 94928
Red Lion Hotel
7450 Hazard Center Drive
San Diego, California 92108
Red Lion Inn
501 Camino Del Rio
Durango, Colorado 81301
Red Lion Hotel, Boise Downtowner
1800 Fairview
Boise, Idaho 83702
Red Lion Inn
700 West Broadway
Missoula, Montana 59802
Red Lion Inn
400 Industry Street
Astoria, Oregon 97103
Red Lion Inn/North
1415 N.E. Third Street
Bend, Oregon 97701
Red Lion Inn
1313 North Bayshore Drive
Coos Bay, Oregon 97420
Red Lion Inn
205 Coburg Road
Eugene, Oregon 97401
Red Lion Inn
200 North Riverside
Medford, Oregon 97501
Red Lion Inn
304 S.E. Nye Avenue
Pendleton, Oregon 97801
A-1
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Red Lion Hotel Salt Lake
255 South West Temple
Salt Lake City, Utah 84101
Red Lion Inn
510 Kelso Drive
Kelso, Washington 98626
Red Lion Hotel, Seattle Airport
18740 Pacific Highway South
Seattle, Washington 98188
Red Lion Inn At The Quay
100 Columbia Street
Vancouver, Washington 98660
Red Lion Inn
1225 North Wenatchee Avenue
Wenatchee, Washington 98801
A-2
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EXHIBIT 10.7
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LEASE
BETWEEN
RLH PARTNERSHIP, L.P.,
A DELAWARE LIMITED PARTNERSHIP
("LANDLORD")
AND
RED LION HOTELS, INC.,
A DELAWARE CORPORATION
("TENANT")
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TABLE OF CONTENTS
LEASE
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PAGE
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ARTICLE I - LEASE OF PREMISES............................................... 1
1.1 "As-Is" Letting................................................... 1
1.2 Tenant's Right of Possession...................................... 2
1.3 Landlord's Cooperation............................................ 2
ARTICLE II - DEFINITION OF TERMS............................................ 3
ARTICLE III - TERM.......................................................... 10
3.1 Term.............................................................. 10
3.2 Extended Term..................................................... 10
3.3 Notice of Termination............................................. 11
3.4 Obligations of Parties at Termination............................. 11
ARTICLE IV - ABSOLUTELY NET LEASE........................................... 12
4.1 Net Lease......................................................... 12
4.2 Non-Terminability................................................. 12
ARTICLE V - RENT............................................................ 13
5.1 Base Rent and Percentage Rent..................................... 13
5.2 Payment of Rent................................................... 13
5.3 Records; Audit by Landlord........................................ 15
5.4 Subleases, Licenses, and Concessions.............................. 16
5.5 Rent Upon Certain Expansions...................................... 17
ARTICLE VI - OPERATION AND MAINTENANCE OF PREMISES.......................... 17
6.1 Operation and Maintenance of Premises............................. 17
6.2 Taxes............................................................. 18
6.3 Compliance with Requirements, Covenants and Restrictions.......... 19
6.4 Landlord's Right to Perform Tenant Obligations.................... 19
6.5 Compliance with Laws and Agreements............................... 19
6.6 Tenant's Right to Contest......................................... 19
6.7 Liens............................................................. 20
ARTICLE VII - USE........................................................... 21
ARTICLE VIII - INDEMNIFICATION.............................................. 21
8.1 General Indemnification by Tenant................................. 21
8.2 Environmental Indemnification..................................... 22
8.3 Defense of Indemnified Parties.................................... 22
8.4 Payment by Tenant................................................. 23
8.5 Survival.......................................................... 23
8.6 Continuing Obligations............................................ 23
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ARTICLE IX - ALTERATIONS AND EXPANSIONS..................................... 23
9.1 Alterations and Expansions........................................ 23
9.2 Alterations and Expansions During Last Five Years of Term......... 24
ARTICLE X - FF&E, FIXED ASSET SUPPLIES AND INVENTORIES...................... 24
10.1 FF&E Upon Commencement Date...................................... 24
10.2 Replacement of FF&E.............................................. 25
10.3 FF&E Upon Termination............................................ 25
10.4 Landlord's Security Interest in Tenant's FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories................ 26
ARTICLE XI - TRADEMARKS, TRADE NAMES AND SERVICE MARKS...................... 26
11.2 Use of Trademarks, Trade Names and Service Marks................. 26
11.3 Proprietary Software............................................. 26
ARTICLE XII - ENVIRONMENTAL HAZARDS......................................... 27
12.1 Compliance with Environmental Law................................ 27
12.2 Site Assessments................................................. 28
ARTICLE XIII - INSURANCE.................................................... 30
13.1 Property & Business Interruption Insurance....................... 30
13.2 Application of Proceeds.......................................... 31
13.3 Waiver of Rights of Subrogation.................................. 32
13.4 Operational Insurance............................................ 32
13.5 Blanket and Self-Insurance....................................... 33
13.6 Costs of Insurance............................................... 33
13.7 Defense of Claims after Termination.............................. 33
13.8 Coverage and Certificates........................................ 33
13.9 Alternative Insurance Coverage................................... 34
ARTICLE XIV - DAMAGE BY FIRE OR OTHER CASUALTY.............................. 34
14.1 Damage by Fire or Other Casualty................................. 34
14.2 Partial Damage by Fire or Other Casualty......................... 34
14.3 Damage Occurring After the 10th Anniversary of Commencement
Date......................................................... 34
14.4 No Abatement of Rent Due to Casualty............................. 35
14.5 Early Termination................................................ 35
ARTICLE XV - CONDEMNATION................................................... 36
15.1 Notice of Condemnation and Assignment of Rights.................. 36
15.2 Tenant's Right to Pursue a Claim................................. 36
15.3 Temporary Taking................................................. 36
15.4 Total Taking..................................................... 37
15.5 Substantial Taking............................................... 38
15.6 Partial Taking................................................... 38
ARTICLE XVI - ASSIGNMENT, SALE AND SUBLETTING............................... 39
16.1 Sale or Assignment by Landlord, Subject to Lease................. 39
16.2 Assignment by Tenant............................................. 40
16.3 Tenant's Right to Sublease....................................... 40
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ARTICLE XVII - HOLDING OVER................................................. 40
ARTICLE XVIII - ESTOPPEL CERTIFICATES....................................... 41
ARTICLE XIX - LANDLORD/TENANT FINANCING..................................... 41
19.1 Right to Finance................................................. 41
19.2 Priority......................................................... 41
19.3 Mortgagee Amendments............................................. 42
ARTICLE XX - DEFAULT BY TENANT.............................................. 42
20.1 Events of Default................................................ 42
20.2 Landlord's Rights Upon an Event of Default....................... 44
20.3 Implied Waiver................................................... 45
20.4 Injunctive Relief................................................ 46
ARTICLE XXI - PROVISIONS APPLICABLE TO PURCHASE BY TENANT
OF THE PREMISES........................................... 46
21.1 Purchase "As Is"................................................. 46
21.2 Timing of Closing................................................ 46
21.3 Deliveries at Closing........................................... 46
21.4 TENANT'S FAILURE TO CLOSE........................................ 47
21.5 LANDLORD'S FAILURE TO CLOSE...................................... 47
21.6 Payment of Costs................................................. 48
21.7 Prorations....................................................... 48
ARTICLE XXII - MISCELLANEOUS................................................ 48
22.1 Notices.......................................................... 48
22.2 Memorandum of Lease.............................................. 49
22.3 Determination of Fair Market Value............................... 49
22.4 Partial Invalidity............................................... 51
22.5 Headings......................................................... 51
22.6 Binding Effect................................................... 51
22.7 Representations.................................................. 51
22.8 Amendments....................................................... 51
22.9 Brokers.......................................................... 51
22.10 Authority to Execute............................................ 51
22.11 Applicable Law.................................................. 51
22.12 Construction.................................................... 51
22.13 Impossibility of Performance.................................... 52
22.14 Time of Essence................................................. 52
22.15 Attorney's Fees................................................. 52
22.16 No Merger....................................................... 52
22.17 Landlord's Right to Enter....................................... 52
22.18 Corporate Reorganization of Tenant.............................. 52
22.19 No Waiver....................................................... 52
22.20 Confidentiality................................................. 53
22.21 Gender and Number............................................... 53
22.22 Survival........................................................ 53
22.23 Acceptance of Surrender......................................... 53
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22.24 Non-Recourse as to Landlord..................................... 53
22.25 Entire Agreement; Integration................................... 54
22.26 Waiver of Trial by Jury......................................... 54
22.27 Tenant's Remedies............................................... 54
22.28 Landlord and Tenant Relationship................................ 54
22.29 Relationship with Groundlessors................................. 54
22.30 Limited Liability............................................... 55
EXHIBITS
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A Descriptions of Land
B Schedule of Rent
</TABLE>
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LEASE
THIS LEASE is made as of the 1st day of August, 1995 ("Commencement
Date"), by and between RLH PARTNERSHIP, L.P., a Delaware limited partnership
("Landlord"), with a mailing address in care of KKR Associates, 2800 Sand Hill
Road, Suite 2000, Menlo Park, California 94025, and RED LION HOTELS, INC.
("Tenant"), a Delaware corporation, with a mailing address at 4001 Main Street,
Vancouver, Washington 98663.
R E C I T A L S:
WHEREAS, Landlord currently holds an interest in certain parcels of real
property either in fee or as ground lessee, which parcels are more specifically
described in Exhibits A-1 through A-17 hereto, and each of which has been
developed, improved, and is currently being utilized for, the operation of a
Red Lion hotel (individually, a "Hotel," and, collectively, the "Hotel(s)");
WHEREAS, the lease transaction described herein is a portion of a larger
transaction involving, among other things, an initial public offering of the
common stock of Tenant, and wherein, among other matters, Tenant will succeed
to certain of the assets of the Red Lion hotel business, including the
operation of "Red Lion" hotels on other properties not the subject of this
Lease, and wherein both Tenant and Landlord shall borrow funds from certain
lenders and each of their respective interests under this Lease shall be
pledged as collateral for such loans (collectively, such larger series of
transactions shall be referred to herein as the "Restructuring"); and
WHEREAS, prior to the Restructuring, Tenant or Tenant's predecessor's in
interest have possessed and operated each Hotel leased hereunder.
ARTICLE I
LEASE OF PREMISES
Section 1.1 "As-Is" Letting
(a) In consideration of the Rents, covenants and agreements to be
paid, kept and performed hereunder, Landlord, for the term and upon the
conditions hereinafter set forth, leases to Tenant and Tenant leases and
takes from Landlord, the Premises (including, without limitation, all
FF&E, Fixed Asset Supplies, Operating Equipment and Inventories located at
the Hotels on the Commencement Date), together with all privileges,
easements and appurtenances beneficial thereto.
(b) The Premises are leased to Tenant "as-is" and Landlord makes no
representation or warranty, express or implied, with respect to the
condition of the Premises, or as to the compliance of the Premises with
any Legal Requirements. Tenant has examined the Premises and title to the
Premises and has found all of the same satisfactory for its purposes.
Tenant accepts the Premises subject to the existing state of title.
During the term of this Lease, Tenant shall have the exclusive right to
use, enforce and obtain the benefits of (i) all guaranties,
representations, and warranties relating to the construction, improvement,
alteration and repair of the Premises and all architectural and
engineering plans, drawings and specifications related thereto, and (ii)
all of Landlord's transferable licenses, permits, franchises, approvals,
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<PAGE> 7
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person
related to any Hotel which is required to be held by Tenant in connection
with the operation of the Hotels and/or the transactions contemplated
hereby. During the term of this Lease, Landlord shall execute such
assignments or other transfer instruments as are necessary to transfer the
benefits of all such items to Tenant, and shall not waive, surrender or
modify any of Landlord's rights with respect thereto without obtaining
Tenant's prior written consent.
Section 1.2 Tenant's Right of Possession. Subject to the provisions of
Sections 6.4 and 12.2, and any other provision of applicable law affording any
inspection rights to Landlord and/or any Mortgagee, Tenant shall have exclusive
possession and control of the Premises during the term of this Lease.
Section 1.3 Landlord's Cooperation
(a) Landlord agrees upon request by Tenant to provide all
information relevant to Landlord, its general partners, officers and
directors, and to execute, and to cause its general partners, officers and
directors to sign, promptly, and without charge, all applications
(including all documents related thereto) for licenses, permits,
instruments or other general approvals required to be submitted to any
governmental authority that are necessary for the proper and successful
conduct of Tenant's lawful business operations at any of the Hotels if and
to the extent such execution and/or information by or from Landlord and/or
any of its officers and directors is required by law, regulation or
governmental practice in order for Tenant to obtain any such license,
permit, instrument or other governmental approval; provided, however, that
all costs and expenses associated therewith shall be the sole obligation
of Tenant, and Tenant shall promptly pay and discharge the same, and
provided further, that the proper execution of any such application shall
not expose Landlord or any of its constituent partners to any personal
liability. In all cases, Landlord shall have a reasonable amount of time
to comply with Tenant's requests pursuant to this Section 1.3(a), Landlord
and Tenant shall, in good faith, cooperate with each other in determining
and complying with relevant governmental requirements, and Tenant shall
afford Landlord every reasonable opportunity to question and challenge by
appropriate administrative and/or judicial process any relevant
governmental requirement so long as such challenge does not materially and
adversely affect any material license, permit or governmental approval of
Tenant. Tenant hereby agrees that it will fully indemnify, defend and save
Landlord harmless from and against any and all costs, losses and expenses,
including, without limitation, any and all legal fees and court costs
incurred or suffered by Landlord as a result of its compliance with the
obligations imposed upon Landlord under this Section 1.3 or as a result of
Tenant's contest of the results of any such application to any
governmental entity, except in the case of Landlord's fraud, willful
misconduct or gross negligence.
(b) If Landlord should fail to comply with the requirements of
Section 1.3(a) above, and such failure should continue for more than
thirty (30) days after Notice from Tenant to Landlord and the Senior
Landlord's Mortgagee specifying the required cooperation and informing the
recipients of such Notice that Tenant intends to act pursuant to this
Section 1.3(b) if such cooperation is not provided (whether by action of
Landlord or by action of the Senior Landlord's Mortgagee) within said
thirty (30) day period and such failure results, or with reasonable
certainty will result, in the denial, non-renewal or withdrawal of a
material license, permit or governmental approval that will materially and
adversely affect Tenant's business at such Hotel, then, in addition and
not as a substitution for any remedies available to Tenant under Section
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22.27 of this Lease, if such failure is not cured within such thirty (30)
day period, Tenant shall have the right to terminate this Lease with
respect to the affected Hotel by so notifying Landlord not later than the
date which is sixty (60) days after the date of the aforesaid Notice. If
Tenant elects to exercise the right described in the preceding sentence,
it shall, simultaneously with its delivery of its Notice of termination,
deliver to Landlord its irrevocable offer to purchase such Hotel, but only
such Hotel, for an amount equal to the Leasehold Purchase Price. Tenant
shall not, by reason of exercising said right to terminate, be excluded
from exercising any other right or remedy afforded to Tenant under Section
22.27 as a result of Landlord's breach of this Section 1.3.
(c) Landlord may accept or reject Tenant's irrevocable offer to
purchase such Hotel by sending Tenant a Notice of rejection or acceptance
within thirty (30) days from the date upon which Landlord received
Tenant's Notice of termination. If Landlord fails to send Tenant a Notice
of rejection or acceptance within thirty (30) days of its receipt of
Tenant's irrevocable offer to purchase such Hotel, Landlord shall be
deemed to have rejected such offer. If Landlord accepts Tenant's offer to
purchase, this Lease shall terminate with respect to such Hotel and
closing of such purchase shall occur in accordance with the provisions of
Article XXI. Upon such termination, Tenant shall pay to Landlord all Rent
due through such date of termination, in addition to the Leasehold
Purchase Price. Landlord shall convey such Hotel to Tenant in accordance
with the provisions of Article XXI.
(d) If Landlord rejects or is deemed to have rejected Tenant's
irrevocable offer to purchase pursuant to Section 1.3(b), this Lease shall
terminate with respect to such Hotel on a Base Rent payment date specified
by Tenant in its Notice of termination which occurs not earlier than
ninety (90) days nor later than one hundred twenty (120) days after
delivery to Landlord of Tenant's irrevocable offer to purchase, provided
that this Lease shall not terminate with respect to such Hotel unless and
until Tenant shall have paid all sums due hereunder (including, without
limitation, all taxes and insurance premiums) as of the actual date of
termination. Upon such termination, Tenant shall vacate such Hotel in
accordance with the provisions of Section 3.4.
(e) Landlord shall have the right at all times prior to either a
closing date for any purchase under Section 1.3(c) or the termination date
under Section 1.3(d), to cancel the right of Tenant to so purchase or
terminate pursuant to said sections, by complying with the requirements of
Section 1.3(a) in sufficient time and manner so that the subject license,
permit or approval is obtained or reinstated by a date that is prior to
the aforesaid closing date or termination date as the case may be.
ARTICLE II
DEFINITION OF TERMS
The following terms when used in this Lease shall have the meanings
indicated:
"Accounting Period" shall mean a calendar month.
"Additional Rent" shall mean any obligation of Tenant to pay money to
Landlord under this Lease, other than Base Rent, Percentage Rent, and any
Leasehold Purchase Price.
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"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a second
Person if such first Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the
election of directors or managers of such second Person or (ii) to direct or
cause the direction of the management and policies of such second Person,
whether through the ownership of voting securities, by contract or otherwise.
"Base Rent" shall have the meaning set forth in Section 5.1.
"Base Revenues" shall have the meaning set forth in Section 5.1(b).
"Business Day(s)" means Monday through Friday (except holidays); "normal
business hours" means 8:00 a.m. to 6:00 p.m. on Business Days; and "holidays"
means New Year's Day, President's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
"Change in Control" shall mean that Kohlberg Kravis Roberts & Co., L.P., a
Delaware limited partnership, its general partners and its Affiliates
(determined without giving effect to the second sentence of the definition
thereof) (x) shall cease to possess, directly or indirectly, the power to
direct or cause the direction of the management policies of Landlord, whether
through the ownership of voting securities, by contract or otherwise or (y)
shall cease to own, directly or indirectly, at least 50% of the direct or
indirect economic interest owned by them in Landlord on the Commencement Date.
"Commencement Date" shall have the meaning set forth in the Preamble.
"Concurrent Tenant Credit Facility" shall mean that certain Credit
Agreement of even date herewith by and among Tenant, as Borrower, various
lending institutions, as the Banks, and Credit Lyonnais, New York Branch, as
Administrative Agent, as the same may from time to time be amended, modified
and/or supplemented.
"Effective Extended Term" means any Extended Term that has become
effective by reason of the occurrence of the first day of such Extended Term or
because Tenant has irrevocably exercised its option to extend the Term through
such Extended Term.
"Environmental Laws" shall mean any applicable federal, state, foreign, or
local law, statute, ordinance, rule, regulation, or rule of common law (now or
hereafter in effect), or any binding and enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree, or judgment, relating to (1) the use, generation, treatment,
management, storage, transportation or other handling of Hazardous Materials,
(2) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, and (3) environmental
matters, including, without limitation, those relating to fines, injunctions,
penalties, damages, contribution, cost recovery, losses or injuries resulting
from the release, threatened release, discharge, disposal or other handling of
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), the
<PAGE> 10
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Clean Water Act (29 U.S.C.
Section 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide, Rodenticide Act (7 U.S.C. Section
136 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), any analogous present or future federal, state, foreign, or local law,
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<PAGE> 11
statute or ordinance, and any regulation or rule promulgated thereunder, each
as amended or supplemented.
"Environmental Violation" shall mean any violation of any Environmental
Law at or relating to any Premises.
"Event of Default" shall have the meaning set forth in Section 20.1.
"Expansion" shall have the meaning set forth in Section 9.1.
"Expansion Rent" shall have the meaning set forth in Section 5.5.
"Extended Term(s)" shall have the meaning set forth in Section 3.2.
"Fair Market Value" shall mean the fair market value of any affected Hotel
determined in accordance with the appraisal procedures set forth in Section
22.3. Fair Market Value shall be determined without regard to any condition
such as casualty or condemnation which might have given rise to the need to
determine the Fair Market Value, and by assuming the Hotel is unencumbered by
this Lease or by any encumbrance securing funded indebtedness; provided,
however, that if any such encumbrance may not be removed without penalty, the
positive or negative effect on Fair Market Value attributable to the interest
rate, amortization schedule, maturity date, prepayment penalty and other terms
and conditions of such encumbrance shall be taken into account. The Hotel shall
be valued at its highest and best use which shall be presumed to be as a hotel
operated in accordance with the provisions of this Lease. Fair Market Value of
the Hotel shall not include "going concern" or "business enterprise" value
attributable to factors other than the highest and best use of the Hotel.
"FF&E" shall mean the Furnishings, Fixtures, machinery and equipment
installed and used in any Hotel, including, without limitation, floor and
window coverings, decorative light fixtures and equipment.
"FF&E Reserve Account" shall have the meaning set forth in Section 10.2.
"Fiscal Year" shall mean Tenant's Fiscal Year which ends at midnight on
December 31 in each calendar year. If Tenant's Fiscal Year is changed in the
future, appropriate adjustment to this Lease's reporting and accounting
procedures shall be made; provided, however, that no such change or adjustment
shall alter the Term of this Lease or in any way reduce the payment of
Percentage Rent or other payments due Landlord hereunder.
"Fixed Asset Supplies" shall mean supply items included within "Property
and Equipment" under the Uniform System of Accounts including linen, china,
glassware, silver, uniforms, and similar items.
"Fixtures" shall mean all permanently affixed equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection with
and permanently affixed to or incorporated into any Hotel, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
<PAGE> 12
plumbing, lighting, ventilating, refrigerating, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, all of
which, to the greatest extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto.
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"Furnishings" shall mean all furniture and furnishings (including art work
and other items of decor) for guest rooms, public areas and non-public areas,
and movable equipment (but not Fixtures), inventory and linens.
"GDP Deflator" shall mean the "Gross Domestic Product Implicit Price
Deflator" issued from time to time by the United Sates Bureau of Economic
Analysis of the Department of Commerce, or if the aforesaid GDP Deflator is not
at such time so prepared and published, any comparable index selected by
Landlord and reasonably satisfactory to Tenant (a "Substitute Index") then
prepared and published by an agency of the Government of the United States,
appropriately adjusted for changes in the manner in which such index is
prepared and/or year upon which such index is based. Except as otherwise
expressly stated herein, whenever a number or amount is required to be
"adjusted by the GDP Deflator", or similar terminology, such adjustment shall
be equal to the percentage increase in the GDP Deflator which is issued for the
month which is two months earlier than the month in which such adjustment is to
be made as compared to the GDP Deflator which was issued for the month which is
two months earlier than the month in which the Commencement Date occurred, it
being agreed that for purposes of this Lease, no GDP Deflator adjustment shall
operate to decrease any sum or number specified in this Lease.
"Hazardous Materials" shall mean (1) any substance or material defined as
or included in the definition of one or more of any of the following:
"hazardous material," "hazardous waste," "hazardous substance," "regulated
substance," "toxic substance," "pollutant," "contaminant," "radioactive
material," or any other similar designation in, or otherwise subject to
regulation under an Environmental Law, (2) any oil, petroleum, petroleum
fraction or petroleum derived substance, (3) any flammable substance or
explosive, (4) asbestos in any form, (5) polychlorinated biphenyls, (6) urea
formaldehyde foam insulation, (7) pesticides, and (8) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated
under any Environmental Law.
"Hotel" shall have the meaning specified in the Recitals.
"Improvements" shall mean the buildings and structures, together with the
electrical, mechanical, plumbing and HVAC systems installed therein, parking
lots and all other improvements and FF&E (other than personalty owned by
Tenant) now or hereafter located on the Land.
"Indemnified Parties" shall have the meaning set forth in Section 8.1.
"Initial Term" shall have the meaning set forth in Section 3.1.
"Insubstantial Taking" shall mean a condemnation of a portion of any Hotel
that is less than all or substantially all of, or less than a material portion
of, such Hotel if: (i) the Improvements can be restored to substantially the
same physical condition which prevailed therein and thereon prior to such
condemnation at a cost not exceeding the condemnation award payable with
respect thereto, (ii) the condemnation does not cause a material reduction in
the size or useability of any such Hotel or any material disruption to Tenant's
use and occupancy of such Hotel, and (iii) such condemnation will not
materially reduce the operating profitability of Tenant's business at the Hotel
after any restoration when compared to such profitability before the
condemnation.
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"Insurance Requirements" shall mean the requirements of any and all
insurance policies procured in accordance with the terms hereof or required to
be carried hereunder.
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"Insurance Trustee" shall mean a bank, insurance company, pension fund,
real estate investment trust or commercial lending institution, with financial
statements audited by an independent public accounting firm and a net worth of
at least One Hundred Million Dollars ($100,000,000). The Senior Landlord's
Mortgagee for a Hotel shall be the Insurance Trustee for such Hotel if the
Senior Landlord's Mortgagee fulfills the requirements of the first sentence of
this paragraph. If there is no Senior Landlord's Mortgagee for such Hotel that
fulfills the requirements of the first sentence of this paragraph, the
Insurance Trustee shall be such qualifying institution as is selected by Tenant
and approved by Landlord, such approval not to be unreasonably withheld,
conditioned or delayed.
"Inventories" shall mean "Inventories" as defined in the Uniform System of
Accounts, such as provisions in storerooms, refrigerators, pantries and
kitchens; beverages in wine cellars and bars; other merchandise intended for
sale; fuel; mechanical supplies; stationery; and other expensed supplies and
similar items.
"Land" shall mean all of the real property owned or leased by Landlord
underlying the Hotels as described in Exhibits A-1 through A-17 hereto, or such
lesser area for any such Hotel that from time to time may be leased by Tenant
hereunder as set forth in this Lease.
"Landlord" shall have the meaning set forth in the Preamble and shall
include its successors and assigns.
"Landlord's Audit" shall have the meaning set forth in Section 5.3.
"Landlord's Mortgagee" shall mean the holder of, or beneficiary under, any
Mortgage of Landlord's interest in any of the Hotels and/or this Lease,
including without limitation all members of any syndicate and the trustee or
any other agent thereof, if Landlord's Mortgagee consists of more than one
entity or person.
"Landlord's Temporary Taking Award" shall have the meaning set forth in
Section 15.3.
"Lease" shall mean this Lease between Landlord and Tenant dated as of the
Commencement Date as the same may be from time to time amended, modified and/or
supplemented.
"Lease Interest Rate" shall mean the Prime Rate plus two (2) percentage
points per annum; provided, however, that the Lease Interest Rate shall not
exceed the maximum rate of interest from time to time permitted to be charged
under applicable law with respect to the indebtedness of any party for which
and against whom such interest is charged under this Lease.
"Lease Memorandum" shall have the meaning set forth in Section 22.2.
"Lease Year" shall refer to the first four full fiscal quarters (based on
Tenant's Fiscal Year) after the Commencement Date and to each successive four
fiscal quarter period that occurs during the Term.
<PAGE> 16
"Leasehold Purchase Price" shall be at any particular time during the
Term, the dollar amount equal to the present value as of the date of such
purchase of the payments of Base Rent applicable to such Hotel (as determined
in accordance with the Schedule of Rent shown on Exhibit B), that would have
been payable during the period commencing on the date of such purchase and
ending on the date of expiration of the then current term of this Lease
(including any Effective Extended Term) for such Hotel, discounted to the date
of purchase at an interest rate equal to the effective interest rate on United
States Treasury
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<PAGE> 17
obligations as of the month preceding the date of such purchase and having a
maturity most nearly equal to the number of months remaining in the current
term of this Lease (including any Effective Extended Term) as of the date of
such purchase.
"Legal Requirement(s)" shall have the meaning set forth in Section 6.5.
"Major Casualty" shall mean any damage to or destruction of all or any
portion of any Hotel when such casualty is likely to result in a reduction of
40% or more of the then operating profitability of Tenant's business at such
Hotel for a period exceeding twelve (12) months based upon the assumption that
the casualty will be repaired with reasonable diligence.
"Mortgage" shall mean any security instrument to which Landlord or Tenant
is a party and which encumbers any interest in any of the Hotels and/or this
Lease, including, without limitation, mortgages, deeds of trust, security deeds
and similar instruments.
"Mortgagee" shall refer to each and every Landlord's Mortgagee and
Tenant's Mortgagee.
"Notice" shall have the meaning set forth in Section 22.1.
"Operating Equipment" shall mean equipment which is capital in nature, but
is removable and therefore not affixed to or installed permanently in a Hotel,
such as shuttle vans, cleaning equipment and other personalty utilized by
Tenant specifically for the operation of the business of the Hotel.
"Operating Revenues" shall mean in accordance with the Uniform System of
Accounts all revenues received or receivable for the use, occupancy or
enjoyment of the Hotels, or any part thereof, or received or receivable by
Tenant for the sale of any goods, services or other items sold on or provided
from the Premises in the ordinary course of each Hotel's operation, including
without limitation: (a) all income and proceeds received from rental of rooms
and other space within the Hotels including net parking revenue; (b) all income
and proceeds received from food and beverage operations and from catering
services conducted from any Hotel even though rendered outside of such Hotel;
(c) all income and proceeds (amortized over the period for which it relates)
from business interruption, rental interruption and use and occupancy insurance
with respect to the operation of each Hotel (after deducting therefrom all
necessary costs and expenses incurred in the adjustment or collection thereof);
(d) all awards allocated to Tenant for condemnation for temporary use
(allocated over the period for which it relates) (after deducting therefrom all
costs incurred in the adjustment or collection thereof); and (e) all income and
proceeds from judgments, settlements and other resolutions of disputes
(allocated over the period for which it relates) with respect to matters which
would be included in "Operating Revenues" if received in the ordinary course of
any Hotel's operation (after deducting therefrom all necessary costs and
expenses incurred in the adjustment or collection thereof). Such term shall
not include: (1) gross receipts received by lessees, licensees or
concessionaires of any Hotel to the extent not expressly included in Operating
Revenues; (2) consideration received at the Hotel for hotel accommodations,
goods and services to be provided at other hotels, although arranged by, for or
on behalf of Tenant; (3) income and proceeds from the sale or other disposition
of goods, capital assets and other items not in the ordinary course of any
Hotel's operation; (4) federal, state
<PAGE> 18
and municipal excise sales and use taxes collected directly from patrons or
guests of any Hotel as part of or based on the sales receipts, room admission,
cabaret or equivalent taxes; (5) condemnation awards (except to the extent
provided in clause (d) of the first sentence of this definition); (6)
reasonable bad debt reserves taken in the ordinary course of business, subject
to adjustment; (7) gratuities paid to Hotel employees; (8) the proceeds of any
financing or sale of any Hotel, (9) insurance proceeds other than from business
interruption, rental interruption and use and occupancy
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insurance with respect to operation of any Hotel; (10) other income or proceeds
resulting other than from the use or occupancy of any Hotel, or any part
thereof, or other than from goods, services or other items sold on or provided
from the Premises in the ordinary course of business; or (11) interest and
income on any funds standing from time to time in any Hotel's agency or reserve
accounts.
"Partial Condemnation Reduction Percentage" shall mean that percentage
applicable upon a condemnation equal to the fraction whose numerator is the
Fair Market Value of the condemned Hotel immediately prior to the effective
date of such condemnation less the Fair Market Value of the portion of such
Hotel remaining immediately after such condemnation has become effective, and
whose denominator is the Fair Market Value of such Hotel immediately prior to
the effective date of such condemnation. Thus, for example, if the Fair Market
Value of the affected Hotel immediately prior to such condemnation was $20
million and the Fair Market Value of the portion of the affected Hotel
remaining immediately after such condemnation was $15 million, the Partial
Condemnation Reduction Percentage would be 25%.
"Partial Lease Year" shall mean the period between the end of the last
full Lease Year and the termination of this Lease.
"Percentage Rent" shall have the meaning set forth in Section 5.1.
"Premises" shall mean all of the Land and the Improvements associated with
the Hotels, or such lesser area or portion of each such Hotel that from time to
time may be leased by Tenant hereunder as set forth in this Lease.
"Prime Rate" shall mean the prime commercial lending rate as announced
from time to time by Credit Lyonnais at its branch in New York City (or such
other financial institution as Landlord and Tenant may mutually agree in
writing), each change in said rate to be effective as of the date of such
change.
"Prospectus" shall have the meaning set forth in Section 22.20.
"Renovations" shall have the meaning set forth in Section 10.2.
"Rent(s)" shall mean Base Rent, Percentage Rent, Additional Rent and
Expansion Rent either collectively or any one or more of same as the context
may indicate.
"Sale of a Hotel" shall mean any sale, assignment, transfer or other
disposition, for value or otherwise, voluntary or involuntary, of Landlord's
title to a Hotel, including, if applicable, the Land or Landlord's leasehold
interest in the underlying ground lease for the Land or an assignment or
sublease of Landlord's leasehold interest in the underlying lease of the Hotel
but excluding any Mortgage on Landlord's interest in any Hotel and/or this
Lease. For purposes of this Lease, a Sale of a Hotel shall also include a
lease (subject to this Lease) of all or substantially all of any Hotel or the
Land located at any such Hotel and any Change in Control of Landlord.
"Senior Landlord's Mortgagee" for any Hotel shall mean the holder of, or
<PAGE> 20
beneficiary under, from time to time the most senior Mortgage against
Landlord's interest in such Hotel and/or this Lease.
"Site Assessment" shall have the meaning ascribed to it in Section 12.2.
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<PAGE> 21
"Site Reviewer" shall have the meaning ascribed to it in Section 12.2.
"Substantial Taking" shall mean a condemnation of a portion of any Hotel
which is not an Insubstantial Taking.
"Surviving Obligations" shall mean any obligations of Tenant under this
Lease, actual or contingent, which arise on or prior to the expiration or prior
termination of this Lease and which survive such expiration or termination by
their own terms.
"Tenant" shall have the meaning set forth in the Preamble and shall
include its successors and assigns.
"Tenant's Mortgagee" shall mean the holder of, or beneficiary under any
Mortgage of Tenant's interest in any of the Hotels and/or this Lease, including
without limitation all members of any syndicate and the trustee or any other
agent thereof, if Tenant's Mortgagee consists of more than one entity or
person.
"Term" shall have the meaning set forth in Section 3.1.
"Uniform System of Accounts" shall mean the Uniform System of Accounts for
Hotels, as adopted and published from time to time by the American Hotel and
Motel Association. [Eighth Revised Edition, 1986, as published by the Hotel
Association of New York City, Inc.]
"Use Award" shall have the meaning set forth in Section 15.3.
"Year" shall mean a calendar year commencing on January 1 and ending on
December 31. A "Partial Year" shall mean that portion of a Year that occurs
during the Term in the case of the Year in which the Commencement Date occurs
and the Year in which the expiration or termination of this Lease occurs.
ARTICLE III
TERM
Section 3.1 Term. The "Term" shall consist of the Initial Term and the
Extended Term(s), if any. The Initial Term of this Lease shall commence on the
Commencement Date, and, unless sooner terminated as otherwise provided herein,
shall expire on December 31, 2010.
Section 3.2 Extended Term. If Tenant has not given Notice of its
intention to terminate this Lease with respect to any Hotel pursuant to Section
3.3 and the Initial Term or any then current Extended Term with respect to such
Hotel has not been sooner terminated, the Term of this Lease with respect to
each such Hotel shall automatically be extended on the same terms and
conditions as set forth herein for an Extended Term of five (5) years (the
"Extended Term"); provided, however, that there shall not be more than five
such Extended Terms and, if the Land for such Hotel is leased by Landlord, no
such Term shall extend in excess of one month less than the remaining term of
<PAGE> 22
Landlord's leasehold interest in such Land. Notwithstanding the foregoing,
Tenant may elect at any time throughout the Term to exercise, by Notice to
Landlord, its option to extend the Term with respect to any or all Hotels
through any or all Extended Terms. If and to the extent Tenant elects by
written notice to Landlord to exercise its option to extend the Term for any
such Hotel through any Extended Term, Tenant's option to terminate this
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<PAGE> 23
Lease pursuant to Section 3.3 with respect to such Extended Term for which
Tenant has exercised its extension option shall no longer be applicable, but
such option to terminate pursuant to Section 3.3 shall continue to apply to any
Extended Term with respect to which such option to extend was not exercised
pursuant to this Section 3.2. All elections to extend the Term shall be
irrevocable after exercise.
Section 3.3 Notice of Termination. Tenant may terminate this Lease with
respect to any Hotel at the end of the Initial Term or at the end of any
Extended Term upon Notice to Landlord not less than twelve (12) calendar months
prior to the expiration of the Initial Term or the then current Extended Term,
as the case may be. In addition, Tenant may terminate this Lease with respect
to any Hotel if Tenant gives a Notice of termination to Landlord after the date
which is twelve (12) months prior to the expiration of the Initial Term or the
then current Extended Term, as the case may be (but prior to the last day of
the Initial Term or the then current Extended Term and prior to the expiration
of the thirty (30) day period referenced below), and in such event this Lease
shall terminate with respect to such Hotel on the date which is twelve (12)
months after the date upon which Tenant delivers such Notice; except that if,
after the beginning of the twelve (12) month period prior to the expiration of
the Initial Term or the then current Extended Term, as the case may be, Tenant
does not give a Notice of termination within thirty (30) days after Landlord
requests Tenant to notify Landlord whether Tenant intends to terminate this
Lease with respect to all or any portion of the Premises, the Term of this
Lease shall be automatically extended with respect to the portion of the
Premises that was the subject of Landlord's request for the next Extended Term,
and Tenant's right to terminate this Lease with respect to such portion of the
Premises prior to the expiration of the next Extended Term shall cease to have
any further force or effect.
Section 3.4 Obligations of Parties at Termination
(a) Promptly upon the effective date of any termination of this
Lease with respect to any Hotel or Hotels: (i) Tenant shall peaceably
surrender all of such Hotel or Hotels to Landlord in the same condition as
existed as of the Commencement Date, subject only to such additions or
alterations as have been permitted pursuant to Article IX hereof and
subject to reasonable wear and tear; (ii) Tenant shall assign and deliver
to Landlord Tenant's entire interest in any and all service contracts,
guaranties and warranties relating to the construction, improvement,
alteration and repair of such Hotels and all architectural and engineering
plans, drawings and specifications related thereto; (iii) if Landlord
exercises its option described in subsection 10.3(a) to purchase certain
equipment relating to such Hotel or Hotels from Tenant, Tenant shall
assign and deliver appropriate title documentation and possession of such
equipment; and (iv) if Landlord so requests, Tenant shall cause any person
or entity occupying the Premises by, through or under Tenant to be evicted
and removed from the Premises.
(b) Rent relating to such Hotel or Hotels shall be paid through the
date of termination. Within one hundred twenty (120) days after this
Lease terminates, Tenant shall deliver to Landlord a complete and final
accounting, prepared in accordance with the provisions of Section 5.3
hereof, of Operating Revenues relating to such Hotel or Hotels together
with all payments of Rent relating to such Hotel or Hotels due hereunder
and, if Landlord opted to purchase the equipment described in Subsection
10.3(a), the purchase price therefor. Landlord's right to audit Tenant's
books and records as described in Section 5.3 and to receive Percentage
Rent and Additional Rent relating to such Hotel or Hotels, if any,
together with interest at the Lease Interest Rate shall survive the
termination of this Lease.
<PAGE> 24
(c) If Landlord, directly or indirectly, intends to conduct upon
termination of this Lease a business or use at any of the Hotels similar
to Tenant's business or use at such Hotel, Tenant,
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<PAGE> 25
at Landlord's request, shall: (i) make available to Landlord such books
and records as are appropriate to such business and/or use (but not
including employee records that must remain confidential either under
Legal Requirements or reasonable policies of Tenant, or any proprietary
information or property of Tenant), and (ii) assign or transfer to
Landlord or its designee, to the extent permitted by Legal Requirements,
all licenses, permits, permissions and approvals pertinent to the conduct
of such business or use at such Hotel; provided that if Tenant has
expended any of its own funds within the five (5) year period preceding
the termination date in the acquisition or maintenance of any such
license, permit, permission or approval (other than annual license fees
whether prepaid or paid currently), or if there are any deposits or escrow
funds relevant thereto that Tenant assigns and transfers to Landlord,
Landlord shall, as a condition of receiving an assignment or transfer of
such license, permit, deposit, escrow fund, permission or approval (if
requested by Landlord), reimburse Tenant therefor. The cost of
effectuating any such transfer of any licenses, permits, permissions or
approvals shall be borne by Landlord except when termination is due to
Tenant's default.
(d) The provisions of Section 10.3 shall apply upon termination of
this Lease with respect to all or any portion of the Premises, and Tenant
shall take all other appropriate actions as required under all other
applicable provisions of this Lease. The provisions of this Section 3.4,
as well as all Surviving Obligations, Landlord's right to receive the late
charges described in Section 5.2(b), interest on sums outstanding at the
Lease Interest Rate and legal fees (but if termination was not due to an
Event of Default such Legal Fees shall be reasonable legal fees) and court
costs, shall survive termination of this Lease with respect to all or any
portion of the Premises.
ARTICLE IV
ABSOLUTELY NET LEASE
Section 4.1 Net Lease. Subject to any express obligation of Landlord to
the contrary under this Lease, it is expressly understood and agreed by and
between the parties that this Lease is an absolutely net lease, and that Tenant
shall pay the Rents and all other sums payable hereunder to or on behalf of
Landlord without Notice or demand and without set-off, counterclaim, abatement,
suspension, deduction, or defense, and Landlord is not obligated to expend any
of its funds in connection with the Hotels, Premises or this Lease.
Section 4.2 Non-Terminability of Lease
(a) Except as otherwise expressly provided herein, this Lease shall
not terminate, nor shall Tenant have any right to terminate this Lease,
nor shall the obligations hereunder of Tenant be otherwise affected, for
any reason whatsoever, including without limitation by reason of any
damage to or destruction of all or any part of the Premises from whatever
cause, the taking of the Premises or any portion thereof by condemnation,
the prohibition, limitation or restriction of Tenant's use of the
Premises, or interference with such use by any private person or
corporation or by reason of any eviction or otherwise, or Tenant's
acquisition of ownership of the Premises otherwise than pursuant to an
express provision of this Lease, or for any other cause whether similar or
dissimilar to the foregoing, any present or future Legal Requirement to
the contrary notwithstanding, it being the intention of the parties hereto
that the Rent and all other charges payable hereunder to or on behalf of
Landlord, shall continue to be payable in all events
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<PAGE> 26
and the obligations of Tenant hereunder shall continue unaffected, unless
the requirement to pay or perform the same shall be terminated pursuant to
an express provision of this Lease.
(b) Tenant covenants and agrees that it will remain obligated under
this Lease in accordance with its terms, and that Tenant will not take any
action to terminate, rescind, reject or avoid this Lease or any term,
part, or provision hereof, notwithstanding the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other proceeding affecting Landlord or any assignee of
Landlord in any such proceeding and notwithstanding any action with
respect to this Lease which may be taken by any trustee or receiver of
Landlord or of any assignee of Landlord in any such proceeding or by any
court in any such proceeding.
(c) Except as otherwise expressly provided in this Lease, Tenant
waives all rights now or hereafter conferred by law or obtainable in
equity (i) to quit, terminate or surrender this Lease or the Premises, or
any part thereof, or (ii) to any abatement, suspension, deferment or
reduction of any Rents or charges payable hereunder to or on behalf of
Landlord, regardless of whether such rights shall arise from any present
or future constitution, statute or rule of law.
ARTICLE V
RENT
Section 5.1 Base Rent and Percentage Rent. Tenant covenants to pay
Landlord Rent for the Premises as follows:
(a) Commencing with the Commencement Date and continuing to the end
of the Term (including all Extended Terms), "Base Rent" in an amount equal
to Fifteen Million Dollars ($15,000,000) per Year for each Year; plus
(b) Commencing with the Second Lease Year and continuing for each
succeeding Lease Year until the end of the Term (including during all
Extended Terms), "Percentage Rent" equal to seven and one half percent
(7.5%) of that portion of the Operating Revenues for all Hotels for such
Lease Year that exceed the total Operating Revenues for the first Lease
Year ("Base Revenues"); provided, however, that in the case of a Partial
Lease Year, Percentage Rent shall be calculated by comparing Operating
Revenues for the Partial Lease Year against Base Revenues for the
comparable period of the first Lease Year. Once Base Revenues are
calculated and such figures are certified by Tenant's auditors and chief
financial officer, and Landlord has concurred in such calculation, the
Base Revenues with respect to each Hotel shall be inserted on Exhibit B
and the so revised Exhibit B shall become and remain a part of this Lease
to be utilized for reference purposes if a future recalculation of Base
Revenues becomes necessary due to the termination of this Lease with
respect to any one or more, but not all, Hotels.
Section 5.2 Payment of Rent
(a) Base Rent shall be paid (i) with respect to each calendar month
in each of the first two (2) fiscal quarters (based on Tenant's Fiscal
Year) after the Commencement Date, monthly in arrears, in six equal
payments of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) on
or before the last business day of each such calendar month, and (ii) with
respect to all periods thereafter during the Term, quarterly in arrears,
in four equal payments of Three
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<PAGE> 27
Million Seven Hundred Fifty Thousand Dollars ($3,750,000), on or before
the last business day of each March, June, September and December during
each Year of the Term. Base Rent for any partial quarter shall be
prorated and computed by multiplying the quarterly Base Rent by a
fraction, the numerator of which is the number of days in such partial
quarter and the denominator of which is ninety. In the event this Lease
terminates pursuant to the specific terms hereof with respect to one or
more Hotels (but not all Hotels), Base Rent shall be recalculated in
accordance with the Schedule contained on Exhibit B, and Percentage Rent
shall be recalculated by deleting the Base Revenues of the so terminated
Hotel or Hotels from the Base Revenues utilized to calculate Percentage
Rent. Percentage Rent shall be calculated on an annual basis beginning at
the end of the second Lease Year and then for each succeeding Lease Year.
The calculation of Operating Revenues for the then ended Lease Year shall
be made by Tenant and provided to Landlord within one hundred and twenty
(120) days after the end of such Lease Year in accordance with Section
5.3(a). Tenant shall pay the Percentage Rent annually in arrears on or
before one hundred twenty (120) days after the end of the applicable Lease
Year. All installments of Rent not paid by Tenant when the same become
due shall bear interest from the date due until paid at the Lease Interest
Rate. Time is of the essence with respect to this obligation, and
installments of Rent shall become due and payable without Notice or
demand. All Rent payments shall be made in lawful money of the United
States of America and shall be paid to Landlord at Landlord's address for
receipt of Notices or to such other party and/or to such other address as
Landlord may from time to time designate by Notice to Tenant in accordance
with this Lease.
(b) Tenant acknowledges that late payment of Rent by Tenant to
Landlord will cause Landlord to incur costs not contemplated in this
Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting
charges and late charges that may be imposed upon Landlord by the terms of
any Mortgage on any or all of the Hotels. Accordingly, in addition to the
interest payable by Tenant pursuant to Section 5.2(a), after a period of
five (5) days following the date all or any portion of Rent is due and
unpaid Tenant shall pay to Landlord an amount equal to five percent (5%)
of the amount of such unpaid installment or portion thereof. The parties
agree such late charges represent a fair and reasonable estimate of the
cost Landlord will incur by reason of the late payment by Tenant.
(c) If any of the Hotels are damaged by fire or other casualty and
Tenant must discontinue all or substantially all business operations
therein for a period of time in excess of the period covered by business
interruption insurance required to be carried hereunder, Tenant's
obligation to pay Percentage Rent for the Lease Year in which Tenant has
so discontinued its business operations shall be computed as if such Lease
Year were a Partial Lease Year and as if the number of days in such
Partial Lease Year excluded the number of days during which Tenant
discontinued all or substantially all of its business operations at such
Hotel and which are not covered by business interruption insurance
required to be carried by Tenant hereunder. In no event shall Tenant's
obligation to pay Base Rent be abated for any reason whatsoever, including
without limitation, any fire or other casualty.
(d) If, at any time during the Term, there is a good faith dispute
between Landlord and Tenant with respect to the amount of Percentage Rent
properly due hereunder, Tenant's failure to pay the disputed amount shall
not be deemed an Event of Default with respect to the provisions of
Sections 20.1 and/or 20.2 until such time as the dispute is resolved;
provided, that Tenant shall promptly pay any such disputed amount of
Percentage Rent claimed by Landlord into an escrow
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<PAGE> 28
account specifically created for such purpose, to be held and invested by
the Insurance Trustee or such other escrow agent as may be mutually
approved by Landlord and Tenant. Any amount finally determined to be due
Landlord shall bear interest at the Lease Interest Rate from the date
which is one hundred twenty (120) days after the end of the Lease Year or
Partial Lease Year as to which such disputed Percentage Rent arose until
paid. Any amounts in such escrow account, including any interest earned
thereon, not required to be paid to Landlord shall be returned to Tenant.
Tenant shall have no right of offset as against any Base Rent for any
overpayments of Percentage Rent.
Section 5.3 Records; Audit by Landlord
(a) Tenant shall keep, in appropriate detail and in accordance with
standard accounting practices, at its principal business office, records
of all sums constituting and/or specifically excluded from Operating
Revenues with respect to each Fiscal Year for a period of not less than
four (4) Fiscal Years after the expiration of the Fiscal Year to which
such records relate. Within one hundred twenty (120) days after the end
of the first Lease Year, Tenant shall deliver to Landlord a statement from
an appropriate corporate officer of Tenant and, within two hundred ten
(210) days after the end of the First Lease Year, from Tenant's
independent certified public accountants, certifying the calculation of
Base Revenues required by Section 5.1(b) hereof. Within one hundred
twenty (120) days after the end of each subsequent Lease Year, Tenant
shall deliver to Landlord a statement from an appropriate corporate
officer of Tenant certifying the annual Operating Revenues for such Lease
Year. If there is any overpayment of Percentage Rent, the excess shall be
credited against any future Percentage Rent when next due. If Landlord
delivers its written request to Tenant for copies of records and data to
support such statement, then Tenant shall provide same to Landlord within
thirty (30) days after receipt of such written request. Landlord shall be
entitled to rely directly on Tenant's independent outside certified
auditors or, at Landlord's option and at its own expense, to audit such
statement and supporting records and data, provided Landlord shall cause
such audit to commence within ninety (90) days after receipt of said
statement and to be completed within one hundred twenty (120) days after
receipt of all information requested by Landlord reasonably related to
such audit. In order to provide finality, absent fraud and, except as
otherwise provided below in this Section, Tenant shall be entitled to
treat such statement as being correct if Landlord does not so audit or
otherwise challenge said statement within the time period above provided,
and Landlord shall have no right thereafter to question or examine the
same. If the audit or any audit hereinafter referred to in this Section
(collectively a "Landlord's Audit") discloses an understatement of annual
Operating Revenues, Tenant shall immediately pay Landlord the additional
Percentage Rent found to be due plus interest thereon at the Lease
Interest Rate from the date such additional Percentage Rent was otherwise
due until the date actually paid. However, if Landlord's Audit discloses
that Percentage Rent has been overpaid by Tenant, the excess shall be
credited against any future Percentage Rent when next due hereunder.
Tenant shall have the right to be informed as to any final results of any
such audit. In addition, if Landlord's Audit discloses any underreporting
of the total Operating Revenues for any Lease Year, which underreporting
is in excess of three percent (3%) of the Operating Revenue for such Lease
Year, Tenant shall, upon demand and receipt of evidence of payment, pay
Landlord as Additional Rent the reasonable cost of Landlord's Audit; and
Landlord shall have the option, at Tenant's expense, to audit the
certified statements and supporting records and data for the two (2)
immediately preceding Lease Years, with such audit to be commenced by
Landlord within sixty (60) days after Landlord's receipt of the initial
audit showing an underpayment of Percentage Rent, and to be completed
within one
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<PAGE> 29
hundred twenty (120) days after receipt of all information requested by
Landlord reasonably related to such audit.
(b) In addition to the deliveries required under Section 5.3(a),
Tenant shall, within one hundred twenty (120) days after the end of each
Fiscal Year that ends during the Term, deliver to Landlord a statement
from an appropriate corporate officer of Tenant and from Tenant's
independent certified public accountants, certifying the annual Operating
Revenues for such Fiscal Year.
(c) Landlord shall keep all information regarding annual Operating
Revenues and Base Revenues with respect to the Premises in strict
confidence and shall not divulge such information to third parties except:
(i) to Landlord's accountants and attorneys, (ii) to existing or
prospective purchasers, Mortgagees, partners, lenders, or trustees of
Landlord, (iii) in connection with any claim relating to Percentage Rent
payable under this Lease, (iv) as may be required by law, or (v) to the
holders of direct and indirect beneficial ownership interests in Landlord
and its Affiliates.
Section 5.4 Subleases, Licenses, and Concessions
(a) If Tenant should sublease all or substantially all of any Hotel,
then notwithstanding any other provision of this Lease to the contrary,
Operating Revenues shall not include any rent or other consideration paid
by such sublessee to Tenant but Operating Revenues shall include all gross
receipts of such sublessee that would be included in Operating Revenues if
realized by Tenant.
(b) If Tenant should ever contract with a third party sublessee,
licensee, or concessionaire to deliver goods or services to the customers
at any of the Hotels, which goods and services had previously been
provided by Tenant to Tenant's customers at such Hotel (and exclusive of
any such service businesses which individually do not utilize space
exceeding 500 square feet of rentable area), then notwithstanding any
other provision of this Lease to the contrary, the gross receipts of such
sublessee(s), licensee(s), and concessionaire(s) that would be included in
Operating Revenues if realized by Tenant shall be included in Operating
Revenues; and in any case in which the gross receipts of any sublessee,
licensee, or concessionaire are included in Operating Revenues hereunder,
the rental, license, or concession fees, if any, paid by such sublessee,
licensee, or concessionaire to Tenant shall not be included in Operating
Revenues; provided, however, that the provisions of this Section 5.4(b)
shall not apply to the gross receipts of any one or more sublessees,
licensees, or concessionaires if the gross receipts of all such
sublessees, licensees, or concessionaires in the applicable Lease Year do
not exceed Fifty Thousand Dollars ($50,000), which $50,000 amount shall be
increased on the fifth (5th) anniversary of the Commencement Date and
every fifth (5th) anniversary thereafter by an amount proportionate to the
percentage increase in the GDP Deflator over the preceding five (5) year
period.
(c) If any sublessee, licensee, or concessionaire that delivers
goods or services to Tenant's customers at any Hotel is an Affiliate of
Tenant, the gross receipts of such sublessee, licensee, or concessionaire
that would be included in Operating Revenues if realized by Tenant shall
be included in Operating Revenues, and the rental, license, or concession
fees, if any, paid by such sublessee, licensee, or concessionaire to
Tenant shall not be included in Operating Revenues.
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(d) Tenant shall not enter into any sublease, license, or concession
agreement or amendment thereto in which the determination of the amount of
rent, license, or concession fee depends in whole or in part on, or is
expressed in whole or in part as, a percentage of the income or profits
derived by such sublessee, licensee, or concessionaire or any other person
or entity. In any lease, license, or concession agreement or amendment
thereto executed by Tenant in which the amount of rent, license, or
concession fee is determined in whole or in part by reference to the gross
sales or gross receipts of the sublessee, licensee, or concessionaire or
any other person or entity, such sublease, license, or concession
agreement shall contain a provision stating that the gross receipts or
gross sales of the sublessee, licensee, or concessionaire or any other
person or entity shall not be determined in whole or in part by reference
to the income or profits derived by the sublessee, licensee, or
concessionaire or any other person or entity from the Premises or the
subject matter or such lease, license, or concession agreement (other than
an amount based on a fixed percentage or percentages of gross receipts or
gross sales). If Tenant violates the provisions of this paragraph with
respect to any sublease, license, or concession agreement, then in
addition to any other rights and remedies that Landlord may have under
this Lease or applicable law, the gross receipts of such sublessee,
licensee, or concessionaire under such sublease, license, or concession
agreement that would be included in Operating Revenues if realized by
Tenant shall be included in Operating Revenues and the rental, license, or
concession fee, if any, paid by such sublessee, licensee, or
concessionaire shall not be included in Operating Revenues.
Section 5.5 Rent Upon Certain Expansions. If Tenant completes any
Expansion at any Hotel with respect to which: (i) the cost of such Expansion
exceeds One Million Dollars ($1,000,000), and (ii) such Expansion results,
either by itself or aggregated with any and all prior Expansions, in an
increase greater than five percent (5%) in the capacity (measured either in
terms of net useable building square footage, or the aggregate number of rooms)
of such Hotel then, from the first day of the first month following the date of
completion of such Expansion throughout the remaining Term of this Lease,
Tenant shall pay in lieu of Percentage Rent with respect to such Hotel the
lesser of either (x) Percentage Rent for such Hotel calculated pursuant to
Section 5.1 hereof, or (y) Expansion Rent for such Hotel for each Lease Year or
portion thereof during the remainder of the Term hereof in an amount equal to
the average amount of Percentage Rent payable by Tenant with respect to such
Hotel (without regard to the Gross Income from any other Hotels included in the
Premises) for the two (2) full Lease Years immediately preceding the
commencement of construction of such Expansion; provided, however, that the
amount of Expansion Rent shall be increased on each anniversary of the date
such Expansion Rent first became effective by an amount proportionate to the
percentage increase in the GDP Deflator over the preceding twelve (12) month
period.
ARTICLE VI
OPERATION AND MAINTENANCE OF PREMISES
Section 6.1 Operation and Maintenance of Premises.
(a) Tenant shall not alter its operational and/or management
practices with respect to any of the Hotels so as to cause the standard at
which the Hotels are operated and managed to deviate significantly from
the standard of operation and management existing on the Commencement
Date, without obtaining Landlord's prior written consent.
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(b) Throughout the Term, Tenant, at its own expense, shall keep and
maintain each of the Hotels in condition and repair at least as good as
the condition and repair of each Hotel on the Commencement Date,
reasonable wear and tear excepted, and in conformity with all applicable
Legal Requirements and shall make or cause to be made all ordinary and
extraordinary, foreseen and unforeseen items of maintenance, repair,
replacement and alteration to the Premises as necessary for such purpose.
Landlord shall not be required to maintain, repair, or rebuild all or any
part of the Premises. Tenant shall provide all services required and
perform all obligations incurred in connection with the use, operation and
maintenance of the Premises, and Tenant shall be responsible for the
payment of all costs and expenses incurred in the use, operation, or
maintenance of the Premises, including, but not limited to, rents and
other amounts owed under any ground lease, management fees, real estate
taxes, insurance, supplies and materials used in the operation and
maintenance of the Premises, the cost of all maintenance, janitorial,
security and service agreements for the Premises and the equipment therein
and thereon, and the cost of electricity, water and any and all other
utilities, supplied to the Premises, but not including any costs or
expenses affirmatively incurred by Landlord that are not attributable to a
default by Tenant in the performance of Tenant's obligations under this
Lease.
Section 6.2 Taxes
(a) Tenant shall pay, prior to delinquency: (i) all taxes,
including sales, excise, value added, use, real estate and personal
property taxes, assessments, levies and fees, water and sewer rents and
charges, vault charges, and all other taxes, levies, assessments, and
other similar charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, of every kind and nature whatsoever, which are
imposed or levied upon or assessed against or which arise with respect to
the Premises, any Rent or other sums payable hereunder, this Lease or the
leasehold estate hereby created or which arise in respect of the ownership
of the Premises by Landlord, the operation, possession or use of the
Premises by Tenant or the leasing, operation, possession or use of the
Premises; (ii) all gross receipts, sales, excise or similar taxes (i.e.,
taxes based upon gross income which fail to take into account deductions
with respect to the Premises, such as depreciation, interest, taxes or
ordinary and necessary business expenses) imposed or levied upon, assessed
against or measured by any Rent, or other issues or profits derived from
the Premises or other sums payable hereunder; and (iii) all charges of
utilities, communications and other services serving the Premises,
together with any and all interest costs or penalties with respect to any
of the foregoing.
(b) Notwithstanding the foregoing provisions of Section 6.2(a) but
subject to the provisions of Section 6.2(c), Tenant shall not be required
to pay any franchise, estate, inheritance, transfer, income or similar tax
assessed or imposed against Landlord, any Rent or other sums payable
hereunder, this Lease, the Land or Improvements (other than any tax
referred to in clause (ii) of Section 6.2(a)). Tenant will furnish to
Landlord, within ten (10) days after demand therefor, proof of payment of
all items referred to above which are payable by Tenant.
(c) If, at any time, any federal, state or local governmental entity
shall impose upon the Rent payable to Landlord any tax or other imposition
in lieu of any existing real estate or other tax payable by Tenant as of
the Commencement Date, then notwithstanding the provisions of Section
6.2(b), Tenant, at its sole cost and expense, shall pay such tax or
imposition on Landlord's behalf the same as if such tax or imposition had
been levied against Tenant or Tenant's interest in the Premises, as well
as any additional income taxes assessed against Landlord with respect to
such payment.
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Section 6.3 Compliance with Requirements, Covenants and Restrictions.
Tenant shall comply with and cause each of the Hotels to comply with all
obligations and liabilities with respect to all Insurance Requirements
(including, without limitation, to the extent necessary to prevent cancellation
thereof and to insure full payment of any claims made under such policies).
Tenant shall comply with, cause each of the Hotels to comply with, and shall
assume all easements, agreements, covenants, conditions and restrictions
applicable to each such Hotel or the ownership, operation, use or possession
thereof that are of record on the Commencement Date or are hereafter executed
by Tenant or are hereafter consented to by Tenant in writing, including,
without limitation, (i) any superior ground lease currently in effect with
respect to any portion of the Premises, and (ii) any Mortgage or other
agreement executed directly in connection therewith. During the Term, Tenant
will not enter into or consent to any easements, covenants, conditions or
restrictions which would materially affect any Hotel beyond the Term or any
termination of this Lease without the prior consent of Landlord, which consent
will not be unreasonably withheld, conditioned, or delayed.
Section 6.4 Landlord's Right to Perform Tenant Obligations. If Tenant
fails promptly to make any repairs, payments or otherwise take any actions that
are Tenant's obligation to make or do under this Lease, Landlord, at its
option, may make or perform same at the expiration of any applicable Notice and
grace period provided for herein (except that upon any emergency presenting
immediate danger to person or property, such Notice and grace period shall only
be what is reasonable under the circumstances), and Tenant shall pay Landlord,
upon demand and receipt of evidence of payment, as Additional Rent, Landlord's
actual costs plus interest thereon from the date of expenditure until paid at
the Lease Interest Rate. The provisions of this Section 6.4 shall be for the
sole and exclusive benefit of Landlord. Nothing contained herein shall be
construed so as to require Landlord to exercise any of its rights under this
Section 6.4.
Section 6.5 Compliance with Laws and Agreements. Subject to the
provisions of Section 6.6, Tenant, at its sole expense, shall comply with and
cause each Hotel to comply with, and assume all obligations and liabilities
with respect to all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting each Hotel or the construction, use or alteration
thereof, whether now or hereafter enacted and in force, including any which may
(i) require repairs, modifications or alterations in or to any Hotel; (ii) in
any way adversely affect the use and enjoyment thereof, and all permits,
licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Tenant (other than encumbrances
created by Landlord without the consent of Tenant), at any time in force
affecting any Hotel, including without limitation, all superior ground
leasehold agreements and any Mortgage or other agreement executed directly in
connection therewith; or (iii) require the cleanup or other treatment of any
Hazardous Material (such laws, orders, ordinances, agreements and regulations
being herein referred to as "Legal Requirements").
Section 6.6 Tenant's Right to Contest. Notwithstanding any other
provision of this Lease, Tenant shall have the right to contest (a) the payment
of any tax or other imposition, (b) compliance with any Legal Requirement or
(c) any lien referred to in Section 6.7 so long as (i) at the time of any such
contest, no Event of Default exists, (ii) no such contest shall subject
Landlord to the risk of criminal liability, (iii) any such taxes or impositions
are paid prior to the assessment of penalties or interest thereon unless such
payment would deprive Tenant of the right to contest the validity or amount of
such taxes or impositions, and (iv) Tenant shall contest, in good faith, the
<PAGE> 33
existence, amount or validity thereof, the amount of the damages caused
thereby, or the extent of its or Landlord's liability therefor by appropriate
proceedings which shall operate during the pendency thereof to prevent or stay
(1) the collection of, or other realization upon, the matter contested, (2) the
sale, forfeiture or loss of any of the Hotels or any
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portion thereof or any Rent to satisfy or to pay any damages caused by any of
the matters described in clauses (a), (b), and (c), (3) any interference with
the use or occupancy of any of the Hotels, (4) any interference with the
payment of any Rent, (5) the cancellation of any insurance policy, and (6) the
enforcement or execution of any injunction, order or Legal Requirement with
respect to such matter. Tenant further agrees that any such contest shall be
prosecuted to a final conclusion or settled as expeditiously as is reasonably
possible under the circumstances. Any rebate made on account of any taxes or
other impositions shall be repaid to the party who made such payment, or if
such payment relates to a period prior to the Commencement Date, such payment
shall be made to Tenant. If and to the extent required by applicable law or
regulation, Landlord shall render to Tenant, at no cost to Landlord, any and
all reasonable assistance in contesting the validity or amount of any
impositions, including (if requested by Tenant) joining in the signing of any
protests or pleading which Tenant may reasonably deem advisable to file.
Tenant shall pay any and all losses, judgments, decrees and costs in connection
with any such contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interest and costs thereof or in
connection therewith, and perform all acts the performance of which shall be
ordered or decreed as a result thereof. Upon termination of this Lease for any
reason other than an Event of Default, Landlord shall promptly reimburse Tenant
for any such payment made by Tenant for taxes and impositions described in
Section 6.2(a) attributable to the Premises applicable to any period subsequent
to the termination of this Lease.
Section 6.7 Liens. Tenant shall keep the Premises free from any liens
arising from any work performed, materials furnished, or obligations incurred
by or at the request of Tenant or any sublessee, licensee, or concessionaire of
Tenant or arising from any breach by Tenant of its obligations under this
Lease, and any liens with respect to any taxes Tenant is obligated to pay under
this Lease or Legal Requirements. If any lien is filed against any Hotel or
Tenant's leasehold interest therein, or if any lien is filed against any Hotel
which arises out of any purported act or agreement of Tenant, or any sublessee,
licensee, or concessionaire of Tenant, Tenant shall discharge the same within
thirty (30) days after Tenant receives Notice of its filing by payment, filing
of the bond required by law, or endorsement over by a title company reasonably
satisfactory to Landlord (it being understood that any title company with a
national presence and a sound financial condition and reputation shall be
acceptable to Landlord). If Tenant fails to discharge such lien within such
period, then, in addition to any other right or remedy of Landlord, Landlord
may, at its election, discharge the lien by paying the amount claimed to be
due, by obtaining the discharge by deposit with a court or a title company, or
by bonding. Tenant shall pay on demand, as Additional Rent, any amount paid by
Landlord for the discharge or satisfaction of any such lien, together with
interest thereon from the date of such expenditure until paid at the Lease
Interest Rate, and all reasonable attorneys' fees and other costs and expenses
of Landlord incurred in defending any such action or in obtaining the discharge
of such lien, together with all necessary disbursements in connection
therewith. Nothing contained in this Lease shall be construed as constituting
the consent or request of Landlord, express or implied, to or for the
performance by any contractor, laborer, materialman, or vendor of any labor or
services or for the furnishing of any materials for any construction,
alteration, addition, repair or demolition of or to any of the Hotels or any
part thereof, or as making Tenant the agent of Landlord with respect to any
such matter, and no such agency relationship shall exist unless Tenant and
Landlord so agree in writing. Notice is hereby given that Landlord will not be
liable for any labor, services or materials furnished or to be furnished to
Tenant, or to anyone holding an interest in the Premises or any part thereof
through or under Tenant, and that no mechanic's, materialmen's or other liens
for any such labor, services or materials shall attach to or affect the
interest of Landlord in and to the
<PAGE> 35
Premises; and appropriate notice to this effect will be included in the Lease
Memorandum and all construction contracts entered into by Tenant, and Tenant
shall take all steps
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reasonably necessary under the laws of the jurisdiction(s) in which the
relevant portion of the Premises is located to protect Landlord against such
liability (including, if required, the posting of notices of nonresponsibility
on Landlord's behalf).
ARTICLE VII
USE
Subject to the provisions of Section 6.5, Tenant shall have the right to
use the Premises for hotel and related purposes, including, without limitation,
restaurants, bars, gift shops, car rental agencies, airline reservations desks,
golf, tennis and other recreational activities, and other ancillary services.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 General Indemnification by Tenant. In addition to the
provisions of any indemnity provided elsewhere in this Lease, Tenant shall pay,
protect, indemnify, defend, save and hold harmless, Landlord, Landlord's
constituent partners, any ground lessor, and any Affiliate, partner, trustee,
officer, director, employee, agent or shareholder or other holder of any
beneficial interest in any of them (collectively, the "Indemnified Parties"
and, individually, an "Indemnified Party"), from and against all liabilities
(including, without limitation, liabilities expressly retained by Landlord in
connection with a sale of all or any portion of the Premises), obligations,
claims, damages (including, without limitation, punitive damages), penalties
and causes of action or judgments of any nature whatsoever, whether foreseen or
unforeseen, howsoever and whensoever caused including, without limitation, if
caused prior to the Commencement Date, without regard to the form of action and
whether based on strict or statutory liability, gross negligence, negligence
(including the negligence of any Indemnified Party) or any other theory of
recovery at law or in equity, and all reasonable and documented costs and
expenses (including reasonable attorneys' fees, costs of experts, and other
legal costs and expenses), imposed upon or incurred by or asserted against any
of the Indemnified Parties by reason of or in connection with:
(a) Any matter pertaining to the leasing, use, non-use, occupancy,
operation, management, condition, design, construction, maintenance,
repair or restoration of any of the Hotels or Premises, or the employment
of any persons at the Hotels or on the Premises, in each case whether by
Tenant or otherwise;
(b) Any casualty in any matter arising from or in connection with
any of the Premises or any operations or activities thereon, whether or
not Landlord or any Indemnified Party has or should have knowledge or
notice of any default or condition causing or contributing to the
casualty;
(c) Any violation by Tenant (or any employees, agents, invitees,
guests, sublessees, concessionaires, or licensees of Tenant) of any
provision of this Lease, any contract or agreement to which Tenant (or any
sublessee, concessionaire, or licensee of Tenant) is a party, any
violation or alleged violation of any Legal Requirement (including anti-
discrimination laws) or any Insurance Requirement; and
(d) Any contest undertaken by or on behalf of Tenant with respect to
any Legal Requirement, Insurance Requirement, tax imposition or otherwise,
regardless of whether the same
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is permitted pursuant to the terms hereof; except in each case to the
extent the same directly result from the gross negligence or willful
misconduct by an Indemnified Party.
Section 8.2 Environmental Indemnification. Tenant shall pay, protect,
indemnify, defend, save and hold harmless the Indemnified Parties and each of
them, from and against all liabilities (including, without limitation,
liabilities expressly retained by Landlord in connection with a sale of all or
any portion of the Premises), obligations, claims (including, without
limitation, claims by third parties alleging violation of or liability under
any Environmental Law), damages (including, without limitation, punitive
damages and damages to natural resources), penalties and causes of action or
judgments of any nature whatsoever, both foreseen and unforeseen, howsoever and
whensoever caused including, without limitation, if caused prior to the
Commencement Date, without regard to the form of action and whether based on
strict or statutory liability, gross negligence, negligence (including the
negligence of any Indemnified Party or their agents), or any other theory of
recovery at law or in equity, and all reasonable and documented costs and
expenses (including reasonable attorneys' fees, costs of experts, and other
legal costs and expenses), imposed upon or incurred by or asserted against any
of the Indemnified Parties by reason of or in connection with:
(a) Tenant's failure to perform its duties and obligations as set
forth in Article XII;
(b) All claims asserted during or after the Term by any third party
for personal or bodily injury or death where such claims allege injury or
damages as a result of exposure, that occurred prior to or during the
Term, to Hazardous Material that existed at or were located in, on, or
under, or were released from, any of the Hotels and/or any portion of the
Premises at any time prior to or during the Term; provided, however, that
this indemnity shall not cover claims arising by reason of the gross
negligence or willful misconduct of Landlord and its agents, or of an
Indemnified Party and its agents; and
(c) The violation of any Environmental Law occurring at any time
prior to the Commencement Date at or in connection with the leasing, use,
non-use, occupancy, management or operation of any of the Hotels and/or
any portion of the Premises; the discharge, disposal or release of any
Hazardous Material at any time prior to the Commencement Date in, on,
under, at or from, or in connection with the leasing, use, non-use,
occupancy, management or operation of, any of the Hotels and/or any
portion of the Premises; or the presence of any Hazardous Material at any
time prior to the Commencement Date in, on, under or at any of the Hotels
and/or any portion of the Premises, including without limitation any
off-site migration onto any of the Hotels and/or any portion of the
Premises.
Section 8.3 Defense of Indemnified Parties. Promptly after receipt by an
Indemnified Party of notice of the commencement or assertion against it of any
claim, action or proceeding, such Indemnified Party shall, if a claim in
respect thereof is to be made against Tenant under this Article VIII, notify
Tenant thereof; but the omission so to notify Tenant shall not relieve Tenant
from any liability which it may have to such Indemnified Party under this
Article VIII except to the extent that Tenant shall have been prejudiced by
such failure. As long as no Event of Default exists and provided that
representation by counsel selected by Tenant will not, in Indemnified Party's
reasonable judgment (which judgment may be based on, without limitation, due
consideration of any obligation such Indemnified Party may have to indemnify
other parties in connection with the same matter, including requirements as to
right of contest, time of indemnification and undertaking of defense of such
other parties), prejudice Indemnified Party in any manner, Tenant, at its sole
cost and expense,
<PAGE> 38
shall have the right by counsel reasonably satisfactory to the Indemnified
Party, to contest, resist and defend any claim, action or proceeding with
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respect to which it shall have received the Notice described in the preceding
sentence; provided, however, that Tenant may not compromise or otherwise
dispose of the same without the prior written approval of the Indemnified
Party, such approval not to be unreasonably withheld, conditioned, or delayed
so long as the Indemnified Party receives a full release with respect to the
claim, action or proceeding. If an Event of Default exists, or, in Indemnified
Party's judgment, representation by counsel selected by Tenant will prejudice
Indemnified Party in any manner, such Indemnified Party shall have the right to
retain its own counsel and defend such action. If Tenant shall have assumed
responsibility for such contest and defense, Tenant shall not be obligated to
pay any attorneys' fees or other legal costs incurred by or on behalf of the
Indemnified Party unless an Event of Default exists. Notwithstanding the
foregoing, each Indemnified Party shall, at Tenant's request and expense,
cooperate with Tenant, at no cost or expense to the Indemnified Party, in the
defense of any such claim, action or proceeding.
Section 8.4 Payment by Tenant. Any amounts which become payable by
Tenant under this Article VIII shall be paid as Additional Rent no later than
ten (10) days after demand by the Indemnified Party entitled thereto (which
demand shall not be made more than ten (10) days prior to the proposed date of
actual payment by the Indemnified Party to a third party) and, if such payment
is not timely paid, shall bear interest at the Lease Interest Rate form the
date when due to the date of payment.
Section 8.5 Survival. Tenant's liability under this Article VIII shall
survive the expiration or earlier termination of this Lease. The failure or
inability on the part of Tenant to carry insurance required to be maintained
under Article XIII shall not affect in any way its indemnification obligations
hereunder.
Section 8.6 Continuing Obligations. The indemnities set forth herein
shall in no way affect or impact any other obligations on the part of Tenant or
any of its Affiliates that may exist under law or under any other agreement in
favor of any Indemnified Party.
ARTICLE IX
ALTERATIONS AND EXPANSIONS
Section 9.1 Alterations and Expansions
(a) Tenant may at its expense and without Landlord's prior written
consent, make any replacements or aesthetic alterations to any of the
Hotels. Tenant may expand the existing Improvements or construct
additional Improvements on the Land located at a Hotel (the expansion of
existing Improvements or the construction of additional Improvements being
referred to collectively herein as an "Expansion"), provided, that: (i)
such Expansion does not (A) increase the rooms available for occupancy at
the subject Hotel by greater than 10% of those existing as of the
Commencement Date; or (B) increase the net area of other revenue producing
square footage at the subject Hotel by more than 10% of that existing as
of the Commencement Date, (ii) no structural elements of the improvements
shall be demolished without obtaining Landlord's prior written consent,
which consent shall not be unreasonably withheld, conditioned, or delayed,
and (iii) such replacements, alterations and/or Expansions will not
adversely affect the structure or the safety of the Improvements, or
adversely affect the electrical, heating, ventilating, air-conditioning,
<PAGE> 40
plumbing or mechanical systems or the functioning thereof. Landlord has
the right to require from Tenant assurances, reasonably acceptable to
Landlord, to be delivered to Landlord prior to the commencement of any
work, that Tenant will fully perform and complete its Expansion, free and
clear of any mechanics' and materialmen's liens. Tenant shall procure
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at its own expense such governmental approvals and permits as may be
required for any alterations made by Tenant. At Tenant's expense,
Landlord shall join in submitting Tenant's plans for any necessary
governmental approval, if required by Legal Requirements. All such
construction, alterations, and maintenance work done by, or for, Tenant,
shall comply with all Legal Requirements and Insurance Requirements, and
shall be completed in a good and workmanlike manner and with reasonable
diligence, and will be completed in all material respects in accordance
with plans prepared by a licensed architect. If any Expansion will cost
more than One Million Dollars ($1,000,000), adjusted by the GDP Deflator,
(w) Tenant shall furnish Landlord with the plans and specifications
therefor prior to commencing work, (x) the contractor selected by Tenant
to perform the work shall be subject to Landlord's approval, which
approval shall not be unreasonably withheld, conditioned or delayed, (y)
Tenant shall carry builder's risk insurance in amounts reasonably
sufficient to cover the cost of replacement of the work during the course
of such construction, and (z) upon the request of Landlord or any
Mortgagee, Tenant will provide appropriate securities, completion bonds,
guarantees, or like reasonable assurances that construction will be
completed. Tenant shall also furnish Landlord with copies of any and all
final plans and specifications (including all changes and modifications
thereto) and all necessary governmental permits prepared or issued for all
alterations (whether or not Landlord's consent was required in connection
with such alterations). With respect to any Expansion or other alteration
for which Tenant must obtain Landlord's consent, Landlord shall not
unreasonably withhold, condition or delay such consent.
(b) All replacements, alterations and substitutions of Improvements
and Expansions made to the Premises pursuant to this Article 9.1 (but not
the replacement FF&E, Fixed Asset Supplies, Operating Equipment or
Inventories described in Article 10.1) shall be and remain part of the
realty and the property of Landlord and shall be subject to this Lease.
Section 9.2 Alterations and Expansions During Last Five Years of Term.
Landlord's prior written consent, which may be withheld in Landlord's sole,
absolute, and subjective discretion, shall be required for any Expansions of or
to the Premises to be constructed during the last five (5) years of the Term
(including any Effective Extended Term); provided, however, that if Tenant
shall then exercise its rights under Section 3.2 to extend the Term hereof so
that at least five (5) years will remain in the Term once the construction is
completed, the provisions of Section 9.1(a) shall apply.
ARTICLE X
FF&E, FIXED ASSET SUPPLIES AND INVENTORIES
Section 10.1 FF&E Upon Commencement Date. On the Commencement Date,
Landlord shall make available to Tenant all of the FF&E, Fixed Asset Supplies,
Operating Equipment and Inventories located at the Premises and to be used and
consumed at the Premises during the Term at no further cost to Tenant and the
FF&E shall be owned by Landlord and leased to Tenant hereunder as part of the
Premises. Landlord shall have no further obligations to provide any additional
FF&E, Fixed Asset Supplies, Operating Equipment or Inventories. Thereafter
during the Term, Tenant shall, at its own cost, replace FF&E as hereinafter
provided, and shall provide such Fixed Asset Supplies, Operating Equipment and
Inventories as it deems necessary and all such replacement FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories shall be and remain the property
of Tenant. Tenant shall also repair and replace, as necessary, all Fixtures
which, as such may be repaired or replaced, shall be and remain property of
Tenant. Tenant shall be obligated to maintain all such Fixtures which are
necessary for the operation of the Hotel in good operating condition.
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Section 10.2 Replacement of FF&E. On or before one hundred twenty (120)
days after the end of each Fiscal Year that ends during the Term (for purposes
of this Section 10.2, the "Subject Fiscal Year"), Tenant shall deposit, into a
reserve account to be maintained as a separate interest bearing account with a
bank or banks reasonably acceptable to Landlord (the "FF&E Reserve Account"),
an amount equal to (A) the positive result, if any, of (I) three percent (3%)
of the Operating Revenues for the subject Fiscal Year minus (II) the amount
actually expended by Tenant during the Subject Fiscal Year to repair and/or
replace FF&E, Fixtures, Fixed Asset Supplies and/or Operating Equipment at any
one or more of the Hotels (individually or collectively, the "Renovations"),
minus (B) with respect to each Fiscal Year prior to the Subject Fiscal Year, if
any, the aggregate amount, if any, by which Tenant's expenditures for
Renovations in each such prior Fiscal Year exceeded three percent (3%) of the
Operating Revenues for that Fiscal Year, less the portion of such amount which
has previously been taken into account in determining the amount to be
deposited into the FF&E Reserve Account in and with respect to Fiscal Years
prior to the Subject Fiscal Year, if any. Tenant shall be entitled to withdraw
funds from such FF&E Reserve Account without Landlord's prior written approval;
provided that Tenant shall deliver to Landlord an annual auditor's statement,
with reasonable supporting detail, within one hundred twenty (120) days of the
end of each Fiscal Year, of all amounts expended for Renovations during such
Fiscal Year, including all amounts withdrawn from the FF&E Reserve Account.
Section 10.3 FF&E Upon Termination
(a) Landlord shall have the option, to be exercised by sending
Notice to Tenant on or before the date that is either (i) six (6) months
prior to the date of expiration of the Term of this Lease or (ii) the date
of termination of the Term of this Lease, if this Lease terminates prior
to the expiration of the Term, to purchase from Tenant upon the date of
termination of this Lease any or all of the items of FF&E, Furnishings,
Fixed Asset Supplies, Operating Equipment and Inventories then located at
the Premises and owned by Tenant at their then fair market value. If the
parties are unable to agree upon such fair market value within thirty (30)
days following such expiration or termination, the parties shall appoint
an independent appraiser mutually agreeable to them to determine such fair
market value, which determination shall be net of the cost to Tenant to
remove such items from the Premises, and which shall be binding on the
parties. The costs of such appraiser shall be shared equally by the
parties. If Landlord exercises its option to purchase, Landlord shall
have the right to use, after the date of expiration or termination of this
Lease, the items of FF&E, Furnishings, Fixed Asset Supplies, Operating
Equipment and Inventories so elected to be purchased by Landlord and
Landlord shall pay such fair market value to Tenant within thirty (30)
days after agreement by the parties or determination by the appraiser; and
this provision shall survive such expiration or termination. Landlord
shall not have the option of purchasing from Tenant any computer software
that is proprietary to Tenant, any Affiliate, or the licensor of any of
them (including without limitation applications used by Tenant as part of
Tenant's accounting, centralized or local sales, business management
systems and otherwise), or any leased equipment. The option granted to
Landlord under this Section 10.3 shall be in addition to, and shall not
prevent, delay or otherwise restrict Landlord from exercising, any and all
rights and remedies as against Tenant in the event of a default under this
Lease, including without limitation, foreclosure of its security interest
described in Section 10.4.
(b) Subject to the provisions of Section 10.3(a), Tenant shall
remove, at Tenant's expense, all of its Furnishings, Fixed Asset Supplies
and Inventories from the Premises on or before the date of expiration or
termination of this Lease and repair any damage caused to the Premises by
such removal. If Tenant fails to remove such items by such date and/or
fails to
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repair such damage, Landlord shall have the right to do so and charge
Tenant the cost therefor together with interest thereon from the date of
such expenditure until paid at the Lease Interest Rate. The provisions of
this Section 10.3 shall survive the expiration or termination of this
Lease.
Section 10.4 Landlord's Security Interest in Tenant's FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories. As security for payment by
Tenant of the Rents payable hereunder and the performance of all of Tenant's
obligations under this Lease, Tenant hereby grants to Landlord a security
interest under the Uniform Commercial Code of each of the States in which a
Hotel is located, in the FF&E Reserve Account and in all FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories now or hereafter owned by Tenant
and now or hereafter ordinarily used on or in the Premises. Tenant shall
execute and deliver to Landlord such documentation as is reasonably necessary
to evidence or perfect said security interest, including without limitation,
such Uniform Commercial Code financing statements and continuation statements
as Landlord determines to be necessary from time to time to perfect and
continue the perfection of Landlord's security interest in such collateral.
Provided no Event of Default shall exist, Tenant shall have the right to
replace any such collateral, to remove any such collateral from the Premises
and dispose of any such collateral, in the ordinary course of Tenant's
business.
ARTICLE XI
TRADEMARKS, TRADE NAMES AND SERVICE MARKS
Section 11.1 Tenant's Trademarks, Trade Names and Service Marks. All
Tenant's trademarks, service marks, trade names, logos, symbols and designs
shall in all events remain the exclusive property of Tenant and its Affiliates,
and nothing contained herein shall confer on Landlord the right to use such
names, trademarks, service marks, trade names, logos, symbols or designs other
than in strict accordance with the terms of this Lease. Except as provided in
Section 11.2, upon the expiration or termination of this Lease, any use of or
right to use said names, trademarks, service marks, trade names, logos, symbols
or designs by Landlord shall cease forthwith and Tenant shall (at Tenant's sole
cost and expense) promptly remove from the Premises any signs or similar items
which contain any of Tenant's names, trademarks, trade names, service marks,
logos, symbols or designs; provided, however, that Tenant shall be responsible
for the cost of any resulting repairs that may be necessary as a result of such
removal. Included under the terms of this Section are all trademarks, service
marks, trade names, symbols, logos or designs used in conjunction with the
Premises, including but not limited to restaurant names, lounge names, etc.,
whether or not the marks contain the "Red Lion" name. The right to use such
trademarks, service marks, trade names, symbols, logos or designs belongs
exclusively to Tenant, and the use thereof inures to the benefit of Tenant
whether or not the same are registered and regardless of the source of the
same.
Section 11.2 Use of Trademarks, Trade Names and Service Marks. Landlord
covenants that any items of FF&E, Furnishings, Operating Equipment, Inventories
or Fixed Asset Supplies which are purchased by Landlord upon the expiration or
termination of this Lease, and which are marked with Tenant's name or any
Tenant trademark, trade name, logo, symbol or design, shall be used exclusively
in connection with the Premises until they are consumed; but in no event for
more than sixty (60) days after any such termination of this Lease, unless such
trademark, trade name, logo, symbol or design is thereafter removed from such
items.
Section 11.3 Proprietary Software. Any computer software (including
upgrades and replacements) at the Premises owned by Tenant, an Affiliate, or
the licensor of any of them which is
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proprietary to Tenant, such Affiliate, or the licensor of any of them and shall
remain proprietary to Tenant and shall in all events remain the exclusive
property of Tenant, the Affiliate, or the licensor of any of them, as the case
may be, and nothing contained in this Lease shall confer on Landlord the right
to use any of such software. Upon expiration or termination of this Lease,
Tenant shall have the right to remove from the Premises without compensation to
Landlord any computer software (including upgrades and replacements) owned by
Tenant, any Affiliate, or the licensor of any of them, provided Tenant repairs
any damage caused by removing such computer software.
ARTICLE XII
ENVIRONMENTAL HAZARDS
Section 12.1 Compliance with Environmental Law
(a) During the Term, Tenant at its cost shall cause the Premises to
be in compliance with all Environmental Laws, whether or not such
noncompliance is the result of a breach of Tenant's obligations under
Sections 12.1(c) or 12.2(b).
(b) Tenant shall never during the Term permit Hazardous Materials to
be (i) generated, used, treated, stored, discharged, released, or
otherwise disposed of in, on, under, or at, or (ii) transported to or from
any of the Hotels, in each case other than in the ordinary course of
Tenant's operation of the Hotels. If, with or without Tenant's knowledge
or permission, there is any generation, use, treatment, storage,
discharge, release, or other disposal of Hazardous Materials in, on,
under, or at any of the Hotels during the Term other than as permitted in
the preceding sentence, Tenant shall, subject to the provisions of this
Article XII, diligently clean up and remove such Hazardous Materials in
compliance with all applicable Environmental Laws.
(c) During the Term and for a period of five (5) years commencing
after the expiration of the Term, if any Hazardous Materials are
discovered in, on or under any of the Hotels and result from, are
introduced by, or arise out of, or the damage from which is materially
expanded as a result of Tenant's acts or failure to act, its negligence,
or the acts or negligence of its employees or agents, or the acts or
negligence of any sublessees, licensees, concessionaires, contractors or
entities acting on behalf of Tenant or any of their employees or agents,
the cost incurred in complying with Environmental Laws with respect to
such Hazardous Materials shall be borne by Tenant. Tenant's obligation
under this Section 12.1(c) shall continue after expiration of the Term
until no further compliance is required with respect to such Hazardous
Materials.
(d) If during the Term any Hazardous Materials are discovered in, on
or under any of the Hotels and are the result of migration from a source
other than any of the Hotels and are not a result of Tenant's acts, its
negligence, or the acts or negligence of its employees or agents, or the
acts or negligence of any sublessees, licensees, concessionaires,
contractors or entities acting on behalf of Tenant or any of their
employees or agents, the cost incurred in complying with Environmental
Laws for such Hazardous Materials shall be borne by Tenant.
(e) If Tenant is required to implement a plan to investigate,
monitor, abate or remove Hazardous Materials pursuant to the requirements
of any Environmental Law, Tenant shall notify Landlord of its planned
method, time and procedure for such implementation and Landlord shall have
the right to require reasonable changes in such method, time or procedure.
Nothing
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contained herein shall be deemed to vest any control whatsoever in
Landlord with respect to Tenant's use, management, or disposal of
Hazardous Materials on any of the Hotels.
(f) During the Term, Landlord may not enter into any agreement,
settlement or consent order with any third party or governmental entity
concerning the payment or possible payment of funds, or the investigation,
monitoring, abatement or removal of Hazardous Materials located in, on, or
near any of the Hotels without the written consent of Tenant which consent
shall not be unreasonably withheld, conditioned or delayed. If Landlord
fails to obtain Tenant's written consent prior to entering into any such
agreement, settlement or consent order, any terms, conditions, obligations
or liabilities contained therein shall be non-binding on Tenant, Tenant
shall have no responsibility to Landlord under this Article XII, and
Landlord shall indemnify Tenant for any costs or losses incurred by Tenant
as a result of such agreement, settlement or consent order.
(g) During the Term, Tenant may not enter into any agreement,
settlement or consent order with any third party or governmental entity
concerning the payment or possible payment of funds, or the investigation,
monitoring, abatement or removal of Hazardous Materials located in, on, or
near any of the Hotels without the written consent of Landlord if such
agreement, settlement or consent order will impose any financial
obligations on (1) Landlord which are to be paid, in whole or in part, at
any time during the Term or after expiration thereof, or (2) on Tenant
which are to be paid, in whole or in part, after the expiration of the
Term. Landlord's consent shall not be unreasonably withheld, conditioned
or delayed. Failure by Tenant to obtain Landlord's written consent shall
be an Event of Default.
(h) During the Term and so long as no Event of Default exists,
Tenant may elect to defend any imposition, order, demand, decree, lawsuit
or governmental action that seeks to impose liability on Tenant or
Landlord due to the existence of Hazardous Materials in, on, or near any
of the Hotels. If Tenant elects to take such action, Tenant shall not be
deemed to be in violation of any provision of this Article XII so long as
such action or contest by Tenant does not result in a risk of the
imposition of any criminal sanctions against Landlord or any of its
directors, officers or employees; provided, however, if Landlord or Tenant
is ultimately held liable for the costs associated with the existence of
such Hazardous Materials, Tenant's liability shall not be reduced by
reason of any delay in such remediation.
Section 12.2 Site Assessments
(a) If Landlord has reasonable cause to believe that an
Environmental Violation may exist on the Premises, or if Landlord desires
to sell or finance any of the Premises, or if any Mortgagee desires to
sell or participate its interest in any of the Hotels, or if an Event of
Default exists, or if there is less than one (1) year remaining prior to
the expiration of the Term, then, upon written direction by Landlord to
Tenant, Tenant shall engage such persons as Tenant shall select ("Site
Reviewers"), such selection subject to the reasonable approval of
Landlord, to visit any of the Hotels and perform such environmental site
investigations and assessments ("Site Assessments") as may be necessary to
determine whether any Environmental Violation exists, and, if any
Environmental Violation exists, to estimate the cost of remediating any
such Environmental Violation; provided, however, if an Event of Default
exists or if there is less than one year remaining prior to the expiration
of the Term, Tenant shall select the Site Reviewer from a list of no less
than five (5) nationally recognized Site Reviewers, such list to be
provided by Landlord, and Landlord and Landlord's Mortgagee, if any, shall
have the right to approve the
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Site Reviewer, such approval to be exercised in a reasonable manner
recognizing Landlord's significant interest in the adequacy of the report
and the scope of work to be performed by such Site Reviewer. Landlord
shall have the right to approve any guidance or instruction requested by
such Site Reviewer during the Site Assessment, and Landlord shall have the
right to confirm that any draft or final reports furnished by such Site
Reviewers conform to approved scope of work, guidance and instructions,
provided that such approvals or confirmation shall not be unreasonably
withheld. If Tenant fails or refuses to engage Site Reviewers within
thirty (30) days after such direction, Landlord may engage the Site
Reviewers. If an Event of Default or a material Environmental Violation
exists that was caused by Tenant, its employees or agents, or by any
sublessee, licensee, concessionaire, contractor or entity acting on behalf
of Tenant, or any of their employees or agents, the cost of any Site
Assessment shall be paid by Tenant. In all other cases, the costs of a
Site Assessment shall be paid by Landlord or by the Mortgagee requesting
such Site Assessment, and Tenant may demand adequate assurances that such
costs will be paid before engaging the Site Reviewers. Such Site
Assessments may, at the option of Landlord, include both above and below
the ground testing and such other tests as may be necessary, in the
reasonable opinion of the Site Reviewers, to verify the existence of an
Environmental Violation or to estimate the cost of remediating any such
Environmental Violation. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The Site
Reviewers shall include in their report a statement estimating the cost of
any remediation, monitoring and other compliance program, if any,
necessary to cure or remediate such Environmental Violation. All of the
Site Reviewers' work shall be made available to Landlord and Tenant.
(b) If Tenant fails diligently to pursue any of its obligations
under this Section 12.2 and such failure continues for a period of thirty
(30) days after Notice from Landlord, Landlord shall have the right (but
no obligation), in addition to any other rights or remedies it may have
pursuant to this Lease or under applicable law, to take any and all
reasonable actions as Landlord shall deem necessary or advisable in order
to effect such compliance, for and on behalf of Tenant and at the cost and
expense of Tenant, including to enter the Premises for the purpose of
making tests, obtaining samples and surveys and performing any other acts
as may be reasonably necessary or desirable, in the reasonable discretion
of Landlord, and reimbursement to Landlord of the cost thereof shall be
due and payable by Tenant as Additional Rent on demand with interest
thereon at the Lease Interest Rate from the date such cost is incurred.
(c) If, during the Term, an Environmental Violation occurs or is
found to exist at the Premises which shall impose a liability to Tenant
after the expiration of the Term pursuant to this Article XII, and in the
judgment of the Site Reviewers, remediation, monitoring or other
compliance program relating to any such Environmental Violation has not or
will not be completed as required by any applicable Environmental Laws by
the expiration or earlier termination of the Term, then Tenant shall
provide to Landlord, no later than thirty (30) days prior to the
expiration or earlier termination of the Term, a bond, letter of credit or
other security reasonably satisfactory to Landlord for 110% of the amount
determined by the Site Reviewers to be necessary to complete such
remediation, monitoring or other compliance program. Upon completion of
such remediation, monitoring or other action in accordance with the
applicable Environmental Law, Landlord shall release the security provided
by Tenant. If an Environmental Violation occurs because of the existence
of Hazardous Material in, on or under any of the Hotels in excess of any
reportable quantity established under any Environmental Law, and Tenant
makes
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all notifications and undertakes and diligently prosecutes to completion
all regulatory, remedial or other actions which are required by any
applicable Environmental Law by any federal, state or local governmental
agency having jurisdiction over such affected Premises, then Tenant shall
not be in default under this Lease so long as Tenant diligently pursues
any and all such actions toward completion, and any action or non-action
by Tenant does not result in a risk of the imposition of any criminal
sanctions against Landlord or any of its directors, officers or employees.
ARTICLE XIII
INSURANCE
Section 13.1 Property & Business Interruption Insurance. Tenant shall,
at its own expense, commencing with the Commencement Date and continuing
throughout the Term, procure and maintain with insurance companies of
recognized responsibility (with a rating of no less than A-VI by A.M. Best,
except that such rating shall not be applicable to those insurers providing
flood and earthquake insurance under this Section), in a manner consistent with
prudent industry practice, property insurance with the following minimum
coverages:
(a) insurance on the Hotels and Premises (including contents)
against loss or damage by fire, lightning and all other risks covered by
the usual standard extended coverage endorsement, and with coverage in the
amount of not less than one hundred percent (100%) of the replacement cost
thereof, exclusive of footings and foundations;
(b) insurance against loss or damage from explosion of boilers,
pressure vessels, pressure pipes and sprinklers installed in the Hotels;
(c) business interruption insurance covering loss of profits and
necessary continuing expenses (including Rents payable under this Lease)
for interruptions caused by any occurrences covered by the insurance
referred to in Sections 13.1(a) and 13.1(b), for a period of at least
eighteen (18) months and of a type and in amounts generally carried by
prudent owners of similar properties;
(d) for each Hotel which is located in a zone identified by the
Federal Emergency management Agency as flood hazard area, flood insurance
in an amount not less than the maximum limit available under the National
Flood Insurance Program;
(e) if and to the extent such insurance is then carried by prudent
owners of similar properties: (i) earthquake insurance and, (ii) for the
Hotels which are not located in a zone identified by the Federal Emergency
Management Agency as a flood hazard area, flood insurance; and
(f) such other property risk insurance, as may from time to time be
generally carried by prudent owners of similar properties, in such amounts
and against such risks as are then customary for property similar in use
to the Premises.
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Section 13.2 Application of Proceeds
(a) All proceeds of any insurance payable on account of any casualty
other than proceeds attributable to Tenant's personal property and other
than the proceeds of insurance referred to in Section 13.1(c) shall be
paid to the Insurance Trustee, who shall hold said proceeds in trust for
the parties in accordance with the provisions of this Section 13.2;
provided, however, that if the aggregate amount of such proceeds with
respect to any such casualty is less than Five Hundred Thousand Dollars
($500,000), such proceeds shall be paid to Tenant who shall use such
proceeds for the purpose of restoration of the Premises. Insurance
proceeds attributable to Tenant's personal property shall be paid directly
to Tenant and shall not be considered when making calculations pursuant to
the preceding sentence. The proceeds of the insurance referred to in
Section 13.1 shall be paid to Tenant except that any such proceeds
attributable to the Rents payable under this Lease shall be paid to
Landlord (as a credit against such Rents) to the extent that such Rents
have not been previously paid by Tenant to Landlord.
(b) Provided that no Tenant default hereunder has occurred and is
continuing, and provided that Tenant complies with all of the terms and
conditions of this Section 13.2, all insurance proceeds received with
respect to a casualty shall be applied to the restoration of the Premises.
(c) Tenant shall commence the restoration of the Premises not later
than the date which is one hundred eighty (180) days after the date upon
which the casualty occurred and thereafter prosecute the restoration with
diligence and continuity without regard to whether insurance proceeds
available to Tenant at any particular time are sufficient to fund the
costs of such restoration.
(d) Prior to commencing any restoration work that will cost more
than One Million Dollars ($1,000,000) to repair, as adjusted by the GDP
Deflator, Tenant, at its sole cost shall (i) obtain the services of a
licensed architect to prepare any required plans and specifications for
such restoration to the extent that such restoration work cannot be
performed based upon previously existing plans and specifications for the
Improvements; and (ii) submit a set of final plans and specifications to
Landlord and the Senior Landlord's Mortgagee for approval to the extent
that such restoration work involves a departure from or addition to
previously existing plans and specifications for the Premises (which
approval may not be unreasonably withheld, conditioned, or delayed); and
(iii) the contractor selected by Tenant to perform the work shall be
subject to Landlord's approval, which approval shall not be unreasonably
withheld, conditioned or delayed, and (iv) Tenant shall carry builder's
risk insurance in amounts reasonably sufficient to cover the cost of
replacement of the work during the course of such construction.
(e) In proceeding with such restoration work, Tenant shall first
expend an amount, if any, equal to the excess of the projected cost of the
restoration work over the amount of all proceeds paid to the Insurance
Trustee. Thereafter, Tenant shall be entitled to submit to the Insurance
Trustee, not more frequently than once every thirty (30) days, an invoice
together with such other documentation (including an architect's
certificate as to the status of work completion, mechanics lien waivers
and title insurance policy endorsements, all obtained at Tenant's sole
cost and expense) as is customarily required by lenders at such time
making construction loans. Upon receipt of an invoice in proper form, the
Insurance Trustee shall make a disbursement within ten (10) business days
equal to the amount shown on the invoice; provided, however, that the
Insurance Trustee shall not be required to disburse more than 90% of the
total projected cost of
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the work, unless and until it has received all of the following: (i)
final mechanics lien waivers from all parties having rights to mechanics
liens against the Premises on account of such restoration work, (ii)
appropriate endorsements or policies of title insurance protecting
Landlord and Mortgagee against mechanics liens arising out of the
restoration work, or a mechanic's lien bond, and (iii) final certification
from the architect that the restoration work has been completed in
accordance with the plans and specifications therefor and all applicable
building codes.
(f) If (i) the amount disbursed upon final completion of the
restoration work in accordance with Section 13.2(e) is less than the total
insurance proceeds then held by the Insurance Trustee, and (ii) no Event
of Default is existing, such excess shall be paid to Tenant.
(g) If Tenant shall fail to prosecute the restoration work with
diligence and continuity until completion, regardless of whether an Event
of Default has occurred, Landlord shall have the right to use any proceeds
held by Insurance Trustee to complete such renovation work. Tenant shall
be liable for any sums incurred by Landlord to complete such restoration
work in excess of the amount held and disbursed by the Insurance Trustee.
(h) If an Event of Default has occurred, Tenant shall not have
access to any insurance proceeds unless and until Tenant shall have cured
such Event of Default, and until such time, Tenant shall use its own funds
to prosecute the restoration work.
(i) Upon the expiration or termination of this Lease, all insurance
proceeds received by the Insurance Trustee or Tenant and not applied to
the costs of restoration shall be paid to Landlord except as otherwise
provided in Article XXI.
Section 13.3 Waiver of Rights of Subrogation. Landlord and Tenant hereby
waive their rights of recovery against each other, their respective officers,
directors, agents and employees for loss or damage to the Premises and any
resultant business interruption to the extent covered by the insurance
maintained under Section 13.1. Should any such policies of insurance require
an endorsement to effect such a waiver, Tenant shall cause them to be so
endorsed.
Section 13.4 Operational Insurance. Tenant shall, at its own expense,
commencing with the Commencement Date and continuing throughout the Term,
procure and maintain operational insurance with reputable insurance companies
of recognized responsibility; provided, however, that with respect to the first
One Million Dollars ($1,000,000) of coverage required by this Section such
coverage shall be obtained from insurance companies authorized to do business
in the United States with a rating of no less than A-VII by A.M. Best. All
other coverage shall be obtained from one or more insurance companies with an
A.M. Best rating of no less than B+V with respect to domestic insurance
companies or of at least comparable standing if a foreign-based insurer.
Operational insurance required herein shall have the following minimum
coverage:
(a) comprehensive or commercial general liability insurance against
claims for death, bodily injury, or property damage occurring on, in or
about the Premises, and automobile liability insurance on vehicles
operated in conjunction with the Premises with a combined single limit of
not less than One Hundred Million Dollars ($100,000,000) per occurrence or
such other amounts, with Landlord's consent, that may from time to time be
more prudent in light of then current practices with respect to insurance
costs and premiums.
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(b) such other insurance as Tenant in its reasonable judgment deems
advisable for protection against claims, liabilities and losses arising
out of or connected with its operation of the Premises.
Section 13.5 Blanket and Self-Insurance. All insurance described in
Sections 13.1 and 13.4 may be obtained by Tenant by endorsement or equivalent
means under its blanket insurance policies, provided that such blanket policies
fulfill the requirements specified herein. With respect to the insurance
described in Section 13.4, the deductible or self-insured retention limits
shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) (to be increased
on the fifth (5th) anniversary of the Commencement Date and every subsequent
fifth (5th) anniversary thereof by an amount proportionate to the percentage
increase in the GDP Deflator over the preceding five (5) year period) or such
other amounts, with Landlord's consent, that Tenant may reasonably deem from
time to time be more prudent in light of the then current practices with
respect to insurance costs and premiums; provided that, with respect to
earthquake insurance, the deductible shall be no higher than 10% of the
building cost. As to all insurance described in Section 13.1, deductible
limits or self-insured retentions shall not exceed Two Hundred Fifty Thousand
Dollars ($250,000) (to be increased on the fifth (5th) anniversary of the
Commencement Date and every subsequent fifth (5th) anniversary thereof by an
amount proportionate to the percentage increase in the GDP Deflator over the
preceding five (5) year period) or, with respect to "high hazard
classification" (as such term is customarily understood in the insurance
industry), such other amount as may then be required by responsible insurance
companies for similar properties and risks.
Section 13.6 Costs of Insurance. Insurance premiums and any costs or
expenses with respect to the insurance described in this Article XIII shall be
borne by Tenant. Any losses, costs, damages or expenses which fall within the
deductible limits or are included within an allowed self-insurance program
pursuant to Section 13.5 above shall be borne by Tenant. If Tenant shall fail
to pay any premium for any such insurance, or if an Event of Default with
respect to any of the provisions of this Article XIII shall occur, Landlord may
pay such premium or procure the insurance coverages required by this Article
XIII and all amounts paid by Landlord in accordance herewith shall become
Additional Rent which is due and payable within five (5) Business Days after
such expenditures are made.
Section 13.7 Defense of Claims after Termination. With respect to any
claim relating to an accident or other occurrence within a given Year for which
Tenant is obligated to indemnify Landlord under Article VIII which is not
finally resolved either through litigation or settlement prior to the
expiration or termination of this Lease, Tenant shall be obligated to continue
to defend such accrued claims regardless of such expiration or termination.
Section 13.8 Coverage and Certificates. All insurance policies provided
for under Section 13.1 or Section 13.4 above shall be carried in the name of
Tenant, with Landlord and any Mortgagee on the Premises as additional insureds,
and with loss payable, in the case of any policies procured under Section 13.1,
in accordance with the provisions of Section 13.2. Tenant shall deliver to
Landlord original certificates of insurance with respect to all policies so
procured under Section 13.1 or Section 13.4, including existing, additional and
renewal policy certificates and, in the case of insurance about to expire,
shall deliver certificates of insurance with respect to the renewal policies
prior to the respective dates of expiration. All insurance policies provided
for under Section 13.1 or Section 13.4 above shall, to the extent obtainable,
have attached thereto an endorsement that such policy shall not be cancelled or
materially changed without at least thirty (30) days' prior written Notice to
Landlord, Tenant, and the holder of any Mortgage. Upon request by Landlord or
<PAGE> 51
any Mortgagee, the requesting party or its representatives shall be entitled to
examine at Tenant's corporate headquarters all insurance policies maintained by
Tenant with respect to the Premises.
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Section 13.9 Alternative Insurance Coverage. Notwithstanding any other
provision of this Lease to the contrary, if at any time during the Term hereof
Tenant is not able to obtain any one or more of the insurance coverages
required pursuant to this Article XIII because the subject insurance
coverage(s) are not then reasonably available in the insurance marketplace,
then Tenant's failure to so obtain such insurance coverage(s) shall not
constitute an Event of Default so long as Tenant does obtain coverage as
similar to that required under this Lease as is reasonably available. For
purposes of this Section 13.9 the term "reasonably available" means that type
of coverage then obtainable from reputable insurance companies for properties
similar to the Premises and purchased by prudent owners of businesses similar
to that operated by Tenant at the Premises.
ARTICLE XIV
DAMAGE BY FIRE OR OTHER CASUALTY
Section 14.1 Damage by Fire or Other Casualty. If during the Term any of
the Hotels shall be damaged or destroyed by fire, or any other casualty or
cause whatsoever, Tenant shall forthwith proceed to repair and/or rebuild the
same, free of all liens, claims and encumbrances, to the same general design
and specification as existed immediately before such damage or destruction
occurred, subject to such delays as may be reasonably attributable to
governmental restrictions or failure to obtain materials or labor, or other
causes (other than financial), whether similar or dissimilar, beyond the
control of Tenant. Materials used in repair shall be as nearly like or
superior in quality to original materials as may then be reasonably procured in
regular channels of supply. All proceeds of insurance carried on the Premises
pursuant to Article XIII hereof and payable as a result of such damage or
destruction, other than proceeds attributable to Tenant's personal property and
other than the proceeds of insurance referred to in Section 13.1(c), shall be
used for the purpose of such repair or rebuilding in accordance with the
provisions of Article XIII, and, if either Landlord or the Insurance Trustee
shall fail to make such insurance proceeds available in violation of the
provisions of Article XIII, and such failure shall continue for a period of 90
days after Notice of such failure is delivered by Tenant to Landlord, Tenant's
obligation to repair and rebuild hereunder shall be suspended until such time
as such insurance proceeds are so made available. If such insurance proceeds
are not so made available within one (1) year thereafter as a result of a
continued violation of the provisions of Article XIII by the Insurance Trustee
or Landlord then, but only then, may Tenant at its option, terminate this Lease
upon ninety (90) days prior Notice to Landlord. Upon any such termination,
Landlord shall have all rights to any insurance proceeds. If Tenant is not
required to repair or rebuild by the terms or conditions of this Lease, all
such insurance proceeds (whether paid to the Insurance Trustee or Tenant) shall
be paid to Landlord. If Tenant is required to, and does repair or rebuild, any
excess insurance proceeds shall be paid to Tenant.
Section 14.2 Partial Damage by Fire or Other Casualty. Upon any partial
damage or destruction, Tenant shall continue to occupy and use the Premises to
the extent that it may be practicable to do so, and Tenant shall proceed to
repair and/or rebuild the Premises in the manner and at the time described in
Sections 13.2 and 14.1.
Section 14.3 Damage Occurring After the 10th Anniversary of Commencement
Date
<PAGE> 53
(a) Upon a Major Casualty occurring after the tenth (10th)
anniversary of the Commencement Date, Tenant shall have the right to
terminate this Lease with respect to the affected Hotel by so notifying
Landlord not later than the date which is sixty (60) days after the
occurrence of such Major Casualty. If Tenant elects to exercise the right
described in the preceding sentence, it shall, simultaneously with its
delivery of its Notice of termination, deliver
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to Landlord its irrevocable offer to purchase the applicable portion of
the Premises for an amount equal to the Fair Market Value thereof.
(b) Landlord may accept or reject Tenant's irrevocable offer to
purchase the applicable portion of the Premises by sending Tenant a Notice
of rejection or acceptance within thirty (30) days from the date upon
which Landlord received Tenant's Notice of termination. If Landlord fails
to send Tenant a Notice of rejection or acceptance within thirty (30) days
of its receipt of Tenant's irrevocable offer to purchase the applicable
portion of the Premises, Landlord shall be deemed to have rejected such
offer. If Landlord accepts Tenant's offer to purchase, this Lease shall
terminate with respect to such portion of the Premises upon the closing of
such purchase, which shall occur in accordance with the provisions of
Article XXI. Upon such termination, Tenant shall pay to Landlord all Rent
due with respect to such portion of the Premises through such date of
termination, in addition to the Fair Market Value thereof, and Landlord
and the Insurance Trustee shall assign to Tenant all their right, title
and interest in insurance proceeds payable and shall deliver to Tenant any
insurance proceeds previously paid to, or then held by, either Landlord or
the Insurance Trustee with respect to such Major Casualty, and Landlord
shall convey the Premises to Tenant in accordance with the provisions of
Article XXI.
(c) If Landlord rejects or is deemed to reject Tenant's irrevocable
offer to purchase pursuant to Section 14.3(a), this Lease shall terminate
with respect to the applicable portion of the Premises on a Base Rent
payment date specified by Tenant in its Notice of termination which occurs
not earlier than ninety (90) days nor later than one hundred twenty (120)
days after Landlord's receipt of Tenant's irrevocable offer to purchase,
provided that this Lease shall not so terminate unless and until Tenant
shall have paid all sums due hereunder (including, without limitation, all
taxes and insurance premiums) with respect to the applicable portion of
the Premises as of the actual date of termination. Upon such termination,
Tenant shall vacate the applicable portion of the Premises in accordance
with the provisions of Section 3.4, and Tenant shall have no right to
receive any insurance proceeds payable, previously paid to, or then held
by, either Landlord or the Insurance Trustee with respect to such Major
Casualty, other than insurance proceeds attributable to Tenant's personal
property, if any such proceeds have not been paid directly to Tenant in
accordance with Section 13.2(a).
Section 14.4 No Abatement of Rent Due to Casualty. No damages,
compensation, or claim shall be payable by Landlord for inconvenience, loss of
business, or annoyance arising from any repair or restoration of any portion of
the Premises or the Improvements. If this Lease is not terminated as a result
of a casualty pursuant to Section 14.3, all proceeds of insurance carried
pursuant to Section 13.1 shall be paid to Tenant (except as otherwise provided
in Section 13.2). Except with respect to Percentage Rent as set forth in
Section 5.2(c), there shall be no abatement of Rents following any casualty and
during any period of repair or reconstruction contemplated in this Article 14.
Section 14.5 Early Termination. Upon the termination of this Lease
pursuant to the provisions of Sections 14.3 or 15.4 of this Lease, the Term and
the estate hereby granted shall expire as of the date of such termination in
the same manner and with the same effect as if it were the date set for the
normal expiration of the Term, and Rent shall be apportioned as of the date of
termination.
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ARTICLE XV
CONDEMNATION
Section 15.1 Notice of Condemnation and Assignment of Rights
(a) The party receiving any notice of the kinds specified below with
respect to any one or more Hotels shall promptly give the other party
Notice of the receipt, contents and date of the Notice received:
(i) Notice of intended condemnation;
(ii) Service of any legal process relating to condemnation of
any portion of any of the Hotels or Improvements;
(iii) Notice in connection with any proceedings or negotiations
with respect to such a condemnation; or
(iv) Notice of intent or willingness to make or negotiate a
private purchase, sale or transfer in lieu of condemnation.
(b) Subject to the rights of each party as set forth in this Article
XV, each party hereby irrevocably assigns to Insurance Trustee any award
or payment to which they may be or become entitled by reason of any taking
of any Hotel or any part thereof, in or by condemnation or other eminent
domain proceedings pursuant to any law, general or special. Insurance
Trustee shall distribute all such condemnation proceeds to the benefit of
Landlord and/or Tenant in accordance with the provisions of this Article
XV. Each party shall be entitled to participate at its own expense in any
such proceedings.
Section 15.2 Tenant's Right to Pursue a Claim. Notwithstanding anything
herein to the contrary, provided that no Tenant default hereunder has occurred
and is continuing, Tenant shall have the right to pursue a claim with and
retain any award from the condemning authority or entity for damage to or loss
of Tenant's leasehold estate in any Hotel or any portion thereof as well as for
any other separate damages that Tenant may suffer; provided, however, that such
award or payment to Tenant is completely separate from and shall in no manner
reduce the award or payment to Landlord for the value of any such Hotel
unencumbered by this Lease. If the foregoing contingency is not met, any
Tenant's award or payment shall be deemed assigned to the Insurance Trustee
pursuant to Section 15.1.
Section 15.3 Temporary Taking. If the use of any Hotel or any part
thereof is taken in condemnation by any governmental authority under the power
of eminent domain for a period of time, whether definite or indefinite (but
less than the acquisition of a fee simple interest in perpetuity), or whether
less than, equal to or greater than the unexpired portion of the Term of this
Lease, this Lease shall nevertheless continue in full force and effect and
Tenant shall have the right (except as hereinafter provided) to receive the
entire award ("Use Award") attributable to the unexpired portion of the Term of
this Lease (including any Effective Extended Term), and Landlord shall have the
right to receive the entire award ("Landlord's Temporary Taking Award")
attributable to the period after the expiration of the Term of this Lease
(including any Effective Extended Term), such allocation between periods to be
determined either (i) by the court in which the complaint in eminent domain was
filed (a request for which determination Tenant shall make to such court) or
(ii) absent a decision by such court, by Landlord using a formula reasonably
calculated to arrive at a fair and equitable allocation, and no claim or demand
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of any kind shall be made by Tenant against Landlord by reason of such taking,
no claim for abatement of Base Rent or Percentage Rent and other amounts which
may become due under this Lease shall be made by reason of such taking and the
rights and liabilities of the parties hereto shall be the same as if there had
been no such taking.
(a) The Use Award, in such amount as may be eventually determined,
shall be paid to and held in trust by the Insurance Trustee and shall be
administered as hereinafter set forth. There shall first be deducted
therefrom and paid out all legal and other expenses, reasonable in amount,
which were incurred in obtaining such Use Award, except that Landlord
shall pay that portion of such expenses (but not to exceed the amount of
Landlord's Temporary Taking Award) that Landlord's Temporary Taking Award
bears to the sum of Landlord's Temporary Taking Award and the Use Award.
The Use Award shall be administered as follows:
(i) If any such Use Award shall be in the form of rent
recoverable for such taking and shall be payable in quarterly (or
more frequent) installments, the Insurance Trustee shall pay to
Landlord quarterly such installments of the Use Award on account of
and to the extent of Tenant's obligations to pay Base Rent and
Percentage Rent under this Lease; any balance remaining from each
such quarterly (or more frequent) installment shall be paid by the
Insurance Trustee to Tenant. The entire amount of such quarterly (or
more frequent) installments of the Use Award received by the
Insurance Trustee (whether paid to Landlord or Tenant) shall be
included in the cash receipts of Tenant during the quarter when
received by the Insurance Trustee for purposes of determining
Operating Revenues.
(ii) If any such Use Award is made in a lump sum or in the form
of rent recoverable for such taking and is payable in installments
less frequently than quarterly, the lump sum or other installment
shall be divided by the number of calendar quarters included in the
period for which such award has been paid, and the Insurance Trustee
shall pay to Landlord such quotient quarterly on account of and to
the extent of Tenant's obligation to pay Base Rent and Percentage
Rent under this Lease; any balance remaining from each such quarterly
quotient shall be paid by the Insurance Trustee to Tenant. The
entire amount of such quarterly installments of the Use Award
received by the Insurance Trustee (whether paid to Landlord or
Tenant) shall be included in the cash receipts of Tenant during the
quarter in which such quarterly quotient is distributed by the
Insurance Trustee to Landlord and Tenant for purposes of determining
Operating Revenues.
(iii) If any such Use Award shall be made for the cost of
repairs and restoration following termination of such temporary
taking, then the Insurance Trustee shall apply the same to Tenant's
obligation hereunder to repair and restore as herein provided.
(b) Any Use Award deposited with the Insurance Trustee shall be
invested by the Insurance Trustee in an interest-bearing account, with
interest to be added to the amount of the Use Award and distributed as
part of the Use Award in accordance with the provisions of this Section
15.3. All such interest shall be included in Operating Revenues for the
month in which such interest is distributed by the Insurance Trustee.
Section 15.4 Total Taking. If, during the Term, all or substantially all
of any Hotel shall be taken in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, then this Lease shall
terminate with respect to such Hotel on the date such taking becomes
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effective. Tenant shall pay all Rent and all other sums due hereunder
(including, without limitation, all taxes and insurance premiums) through such
date with respect to such Hotel. All condemnation proceeds shall belong to and
be paid to Landlord, except that, to the extent such proceeds exceed the Fair
Market Value thereof as of such termination date, such excess shall be paid to
Tenant up to an amount equal to any unamortized investments made by Tenant in
Expansions, with any remaining portion of such excess being payable to
Landlord.
Section 15.5 Substantial Taking
(a) Upon a Substantial Taking of any Hotel, Tenant shall have the
right to terminate this Lease with respect to such Hotel by so notifying
Landlord not later than the date which is sixty (60) days after the
occurrence of such Substantial Taking. If Tenant elects to exercise the
right described in the preceding sentence, it shall, simultaneously with
its delivery of its Notice of termination, deliver to Landlord its
irrevocable offer to purchase such Hotel for an amount equal to the Fair
Market Value thereof.
(b) Landlord may reject or accept Tenant's irrevocable offer to
purchase such Hotel by sending Tenant a Notice of such rejection or
acceptance within thirty (30) days from the date upon which Landlord
received Tenant's Notice of termination. If Landlord fails to send Tenant
a Notice of rejection or acceptance within thirty (30) days of its receipt
of Tenant's irrevocable offer to Purchase such Hotel, Landlord shall be
deemed to have rejected such offer. If Landlord accepts Tenant's offer to
purchase, this Lease shall terminate with respect to such Hotel on a Base
Rent payment date specified by Tenant in its Notice of termination which
occurs not earlier than ninety (90) days nor later than one hundred twenty
(120) days after Landlord's receipt of Tenant's irrevocable offer to
purchase. Upon such termination, Tenant shall pay Landlord all Rent due
with respect to such Hotel through such date in addition to the Fair
Market Value thereof, and Landlord and the Insurance Trustee shall assign
to Tenant all their right, title and interest in condemnation proceeds
payable and shall deliver to Tenant any condemnation proceeds previously
paid to, or then held by, either Landlord or the Insurance Trustee with
respect to such Substantial Taking, and Landlord shall convey such Hotel
to Tenant in accordance with the provisions of Article XXI.
(c) If Landlord rejects or is deemed to reject Tenant's irrevocable
offer to purchase pursuant to Section 15.5(a), this Lease shall terminate
with respect to the affected Hotel on a Base Rent payment date specified
by Tenant in its Notice of termination which occurs not earlier than
ninety (90) days nor later than one hundred twenty (120) days after
Landlord's receipt of Tenant's irrevocable offer to purchase, provided
that this Lease shall not terminate with respect to such Hotel unless and
until Tenant shall have paid all sums due hereunder (including, without
limitation, all taxes and insurance premiums) as of the actual date of
termination. Upon such termination, all condemnation proceeds shall be
delivered to Landlord and Tenant shall vacate such Hotel in accordance
with the provisions of Section 3.4.
Section 15.6 Partial Taking
(a) Upon a Substantial Taking of any Hotel pursuant to which Tenant
has not given an irrevocable offer to purchase pursuant to the provisions
of Section 15.5, Tenant shall be obligated to restore the portion of such
Hotel not taken by the governmental authority to a condition as good as or
better than the condition which prevailed thereon and therein prior to
such condemnation as nearly as is practicable under the circumstances,
regardless of whether the
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condemnation proceeds are sufficient to complete such restoration. Upon
an Insubstantial Taking, Tenant shall not be obligated to replace any
landscaping or facilities taken by the governmental authority but shall
only be obligated to repair any damage to the portion of the affected
Hotel not taken by the governmental authority. Materials used in repair
and restoration shall be as nearly like or superior in quality to the
original materials as may then be reasonably procured in regular channels
of supply, and construction shall be completed in a workmanlike manner
free of all liens and encumbrances. All condemnation proceeds payable on
account of such condemnation other than proceeds attributable to Tenant's
personal property shall be paid to the Insurance Trustee who shall hold
said proceeds in trust for the parties in accordance with the provisions
of this Section 15.6.
(b) Tenant shall commence the restoration of any affected Hotel as
soon as practicable, but in no event later than the date which is one
hundred eighty (180) days after the date upon which the condemnation
occurred, and thereafter shall prosecute the restoration with diligence
and continuity. The provisions of Section 13.2(d) and 13.2(e) shall apply
to any such restoration.
(c) If the amount disbursed in accordance with Section 13.2(e) shall
be less than the total condemnation proceeds, such excess shall be
distributed to Landlord.
(d) Any award attributable to personal property owned by Tenant that
is not attributable to FF&E owned by Landlord shall be paid to Tenant.
Any award attributable to FF&E owned by Tenant shall be paid to Tenant and
applied by Tenant for the purpose of replacing such FF&E if and to the
extent that the Hotel requires such replacement FF&E to be fully
operational.
(e) Upon a condemnation that is an Insubstantial Taking, there shall
be no reduction in or abatement of the Base Rent or Percentage Rent
thereafter payable by Tenant. Upon a condemnation that is a Substantial
Taking and if this Lease is not terminated pursuant to Section 15.5, there
shall be a reduction in the Base Rent payable by Tenant effective as of
the date of the Substantial Taking in an amount equal to the lesser of:
(i) 7 1/2% of the condemnation award received by Landlord with respect to
such affected Hotel; or (ii) an amount equal to the Base Rent shown for
such Hotel on Exhibit B, multiplied by the Partial Condemnation Reduction
Percentage.
(f) If Tenant shall fail to prosecute the restoration work with
diligence and continuity until completion, regardless of whether an Event
of Default has occurred, Landlord shall have the right to use any proceeds
held by Insurance Trustee to complete such restoration work. Tenant shall
be liable for any sums incurred by Landlord to complete such restoration
work in excess of the amount held and disbursed by the Insurance Trustee.
(g) If an Event of Default has occurred, Tenant shall not have
access to any condemnation proceeds unless and until Tenant shall have
cured such Event of Default, and until such time, Tenant shall use its own
funds to prosecute the restoration work.
ARTICLE XVI
ASSIGNMENT, SALE AND SUBLETTING
Section 16.1 Sale or Assignment by Landlord, Subject to Lease. Landlord
shall have the right to assign or transfer its interest in this Lease in
connection with a Sale of a Hotel subject to this Lease
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which shall remain in full force and effect, but may be evidenced by a separate
lease agreement on the same terms and conditions, except that Base Rent shall
be calculated in accordance with the amounts shown on Exhibit B and Percentage
Rent shall be calculated based solely on the Operating Revenues of such Hotel
(or Hotels) alone. For purposes of calculating Percentage Rent under this
Lease, the Base Revenues attributed to such Hotel shall be deducted from total
Base Revenues for purposes of the next Percentage Rent due to Landlord
hereunder. In the event such sale or assignment takes place at any time other
than the end of a Lease Year, Percentage Rent for both the Hotel or Hotels so
assigned and the then remaining Hotels shall be calculated based on a proration
computed in accordance with the number of days in the Partial Lease Year.
Furthermore, Landlord shall have right to assign or transfer without
restriction its interest in this Lease as collateral security with respect to
any financing secured by an interest in the Premises. Upon any Sale of a
Hotel, Landlord shall assign this Lease to the purchaser and, concurrently with
the finalization thereof, the purchaser shall, by an appropriate written
instrument, assume (subject to the provisions of Section 22.24) all of
Landlord's obligations hereunder. Any attempted sale or assignment in
violation of the provisions of this Section 16.1 shall be void and without
effect. Within thirty (30) days after Landlord sends Notice to Tenant advising
Tenant of the name, identity and address of any proposed assignee or transferee
and requesting a determination as to whether the proposed assignment or
transfer would violate the requirements of the first sentence of this Section
16.1, Tenant shall advise Landlord by Notice to Landlord whether or not such
proposed assignment or transfer would violate such requirements and, if so,
setting forth in reasonable detail the basis for such violation (which Notice
shall be binding upon Tenant), and if Tenant fails to send such Notice to
Landlord prior to the expiration of such thirty (30) day period, such
assignment or transfer shall be deemed to comply with the requirements of the
first sentence of this Section 16.1.
Section 16.2 Assignment by Tenant. Tenant shall have the right to
transfer or assign its interest in any Hotel demised hereunder without
Landlord's consent provided that (w) the transferee or assignee is a
corporation organized under the laws of any state in the United States and in
good standing and authorized to do business in each state in which any of the
Hotels is located, (x) such transferee or assignee assumes this Lease by an
appropriate writing, (y) Tenant shall continue to remain liable under all of
the provisions of this Lease and (z) Tenant first obtains the consent of any
and all applicable ground lessors, if such consent is required.
Section 16.3 Tenant's Right to Sublease. Tenant may sublease space or
grant concessions or licenses at any of the Hotels so long as the terms of any
such subleases, concessions or licenses do not exceed the Term and shall expire
upon any termination of this Lease.
ARTICLE XVII
HOLDING OVER
Should Tenant continue to hold any Hotel after the termination of this
Lease, whether the termination occurs by lapse of time or otherwise, such
holding over, unless otherwise agreed to by Landlord in writing, shall
constitute and be construed as a tenancy at sufferance at a daily Rent equal to
1/30th of an amount equal to two hundred percent (200%) of the monthly Base
Rent last in effect and subject to all of the other obligations imposed on
Tenant hereunder, but the foregoing shall not constitute a consent by Landlord
to such holding over and shall not prevent Landlord from exercising any of its
remedies under this Lease or applicable law by reason of such holding over.
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ARTICLE XVIII
ESTOPPEL CERTIFICATES
Tenant agrees to furnish periodically, within ten (10) days after
written request therefor by Landlord, or any actual or prospective Mortgagee
for any Hotel, or any interest of Landlord therein or any actual or prospective
purchaser of Landlord's interest, a certificate signed by Tenant (which may
require a true and correct copy of this Lease and any and all amendments hereto
to be attached) certifying (to the extent same is true) to the then current
Rent due hereunder; that Tenant is not in default hereunder; that this Lease is
in full force and effect and unmodified; that the Term has commenced and the
full rental is then accruing hereunder; that no Rent under this Lease has been
paid more than ninety (90) days in advance of its due date; that the address
for Notices to be sent to Tenant is as set forth in this Lease (or has been
changed by Notice duly given and is as set forth in the certificate); that
Tenant has no knowledge of any default by Landlord then existing under this
Lease; and such other matters as may be reasonably requested by Landlord or any
Mortgagee, prospective Mortgagee or prospective purchaser. If Tenant is unable
to so certify as to one or more of the foregoing items, Tenant shall specify
its reason therefor in writing. Any such certificate may be relied upon by any
prospective purchaser, ground lessor, Mortgagee, or any beneficiary under any
deed of trust on the Improvements or the Land or any part thereof. Landlord
agrees to furnish periodically, within ten (10) days after written request
therefor by Tenant or any actual or prospective Mortgagee, a certificate signed
by Landlord containing substantially the same information as described above.
ARTICLE XIX
LANDLORD/TENANT FINANCING
Section 19.1 Right to Finance
Landlord shall have the right, at any time, and from time to time, to
subject its interest in any of the Hotels to one or more Mortgages without
Tenant's consent. Landlord also acknowledges that, concurrently with the
Commencement Date, Tenant's interests under this Lease shall be collaterally
assigned to Tenant's Mortgagee and that Tenant from time to time may secure
additional financings and/or refinancings with all or some portion of its
interests hereunder. Landlord agrees to cooperate with Tenant with respect to
any such financings; provided, however, that Landlord shall have no obligation
to amend the terms of this Lease, expend any sums in connection therewith, or
subordinate or waive any of its rights hereunder.
Section 19.2 Priority
(a) Landlord agrees that this Lease and any extensions, renewals,
replacements or modifications thereto and all right and interest of Tenant
in and to the Hotels shall be superior to any and all Mortgages now or
hereafter granted by Landlord.
(b) As more particularly described herein, Tenant has no right to
cancel, rescind or terminate this Lease except as expressly provided in
the particular provisions specified herein. If Tenant exercises any such
right to cancel or terminate this Lease with respect to a specific Hotel
or Hotels, this Lease shall remain in full force and effect with respect
to all other Hotels leased hereunder.
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(c) If at any time there shall occur a foreclosure action with
respect to the interest of Landlord under this Lease, or a deed in lieu of
foreclosure, or any similar action or proceeding, then (i) this Lease
shall not terminate, and (ii) Tenant shall attorn to and recognize the
purchaser at such foreclosure sale (whether such person is the Mortgagee
or another person or entity) or the grantee of a deed in lieu of
foreclosure as Tenant's Landlord under this Lease, except that neither
such purchaser or grantee, nor anyone claiming by, through or under any
such person or grantee, shall be:
(i) liable for any action or omission of Landlord (or its
predecessors in interest);
(ii) subject to any offsets or defenses which Tenant may have
against Landlord (or its predecessors in interest); or
(iii) bound by any payment of Rent which Tenant might have made
to Landlord (or its predecessors in interest) for more than one month
in advance of the date the same was due under this Lease; but the
foregoing shall not relieve any such purchaser or grantee, or anyone
claiming by, through or under any such purchaser or grantee from
performing all obligations of Landlord under this Lease with respect
to each Hotel so owned after it acquires title to such Hotels.
Section 19.3 Mortgagee Amendments. If at any time, any prospective
Mortgagee requests any change or modification to this Lease as a condition of
granting a Mortgage to either Landlord or Tenant, the other party shall consent
to such change or modification provided that (i) the requesting party bears the
cost of preparing all documentation required to effect such change or
modification; (ii) such change or modification does not materially and
adversely increase the other party's cost of operating any of the Hotels or
performing its obligations under this Lease; and (iii) such change does not
materially and adversely affect the rights of the other party and/or its
Mortgagees hereunder. Examples of modifications to which each party shall
consent include, without limitation, obligations to give copies of notices and
other documents to Mortgagees where one party has previously agreed to give
same to the other, to obtain a Mortgagee's consent or approval where one party
has previously agreed to obtain the other's consent or approval, to allow a
Mortgagee to act for the requesting party if such party fails to exercise a
right granted to it hereunder, and provisions which govern the relationship
between the other party and Mortgagee.
ARTICLE XX
DEFAULT BY TENANT
Section 20.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" by Tenant under this
Lease:
(a) if Tenant shall fail to make any payment of Base Rent payable by
it under this Lease when the same becomes due and payable and such failure
continues for five or more days;
(b) if Tenant shall fail to make any payment of Percentage Rent or
Additional Rent payable by it under this Lease when the same becomes due
and payable and such failure is not cured by Tenant within a period of 10
days after receipt by Tenant of notice thereof from Landlord; provided,
however, that such notice shall, to the full extent permitted by
applicable law, be in lieu of and not in addition to any notice required
under applicable law; and provided,
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further, that such notice requirement shall not prevent the imposition of
the required payment of interest and/or late charges on such overdue
amounts;
(c) if Tenant shall fail to observe or perform any material term,
covenant or condition of this Lease and such failure is not cured by
Tenant within a period of 30 days after receipt by Tenant of notice
thereof from Landlord, unless such failure cannot with diligence be cured
within a period of 30 days, in which case such failure shall not be deemed
to continue if Tenant proceeds promptly and with diligence to cure the
failure and diligently completes the curing thereof in no event later than
180 days after receipt of such notice; provided, however, that such
180-day limitation shall not apply with respect to the cure by Tenant of
defaults in its obligations under Article XII, so long as Tenant has
promptly commence to cure said default within the initial 30-day period,
and thereafter diligently prosecutes the cure to completion; and provided,
further, that such notice described above shall, to the full extent
permitted by applicable law, be in lieu of and not in addition to any
notice required under applicable law;
(d) if Tenant shall:
(i) admit in writing its inability to pay its debts generally
as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state thereof;
(e) if Tenant shall, on a petition in bankruptcy filed against it,
be adjudicated as bankrupt or a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of Tenant, a
receiver of Tenant or of the whole or substantially all of its property,
or approving a petition filed against it seeking reorganization or
arrangement of Tenant under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state
thereof, and such judgment, order or decree shall not be vacated or set
aside or stayed within 60 days from the date of the entry thereof;
(f) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution;
(g) if the estate or interest of Tenant in any Hotel or any part
thereof shall be levied upon or attached in any proceeding and the same
shall not be vacated or discharged within the later of 90 days after
commencement thereof or 30 days after receipt by Tenant of notice thereof
from Landlord (unless Tenant shall be contesting such lien or attachment
in accordance with the terms of this Lease); provided, however, that such
notice shall, to the full extent permitted by applicable law, be in lieu
of and not in addition to any notice required under applicable law;
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(h) if, except as a result of damage, destruction or a partial or
complete Condemnation, Tenant voluntarily ceases operations at any Hotel
for a period in excess of 30 consecutive days;
(i) if, with respect to the Concurrent Tenant Credit Facility, any
written notice is sent to Tenant by the Administrative Agent or the
Required Banks (as such terms are defined in the Concurrent Tenant Credit
Facility) notifying Tenant in its capacity as Borrower thereunder that it
is in default under the Concurrent Tenant Credit Facility, and such
default shall not be cured within the cure period applicable therefor, if
any; or
(j) if Tenant shall make, or purport to make, any assignment or
subletting of its interest under this Lease for which Landlord's consent
is required without first obtaining such consent.
Section 20.2 Landlord's Rights Upon an Event of Default
(a) If an Event of Default occurs, then Landlord may commence doing
any one or more of the following provided that such commencement is prior
to the date that Tenant cures such default:
(i) Terminate this Lease upon ten (10) days Notice to Tenant,
in which event Tenant shall immediately surrender the Premises to
Landlord and Tenant shall be liable to Landlord for all Surviving
Obligations and to the extent provided in Article XVII and to the
extent hereinafter provided in this Section 20.2(a). If Tenant fails
to do so, Landlord may, without Notice and without prejudice to any
other remedy Landlord may have, enter upon and take possession of any
or all of the Premises and expel or remove Tenant and its effects
without being liable to prosecution or any claim for damages
therefor. Tenant shall indemnify Landlord for all loss and damage
which Landlord may suffer by reason of such Termination, whether
through inability to relet any or all of the Premises or otherwise,
including any loss of Rent for the remainder of the Term. In
connection with Landlord's exercise of the remedy described in this
Subparagraph, Landlord shall have the right to seize and take
possession of all of Tenant's FF&E located at the Hotels and either
use same in connection with operating the property or dispose of same
as Landlord sees fit to do. To the greatest extent permitted by law,
Tenant hereby fully, finally and forever waives any and all
protections provided by applicable law against Landlord's right of
distraint.
(ii) Enter upon and take possession of any or all of the
Premises as Tenant's agent, with the right but not the obligation of
terminating this Lease and without being liable to prosecution or any
claim for damages therefor, and Landlord may relet any or all of the
Premises either in its own name or as Tenant's agent and in either
event receive the rent therefor, in any of which events Tenant shall
pay to Landlord on demand (i) any and all costs of re-leasing,
renovating, repairing, and altering any or all of the Premises and/or
the Hotels (including but not limited to advertising costs,
commissions, finders fees, legal fees and other costs) for a new
Tenant or Tenants and (ii) any deficiency that may arise by reason of
such reletting from the net income from the Hotels that Landlord
would have received if there had not been a default by Tenant. In
addition, to the extent any of the Hotels are not relet, Tenant shall
continue to be obligated to satisfy all of its obligations under this
Lease. In connection with Landlord's exercise of the remedy
described in this Subparagraph, Landlord shall have the right to
seize and take possession of all of Tenant's FF&E located in the
Hotels and either use same in connection with
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operating the property or dispose of same as Landlord sees fit to do.
To the greatest extent permitted by law, Tenant hereby fully, finally
and forever waives any and all protections provided by applicable law
against Landlord's right of distraint.
(iii) Do whatever Tenant is obligated to do under this Lease
and enter any or all of the Hotels without being liable to
prosecution or any claim for damages therefor to accomplish this
purpose. Tenant shall reimburse Landlord, as Additional Rent,
immediately upon demand for any expenses which Landlord incurs in
thus effecting compliance with this Lease on Tenant's behalf,
together with interest thereon from the date of such expenditure
until paid at the Lease Interest Rate.
(iv) Bring a summary proceeding/action for ejectment in order
to recover possession of any or all of the Hotels.
(v) Landlord hereby reserves the right to institute successive
legal actions to collect any damages payable to Landlord hereunder,
it being intended that a suit for damages shall not bar any
subsequent suit for damages that have subsequently accrued.
(vi) Accelerate the Base Rents due under this Lease. Upon any
termination pursuant to subsection 20.2(a)(i) hereunder, in addition
to all other rights and remedies it may have under this Lease,
Landlord may recover from Tenant: (A) the worth at the time of award
of any unpaid Rent which has been earned at the time of such
termination, plus (B) the worth at the time of award of any unpaid
Rent which would have been earned after termination until the time of
award (less any rental loss which applicable law requires Landlord to
mitigate and which is proved by Tenant that Landlord could reasonably
have avoided), plus (C) the worth at the time of award of the amount
of the unpaid Rent for the balance of the term of this Lease after
the time of award (less any rental loss that Tenant proves reasonably
could be avoided if applicable law requires such to be deducted),
plus (D) any other amount in addition to or in lieu of the foregoing
as may be permitted from time to time under applicable law. The
discount rate to be used in computing the amount of Base Rent due
hereunder shall be equal to the effective annual yield prevailing on
the date the Event of Default occurred with respect to United States
treasury obligations having a maturity date that is the same or
nearest to the date on which this Lease would have expired if no
Event of Default occurred.
(b) If an Event of Default has occurred under Section 20.1(b), then,
notwithstanding anything in applicable law to the contrary, Landlord shall
have no obligation whatsoever to mitigate any of its damages. If any
other Event of Default shall have occurred, Landlord shall be obligated to
mitigate its damages only to the extent it is required to do so under
applicable law.
Section 20.3 Implied Waiver
(a) No act or thing done by Landlord or its agents during the Term
shall constitute an acceptance of an attempted surrender of the premises,
and no agreement to accept a surrender of the Premises shall be valid
unless made in writing and signed by Landlord. No re-entry or taking
possession of the Premises by Landlord pursuant to Section 20.2(a)(ii) or
otherwise shall constitute an election by Landlord to terminate this
Lease, unless a written Notice of such
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intention is given to Tenant. No waiver by Landlord of any breach of this
Lease shall constitute a waiver of any other violation or breach of any of
the terms hereof.
(b) No provision of this Lease shall be deemed to have been waived
by Landlord or Tenant unless such waiver is in writing and signed by such
party. The rights granted to Landlord and Tenant in this Lease shall be
cumulative of every other right or remedy which Landlord or Tenant may
otherwise have at law or in equity or by statute, and the exercise of one
or more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
Section 20.4 Injunctive Relief. Landlord shall be entitled to obtain
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the provisions hereof, or to a decree compelling
performance of any of the provisions hereof, to the extent that any such relief
is provided by a court of equity.
ARTICLE XXI
PROVISIONS APPLICABLE TO
PURCHASE BY TENANT OF THE PREMISES
Section 21.1 Purchase "As Is". If Tenant is to acquire any Hotel
pursuant to Sections 1.3, 14.3 or 15.5 of this Lease, such Hotel shall be
transferred "As Is" on the date of transfer and otherwise as provided in
Section 1.1 hereof. Landlord shall convey title to such Hotel to Tenant in the
same condition of title (including all restrictions, limitations, covenants and
easements of record and all encroachments) that existed as of the Commencement
Date, subject, however, to (i) the lien of real estate taxes, water and sewer
charges and other governmental charges that are not then due and payable, (ii)
all restrictions, limitations, covenants, easements and encroachments that were
created after the Commencement Date other than those created by Landlord
without the written consent of Tenant, and (iii) all Legal Requirements, but
free of the following items ("Landlord Obligations"): (x) the lien of any
security interest created by any Mortgage on Landlord's interest, (y) the lien
of any judgment, tax assessment or other obligation incurred by Landlord that
is not the responsibility of Tenant under this Lease, and (z) any liens created
on and after the Commencement Date which have been created by or resulted
solely from acts of Landlord undertaken without the written consent of Tenant.
Landlord shall pay off and discharge all Landlord Obligations at closing of
Tenant's purchase of such Hotel, but Landlord shall have the right to apply the
purchase price proceeds for the purpose of discharging such Landlord
Obligations.
Section 21.2 Timing of Closing. If Landlord accepts Tenant's irrevocable
offer pursuant to Sections 1.3, 14.3 or 15.5 to purchase any Hotel, closing of
such purchase shall be held on the date (the "Purchase Closing Date") specified
by Tenant in its notice of Termination pursuant to Sections 1.3, 14.3 or 15.5
which occurs not earlier than ninety (90) days nor later than one hundred
twenty (120) days after Landlord's receipt of Tenant's irrevocable offer to
purchase. Closing of such purchase shall be conducted by an escrow agent (the
"Closing Escrow Agent") which shall be a national title insurance company
designated by Tenant that meets with the reasonable satisfaction of Landlord.
Section 21.3 Deliveries at Closing. On the Purchase Closing Date,
Landlord shall deliver to the Closing Escrow Agent:
<PAGE> 66
(a) a deed ("Landlord's Deed") conveying such Hotel to Tenant or
Tenant's designee and containing no warranties other than a warranty that
any of the Hotels are not subject to: (i)
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the lien of any security interest created by an Mortgage executed by
Landlord on Landlord's interest, (ii) the lien of any judgment, tax
assessment or other obligation incurred by Landlord that is not the
responsibility of Tenant under this Lease and (iii) any liens created on
or after the Commencement Date which have been created by or resulted
solely from acts of Landlord undertaken without the consent of Tenant.
(b) a written instrument (the "Assignment"), without warranty of
title, assigning and transferring to Tenant or Tenant's designee (i)
Landlord's interest in any FF&E leased by Landlord to Tenant hereunder and
any licenses or permits relating to such Hotel and (ii) Landlord's
interest in any insurance proceeds payable with respect to any casualty
that has previously occurred to such Hotel (if any) (which assignment of
insurance proceeds shall be consented to by the Insurance Trustee). If
and to the extent that there are any insurance proceeds previously paid to
Landlord or the Insurance Trustee which have not been applied for the
purpose of repair or restoration and are then held by Landlord or the
Insurance Trustee, Landlord and the Insurance Trustee, as the case may be,
shall deliver such insurance proceeds (the "Escrowed Insurance Proceeds")
to the Closing Escrow Agent. Tenant shall deliver to the closing Escrow
Agent current immediately available funds in the amount of the purchase
price and any costs payable by Tenant hereunder that are set forth in
Section 21.7 ("Tenant's Funds"). Closing Agent shall then proceed to
consummate the Closing in accordance with local custom and practice.
SECTION 21.4 TENANT'S FAILURE TO CLOSE. IF TENANT FAILS TO PERFORM ITS
OBLIGATIONS UNDER THIS ARTICLE XXI ON THE PURCHASE CLOSING DATE FOR ANY REASON
OTHER THAN THE DEFAULT OF LANDLORD, AND SUBJECT TO ANY CURE RIGHTS EXPRESSLY
GRANTED TO TENANT'S MORTGAGEE, TENANT'S NOTICE OF TERMINATION PURSUANT TO
SECTIONS 1.3, 14.3 OR 15.5 SHALL BE RESCINDED AND DEEMED NULL AND VOID, THIS
LEASE SHALL CONTINUE IN FULL FORCE AND EFFECT AND NEITHER TENANT NOR LANDLORD
SHALL HAVE ANY LIABILITY OR OBLIGATION TO THE OTHER BY REASON OF SUCH FAILURE
TO CONSUMMATE SETTLEMENT OF SUCH PURCHASE EXCEPT THAT, IN RECOGNITION OF THE
FACT THAT SUCH FAILURE OF PERFORMANCE WILL CAUSE LANDLORD TO INCUR COSTS NOT
CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY
DIFFICULT TO ASCERTAIN, TENANT SHALL PAY TO LANDLORD, AS FIXED, AGREED AND
LIQUIDATED DAMAGES FOR TENANT'S DEFAULT, THE SUM OF FIFTY THOUSAND DOLLARS
($50,000), WHICH AMOUNT THE PARTIES AGREE REPRESENTS A FAIR AND REASONABLE
ESTIMATE OF SUCH COSTS.
------------------------- --------------------------
Tenant's Initials Landlord's Initials
SECTION 21.5 LANDLORD'S FAILURE TO CLOSE. IF LANDLORD FAILS TO PERFORM
ITS OBLIGATIONS UNDER THIS ARTICLE XXI ON THE PURCHASE CLOSING DATE FOR ANY
REASON OTHER THAN THE DEFAULT OF TENANT AND SUBJECT TO ANY CURE RIGHTS
EXPRESSLY GRANTED TO LANDLORD'S MORTGAGEE, AND AN ORDER OF SPECIFIC PERFORMANCE
IS NOT OBTAINED BY TENANT AND COMPLIED WITH, THIS LEASE SHALL TERMINATE AS OF
THE PURCHASE CLOSING DATE AND NEITHER TENANT NOR LANDLORD SHALL HAVE ANY
LIABILITY OR OBLIGATION TO THE OTHER BY REASON OF SUCH FAILURE TO CONSUMMATE
SETTLEMENT OF SUCH PURCHASE EXCEPT
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THAT, IN RECOGNITION OF THE FACT THAT SUCH FAILURE OF PERFORMANCE WILL CAUSE
TENANT TO INCUR COSTS NOT CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH
WILL BE EXTREMELY DIFFICULT TO ASCERTAIN, LANDLORD SHALL PAY TO TENANT, AS
FIXED, AGREED AND LIQUIDATED DAMAGES FOR LANDLORD'S DEFAULT, THE SUM OF FIFTY
THOUSAND DOLLARS ($50,000), WHICH AMOUNT THE PARTIES AGREE REPRESENTS A FAIR
AND REASONABLE ESTIMATE OF SUCH COSTS.
------------------------- --------------------------
Tenant's Initials Landlord's Initials
Section 21.6 Payment of Costs. All costs and expenses in connection with
any such purchase, including title insurance, transfer taxes, recording costs
and the reasonable attorney's fees of Landlord and any Mortgagee, shall be paid
by Tenant.
Section 21.7 Prorations. Percentage Rent shall be prorated as of the
date of such purchase, calculated in accordance with Section 5.1(b) and Exhibit
B, so that such dollar figure is multiplied by a fraction whose numerator is
the number of days in such Lease Year that precede the date of such purchase
and whose denominator is three hundred sixty-five (365).
ARTICLE XXII
MISCELLANEOUS
Section 22.1 Notices
(a) Any Notice or demand, consent, approval or disapproval, or
statement (collectively called "Notice" or "Notices") required or
permitted to be given by the terms and provisions of this Lease, or by any
law or governmental regulation, shall be in writing (unless otherwise
specified herein) and unless otherwise required by such law or regulation,
shall be personally delivered with receipt acknowledged in writing or sent
by United States mail postage prepaid as registered or certified mail,
return receipt requested or by courier service guarantying overnight
delivery. Any Notice shall be addressed to Landlord or Tenant, as
applicable, at its address specified below as said address may be changed
from time to time as hereinafter provided. By giving the other party at
least ten (10) days' prior written Notice, either party may designate a
different address or addresses for Notices. Landlord may elect to require
Tenant to send a copy of any Notice of Landlord's default to Landlord's
Mortgagee(s) simultaneously with the sending of Notice to Landlord,
provided that Landlord shall have supplied to Tenant the name and address
of such Mortgagee(s).
(b) Any Notice shall be deemed given as of the date of delivery as
indicated by affidavit in case of personal delivery or by the return
receipt in the case of mailing or by the confirmation of the courier
service making delivery; and upon any failure to deliver by reason of
changed address of which no Notice was given or refusal to accept
delivery, as of the date of such failure as indicated by affidavit or on
the return receipt or by Notice of the postal service or by the
confirmation of the courier service making delivery, as the case may be.
(c) A copy of each Notice given pursuant to Section 22.1(a) above
shall also be sent to the addressee by FAX.
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(d) Notices shall be sent as follows:
To Tenant: Red Lion Hotels, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: Mr. Anupam Narayan
FAX No: (360) 750-4165
with a Beth A. Ugoretz, Esq.
copy to: 4001 Main Street
Vancouver, WA 98663
FAX No: (360) 693-1739
To Landlord: RLH Partnership, L.P.
in care of Mr. Todd A. Fisher
2800 Sand Hill Rd., Suite 2000
Menlo Park, CA 94025
FAX No.: (415) 233-6564
with a Beth A. Ugoretz, Esq.
copy to: 4001 Main Street
Vancouver, WA 98663
FAX No: (360) 693-1739
Section 22.2 Memorandum of Lease
(a) Landlord and Tenant shall execute, acknowledge and deliver a
memorandum of this Lease (a "Lease Memorandum") in recordable form setting
forth the date and general description of this Lease, the names of the
parties hereto, the Commencement Date, the Expiration Date, a description
of the Land and the Hotels, Tenant's rights to renew this Lease,
Landlord's disclaimer of liability for mechanic's liens attributable to
Tenant's use, occupancy and possession of the Hotels, and such other
provisions of this Lease (including, if necessary or advisable under
applicable law, the incorporation by reference of all of the terms of this
Lease) as either party may designate. Said Lease Memorandum shall not in
any circumstances be deemed to modify or to change any of the provisions
of this Lease.
(b) Tenant shall after the expiration or termination of the Term, at
the request of Landlord, execute, acknowledge and deliver to Landlord a
memorandum in recordable form evidencing the expiration or Termination of
this Lease.
Section 22.3 Determination of Fair Market Value
(a) If it becomes necessary to determine the Fair Market Value of
any Hotel for any purpose of this Lease, the party required or permitted
to give notice of such required determination shall give the other party
Notice that such determination is required and shall set forth such
party's estimate of the Fair Market Value of the Hotel to be valued. The
parties shall thereupon attempt, in good faith, to agree upon the Fair
Market Value of such Hotel within 10 days of such Notice. Failing any
agreement within such 10 day period, the party who gave such
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Notice shall send a second notice of such required determination and shall
include in such Notice the name of a Person selected to act as appraiser
on its behalf. Within 10 days after receipt of any such notice, Landlord
or Tenant, as the case may be, shall by notice to Tenant or Landlord, as
the case may be, appoint a second Person as appraiser on its behalf. Each
appraiser must be licensed as an appraiser in the State and be a member of
the Appraisal Institute (or any successor organization thereto).
(b) After appointment, the appraisers shall, within 45 days after
the date of the notice appointing the first appraiser, determine the Fair
Market Value of the Hotel as of the date it becomes necessary to determine
the Fair Market Value (giving effect to the impact, if any, of inflation
from that date to the date the appraisers determine such Fair Market
Value); provided, however, that if only one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one
such appraiser shall have made such determination within the required 45
days, then the determination of such appraiser shall be final and binding
upon the parties.
(c) Unless the parties otherwise jointly instruct the appraisers in
writing to the contrary, the appraisers shall value the Hotel at Fair
Market Value pursuant to the Uniform Standards of Professional Appraisal
Practice and, to the extent not inconsistent therewith, the Appraisal
Institute's Standards of Professional Practice, and in accordance with
generally accepted appraisal methodology.
(d) Subject to Sections 22.3(d)(i) and 22.3(d)(ii), if two
appraisers shall have been appointed and shall have made their
determinations of the Fair Market Value of the Hotel within the required
45-day period, then the Fair Market Value of that property shall be an
amount equal to the sum of fifty percent (50%) of each appraiser's
determination.
(i) If the difference between the appraisals made pursuant to
Section 22.3(b) shall exceed ten percent (10%) of the lesser of such
amounts, then the appraisers shall have 20 days to appoint a third
appraiser. If such appraisers fail to appoint such third appraiser,
then either party may request the American Arbitration Association
(or any successor organization) or a court (having jurisdiction over
such appointment) to appoint the third appraiser. The third
appraiser shall be licensed as an appraiser in the State and be a
member of the Appraisal Institute. If a third appraiser is not
appointed under this Section 22.3(d)(i), then the Fair Market Value
of the Hotel shall be determined as provided for in Section 22.3(d)
notwithstanding this Section 22.3(d)(i).
(ii) Any appraiser appointed by the original appraisers, by the
American Arbitration Association or by an appropriate court shall be
instructed to determine the Fair Market Value within 30 days after
appointment of such appraiser. The determination of the appraiser
which differs most in terms of dollar amount from the determinations
of the other two appraisers shall be excluded, and fifty percent
(50%) of the sum of the remaining two determinations shall be final
and binding upon Landlord and Tenant as the Fair Market Value for the
Hotel.
(e) This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under
applicable law, and any determination hereunder shall be final and binding
upon the parties except as otherwise provided by applicable law. Landlord
and Tenant shall each pay the fees and expenses of the appraiser appointed
by it and each shall pay
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one-half of the fees and expenses of the third appraiser and one-half of
all other costs and expenses incurred in connection with each appraisal.
Section 22.4 Partial Invalidity. If any portion of this Lease shall be
declared invalid by order, decree or judgment of a court, or governmental
agency having jurisdiction, this Lease shall be construed as if such portion
had not been inserted herein, except when such construction would operate as an
undue hardship on Tenant or Landlord, constitute a substantial deviation from
the general intent and purpose of said parties as reflected in this Lease, or
deny either Tenant or Landlord to a material extent a right or benefit pursuant
to this Lease as originally written, in which event this Lease in pertinent
part shall be reformed so as to place both Landlord and Tenant to the greatest
extent permitted by law in the same relative positions as they would have
enjoyed under this Lease as originally written.
Section 22.5 Headings. The article and section headings and the Table of
Contents contained in this Lease are for convenience only and shall not enlarge
or limit the scope or meaning of the various and several provisions hereof.
Section 22.6 Binding Effect. All agreements and covenants herein
contained shall be binding upon the respective heirs, personal representatives,
successors, and, to the extent permitted under this Lease, assigns of the
parties hereto.
Section 22.7 Representations. Neither Landlord nor Landlord's agents
have made any representations or promises with respect to the Premises except
as herein expressly set forth and all reliance with respect to any
representations or promises is based solely on those contained herein.
Section 22.8 Amendments. No amendment or modification of this Lease
shall be binding or valid unless expressed in a writing executed by both
parties hereto or their respective successors and assigns.
Section 22.9 Brokers. Neither party has engaged any agents or brokers
with respect to the negotiation and execution of this Lease and each party
shall indemnify and defend the other with respect to any claim by an agent or
broker claiming through the indemnifying party against the indemnified party.
Section 22.10 Authority to Execute
(a) Tenant represents and warrants that Tenant has the full right
and authority to enter into this Lease, and that all persons signing on
behalf of Tenant were authorized to do so by any and all necessary or
appropriate corporate actions.
(b) Landlord represents and warrants that Landlord has the full
right and authority to enter into this Lease, and that all persons signing
on behalf of Landlord were authorized to do so by any and all necessary or
appropriate corporate or Landlord actions.
Section 22.11 Applicable Law. This Lease shall be governed by and
construed under the laws of the state within which the Land is located.
<PAGE> 72
Section 22.12 Construction. All exhibits referred to in this Lease are
by this reference incorporated fully herein. The term "this Lease" shall be
considered to include all such exhibits.
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Section 22.13 Impossibility of Performance. If any covenant or
obligation of Tenant under this Lease (other than a covenant or obligation to
pay Rent or other sums payable by Tenant hereunder) as applied to a particular
circumstance would be incapable of being fully performed by any person or
entity notwithstanding the fact that such person or entity had sufficient funds
available to enable it to perform such covenants or obligations under this
Lease, then Tenant shall only be obligated to perform such covenant or
obligation as applied to such circumstance to the extent that such covenant or
obligation can be so performed.
Section 22.14 Time of Essence. Time is of the essence with respect to
the rights and obligations of Landlord and Tenant under this Lease.
Section 22.15 Attorney's Fees. Except as otherwise provided herein, in
any action or proceeding (including without limitation appellate proceedings)
brought by either party against the other under this Lease, the prevailing
party shall be entitled to recover from the other party reasonable attorneys'
fees, investigation costs, and other reasonable legal expenses and court costs
incurred by such party in such action or proceeding.
Section 22.16 No Merger. There shall be no merger of the leasehold
estate created by this Lease with respect to each of the Hotel sites, with the
fee estate or any superior ground leasehold estate, by reason of the fact that
the same legal entity or person may own or hold the leasehold estate created by
this Lease or any interest in such leasehold estate, and any interest in either
or both of the fee estate or any superior ground leasehold estate. No merger
of any leasehold estate and fee estate shall occur unless and until all persons
or entities, having any interest in: (i) the leasehold estate created by this
Lease, (ii) the leasehold estate created by any applicable superior ground
leasehold estate, and (iii) the fee estate in the site of the affected Hotel,
shall join in a written instrument effecting such merger and shall duly record
the same.
Section 22.17 Landlord's Right to Enter. Landlord and its agents and
designees may enter upon and examine any Hotel at reasonable times, accompanied
by a representative of Tenant that Tenant shall make available to Landlord, and
show any Hotel to prospective purchasers, partners, investors, mortgagees or
lessees as long as such examination or showing shall not unreasonably interfere
with the business operations of Tenant at the Hotel.
Section 22.18 Corporate Reorganization of Tenant. Upon the merger of
Tenant into another corporation where Tenant is not the surviving corporation
or the consolidation of Tenant with one or more other corporations where Tenant
is not the surviving corporation, or the sale or other disposition of all or
substantially all of the assets of Tenant to one or more other entities, the
surviving entity or transferee of assets, as the case may be, shall be deemed
to have assumed all obligations, covenants and responsibilities of Tenant under
this Lease. Promptly after such corporate reorganization, such entity shall
deliver to Landlord an instrument in recordable form reasonably acceptable to
counsel for both parties, evidencing such assumption.
Section 22.19 No Waiver. The failure of either party to insist upon a
strict performance of any of the terms or provisions of this Lease or to
<PAGE> 74
exercise any option, right or remedy herein contained shall not be construed as
a waiver or as a relinquishment for the future of such term, provision, option,
right or remedy, but the same shall continue and remain in full force and
effect. No waiver by either party of any term or provision hereof shall be
deemed to have been made unless expressed in writing and signed by such party.
52
<PAGE> 75
Section 22.20 Confidentiality. The parties hereby agree that the matters
set forth in this Lease (except to the extent such matters are expressly
disclosed in any Memorandum of Lease recorded pursuant to Section 22.2(a)) are
strictly confidential and each party will make every effort to ensure that such
information is not disclosed to any outside persons or entities (including the
press) without the consent of the other party, except as required by ERISA or
any other Legal Requirement reporting and disclosure rules or otherwise
specifically provided herein. For purposes of the preceding sentence, the
words "outside persons or entities" do not include the parties' attorneys,
accountants, consultants, shareholders, lenders, partners, investors, or any
prospective lenders, partners and investors. No references to Tenant or to any
Affiliate will be made in any prospectus, private placement memorandum,
offering circular or offering documentation related thereto (collectively
referred to as the "Prospectus"), issued by Landlord or one of its affiliates,
which is designated to interest potential investors in any Hotel, unless Tenant
has previously received a copy of all such references. However, regardless of
whether Tenant does or does not so receive a copy of all such references,
neither Tenant nor any Affiliate will be deemed a sponsor of the offering
described in the Prospectus, nor will it have any responsibility for the
Prospectus, and the Prospectus will so state. Landlord shall indemnify, defend
and hold Tenant harmless from and against all loss, costs, liability and damage
(including reasonable attorneys' fees and expenses, and the cost of litigation)
arising out of any Prospectus or the offering described therein; and this
obligation of Landlord shall survive Termination of this Lease.
Section 22.21 Gender and Number. Words of any gender used in this Lease
shall be held to include any other gender, and words in the singular shall be
held to include the plural and vice versa, when the sense requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien"
shall mean "lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "the
Premises" shall mean "the Premises or any part thereof or interest therein";
(vi) "Hotel" shall mean "Hotel or any part thereof or interest therein"; (vii)
"any of the Land" shall mean "the Land or any part thereof or interest
therein"; (viii) "any of the Improvements" shall mean "the Improvements or any
part thereof or interest therein"; and (ix) "any of the personal property"
shall mean "the personal property or any part thereof or interest therein."
Section 22.22 Survival. All claims and liabilities of either party
existing or arising prior to the expiration or earlier termination of this
Lease, unless otherwise specifically provided herein, and all Surviving
Obligations shall survive such expiration or earlier Termination.
Section 22.23 Acceptance of Surrender. No surrender to Landlord of this
Lease or of any of the Hotels or of any part thereof or of any interest therein
shall be valid or effective unless agreed to and accepted in writing by
Landlord and the Senior Mortgagee if any, and no act by Landlord or any
representative or agent of Landlord, other than a written acceptance, shall
constitute an acceptance of any such surrender.
Section 22.24 Non-Recourse as to Landlord. Anything contained herein to
the contrary notwithstanding, any claim based on or in respect of any liability
of Landlord under this Lease shall be enforced only against the Premises and
not against any other tangible or intangible assets, properties or funds of (i)
Landlord, (ii) any shareholder of Landlord or any director, officer, general
<PAGE> 76
partner, limited partner, employee or agent of Landlord, (or any legal
representative, heir, estate, successor or assign of any thereof), (iii) any
predecessor or successor partnership or corporation (or other entity) of
Landlord, or any of its shareholders, either directly or through Landlord or
its shareholders or any predecessor or
53
<PAGE> 77
successor partnership or corporation or their shareholders, officers,
directors, employees or agents (or other entity), or (iv) any other Affiliate
of any of the foregoing, or any director, officer, employee or agent of any
thereof; provided, however, that if, as a result of a judicial foreclosure of
any Mortgage, the interest of Landlord in any Hotel is transferred to a
Mortgagee or any other person or entity and at the date of such foreclosure,
Tenant has a legal proceeding against Landlord, which is determined adversely
to Landlord after the exhaustion of all appeal periods, Tenant shall have the
right to enforce any judgment from any assets or other properties of Landlord
but not against any Mortgagee or any other person or any of the parties listed
at (ii) through (iv) above.
Section 22.25 Entire Agreement; Integration
(a) This Lease contains all the agreements and conditions made
between the parties hereto with respect to the matters contained herein
and may not be modified orally or in any manner other than as provided in
Section 22.8. All prior written and oral understandings and agreements
shall be deemed to have merged into this Lease and have no further force
and effect.
(b) Landlord and Tenant are business entities having substantial
experience with the subject matter of this Lease and have each fully
participated in the negotiation and drafting of this Lease. Accordingly,
this Lease shall be construed without regard to the rule that ambiguities
in a document are to be construed against the drafter.
(c) No inferences shall be drawn from the fact that the final, duly
executed Lease differs in any respect from any previous draft hereof.
(d) If there is more than one Tenant, the obligations of each shall
be joint and several.
Section 22.26 Waiver of Trial by Jury. The parties hereto each waive, to
the full extent permitted by applicable law, all right to elect a trial by jury
in any litigation relative to this Lease.
Section 22.27 Tenant's Remedies. Tenant shall have the right to seek all
remedies at law and/or in equity, including an order for specific performance,
to obtain full performance of all Landlord's obligations under this Lease,
and/or to recover damages for any breach by Landlord hereunder; provided,
however, that Tenant shall not have the right (i) to terminate this Lease
(except as otherwise specifically provided in this Lease) by reason of any
breach of Landlord's obligations hereunder; (ii) to set-off against Rents
hereunder any amounts owing to Tenant by Landlord; or (iii) to assert by way of
defense, cross-claim or counterclaim in any action by Landlord to recover Rent
or other sums due from Tenant any right to withhold Rent or to pay less than
the amount due hereunder. Any exercise of Tenant's rights hereunder shall be
through a separate and independent action unrelated to any claim Landlord has
against Tenant for Rent due hereunder.
Section 22.28 Landlord and Tenant Relationship. The parties hereto
specifically acknowledge and agree that, notwithstanding any other provision
contained in this Lease (including the provisions for payment of Percentage
Rent), it is the intent of the parties that their relationship hereunder is and
shall at all times be that of Landlord and Tenant and not that of partners,
joint venturers, lender and borrower, agent, or any other relationship other
than that of Landlord and Tenant.
<PAGE> 78
Section 22.29 Relationship with Groundlessors. With respect to any
ground lease concerning any portion of the Premises which terminates by its
terms prior to the end of the Term of this Lease, Landlord shall cooperate with
Tenant in negotiating with the subject ground lessor (i) to extend the term
54
<PAGE> 79
of said ground lease so as to have its term terminate no earlier than the last
day of the Term, or (ii) to persuade the ground lessor to enter into a separate
ground lease directly with Tenant following the termination of said ground
lease.
Section 22.30 Limited Liability of Landlord. Notwithstanding any
provisions hereof, none of the obligations of Landlord under or contemplated by
this Lease shall be an obligation of any officer, director, shareholder,
limited partner, general partner, or owner of Landlord, or any of their
respective officers, directors, shareholders, limited partners, general
partners, or owners, or successors or assigns. Landlord shall be the only
person or entity liable with respect to such obligations. Tenant hereby
irrevocably waives any right it may have against any such officer, director,
shareholder, general partner or limited partner, owner, successor or assign
identified above as a result of the performance of the provisions under or
contemplated by this Lease. This provision shall survive any termination of
this Lease.
EXECUTED as of the date first written above.
TENANT: LANDLORD:
RED LION HOTELS, INC., RLH PARTNERSHIP, L.P.,
a Delaware corporation a Delaware limited partnership
By: /s/ Anupam Narayan By: /s/ David J. Johnson
------------------------------ ------------------------------
Its: Vice President & Treasurer Its: Executive Vice President
ATTEST:
By:
------------------------------
[Assistant] Secretary
55
<PAGE> 80
STATE OF _______________ )
) ss.
COUNTY OF _______________ )
On this ____ day of ______________, 1995, before me personally
appeared _________________________, to me personally known to be the
______________________ of RED LION HOTELS, INC., the Delaware corporation that
executed the within and foregoing instrument, and acknowledged said instrument
to be the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath stated that (s)he was authorized to
execute said instrument and that the seal affixed, if any, is the corporate
seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal
the day and year first above written.
--------------------------------------------
[Seal or Stamp] Notary Public in and for the State of
_______________, residing at _______________
Printed Name:_______________________________
My appointment expires:_____________________
56
<PAGE> 81
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On this ____ day of ______________, 1995, before me personally
appeared _________________________, the ______________________ of Red Lion
G.P., Inc., a Delaware corporation and the Managing General Partner in RLH
PARTNERSHIP, L.P., the Delaware limited partnership that executed the within
and foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation and partnership, for the uses and
purposes therein mentioned, and on oath stated that (s)he was authorized to
execute said instrument on behalf of said corporation and that said corporation
was authorized to do so on behalf of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
--------------------------------------------
[Seal or Stamp] Notary Public in and for the State of
_______________, residing at _______________
Printed Name:_______________________________
My appointment expires:_____________________
57
<PAGE> 82
EXHIBIT A
LEGAL DESCRIPTIONS OF PROPERTIES
See Attached
<PAGE> 83
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sonoma/Rohnert Park, CA)
The land is located in the State of California, County of Sonoma,
City of Rohnert Park, and is described as follows:
Beginning at the most Easterly corner of Lot 137, as shown upon the Map
of Mountain Shadows Subdivision, Unit No. 1, filed in Book 257 of Maps,
pages 16, 17, 18, 19 and 20, Sonoma County Records; thence from said
point of beginning South 62 degrees 28' 00" East 86.00 feet to a 3/4"
iron pipe set, tagged LS 2757; thence North 34 degrees 09' 17" East
295.09 feet to a 3/4" iron pipe set, tagged LS 2757; thence North 38
degrees 42' 59" East 497.31 feet to a 3/4" iron pipe set tagged LS 2757;
thence North 20 degrees 53' 59" West 455.44 feet to a 3/4" iron pipe set,
tagged LS 2757; thence North 38 degrees 49' 36" West 70.75 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 86 degrees 31' 13" West
418.79 feet to a 3/4" iron pipe set, tagged LS 2757; thence South 76
degrees 36' 01" West 12.44 feet to a 3/4" iron pipe set, tagged LS 2757;
thence South 3 degrees 05' 00" West 412.47 feet to a 3/4" iron pipe set
tagged LS 2757; thence North 86 degrees 55' 00" West 5.00 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 3 degrees 05' 00" West 100.00
feet to a 3/4" iron pipe set, tagged LS 2757; thence North 86 degrees 55'
00" West 6.00 feet to a 3/4" iron pipe set tagged LS 2757; thence South 3
degrees 05' 00" West 42.00 feet to a 3/4" iron pipe set, tagged LS 2757;
thence South 86 degrees 55' 00" East 6.00 feet to a 3/4" iron pipe set,
tagged LS 2757; thence South 3 degrees 05' 00" West 61.00 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 86 degrees 55' 00" East 5.00
feet to a 3/4" iron pipe set, tagged LS 2757; thence South 3 degrees 05'
00" West 265.20 feet to a 3/4" iron pipe set, tagged LS 2757; thence
South 6 degrees 35' 00" West 92.00 feet to a 3/4" iron pipe set, tagged
LS 2757, said point being the Northeast corner of the aforementioned Lot
137, Mountain Shadows Subdivision, Unit No. 1, thence along the
Northeasterly lot line of said Lot 137, South 62 degrees 28' 00" East
160.00 feet to the point of beginning of the herein above described tract
of land.
A.P. No.: 160-010-23
1
<PAGE> 84
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sacramento Inn, CA)
THAT CERTAIN REAL PROPERTY SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SACRAMENTO, CITY OF SACRAMENTO, DESCRIBED AS FOLLOWS:
PARCEL 1:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF
SURVEYS, MAP NO. 94, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY BOUNDARY OF THAT CERTAIN 7.32 ACRE
TRACT OF LAND DESCRIBED IN THE DEED DATED JULY 8, 1952, EXECUTED BY ROBERT
SWANSTON, JR. AND LILLIAN SWANSTON, HIS WIFE, TO STATE OF CALIFORNIA, RECORDED
IN BOOK 2280 OF OFFICIAL RECORDS AT PAGE 331, RECORDS OF SAID COUNTY, FROM
WHICH SAID POINT OF BEGINNING, THE SOUTHEAST CORNER OF SAID SECTION 15 BEARS
SOUTH 11 degrees 19'10" EAST 285.00 FEET, SOUTH 25 degrees 12' EAST 167.93
FEET, SOUTH 47 degrees 28' EAST 102.09 FEET, SOUTH 55 degrees 51'10" EAST
454.55 FEET, SOUTH 30 degrees 19'50" WEST 50 FEET TO A POINT ON THE CENTER LINE
OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH, SAID POINT BEING ON THE
NORTHEASTERLY LINE OF PROPERTY ACQUIRED BY STATE OF CALIFORNIA, AS DESCRIBED IN
THE FINAL DECREE OF CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS.
ROBERT SWANSTON, ET AL, A CERTIFIED COPY THEREOF, RECORDED IN THE OFFICE OF THE
RECORDER OF SACRAMENTO COUNTY IN BOOK 1769 OF OFFICIAL RECORDS AT PAGE 470, ET
SEQ., SOUTH 59 degrees 40'10" EAST 3653.94 FEET ALONG SAID CENTER LINE AND THE
NORTHEASTERLY LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE
CENTER LINE OF ETHAN WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH, AND NORTH 01
degrees 46'30" WEST 18.54 FEET ALONG THE CENTER LINE TO THE SOUTHEAST CORNER OF
SAID SECTION 15; THENCE FROM SAID POINT OF BEGINNING ALONG THE NORTHEASTERLY
AND EASTERLY BOUNDARY OF SAID 7.32 ACRE TRACT THE FOLLOWING THREE COURSES AND
DISTANCES: NORTH 11 degrees 19'10" WEST 234.97 FEET; THENCE CURVING TO THE
RIGHT ON AN ARC OF 550.00 FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD
BEARING NORTH 10 degrees 41'50" EAST 412.36 FEET; AND THENCE NORTH 31 degrees
39'40" EAST 268.77 FEET; THENCE SOUTH 34 degrees 01'30" EAST 740.62 FEET;
THENCE SOUTH 41 degrees 46'30" WEST 355.20 FEET; THENCE NORTH 87 degrees 38'40"
WEST 349.58 FEET TO THE POINT OF BEGINNING.
2
<PAGE> 85
EXCEPTING THEREFROM ANY PORTION THEREOF WHICH MAY BE WITHIN THE FOLLOWING:
BEGINNING AT A POINT IN SECTION 15 FROM WHICH THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS THE FOLLOWING EIGHT (8) COURSES AND DISTANCES: NORTH 89
degrees09' WEST 323.88 FEET; SOUTH 11 degrees 19'10" EAST 345.57 FEET; SOUTH 25
degrees 12'00" EAST 167.93 FEET; SOUTH 47 degrees 28'00" EAST 102.09 FEET; AND
SOUTH 55 degrees 51'10" EAST 454.55 FEET; SOUTH 30 degrees 19'50" WEST 50.00
FEET TO A POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET IN
WIDTH, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THAT CERTAIN PROPERTY
ACQUIRED BY THE STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF
CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET
AL, A CERTIFIED COPY THEREOF, RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 1769 OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH
59 degrees 40'10" EAST 3652.94 FEET ALONG SAID CENTER LINE AND THE
NORTHEASTERLY LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE
CENTER LINE OF ETHAN WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH AND NORTH 01
degrees 46'30" WEST 18.54 FEET ALONG SAID CENTER LINE TO THE SAID SOUTHEAST
CORNER OF SAID SECTION 15; THENCE FROM SAID POINT OF BEGINNING SOUTH 89 degrees
09'00" EAST 81.28 FEET; THENCE NORTH 02 degrees 07'40" WEST 87.21 FEET; THENCE
NORTH 39 degrees 35'00" EAST 233.43 FEET; THENCE SOUTH 34 degrees 01'30" EAST
248.78 FEET; THENCE SOUTH 50 degrees 42'00" WEST 321.00 FEET; THENCE NORTH 39
degrees 18'00" WEST 185.64 FEET TO THE POINT OF BEGINNING.
ALSO EXCEPTING THEREFROM THAT PORTION WHICH LIES WEST AND NORTH OF THE LINE
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT THAT BEARS SOUTH 89 degrees 30'32" EAST 211.29 FEET FROM
THE SOUTHWEST CORNER OF LOT 7, SAID BLOCK F, SAID POINT IS ALSO 113.00 FEET
SOUTHEASTERLY, MEASURED AT RIGHT ANGLES FROM THE "B 3" LINE AT ENGINEER'S
STATION "B 3" 180+70.59 OF THE DEPARTMENT OF PUBLIC WORKS' 1959 SURVEY BETWEEN
800 FEET SOUTHWEST OF ARDEN WAY AND 0.3 MILE NORTHEAST OF EL CAMINO AVENUE,
ROAD III-SAC-3-B (THE CALIFORNIA STATE ZONE II COORDINATES FOR SAID POINT ARE
X=2, 163,073.395 AND Y=343,140.590); THENCE FROM SAID POINT OF BEGINNING
PARALLEL TO SAID "B 3" LINE SOUTH 40 degrees 45'28" WEST 730.59 FEET; THENCE
SOUTH 30 degrees 16'27" WEST 258.31 FEET; THENCE ALONG A CURVE TO THE LEFT WITH
A RADIUS OF 500 FEET, THROUGH AN ANGLE OF 40 degrees 01'46", AN ARC LENGTH OF
349.32 FEET THE CHORD OF WHICH CURVE BEARS SOUTH 10 degrees 37'23" WEST 342.26
FEET TO A POINT IN THE EXISTING STATE HIGHWAY RIGHT OF WAY AS ACQUIRED BY DEED
RECORDED JUNE 28, 1943, IN BOOK 1009, AT PAGE 357 OF OFFICIAL RECORDS,
SACRAMENTO COUNTY.
3
<PAGE> 86
PARCEL 1-A:
A NON-EXCLUSIVE EASEMENT FOR PRIVATE STREET PURPOSES, TO BE APPURTENANT TO
PARCEL NO. 1, ABOVE DESCRIBED, ON, OVER AND ACROSS A STRIP OF LAND OF THE
UNIFORM WIDTH OF 50.00 FEET, THE WESTERN LINE OF SAID STRIP OF LAND BEING
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE ABOVE DESCRIBED PARCEL NO. 1; THENCE
FROM SAID POINT OF BEGINNING ALONG THE EASTERN LINE OF THE ABOVE REFERRED TO
7.32 ACRE TRACT OF LAND DESCRIBED IN THE DEED RECORDED IN BOOK 2280 OF OFFICIAL
RECORDS AT PAGE 331, SOUTH 11 degrees 19'10" EAST 285.00 FEET; THENCE ALONG THE
ARC OF A CURVE TO THE LEFT WITH A RADIUS OF 350.00 FEET, THE CHORD OF WHICH
BEARS SOUTH 25 degrees 12' EAST 167.93 FEET TO THE WESTERN LINE OF THE PROPERTY
DESCRIBED IN THE DEED FROM HERATY & GANNON TO SEARS, ROEBUCK & CO., RECORDED
MAY 5, 1955, IN BOOK 2825 OF OFFICIAL RECORDS AT PAGE 200, THE EASTERN LINE OF
SAID 50 FOOT STRIP TO BE EXTENDED OR SHORTENED SO AS TO EXTEND, FROM THE
SOUTHERN LINE OF PARCEL NO. 1, ABOVE DESCRIBED IN DEED TO SEARS, ROEBUCK & CO.,
RECORDED IN BOOK 2825 OF OFFICIAL RECORDS AT PAGE 200.
PARCEL 1-B:
NON-EXCLUSIVE EASEMENTS FOR VEHICULAR ACCESS AS DESCRIBED IN EXHIBIT "B" AS
ATTACHED TO THAT CERTAIN INSTRUMENT ENTITLED "EASEMENT AGREEMENT", RECORDED
APRIL 26, 1989, IN BOOK 8904-26, PAGE 2537, OFFICIAL RECORDS, DESCRIBED AS
FOLLOWS:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE SACRAMENTO COUNTY RECORDER IN BOOK A OF SURVEYS, MAP NO. 94, DESCRIBED
AS FOLLOWS:
A STRIP OF LAND 40.00 FEET WIDE, THE CENTERLINE OF SAID STRIP BEGINNING AT A
POINT ON THE NORTHERLY LINE OF ARDEN WAY, A PUBLIC ROAD, AS SAID ROAD IS SHOWN
ON THE PLAT OF SURVEY ENTITLED "A PORTION OF SECTIONS 15, 64 AND 65 OF RANCHO
DEL PASO", RECORDED IN THE OFFICE OF THE SACRAMENTO COUNTY RECORDER IN BOOK 9
OF SURVEYS, MAP NO. 22, FROM WHICH POINT OF BEGINNING THE SOUTHEAST CORNER OF
SAID SECTION 15 BEARS SOUTH 30 degrees 19'50" WEST 30.00 FEET TO A POINT ON THE
CENTERLINE OF ARDEN WAY, AND ALONG SAID CENTERLINE SOUTH 59 degrees 40'10" WEST
3,583.93 FEET TO A POINT ON THE CENTERLINE OF ETHAN WAY, A PUBLIC ROAD 60.00
FEET IN WIDTH, AND NORTH 01 degrees 46'30" WEST 18.54 FEET ALONG SAID
CENTERLINE TO SAID SOUTHEAST CORNER; THENCE FROM SAID POINT OF BEGINNING NORTH
4
<PAGE> 87
30 degrees 19'50" EAST 103.00 FEET; THENCE NORTH 59 degrees 40'10" WEST 616.57
FEET MORE OR LESS TO A POINT ON THE WESTERLY BOUNDARY OF PARCEL I AS SAID
PARCEL IS SHOWN ON "RECORD OF SURVEY, PORTION OF SECTIONS 15 AND 66, RANCHO DEL
PASO", RECORDED IN THE OFFICE OF THE SACRAMENTO COUNTY RECORDER IN BOOK 21 OF
SURVEYS, MAP NO. 13.
PARCEL 2:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK A OF SURVEYS, MAP NO. 94,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN SAID SECTION 15 FROM WHICH THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS THE FOLLOWING EIGHT (8) COURSES AND DISTANCES: NORTH 89
degrees 09' WEST 323.88 FEET; SOUTH 11 degrees 19'10" EAST 345.57 FEET; SOUTH
25 degrees 12'00" EAST 167.93 FEET; SOUTH 47 degrees 28'00" EAST 102.09 FEET;
AND SOUTH 55 degrees 51'10" EAST 454.55 FEET; SOUTH 30 degrees 19'50" WEST
50.00 FEET TO A POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET
IN WIDTH, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THAT CERTAIN PROPERTY
ACQUIRED BY THE STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF
CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET
AL, A CERTIFIED COPY THEREOF RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 1780 OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH
59 degrees 40'10" EAST 3653.94 FEET ALONG SAID CENTER LINE AND THE
NORTHEASTERLY LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE
CENTER LINE OF ETHAN WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH AND NORTH 01
degrees 46'30" WEST 18.54 FEET ALONG SAID CENTER LINE TO SAID SOUTHEAST CORNER
OF SAID SECTION 15; THENCE FROM SAID POINT OF BEGINNING SOUTH 89 degrees 09'00"
EAST 81.28 FEET; THENCE NORTH 02 degrees 07'40" WEST 87.21 FEET; THENCE NORTH
39 degrees 35'00" EAST 233.43 FEET; THENCE SOUTH 34 degrees 01'30" EAST 248.78
FEET; THENCE SOUTH 50 degrees 42'00" WEST 321.00 FEET; THENCE NORTH 39 degrees
18'00" WEST 185.64 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM ALL THAT PORTION OF "PARCEL H", AS SAID PARCEL IS SHOWN ON
THAT CERTAIN RECORD OF SURVEY ENTITLED "PORTION OF SECTIONS 15 AND 66, RANCHO
DEL PASO", RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK
21 OF SURVEYS, MAP NO. 13, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID "PARCEL H"; THENCE FROM SAID
POINT OF BEGINNING ALONG THE NORTHEASTERLY LINE OF SAID "PARCEL H" NORTH 34
degrees 01'30" WEST 166.69 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THAT
CERTAIN 50.00 FOOT ROAD
5
<PAGE> 88
EASEMENT DESCRIBED IN THAT CERTAIN DEED RECORDED IN THE OFFICE OF THE SAID
RECORDER IN BOOK 2825 OF OFFICIAL RECORDS, PAGE 202, SAID EASEMENT BEING
DESIGNATED (EASEMENT NO. 5) ON SAID RECORD OF SURVEY; THENCE ALONG THE
SOUTHEASTERLY AND EASTERLY LINE OF SAID 50.00 FOOT ROAD EASEMENT THE FOLLOWING
THREE (3) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST 33.71 FEET;
(2) CURVING TO THE LEFT ON AN ARC OF 68.33 FOOT RADIUS, SAID ARC BEING
SUBTENDED BY A CHORD BEARING SOUTH 04 degrees 29'00" EAST 112.20 FEET AND (3)
SOUTH 59 degrees 40'10" EAST 78.79 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF
SAID "PARCEL H"; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID "PARCEL H" NORTH
50 degrees 42'00" EAST 55.02 FEET TO THE POINT OF BEGINNING.
PARCEL 3:
ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE "MAP OF SURVEYS AND SUBDIVISION
OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF
SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED
IN THE DEED DATED JANUARY 30, 1959, EXECUTED BY WILLIAM G. GANNON AND CLARA D.
GANNON TO PHILIP G. HERATY, RECORDED FEBRUARY 24, 1959, IN THE OFFICE OF SAID
RECORDER IN BOOK 3708 OF OFFICIAL RECORDS AT PAGE 35; THENCE FROM SAID POINT OF
BEGINNING ALONG THE BOUNDARY LINE OF SAID HERATY PROPERTY THE FOLLOWING TWO
COURSES AND DISTANCES: NORTH 50 degrees 42'00" EAST 220.00 FEET AND SOUTH 34
degrees 01'30" EAST 81.33 FEET; THENCE NORTH 55 degrees 58'30" EAST 74.00 FEET;
THENCE NORTH 34 degrees 01'30" WEST 226.71 FEET; THENCE SOUTH 50 degrees 42'00"
WEST 294.31 FEET TO A POINT ON THE EASTERLY LINE OF THAT CERTAIN 11.893 ACRE
TRACT OF LAND DESCRIBED IN THE DOCUMENT RECORDED IN THE OFFICE OF SAID RECORDER
IN BOOK 3294 OF OFFICIAL RECORDS, AT PAGE 91; THENCE ALONG SAID EASTERLY LINE
SOUTH 34 degrees 01'30" EAST 138.55 FEET TO THE POINT OF BEGINNING.
PARCEL 4:
ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE OFFICIAL "MAP OF SURVEY AND
SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP NO. 94,
RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHWESTERN LINE OF PROPERTY DESCRIBED IN THE DEED
FROM PHILIP F. HERATY, ET UX, TO WILLIAM G. GANNON, ET UX, DATED JULY 17, 1958
AND RECORDED JULY 18, 1958, IN BOOK 3550 OF OFFICIAL RECORDS AT PAGE 255, SAID
POINT BEING
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LOCATED SOUTH 50 degrees 42' WEST 323.47 FEET FROM THE MOST WESTERN CORNER OF
LOT 548, AS SHOWN ON THE OFFICIAL "PLAT OF SWANSTON ESTATES UNIT NO. 5",
RECORDED MAY 29, 1958, IN BOOK 49 OF MAPS, MAP NO. 13; THENCE FROM SAID POINT
OF BEGINNING SOUTH 50 degrees 42' WEST 220.00 FEET TO A POINT ON THE
NORTHEASTERN LINE OF PROPERTY DESCRIBED IN THE LEASE EXECUTED BY HERATY &
GANNON, A CO- PARTNERSHIP, AS LESSOR, AND SACRAMENTO, INN, INC., A CORPORATION,
AS LESSEE, DATED JANUARY 10, 1957, AND RECORDED MAY 3, 1957, IN BOOK 3294 OF
OFFICIAL RECORDS AT PAGE 30; THENCE ALONG THE NORTHEASTERN LINE OF SAID
SACRAMENTO INN, INC., A PROPERTY NORTH 34 degrees 01'30" WEST 200.00 FEET;
THENCE NORTH 50 degrees 42' EAST 220.00 FEET; THENCE SOUTH 34 degrees 01'30"
EAST 200.00 FEET TO THE POINT OF BEGINNING.
PARCEL 5:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE OFFICIAL "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN
BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF LOT 540, AS SHOWN ON THE "PLAT OF SWANSTON
ESTATES UNIT NO. 5", RECORDED MAY 29, 1958, IN BOOK 49 OF MAPS, MAP NO. 13;
THENCE FROM SAID POINT OF BEGINNING ALONG THE WESTERLY BOUNDARY OF SAID
SWANSTON ESTATES UNIT NO. 5, THE FOLLOWING THREE COURSES AND DISTANCES; SOUTH
00 degrees 57'30" EAST 144.50 FEET, SOUTH 21 degrees 00'02" WEST 99.05 FEET AND
SOUTH 50 degrees 42'00" WEST 234.00 FEET; THENCE CONTINUING SOUTH 50 degrees
42'00" WEST 323.47 FEET; THENCE NORTH 34 degrees 01'30" WEST 200.00 FEET;
THENCE SOUTH 50 degrees 43'00" WEST 220.00 FEET; THENCE NORTH 34 degrees 01'30"
WEST 275.85 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF A ROADWAY; THENCE
NORTH 31 degrees 38'20" EAST 93.47 FEET AND NORTH 39 degrees 17'30" EAST 512.87
FEET; THENCE NORTH 89 degrees 02'30" EAST 43.20 FEET; THENCE CURVING TO THE
RIGHT ON AN ARC OF 143.42 FEET RADIUS, SAID ARC BEING SUBTENDED BY A CHORD
BEARING SOUTH 62 degrees 51'35" EAST 135.10 FEET; THENCE CURVING TO THE LEFT ON
AN ARC OF 195.42 FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH
62 degrees 51'35" EAST 184.08 FEET AND THENCE NORTH 89 degrees 02'30" EAST
200.00 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE "MAP OF
SURVEYS AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP
NO. 94, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED
IN THE DEED DATED JANUARY 30, 1959, EXECUTED BY WILLIAM G. GANNON AND CLARA D.
GANNON TO PHILIP F. HERATY,
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RECORDED FEBRUARY 24, 1959, IN THE OFFICE OF THE SAID RECORDER IN BOOK 3708 OF
OFFICIAL RECORDS, AT PAGE 35; THENCE FROM SAID POINT OF BEGINNING ALONG THE
BOUNDARY LINE OF SAID HERATY PROPERTY THE FOLLOWING TWO COURSES AND DISTANCES;
NORTH 50 degrees 42'00" EAST 220.00 FEET AND SOUTH 34 degrees 01'30" EAST 81.33
FEET; THENCE NORTH 55 degrees 58'30" EAST 74.00 FEET; THENCE NORTH 34 degrees
01'30" WEST 226.71 FEET; THENCE SOUTH 50 degrees 42'00" WEST 294.31 FEET TO A
POINT ON THE EASTERLY LINE OF THAT CERTAIN 11.893 ACRE TRACT OF LAND DESCRIBED
IN THE DOCUMENTS RECORDED IN THE OFFICE OF THE SAID RECORDER IN BOOK 3294 OF
OFFICIAL RECORDS AT PAGE 91; THENCE ALONG SAID EASTERLY LINE SOUTH 34 degrees
01'30" EAST 138.55 FEET TO THE POINT OF BEGINNING.
FURTHER EXCEPTING THEREFROM ALL THAT PORTION OF "PARCEL A" AND "PARCEL B" AS
SAID PARCELS ARE SHOWN ON THAT CERTAIN RECORD OF SURVEY ENTITLED "PORTION OF
SECTION 15 & 66 RANCHO DEL PASO", RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 21 OF SURVEYS, MAP NO. 13, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID "PARCEL A" SAID CORNER ALSO BEING THE
NORTHWEST CORNER OF LOT 540 AS SAID LOT IS SHOWN ON THE OFFICIAL "PLAT OF
SWANSTON ESTATES UNIT NO. 5", RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK
49 OF MAPS, MAP NO. 13; THENCE FROM SAID POINT OF BEGINNING ALONG THE EAST
BOUNDARY OF SAID "PARCEL A" AND THE WEST BOUNDARY OF SAID SWANSTON ESTATES UNIT
NO. 5, THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 00 degrees 57'30"
EAST 144.50 FEET AND (2) SOUTH 21 degrees 02'00" WEST 55.00 FEET; THENCE SOUTH
89 degrees 02'30" WEST 347.04 FEET; THENCE NORTH 50 degrees 42'30" WEST 360.41
FEET TO A POINT ON THE NORTHWESTERLY BOUNDARY OF SAID "PARCEL B"; THENCE ALONG
THE NORTHWESTERLY BOUNDARY OF SAID "PARCEL B" NORTH 39 degrees 17'30" EAST
148.00 FEET TO THE NORTHWEST CORNER OF SAID "PARCEL B"; THENCE ALONG THE NORTH
BOUNDARY OF SAID "PARCEL A" AND "PARCEL B" THE FOLLOWING FOUR (4) COURSES AND
DISTANCES: (1) NORTH 89 degrees 02'30" EAST 65.52 FEET; (2) CURVING TO THE
RIGHT ON AN ARC OF 143.42 FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD
BEARING SOUTH 62 degrees 51'35" EAST 135.10 FEET; (3) CURVING TO THE LEFT ON AN
ARC OF 195.42 FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62
degrees 51'35" EAST 184.08 FEET AND (4) NORTH 89 degrees 02'30" EAST 200.00
FEET TO THE POINT OF BEGINNING.
ALSO EXCEPTING THEREFROM ALL THAT PORTION OF THE ABOVE DESCRIBED PROPERTY LYING
WITHIN ANY PUBLIC ROAD.
8
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PARCEL 6:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE OFFICIAL "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN
BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT FROM WHICH THE MOST SOUTHERLY CORNER OF LOT 548, AS SAID
LOT IS SHOWN AND SO DESIGNATED ON THE OFFICIAL "PLAT OF SWANSTON ESTATES UNIT
NO. 5", RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK 49
OF MAPS, MAP NO. 13, SAID CORNER BEING A POINT ON THE NORTHWESTERLY LINE OF
ROYALE ROAD, AS SHOWN ON SAID SWANSTON ESTATES UNIT NO. 5, BEARS NORTH 50
degrees 42' EAST 311.47 FEET; THENCE FROM SAID POINT OF BEGINNING SOUTH 50
degrees 42' WEST 250.00 FEET; THENCE NORTH 34 degrees 01'30" WEST 195.83 FEET;
THENCE NORTH 50 degrees 42' EAST 232.00 FEET; THENCE SOUTH 39 degrees 18' EAST
195.00 FEET TO THE POINT OF BEGINNING.
PARCEL 7:
ALL THAT PORTION OF PARCEL H AS SAID PARCEL IS SHOWN ON THE RECORD OF SURVEY
ENTITLED "PORTION OF SECTIONS 15 & 66 RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE RECORDER OF SACRAMENTO COUNTY IN BOOK 21 OF SURVEYS, MAP NO. 13,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID PARCEL H; THENCE FROM SAID POINT
OF BEGINNING ALONG THE SOUTHEASTERLY BOUNDARY OF SAID PARCEL H NORTH 30 degrees
19'50" EAST 96.82 FEET; THENCE CONTINUING ALONG THE SOUTHEASTERLY BOUNDARY OF
SAID PARCEL H NORTH 50 degrees 42'00" EAST 677.21 FEET TO THE MOST EASTERLY
CORNER OF SAID PARCEL H; THENCE ALONG THE BOUNDARY OF SAID PARCEL H NORTH 34
degrees 01'30" WEST 166.69 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THAT
CERTAIN 50.00 FOOT ROAD EASEMENT DESCRIBED IN THE DOCUMENT RECORDED IN THE
OFFICE OF SAID RECORDER IN BOOK 3497 OF OFFICIAL RECORDS, AT PAGE 131; THENCE
ALONG THE SOUTHEASTERLY AND EASTERLY LINE OF SAID 50.00 FOOT ROAD EASEMENT THE
FOLLOWING THREE (3) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST
33.71 FEET; (2) CURVING TO THE LEFT ON AN ARC OF 68.33 FOOT RADIUS, SAID ARC
BEING SUBTENDED BY A CHORD BEARING SOUTH 04 degrees 09'00" EAST 112.20 FEET AND
(3) SOUTH 59 degrees 40'10" EAST 36.12 FEET TO A POINT ON THE SOUTHEASTERLY
LINE OF THAT CERTAIN 1.549 ACRE TRACT OF LAND DESCRIBED AS PARCEL NO. 2 IN THE
DEED RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 7608-31 OF OFFICIAL
RECORDS, AT PAGE 1333; THENCE ALONG THE BOUNDARY OF SAID 1.589 ACRE TRACT OF
LAND THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00"
WEST 247.43 FEET TO THE MOST SOUTHERLY CORNER OF SAID
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1.549 ACRE TRACT OF LAND AND (2) NORTH 39 degrees 13'00" WEST 110.85 FEET TO A
POINT ON THE SOUTHEASTERLY LINE OF THAT CERTAIN 8.001 ACRE TRACT OF LAND
DESCRIBED AS PARCEL NO. 1 IN THE DEED RECORDED IN THE OFFICE OF SAID RECORDER
IN BOOK 7608-31 OF OFFICIAL RECORDS AT PAGE 1333; THENCE ALONG THE BOUNDARY OF
SAID 8.001 ACRE TRACT OF LAND THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1)
SOUTH 41 degrees 46'30" WEST 15.04 FEET TO THE MOST SOUTHERLY CORNER OF SAID
8.001 ACRE TRACT OF LAND AND (2) NORTH 87 degrees 38'40" WEST 350.40 FEET TO A
POINT ON THE NORTHEASTERLY BOUNDARY OF THAT CERTAIN 7.32 ACRE TRACT OF LAND
DESCRIBED IN THE DEED RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 2280 OF
OFFICIAL RECORDS AT PAGE 331; SAID POINT ALSO BEING LOCATED ON THE WESTERLY
LINE OF SAID PARCEL H; THENCE ALONG SAID NORTH-EASTERLY BOUNDARY AND SAID
WESTERLY LINE THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 11 degrees
19'00" EAST 286.27 FEET AND (2) CURVING TO THE LEFT ON AN ARC OF 350.00 FOOT
RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 25 degrees 33'54"
EAST 167.10 FEET TO THE POINT OF BEGINNING.
NON-EXCLUSIVE EASEMENTS FOR RIGHT-OF-WAY FOR INGRESS AND EGRESS AND MUTUAL
PARKING AS DESCRIBED IN "ARTICLE I" OF THAT CERTAIN INSTRUMENT ENTITLED "GRANTS
OF EASEMENTS, COVENANTS AND AGREEMENT FOR MAINTENANCE OF PARKING AREA",
RECORDED JULY 28, 1967, IN BOOK 6707-28, PAGE 645, OFFICIAL RECORDS.
10
<PAGE> 93
EXHIBIT A
PROPERTY DESCRIPTION
(Property: San Diego, CA)
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL 1:
PARCEL 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP NO. 15912, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
DIEGO COUNTY, ON DECEMBER 19, 1989
PARCEL 2:
A NON-EXCLUSIVE AND EXCLUSIVE UTILITY, FIRE AND SERVICE CORRIDOR, AND HOTEL
COURTYARD EASEMENTS WHICH ARE ALL PERPETUAL AND IRREVOCABLE, ENCUMBERING LOTS 2
THROUGH 4 OF HAZARD CENTER, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO,
STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11949, FILED IN THE OFFICE OF
THE COUNTY RECORDER OF SAN DIEGO COUNTY ON NOVEMBER 10, 1987, ALL AS MORE
PARTICULARLY DESCRIBED IN ARTICLE 2, PARAGRAPHS 2.6, 2.7 AND 2.8 OF THE
CONSTRUCTION OPERATION AND RECIPROCAL EASEMENT AGREEMENT, EXECUTED BY AND
BETWEEN R. E. HAZARD CONTRACTING CO., A CALIFORNIA CORPORATION, CROW-HAZARD
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND RL ACQUISITION COMPANY, A
CALIFORNIA LIMITED PARTNERSHIP, RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF
OFFICIAL RECORDS.
THE EASEMENT HEREIN DESCRIBED ARE HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREINDESCRIBED.
PARCEL 3:
AN EXCLUSIVE PARKING EASEMENT, TEMPORARY ADDITIONAL EXCLUSIVE PARKING, A NON-
EXCLUSIVE PARKING EASEMENT, AND NON-EXCLUSIVE ACCESS EASEMENT, WHICH ARE ALL
PERPETUAL AND IRREVOCABLE, ENCUMBERING LOTS 2 THROUGH 4 OF HAZARD CENTER, IN
THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO
MAP THEREOF NO. 11949, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY ON NOVEMBER 10, 1987, ALL AS MORE PARTICULARLY DESCRIBED IN ARTICLE 2,
PARAGRAPHS 2.2, 2.3, 2.4 AND 2.5 OF THE CONSTRUCTION, OPERATION AND RECIPROCAL
EASEMENT AGREEMENT, EXECUTED BY AND BETWEEN R. E. HAZARD CONTRACTING
11
<PAGE> 94
CO., A CALIFORNIA CORPORATION; CROW-HAZARD ASSOCIATES, A CALIFORNIA GENERAL
PARTNERSHIP AND RL ACQUISITION COMPANY, A CALIFORNIA LIMITED PARTNERSHIP,
RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF OFFICIAL RECORDS.
THE EASEMENTS HEREIN DESCRIBED ARE HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREINDESCRIBED.
PARCEL 4:
AN EXCLUSIVE PARKING GARAGE CONNECTION EASEMENT ENCUMBERING LOT 2 OF HAZARD
CENTER, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 11949, FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY, ON NOVEMBER 10, 1987, AS MORE PARTICULARLY DESCRIBED IN
THE CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT AGREEMENT EXECUTED BY AND
BETWEEN R. E. HAZARD CONTRACTING CO., A CALIFORNIA CORPORATION; CROW-HAZARD
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND RED LION, A CALIFORNIA LIMITED
PARTNERSHIP (FORMERLY KNOWN AS RL ACQUISITION COMPANY, A CALIFORNIA LIMITED
PARTNERSHIP), RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF OFFICIAL RECORDS.
THE EASEMENT HEREIN DESCRIBED IS HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREIN DESCRIBED.
12
<PAGE> 95
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Durango, CO)
Situated in the County of La Plata, State of Colorado, to-wit:
Lot 1A in RED LION INN RESUBDIVISION, according to the plat thereof filed for
record July 1, 1993 under Reception No. 649036.
Tax Parcel Numbers: 5665-301-00048
5665-301-00120
5665-301-00129
13
<PAGE> 96
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Boise Downtowner, ID)
The land is situated in the State of Idaho, County of Ada, and is described as
follows:
PARCEL A:
PARCEL I:
All of Lots 1 and 2 in Block 40 and all of Block 41 of FAIRVIEW ADDITION,
according to the official plat thereof, filed in Book 2 of Plats at Page 73,
Official Records of Ada County, Idaho, and all of Block 40-A CITIZENS RIGHT-OF-
WAY, according to the official plat thereof, filed in Block 7 of Plats at Page
341, and a portion of Lots 1 and 2 in Block 10 and all of Lots 11, 12, 13 and
14 in Block 9 of McCARTY'S SECOND ADDITION, according to the official plat
thereof, filed in Book 2 of Plats at Page 85, Official Records, and the vacated
streets and alley included within the boundaries thereof, more particularly
described as follows:
Beginning at the intersection of the Easterly boundary of 22nd Street and
Northerly boundary of Fairview Avenue, being the Southwest corner of
Block 41 of FAIRVIEW ADDITION, said point being THE TRUE POINT OF
BEGINNING; thence
North 0 degrees 00'00" East 350.16 feet along the Easterly boundary of said
22nd street to a point on the Southerly boundary of Main Street; thence
North 89 degrees 59'20" East 157.99(8) feet along the said Southerly boundary
of Main Street to a point; thence
South 89 degrees 50'40" East 157.98(151.50) feet along the said Southerly
boundary of Main Street to a point; thence
South 54 degrees 50'40" East 57.50 feet along the said Southerly boundary of
Main Street to a point; thence
South 1 degrees 57'20" West 192.00 feet to a point, said point being the
Southeast corner of said Lot 14 in Block 9 of said McCARTY'S SECOND
ADDITION; thence
North 88 degrees 02'40" West 230.08 feet to a point; thence
South 2 degrees 53'20" West 136.32 feet to a point on the Northerly boundary of
said Fairview Avenue; thence
North 88 degrees 13'50" West 113.20 feet along the said Northerly boundary of
said Fairview Avenue to the POINT OF BEGINNING.
PARCEL II:
Lots 9 and 10 in Block 9 of McCARTY'S SECOND ADDITION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records.
EXCEPT THEREFROM that portion of said Lot 10, more particularly described as
follows:
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<PAGE> 97
Commencing at the Northwest corner of said Lot 10, said point being the TRUE
POINT OF BEGINNING; thence
South 88 degrees 02'40" East 20.00 feet along the Northerly boundary of said
Lot 10 to a point; thence
South 46 degrees 57'20" West 28.28 feet to a point on the Westerly boundary of
said Lot 10; thence
North 1 degrees 57'20" East 20.00 feet along the said Westerly boundary of said
Lot 10 to the POINT OF BEGINNING.
ALSO EXCEPT a parcel of land for public right-of-way being a portion of Lots 9
and 10 of Block 9 of McCARTY'S SECOND ADDITION, a subdivision according to the
official plat thereof, filed in Book 2 of Plats at Page 85, lying in the
Southeast quarter of Section 4, Township 3 North, Range 2 East, Boise Meridian,
Ada County Idaho, and more particularly described as follows:
Beginning at a lead plug and tack marking the Northwest corner of Lot 2 of
Block 40 of FAIRVIEW ADDITION, a subdivision, according to the official
plat thereof, filed in Book 2 of Plats at Page 73, Official Records;
thence
South 0 degrees 00'00" West 350.16 feet along the Westerly boundaries of said
Lot 2 of Block 40 of FAIRVIEW ADDITION, Block 40-A CITIZEN'S
RIGHT-OF-WAY, a subdivision, according to the official plat thereof,
filed in Book 7 of Plats at Page 341, and Block 41 of said FAIRVIEW
ADDITION, which is also the Easterly right-of-way line 22nd Street, to a
point marking the Southwest corner of the said Block 41 of FAIRVIEW
ADDITION; thence
South 88 degrees 13'50" East 190.58 feet along the Southerly boundary of the
said Block 41 of FAIRVIEW ADDITION, Block 40-A of Citizens Right-of-Way,
the adjacent alley to the said Lot 10 of Block 9, McCARTY'S SECOND
ADDITION, all of Lot 10 and a portion of Lot 9 of Block 9 of McCARTY'S
SECOND ADDITION, which is also the Northerly right-of-way line of
Fairview Avenue, to a point, also said point being the REAL POINT OF
BEGINNING; thence continuing
South 88 degrees 13'50" East 30.0 feet along the said Southerly boundaries of
Lots 10 and 9 of Block 9 of McCARTY'S SECOND ADDITION to a point; thence
North 1 degrees 57'20" East 99.95 feet along a line 25.00 feet Westerly of and
parallel with the Easterly boundary of the said Lot 9 of Block 9 of
McCARTY'S SECOND ADDITION to a iron pin; thence
North 46 degrees 57'20" East 28.28 feet to an iron pin on the Northerly
boundary line of the said Lot 9 of Block 9 of McCARTY'S SECOND ADDITION;
thence
North 88 degrees 02'40" West 50.00 feet along the said Northerly boundary of
Lot 9 and the Northerly boundary of the said Lot 10 of Block 9 of
McCARTY'S SECOND ADDITION to a iron pin; thence
South 1 degrees 57'20" West 120.05 feet along line 5.00 feet Westerly of and
parallel with Easterly boundary of the said Lot 10 of Block 9 of
McCARTY'S SECOND ADDITION to THE REAL POINT OF BEGINNING.
15
<PAGE> 98
PARCEL III:
The East 150 feet of Lot 1 in Block 38 and all of Block 39 of FAIRVIEW
ADDITION, according to the official plat thereof, filed in Book 2 of Plats at
Page 73 and the East 150 feet of Block 38-A of CITIZEN'S RIGHT-OF-WAY,
according to the official plat thereof, filed in Book 7 of Plats at Page 341,
Official Records, of Ada County, Idaho.
PARCEL IV:
Lots 15 and 16 of Block 9 of McCARTY'S SECOND ADDITION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho and that portion of 18th Street, now vacated, described as
follows: Beginning at the Northeast corner of said Lot 16; thence West 100
feet; thence
North 69.88 feet; thence
Southeast 119.28 feet; thence
South 4.86 feet to THE POINT OF BEGINNING.
PARCEL V:
A parcel of land being all of the alley lying Westerly of and adjacent with the
Westerly boundary of Lot 10 of Block 9 and a portion of the 16.00 foot alley
lying Northerly of and adjacent with said Lot 10 of Block 9 of McCARTY'S SECOND
ADDITION, a subdivision according to the official plat thereof, filed in Book 2
of Plats at Page 85, lying in the Southeast quarter of Section 4, Township 3
North, Range 2 East, Boise Meridian, Ada County Idaho, more particularly
described as follows:
Beginning at a lead plug and tack marking the Northwest corner of Lot 2 of
Block 40 of FAIRVIEW ADDITION, a subdivision, according to the official
plat thereof, filed in Book 2 of Plats at Page 73, Official Records;
thence
South 0 degrees 00'00" West 350.16 feet along the Westerly boundaries of said
Lot 2 of Block 40 of FAIRVIEW ADDITION, Block 40-A CITIZEN'S
RIGHT-OF-WAY, a subdivision, according to the official plat thereof,
filed in Book 7 of Plats at Page 341, and Block 41 of said FAIRVIEW
ADDITION, which is also the Easterly right-of-way line 22nd Street, to a
point marking the Southwest corner of the said Block 41 of FAIRVIEW
ADDITION; thence
South 88 degrees 13'50" East 145.58 feet along the Southerly boundaries of said
Block 41 of FAIRVIEW ADDITION and Block 40-A of CITIZENS RIGHT-OF-WAY and
adjacent alley to said Lot 10 of Block 9 OF McCARTY'S SECOND ADDITION
which is also the Northerly right-of-way line of FAIRVIEW AVENUE, to a
point marking the Southwest corner of the said Lot 10 of Block 9 of
McCARTY'S SECOND ADDITION, also said point being the REAL POINT OF
BEGINNING; thence
North 1 degrees 57'20" East 100.20 feet along the Westerly boundary of the said
Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to an iron pin; thence
North 46 degrees 57'20" East 26.28 feet to an iron pin on the Northerly
boundary of the said Lot 10 of Block 9 of McCARTY'S SECOND ADDITION;
thence
16
<PAGE> 99
South 88 degrees 02'40" East 25.00 feet along the said Northerly boundary of
the said Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to an iron pin;
thence
North 1 degrees 57'20" East 16.0 feet along a line Westerly of and parallel
with the Westerly boundary extended of the said Lot 9 in Block 9 of
McCARTY'S SECOND ADDITION to an iron pin on the Northerly boundary of the
said 16- foot alley; thence
North 88 degrees 02'40" West 75.16 feet along the said Northerly boundary of
the said 16-foot alley to an iron pin on the Westerly boundary of the
said McCARTY'S SECOND ADDITION; thence
South 2 degrees 53'20" West 136.32 feet along the said Westerly boundary of
McCARTY'S SECOND ADDITION, which is also the Westerly boundary of the
said adjacent alley to Lot 10 of Block 9 of McCARTY'S SECOND ADDITION, to
a point marking the Southwest corner of the said adjacent alley to Lot 10
of Block 9 of McCARTY'S SECOND ADDITION; thence
South 88 degrees 13'50" East 32.38 feet along the said Southerly boundary of
the adjacent alley to Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to
the REAL POINT OF BEGINNING.
PARCEL VI:
Lots 7 and 8 in Block 9 of McCARTY's SECOND ADDITION, according to the official
plat thereof, filed in Book 2 of Plats at Page 85, Official Records of Ada
County, Idaho.
As to leasehold estate in:
PARCEL B:
Lots 3, 4, 5, 6 and 17 in BLock 9 of McCARTY'S SECOND ADDITION, according to
the official plat thereof, filed in Book 2 of Plats at Page 85, Official
Records of Ada County, Idaho, and Lots 18 and 19 in Block 9, EXCEPT the
hereinafter described:
A parcel of land being on the Westerly side of the center line of Boise One-Way
Couplet, Project No. U-3021 (21) Highway Survey, as shown on the plans thereof
now on file in the office of the Department of Highways of the State of Idaho,
and being a portion of Lot 18 in Block 9 of McCARTY'S SECOND ADDITION,
according to the official plat thereof, filed in Book 2 of Plats at Page 85,
Official Records of Ada County, Idaho, described as follows:
Beginning at the Northeast corner of Lot 18 in Block 9 of said McCARTY'S SECOND
ADDITION; thence
Southerly along the Easterly boundary line of said Lot 18 a distance of 12.2
feet to a point that bears
North 87 degrees 54'04" West, 58.74 feet from Station 80456.72 of Boise, One
Way Couplet, Project No. U-3021 (21) Highway Survey; thence Northwesterly
along a 140.50 foot radius curve left 35.94 feet to a point that bears
17
<PAGE> 100
South 35 degrees 10'41" West 42.38 feet from Station 79462.58 of said Highway
Survey; thence Northerly 3.0 feet, more or less, to a point in the
Northeasterly line of said Lot 18 that bears
South 35 degrees 10'41" West 40.00 feet from Station 79460.90 of said Highway
Survey; thence Southeasterly along the Northeasterly line of said Lot 18
to the PLACE OF BEGINNING.
AND
All of Lot 19, Block 9 of McCARTY'S SECOND SUBDIVISION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho.
EXCEPTING THEREFROM a parcel of land being on both sides of the centerline of
Boise One-Way Couplet, Project No. U-3021 (21) Highway Survey as shown on the
plans thereof now on file in the office of the Department of Highways of the
State of Idaho and being a portion of Lot 19 in Block 9 of MCCARTY'S SECOND
SUBDIVISION, according to the official plat thereof, filed in Book 2 of Plats
at Page 85, Official Records of Ada County, Idaho, described as follows:
Beginning at the East corner of Lot 19 in Block 9 of said MCCARTY'S SECOND
ADDITION; thence
Westerly along the South boundary line of said Lot 19, a distance of 95.44 feet
to the Southwest corner thereof; thence
North 62 degrees 17'36" East 23.12 feet to a point that bears North 87 degrees
54'04" West 38.67 feet from Station 80194.74 of Boise, One-Way Couplet,
Project No. U-3021 (21) Highway Survey; thence
Northwesterly along a 140.50 foot radius curve left 55.10 feet to a point in
the Westerly line of said Lot 19 that bears
North 87 degrees 54'04" West, 58.74 feet from Station 80+56.73 of said Highway
Survey; thence
Northerly along said Westerly line 12.7 feet, to the Northwesterly corner of
said Lot 19; thence
Southeasterly along the Northeasterly boundary line of said Lot 19 to the REAL
POINT OF BEGINNING.
Tax Parcel Numbers: R2734252191
R2734252200
R2734252210
R5538940984
R5538940940
R5538941120
Also described as follows pursuant to Survey dated May 13, 1994 and revised
July 17, 1995:
18
<PAGE> 101
Parcel 1:
The east 150.00 feet of Lot 1 Block 38 and all of Block 39 of the FAIRVIEW
ADDITION according to the official plat thereof filed in the office of the Ada
County Recorder in Book 2 of Plats at Page 73, and the east 150.00 feet of
Block 38-A of CITIZEN'S RIGHT OF WAY, according to the official plat thereof,
filed in Book 7 of Plats at Page 341, being more particularly described as
follows:
BEGINNING at a 5/8 inch iron pin at the northeasterly corner of said Block 39,
being the point of intersection of the southerly sideline of West Main Street
with the westerly sideline of North 22nd Street; thence,
1.) S.00 degrees 00'00"E., 165.60 feet along the westerly sideline of
said 22nd Street to a 5/8 inch iron pin; thence,
2.) N.89 degrees 00'42"W., 150.02 feet along the southerly line of said
Lot 1 Block 38 to a 5/8 inch iron pin; thence,
3.) N.00 degrees 00'00"W., 162.98 feet along a line parallel with and
150.00 feet west of the westerly sideline of 22nd Street to a 5/8
inch iron pin; thence,
4.) N.89 degrees 59'20"E., 150.00 feet along the southerly sideline of
said West Main Street to the POINT OF BEGINNING;
said Parcel 1 containing 0.5657 acres of land, and being the same parcel as
described as Parcel III in Instrument No. 8564000, Deed of Trust and Assignment
of Leases and Rents.
Parcel 2:
All of Lots 1 and 2 of Block 40 and all of Block 41 of the FAIRVIEW ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 73; all of Block 40-A of CITIZEN'S RIGHT OF
WAY according to the official plat thereof filed in Book 7 of Plats at Page
341; portions of Lots 1 and 2 of Block 10 and a portion of Lot 10 and all of
Lots 11, 12, 13, 14, 15 and 16 of Block 9 of McCARTY'S 2ND ADDITION, according
to the official plat thereof filed in Book 2 of Plats at Page 85; and certain
vacated portions of streets and alleys shown on said plat and included within
the following more particularly described Parcel 2: BEGINNING at the point of
intersection of the easterly sideline of North 22nd with the northerly sideline
of Fairview Avenue, said point being the southwesterly corner of said Block 41
of the FAIRVIEW ADDITION; thence,
1.) N.00 degrees 00'00"W., 350.18 feet along the easterly sideline of
said North 22nd Street, being along the westerly lines of said Block
41, Block 40-A of said CITIZEN'S RIGHT OF WAY and Block 40 of said
FAIRVIEW
19
<PAGE> 102
ADDITION to the point of intersection of said easterly sideline of
North 22nd Street with the southerly sideline of West Main Street;
thence,
2.) N.89 degrees 59'20"E., 157.98 feet along the southerly sideline of
West Main Street, being along the northerly line of Lots 1 and 2 of
Block 40 FAIRVIEW ADDITION and along the northerly terminus of a
vacated portion of 19th Street to a point in the westerly line of
Lot 2 Block 10 of said McCARTY'S 2ND ADDITION; thence,
3.) S.89 degrees 50'40"E., 151.50 feet along said sideline of West Main
Street to a point in the northeasterly line of Lot 1 of said Block
10; thence,
4.) S.54 degrees 50'40"E., 185.34 feet along said sideline, being along
the northeasterly line of said Lot 1, and along the easterly
terminus of vacated 18th Street to a point in the northerly line of
Lot 17 Block 9 of said McCARTY'S 2ND ADDITION; thence,
5.) N.88 degrees 02'40"W., 6.97 feet along the northerly line of said
Lot 17 to the northwesterly corner thereof; thence,
6.) S.01 degrees 57'20"W., 122.00 feet along the westerly line of said
Lot 17 to the southwesterly corner of said Lot 17 Block 9; thence,
7.) N.88 degrees 02'40"W., 255.00 feet along the southerly lines of Lots
16, 15, 14, 13, 12 and 11 to a point; thence,
8.) S.01 degrees 57'20"W., 136.05 feet along the easterly terminus of
the vacated portion of a 16 foot wide alley and along a line
parallel with and 5.00 feet westerly of the easterly line of Lot 10
Block 9 to a point in the southerly line of said Lot 10, being the
northerly sideline of West Fairview Avenue; thence,
9.) N.88 degrees 13'50"W., 190.48 feet along the southerly lines of said
Lot 10 Block 9, the vacated portion of 19th Street, Lot 40-A of
CITIZEN'S RIGHT OF WAY and Block 41 of the FAIRVIEW ADDITION, being
along the northerly sideline of West Fairview Avenue, to the POINT
OF BEGINNING,
said Parcel 2 containing 2.7328 acres, more or less and being the same land as
contained in Parcel No.s I, II, IV and V as described in Instrument No.8564000,
Deed of Trust and Assignment of Leases and Rents.
20
<PAGE> 103
Parcel 3:
All of Lots 7 and 8 and a portion of Lot 9, of Block 9, McCARTY'S 2ND ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 85, and being more particularly described
as follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
A.) S.88 degrees 13'50"E., 220.48 feet along the southerly lines of said
Block 41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the
vacated portion of 19th Street, and Lots 10 and 9 of Block 9 of said
McCARTY'S 2ND ADDITION to a point 25 feet easterly of the westerly line
of said Lot 9, being the POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 99.95 feet along a line parallel with and
25.00 feet easterly of the westerly line of said Lot 9; thence,
2.) N.46 degrees 57'20"E., 28.28 feet to a point in the northerly line
of said Lot 9; thence,
3) S.88 degrees 02'40"E., 105.00 feet along the northerly lines of Lots
9, 8 and 7 to the northeasterly corner of said Lot 7; thence,
4.) S.01 degrees 57'20"W., 119.55 feet along the easterly line of said
Lot 7 to a point in the northerly sideline of West Fairview Avenue;
thence,
5.) N.88 degrees 13'50"W., 125.00 feet along said sideline to the POINT
OF BEGINNING,
said Parcel 3 containing 0.5474 acres, more or less, and being the same land as
contained in Parcel VI and a portion of Parcel II as described in Instrument
No. 8564000, Deed of Trust and Assignment of Leases and Rents.
Parcel 4:
All of Lot 17 and portions of Lots 18 and 19, Block 9, McCARTY'S 2ND ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 85, and being more particularly described
as follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
21
<PAGE> 104
A.) S.88 degrees 13'50"E., 190.48 feet along the southerly lines of said
Block 41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the
vacated portion of 19th Street, and Lot 10, Block 9 of said McCARTY'S 2ND
ADDITION to a point 5.00 feet west of the easterly line of said Lot 10;
thence,
B.) N.01 degrees 57'20"E., 136.05 feet along a line parallel with and 5.00
feet westerly of the easterly line of said Lot 10 to a point in the
southerly line of Lot 11 Block 9; thence,
C.) S.88 degrees 02'40"E., 255.00 feet along the southerly lines of Lots 11,
12, 13, 14, 15 and 16 to the southwesterly corner of said Lot 17 and the
POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 122.00 feet along the westerly line of said
Lot 17 to the northwesterly corner of same; thence,
2.) S.88 degrees 02'40"E., 6.97 feet along the northerly line of said
Lot 17 to the point of intersection of same with the southerly
sideline of West Main Street; thence,
3.) S.54 degrees 50'40"E., 81.62 feet along said sideline of West Main
Street to a point in the westerly sideline of West Grove Street,
also known as the Boise One-Way Couplet, according to the plans of
Project No. U-3021 (21) on file with the Idaho Department of
Transportation, District 3; thence,
4.) S.01 degrees 01'48"W., 2.88 feet (formerly 3.0 feet more or less)
along said westerly sideline of West Grove Street to a point on a
non-tangent curve; thence,
5.) southeasterly along said sideline along a curve to the right having
a radius of 140.50 feet, an arc length of 79.12 feet, a central
angle of 32 degrees 16'38", a chord bearing of S.32 degrees
44'09"E., and a chord distance of 78.07 feet, crossing through Lots
18 and 19 of said Block 9 to an angle point in said sideline;
thence,
6.) S.64 degrees 33'28"W., 22.25 feet (formerly S.62 degrees 17'36"W.,
23.12) along said sideline to the southeasterly corner of said Lot
18 Block 9; thence,
7.) N.88 degrees 02'40"W., 100.00 feet along the southerly lines of Lots
18 and 17 of Block 9 to the POINT OF BEGINNING,
said Parcel 4 containing 0.2233 acres, more or less, and being the same land as
contained in a portion of Parcel B as described in Instrument No. 8564000, Deed
of Trust and and Assignment of Leases and Rents.
22
<PAGE> 105
Parcel 5:
All of Lots 3, 4, 5 and 6 of Block 9, McCARTY'S 2ND ADDITION, according to the
official plat thereof filed in the office of the Ada County Recorder in Book 2
of Plats at Page 85, and being more particularly described as follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
A.) S.88 degrees 13'50"E., 345.48 feet along the southerly lines of said
Block 41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the
vacated portion of 19th Street, and Lots 10, 9, 8 and 7 of Block 9 of
said McCARTY'S 2ND ADDITION to the southwesterly corner of Lot 6 Block 9
and the POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 119.55 feet along the westerly line of said
Lot 6 to the northwesterly corner of same; thence,
3.) S.88 degrees 02'40"E., 200.00 feet along the northerly lines of Lots
6, 5, 4 and 3 to the northeasterly corner of Lot 3 Block 9; thence,
4.) S.01 degrees 57'20"W., 118.90 feet along the easterly line of said
Lot 3 to a point in the northerly sideline of West Fairview Avenue;
thence,
5.) N.88 degrees 13'50"W., 200.00 feet along said sideline to the POINT
OF BEGINNING,
said Parcel 5 containing 0.5487 acres of land, and being the same land as
contained in a portion of Parcel B as described in Instrument No. 8564000, Deed
of Trust and Assignment of Leases and Rents.
23
<PAGE> 106
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Missoula, MT)
Situated in the City of Missoula, Missoula County, Montana, to-wit:
Lots 3, 4 and the East 10 feet of Lot 17, all of Lots 18, 19 and 20, in Block
49 of W.J. McCormick's Addition, in the City of Missoula, Missoula County,
Montana, according to the official recorded plat thereof, together with the
vacated alley.
Lots 1, 2, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and the West 20 feet of
Lot 17 in Block 49 of W.J. McCormick's Addition, in the City of Missoula,
Missoula County, Montana, according to the official recorded plat thereof,
together with the vacated alley and the East one-half of vacated Blanche Street
lying between Pine Street and Broadway Street.
Recording reference: Book 271 of Micro Records at page 1613.
Tax Parcel Number: 1864500
24
<PAGE> 107
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Astoria, OR)
PARCEL NO. 1:
A parcel of land situated in the Northwest quarter of the Southwest
quarter of Section 7, Township 8 North, Range 9 West, Willamette Meridian, City
of Astoria, Clatsop County, Oregon, more particularly described as follows:
Beginning at a point which bears North 56 degrees 53' East a distance of
24 feet from the Southeasterly corner of that certain tract of land conveyed to
Henry J. Barbey et ux by deed recorded in Book 198, page 240, Deed Records,
Clatsop County, Oregon;
thence North 56 degrees 53' East 385.0 feet;
thence North 24 degrees 30' West 132.0 feet;
thence South 56 degrees 53' West 385.0 feet;
thence South 24 degrees 36' East 132.0 feet to the point of beginning;
Together with the following non-exclusive easement for ingress and egress
over the following described property;
A parcel of land in the Northwest quarter of the Southwest quarter of
Section 7, Township 8 North, Range 9 West, Willamette Meridian in Clatsop
County, Oregon described as follows:
Beginning at the Southeasterly corner of that certain tract of land
conveyed by Henry J. Barbey and Ethel G. Barbey to Barbey Packing Corp. as
recorded in Book 198, page 240, Clatsop County Records of Deeds, said point
being also on the Northerly right of way line of Spokane, Portland and Seattle
Railroad;
thence North 56 degrees 53' East along said Northerly right of way a
distance of 710.93 feet to the Westerly line of Industry Street;
thence North 24 degrees 30' West a distance of 15.0 feet; thence South 56
degrees 53' West a distance of 710.93 feet to a point of
intersection with the Easterly line of said Barbey tract;
thence South 24 degrees 30' East along the Easterly line of the Barbey
tract a distance of 15.0 feet to the point of beginning.
PARCEL NO. 2:
A tract of land being part of Parcel No. 1 as described in Volume 198,
page 240 of the Clatsop County Deeds and Records, and bounds as follows:
Beginning at a one-half inch iron pipe, said iron pipe being North 24
degrees 30' West 238.35 feet from the Southwest corner of said Parcel No. 1;
thence North 24 degrees 30' West 246.10 feet to a one-half inch iron
pipe;
thence North 65 degrees 30' East 200.00 feet to a one-half inch iron
pipe;
thence South 24 degrees 30' East 373.52 feet to a one-half inch iron
pipe;
thence South 67 degrees 44' West 45.66 feet to a one-half inch iron pipe;
thence North 82 degrees 07' West 80.56 feet to a one-half inch iron pipe;
thence North 70 degrees 30' West 119.85 feet to the point of beginning;
Situated in the City of Astoria, County of Clatsop, State of Oregon;
Together with the right to connect to the extension of Port Road for the
purposes of ingress and/or egress as set forth in that certain easement granted
by the Port of
<PAGE> 108
Astoria, a municipal corporation, to Barbey Packing Corporation dated September
27, 1971, recorded September 27, 1971 in Book 353, page 565, Film Records.
PARCEL NO. 3:
Beginning at an iron pipe which bears North 56 degrees 53' East a
distance of 202.26 feet from the Southwest corner of Parcel No. 1 as described
in deed recorded in Volume 198, page 240, Deed Records, Clatsop County, Oregon;
thence North 24 degrees 30' West 380.0 feet to a point on the East line
of the Barbey Tract as described in Volume 198, page 240, Deed Records, Clatsop
County, Oregon;
thence North 65 degrees 30' East 46.0 feet;
thence South 24 degrees 30' East 248.0 feet to a point;
thence South 56 degrees 53' West 22.0 feet;
thence South 24 degrees 30' East 132.0 feet;
thence South 56 degrees 53' West 24.0 feet to the point of beginning.
PARCEL NO. 4:
Beginning at a point on the West line of Parcel No. 1 as described by
deed recorded in Book 198, page 240, Clatsop County Deed Records, said point
being North 24 degrees 30' West, a distance of 464 feet from the Southwest
corner of said Parcel No. 1;
thence North 24 degrees 30' West a distance of 72.5 feet;
thence North 65 degrees 30' East a distance of 253 feet;
thence South 24 degrees 30' East a distance of 145.25 feet;
thence South 65 degrees 30' West a distance of 72.5 feet;
thence North 24 degrees 30' West a distance of 72.75 feet:
thence South 65 degrees 30' West a distance of 180.5 feet to the point of
beginning, all situated in the City of Astoria, County of Clatsop, State of
Oregon. NOTE: Parcel No. 4 overlaps with Parcels No. 2 and No. 3.
PARCEL NO. 5:
All that portion of the following tract of land and uplands lying
Northerly of the North line of the right of way of the S. P. & S. Railway
Company described as follows:
Beginning at a point on the South bank of the Columbia River on the
meander line of the Samuel C. Smith D.L.C. in Clatsop County, Oregon, 30.23
chains Westerly according to said meander line of the Northeast corner of said
claim; and running
thence North 65 degrees 30' East 300 feet;
thence North 24 degrees 30' West to the ordinary low tide line;
thence Westerly along the line of ordinary low tide to the East line of
the Henry J. Barbey tract, that is, a tract of land accordingly as described in
that certain deed recorded at page 353, Volume 123 of Records of Deeds in the
Office of the County Clerk of Clatsop County, Oregon;
thence South 24 degrees 30' East to a point on the meander line of the
Samuel C. Smith D.L.C. which point is South 47' 00' West a distance of 400 feet
from the point of beginning;
thence North 47 degrees 00' East a distance of 400 feet to the point of
beginning, all being situate in Section 7, Township 8 North, Range 9 West,
Willamette Meridian, Clatsop County, Oregon.
<PAGE> 109
EXCEPTING THEREFROM the following:
A parcel of land situated in the Northwest quarter of the Southwest
quarter of Section 7, Township 8 North, Range 9 West, Willamette Meridian, City
of Astoria, Clatsop County, Oregon, more particularly described as follows:
Beginning at a point which bears North 56 degrees 53' East a distance of
24 feet from the Southeasterly corner of that certain tract of land conveyed to
Henry J. Barbey, et ux, by deed recorded in Book 198, page 240, Deed Records,
Clatsop County, Oregon;
thence North 56 degrees 53' East 385.0 feet;
thence North 24 degrees 30' West 132.0 feet;
thence South 56 degrees 53' West 385.0 feet;
thence South 24 degrees 36' East 132.0 feet to the point of beginning;
Together with the following non-exclusive easement for ingress and egress
over the following described property;
A parcel of land in the Northwest quarter of the Southwest quarter of
Section 7, Township 8 North, Range 9 West, Willamette Meridian, Clatsop County,
Oregon, described as follows:
Beginning at the Southeasterly corner of that certain tract of land
conveyed by Henry J. Barbey and Ethel G. Barbey to Barbey Packing Corp. as
recorded in Book 198, page 240, Clatsop County Records of Deeds, said point
being also on the Northerly right of way line of Spokane, Portland and Seattle
Railroad;
thence North 56 degrees 53' East along said Northerly right of way a
distance of 710.93 feet to the Westerly line of Industry Street;
thence North 24 degrees 30' West a distance of 15.0 feet;
thence South 56 degrees 53' West a distance of 710.93 feet to a point of
intersection with the Easterly line of said Barbey tract;
thence South 24 degrees 30' East along the Easterly line of the Barbey
tract a distance of 15.0 feet to the point of beginning.
ALSO EXCEPTING THEREFROM:
Beginning at an iron pipe which bears North 58 degrees 53' East a
distance of 202.26 feet from the Southwest corner of Parcel No. 1 as described
in deed recorded in Volume 198, Page 240, Deed Records, Clatsop County, Oregon;
thence North 24 degrees 30' West 380.0 feet to a point on the East line
of the Barbey tract as described in Volume 198, Page 240, Deed Records, Clatsop
County, Oregon;
thence North 65 degrees 30' East 46.0 feet;
thence South 24 degrees 30' East 248.0 feet to a point;
thence South 56 degrees 53' West 22.0 feet;
thence South 24 degrees 30' East 132.0 feet;
thence South 56 degrees 53' West 24.0 feet to the point of beginning.
ALSO EXCEPTING THEREFROM:
Beginning at a point on the West line of Parcel No. 1 as described by
deed recorded in Book 198, Page 240, Clatsop County Deed Records, said point
being North 24 degrees 30' West, a distance of 464 feet from the Southwest
corner of said Parcel No. 1; thence North 24 degrees30' West a distance of 72.5
feet;
thence North 65 degrees 30' East a distance of 253 feet;
thence South 24 degrees 30' East a distance of 145.25 feet;
thence South 65 degrees 30' West a distance of 72.5 feet;
<PAGE> 110
thence North 24 degrees 30' West a distance of 72.75 feet;
thence South 65 degrees 30' West a distance of 180.5 feet to the point of
beginning, all situated in the City of Astoria, County of Clatsop, State of
Oregon.
PARCEL NO. 6:
That parcel of land bounded on the North by the South line of Industry
Street, on the East by the West line of Basin Street, on the South by the North
right-of-way line of the Spokane, Portland & Seattle (now Burlington Northern)
Railway, and on the West by a line 200 feet, more or less, distant from the
West line of Basin Street and running parallel thereto. All being situate in
the City of Astoria, County of Clatsop, State of Oregon.
<PAGE> 111
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Bend-North, OR)
Lots 1 through 12 in Block 3 of WIESTORIA, City of Bend, Deschutes County,
Oregon, TOGETHER WITH that portion of a vacated alley which inured thereto upon
the vacation thereof, by ORDINANCE NO. 850, recorded July 8, 1971 in Book 176
at page 956 of Deschutes County Deed Records.
Tax Parcel Number: 1-001 17 12 33 BB 02101 and 1-001 17 12 33 BB 02100
<PAGE> 112
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Coos Bay, OR)
Being a portion of Blocks 35 and 36, of Nasburg's Addition along with a portion
of Blocks 36, 32, 63 and 62, of Bennett's Addition to Coos Bay. Including that
portion of vacated 4th, 5th and 6th Street and 7th Court.
More particularly described as follows:
Beginning at the Southwest corner of Block 35, Nasburg's Addition to Coos Bay;
thence 00 degrees 00' 20" West a distance of 171.17 feet; thence North 60
degrees 30' 00" East a distance of 591.96 feet to a point located on the
Westerly line of U.S. Highway 101; thence along said Westerly line along a
curve to the left having a radius of 1949.86 feet and a central angle of 1
degree 36' 18" a distance of 54.62 feet (whose long chord bears South 40
degrees 18' 48" East 54.62 feet); thence along a spiral curve to the left
having a centerline length of 300.00 feet and an S value of 4 degrees 30'
(whose long chord bears South 42 degrees 24' 10" East 303.05 feet); thence
South 43 degrees 54' 35" East a distance of 241.83 feet to the beginning of a
curve; thence along a curve to the right having a radius of 13.50 feet and a
central angle of 133 degrees 54' 00" a distance of 31.54 feet (whose long chord
bears South 23 degrees 02' 25" West 24.84 feet); thence South 89 degrees 59'
25" West a distance of 471.94 feet; thence North 00 degrees 04' 35" East a
distance of 99.97 feet; thence South 89 degrees 59' 25" West a distance of
242.89 feet, thence South 00 degrees 04' 35" West a distance of 99.97 feet;
thence South 89 degrees 59' 25" West a distance of 197.97 feet, to the point of
beginning.
Tax Parcel Number: 251326BB500
<PAGE> 113
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Eugene, OR)
PARCEL 1:
A parcel of land lying within Section 29, Township 17 South, Range 3 West of
the Willamette Meridian, in Lane County, Oregon: Beginning at the concrete
monument designated as Station "A" in County Survey Number 1781, said survey
being filed in Volume 5, Page 41 of County Surveys for Lane County, Oregon,
said Station "A" being East 13.34 chains of the Southeast corner of the Charles
W. Young Donation Land Claim No. 53, Township 17 South, Range 3 West of the
Willamette Meridian, according to said survey; thence South 0 degrees 10'20"
East, 957.88 feet along the West line of said survey to a point, said point
being the TRUE POINT OF BEGINNING; running thence South 0 degrees 10'20" East
382.89 feet along the West line of said survey to the North line of the
Eugene-Springfield Highway; thence North 77 degrees 37'30" West, 620.02 feet
along the North line of said highway; thence North 1 degrees 31' West 68.07
feet along the North line of said highway to a point on the Southeasterly line
of Coburg Road; thence North 55 degrees 29'21" East 340.90 feet along the
Southeasterly line of Coburg Road to a point; thence South 35 degrees 03'40"
East 206.36 feet; thence North 54 degrees 56'20" East 210.00 feet; thence North
35 degrees 03'40" West 4.31 feet; thence North 48 degrees 03'20" East 50.29
feet to the TRUE POINT OF BEGINNING, all in the City of Eugene, Lane County,
Oregon.
PARCEL 2:
Beginning at a point on the Easterly right of way line of County Road No. 431,
said point being 1142.75 feet North and 181.36 feet West of the Southwest
corner of County Survey No. 1781 in Section 29, Township 17 South, Range 3 West
of the Willamette Meridian; running thence South 34 degrees 32' East 204.46
feet to the true point of beginning; thence South 55 degrees 28' West 180 feet;
thence South 34 degrees 32' East 30 feet; thence North 55 degrees 28' East 180
feet; thence North 34 degrees 32' West 30 feet to the true point of beginning,
in Lane County, Oregon.
Tax Parcel Number: 170329/000500
<PAGE> 114
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Medford, OR)
The land is situated in the State of Oregon, County of Jackson and is described
as follows:
PARCEL 1:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 28 degrees 43'00"
West 273.83 feet, along the Easterly line of North Riverside Avenue, to the
center line of the Northerly wall of the Denison Building for the true point of
beginning; thence continue North 27 degrees 43'00" West 100.00 feet, along said
Easterly line of North Riverside Avenue; thence North 66 degrees 08'20" East
106.08 feet (Record North 66 degrees 08'30" East); thence South 27 degrees
43'00" East 100.00 feet to an intersection of the outside line of the Easterly
wall of the Denison Building with the projection of center line of the
Northerly wall of said Denison Building; thence South 60 degrees 08'30" West
106.08 feet along the center line and the projection thereof, of the Northerly
wall of said Denison Building, to the true point of beginning. EXCEPTING
THEREFROM all that portion of the Northerly wall of the Denison Building lying
Northerly of the centerline of said wall, including all footings and
foundations thereof, together with the land upon which or underneath which said
wall and footings stand, the centerline of said Northerly wall of the Denison
Building being situated as follows: Beginning at a point on the Easterly line
of Riverside Avenue in the City of Medford, Jackson County, Oregon, said point
being North 27 degrees 43' West 224.06 feet from the intersection of said
Easterly line of Riverside Avenue with the Northerly line of East Main Street
(said intersection being also North 34 degrees 12' East 68.0 feet from the
intersection of the Westerly line of Riverside Avenue with the center line of
East Main Street); thence along said Easterly line of Riverside Avenue, North
27 degrees 43' West 49.42 feet to the centerline of Northerly wall of the
Denison Building.
PARCEL 2:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 43'00"
West 273.83 feet along the Easterly line of North Riverside Avenue to the
center line of the Northerly wall of the Denison Building; thence North 66
degrees 08'30" East 106.08 feet along the center line and the projection
thereof the Northerly wall of said Denison Building, to an intersection with
the outside line of the Easterly wall of said Denison Building, for the true
point of beginning; thence North 27 degrees 43'00" West 100.00 feet; thence
South 66 degrees 08'20" West (Record South 66 degrees 08'30" West) 106.08 feet
to the Easterly line of North Riverside Avenue; thence North 27 degrees 43'00"
West 50.00 feet along the Easterly line of North Riverside Avenue; thence North
61 degrees 49'00" East 105.84 feet; thence North 27 degrees 43'00" West 111.09
feet; thence North 67 degrees 45'00" East 23.68 feet to a 1 inch galvanized
iron pipe; thence North 68 degrees 45'00" East 100.30 feet to a 1 inch
galvanized iron pipe; thence North 60"58'42" East 144.73 feet (Record North 61
degrees 00'00" East 144.75 feet); thence North 14 degrees 30'00" West 60.15
feet (Record 60.13 feet); thence North 80 degrees 00'00" East 83.08 feet to
intersect the Westerly right
<PAGE> 115
of way line of Interstate Highway No. 5; thence along said Westerly right of
way line as follows: South 13 degrees 49'50" East 401.71 feet to intersect the
center line of channel of Bear Creek, and South 4 degrees 22'00" East 177.04
feet along center line of channel of said Bear Creek, to the Northerly line of
East Main Street in the City of Medford, Oregon; thence South 76 degrees 27'23"
West 51.38 feet (Record South 76 degrees 32'35" West 51.41 feet) along said
Northerly line of East Main Street; thence North 17 degrees 28'00" West 138.30
feet; thence South 66 degrees 17'00" West 171.30 feet to the Southeast corner
of the Niedermeyer Building; thence North 23 degrees 29'30" West 49.98 feet
along the outside line of the Easterly wall of said Niedermeyer Building, to
the center line of the Northerly wall of said Niedermeyer Building; thence
South 66 degrees 10'00" West 1.92 feet along the center line of said Northerly
wall of said Niedermeyer Building, to a point of intersection with the
projected outside line of the Easterly wall of the Denison Building; thence
North 27 degrees 37'10" West 49.81 feet along the outside line of the Easterly
wall of said Denison Building, to the center line of the Northerly wall of said
Denison Building, the true point of beginning. EXCEPTING THEREFROM all that
part of said wall between the Niedermeyer and Denison Buildings extending
Easterly from the said Denison Building.
PARCEL 3:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 43'00"
West 273.83 feet along the Easterly line of north Riverside Avenue to the
center line of the Northerly wall of the Denison Building; thence continue
North 27 degrees 43'00" West 150.00 feet, along said Easterly line of North
Riverside Avenue, to the true point of beginning; thence continue North 27
degrees 43'00" West 122.08 feet, along said Easterly line of North Riverside
Avenue, to a 1 inch iron pipe at the Northwest corner of "Adkins Tract"; thence
North 67 degrees 45'00" East 106.32 feet; thence South 27 degrees 43'00" East
111.09 feet; thence South 61 degrees 49'00" West 105.84 feet to the true point
of beginning.
PARCEL 4:
Commencing at a concrete monument with bronze disk located at the intersection
of the center line of North Riverside Avenue with the center line of East
Fourth Street in the City of Medford, Jackson County, Oregon; thence along said
East Fourth Street center line North 71 degrees 03'20" East 30.00 feet; thence
parallel with the monumented center line of North Riverside Avenue, South 18
degrees 40'45" East 298.27 feet to a 5/8 inch iron pin for the true point of
beginning; thence continue South 18 degrees 40'45" East 78.32 feet; thence
South 16 degrees 02'20" East 165.00 feet to the Northwest corner of the "Adkins
Tract"; thence to and along the Northwesterly boundary of that parcel described
in Volume 537, Page 13, Jackson County, Oregon, Deed Records, North 67 degrees
50'30" East (record North 67 degrees 45'00" East) 130.05 feet; thence along
said parcel boundary North 68 degrees 51'40" East (record North 68 degrees
45'00" East) 100.27 feet; thence along said parcel boundary North 61 degrees
05'30" East (Record North 61 degrees 00'00" East) 144.75 feet; thence along the
Southwesterly boundary of said parcel, North 14 degrees 24'30" West 60.13 feet
(Record North 14 degrees 30'00" West 60.15 feet); thence along the
Northwesterly boundary of said parcel, North 80 degrees 05'30" East, 83.11 feet
(record North 80 degrees 00'00" East 83.08 feet) to intersect the Southwesterly
right of way line of Interstate Highway No. 5; thence along said highway line
North 13 degrees 44' West 110.98 feet; thence along the Southwesterly boundary
of the tract described in Final Judgment rendered November 2,
<PAGE> 116
1953, in the Circuit Court of Oregon for Jackson County, under Case No.
53-188-E and recorded in Volume 115, Page 347, of the Circuit Court Journal,
North 27 degrees 42' West 312.02 feet to the Southeasterly boundary of East
Fourth Street; thence along said street boundary, South 71 degrees 03'20" West
213.37 feet to the most Northerly corner of that tract described in Volume 579,
Page 429, said Deed Records; thence along the Northeasterly boundary of said
tract, South 18 degrees 56'40" East 154.75 feet to the most Easterly corner
thereof; thence along the Southeasterly boundary of said tract, South 77
degrees 58' West 57.86 feet; thence along the Southeasterly boundary of said
tract South 76 degrees 53'50" West 17.03 feet; thence South 18 degrees 40'45"
East 112.80 feet; thence South 71 degrees 19'15" West 125 feet to the true
point of beginning.
PARCEL 5:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 36'40"
West (record North 27 degrees 33'00" West) 545.91 feet along the easterly line
of North Riverside Avenue to a 1 inch pipe at the Northwest corner of "Adkins
Tract"; thence North 16 degrees 40'45" West along said Easterly line 165.59
feet; thence North 18 degrees 40'45" West along said Easterly line 203.25 feet
to the true point of beginning; thence South 18 degrees 40'45" East along said
Easterly line 125.00 feet; thence North 71 degrees 19'15" East, at right angles
to the said Easterly line of North Riverside Avenue, 125.00 feet; thence North
18 degrees 40'45" West parallel with the said Easterly line to a point on the
South line of tract described in Volume 579, Page 427, Jackson County, Oregon,
Deed Records; thence South 76 degrees 53'50" West along said line to the true
point of beginning.
Tax Parcel Numbers: 371W30BB 9900, 371W30BB 10000, 371W30BB 10100,
371W30BB 10300, and 371W30BB 10301
<PAGE> 117
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Pendleton, OR)
TRACT I:
Lot 2, Block 5, REES ADDITION to City of Pendleton, Umatilla County, Oregon;
ALSO Block 3, REES ADDITION to City of Pendleton, Umatilla County, Oregon,
EXCEPTING THEREFROM that portion thereof under lease to Atlantic Richfield
Corporation and described as following:
Beginning at the Southeast corner of said Block 3, located in the South half
of Section 11, Township 2 North, Range 32 East of the Willamette Meridian,
Umatilla County, Oregon; thence South 78 degrees 28'20" West a distance of
250 feet to a point; thence Northerly a distance of 130 feet, more or less,
to a point on the North line of said Block 3, which bears South 87 degrees
18'10" West a distance of 216 feet from the Northeast corner of said Block 3;
thence North 87 degrees 18'10" East a distance of 216 feet to the Northeast
corner of said Block 3; thence Southerly along the Easterly line of said
Block 3 a distance of 90.36 feet to the point of beginning.
TRACT II:
Lot 1, Block 5, REES ADDITION to City of Pendleton, Umatilla County, Oregon.
Tax Parcel Numbers: 112270-00600
112271-00700
112274-00800
<PAGE> 118
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Salt Lake City, Utah)
BEGINNING at a point which is North 200.00 feet from the Southwest corner of
Block 58, Plat "A", Salt Lake City Survey, and running thence North 302.83
feet; thence East 244.55 feet; thence South 302.83 feet; thence West 244.55
feet to the point of BEGINNING.
TOGETHER WITH the rights contained in that certain Revocable Permit executed by
Salt Lake City Corporation, recorded August 9, 1983 as Entry No. 3829041 in
Book 5481 at page 1600 of Official Records, as modified and superseded by that
certain Lease Agreement to Occupy Public Property by and between Salt Lake City
Corporation, a municipal corporation, as lessor, and Red Lion, a California
Limited Partnership, as lessee, dated May 17, 1988. The Lease Agreement was
renewed for an additional five years through May 16, 1998, pursuant to Notice
of Renewal of Lease Agreement to Occupy Public Property dated November 6, 1992.
ALSO TOGETHER WITH all rights, privileges, conditions, etc., as set forth in
that certain Reciprocal Easement and Maintenance Agreement with Conditions,
Covenants and Restrictions recorded March 20, 1981 as Entry No. 3566733 in Book
5250 at pages 640 through 737 of Official Records; as amended by that certain
Amendment to Reciprocal Easement and Maintenance Agreement with Conditions,
Covenants and Restrictions recorded February 19, 1988 as Entry No. 4587998, in
Book 6005, at Page 591 of Official Records.
ALSO TOGETHER WITH all rights, privileges, conditions, etc., as set forth in
that certain Cross Easement recorded December 31, 1987 as Entry No. 456856 in
Book 5993 at page 448 of Official Records.
Tax Parcel Number: 1501 280 050
<PAGE> 119
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Kelso, WA)
IN THE COUNTY OF COWLITZ, STATE OF WASHINGTON
PARCEL A:
A tract of land in Sections 26 and 35, Township 8 North, Range 2 West of the
Willamette Meridian, lying Easterly of the Easterly right of way line of
Frontage Road No. 1, as proposed, and lying Westerly of the center line of the
existing drainage slough, being more particularly described as follows:
BEGINNING at a point on the line between Sections 26 and 35, where the same
intersects the center line of said drainage slough, said point being North 88
degrees 57' West a distance of 1,889.02 feet from the Southeast corner of
Section 26; thence South 37 degrees 38' East along the center line of said
drainage slough a distance of 415.51 feet;
thence North 88 degrees 57' West parallel with the section line between
Sections 26 and 35, a distance of 645.63 feet, more or less, to the Easterly
right of way line of proposed Frontage Road No. 1;
thence North 8 degrees 16' East along the Easterly right of way of said
proposed Frontage Road a distance of 280.31 feet to a point that is North 88
degrees 04' East a distance of 127.60 feet from a concrete post set to mark the
Easterly right of way of existing Interstate Highway No. 5 at Engineer's
Station 510+00; thence continuing North 8 degrees 16' East along the Easterly
line of the proposed Frontage Road a distance of 360.19 feet to the point of
curvature of a curve to the right;
thence along said curve having a radius of 400.00 feet, through a central angle
of 3 degrees 36' 54", an arc distance of 25.24 feet to a point that is a
distance of 216.55 feet North 88 degrees 04' East from the Easterly right of
way line of present Interstate Highway No. 5;
thence North 88 degrees 04' East a distance of 208.98 feet to the center line
of the aforementioned slough;
thence along the center line of said slough South 18 degrees 45' West a
distance of 78.60 feet;
thence South 17 degrees 39' East a distance of 230.80 feet;
thence South 37 degrees 38' East along the center line of said slough a
distance of 68.37 feet to the point of beginning.
TOGETHER WITH an easement for ingress and egress, 25 feet in width, lying South
of and abutting the Westerly extension of the North line of the above described
tract, and extending from the Easterly right of way line of Primary State
Highway No. 1 to the Westerly line of said premises.
TOGETHER WITH a non-exclusive right of way and easement over the following:
A tract of land in Section 26, Township 8 North, Range 2 West of the Willamette
Meridian, described as follows:
<PAGE> 120
BEGINNING at a point on the Easterly right of way line of Primary State Highway
No. 1 North 1 degrees 56' West a distance of 314.1 feet and West 2389.6 feet
from the Southeast corner of Section 26;
thence along said right of way North 1 degrees 56' West a distance of 28.7 feet
to a point at right angles to center line Station 514+07.5 of said highway;
thence along said right of way North 3 degrees 51' 30" West a distance of 195.8
feet to a point on a radial line from center line station 516+00 and marked by
a concrete post;
thence along said right of way on a curve to the right having a radius of
381.26 feet for 75.5 feet to the center line of the box culvert under said
highway and also the center line of a ditch that bears North 76 degrees 00'
East; thence along said right of way on a curve to the right having a radius of
381.26 feet for 110.0 feet;
thence Southerly to a point which is Easterly of said highway right of way line
25 feet on the center line of said ditch that bears North 76 degrees 00' East;
thence Southerly on a line that is parallel to and 25 feet Easterly of said
highway right of way line to the point of intersection with a line that bears
North 88 degrees 04' East from the point of beginning;
thence Westerly along said line to the point of beginning.
EXCEPTING THEREFROM those portions conveyed to the Department of Highways by
deed recorded under Auditor's File Nos. 787154 and 787155.
PARCEL B:
BEGINNING 1476.4 feet North 1 degrees 38' East and 1882.7 feet North 88 degrees
22' West from the Southeast corner of said Section 26, Township 8 North, Range
2 West, Willamette Meridian, Cowlitz County, Washington, said point being the
Northeast corner of a 5.5 acre tract of land described in Volume 620, Page 571,
Cowlitz County, Washington, deed records;
thence along the center of a ditch South 4 degrees 00' East 369.2 feet; thence
South 28 degrees 55' West 262.06 feet to a point 50.00 feet distant at right
angles to State Highway centerline FR RD NO. (1) 29+32.79 P.C.;
thence continuing parallel to the FR RD NO. (1) centerline South 30 degrees 15'
59" West 278.17 feet to a point 50.00 feet distant at right angles to
centerline station FR RD NO. (1) 26+54.62 P.T.;
thence continuing parallel to the FR RD NO. (1) centerline along a curve left
having a radius of 950.00 feet (the long chord of which bears South 24 degrees
34' 58" West 188.17 feet) 188.48 feet to the true point of beginning;
thence continuing parallel to the FR RD NO. (1) centerline along a curve having
a radius of 950.00 feet (the long chord of which bears South 15 degrees 43' 57"
West 104.95 feet) 105.00 feet; thence North 89 degrees 42' East 224.88 feet to
the center of an old river channel;
thence North 20 degrees 32' East along the center of said channel 105.00 feet;
thence North 89 degrees 38' 21" West 233.27 feet to the true point of
beginning.
Tax Parcel Numbers:2-4021-1 and 2-4023-01
<PAGE> 121
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sea-Tac, WA )
THE LAND IS SITUATED IN THE STATE OF WASHINGTON, COUNTY OF KING
AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT OF INTERSECTION OF THE EAST LINE OF THE NORTHEAST QUARTER
OF THE SOUTHEAST QUARTER OF SAID SECTION 33, WITH THE NORTH LINE OF SOUTH 188TH
STREET, AS ESTABLISHED BY DEEDS RECORDED UNDER RECORDING NOS. 2522597 AND
5350935;
THENCE ALONG THE EAST LINE OF SAID NORTHEAST QUARTER, NORTH 3 DEGREES 04'29"
EAST 230.00 FEET TO THE TRUE POINT OF BEGINNING.
THENCE PARALLEL WITH SAID NORTH LINE, NORTH 88 DEGREES 10'06" WEST 177.36 FEET;
THENCE SOUTH 12 DEGREES 54'07" WEST 234.31 FEET TO SAID NORTH LINE;
THENCE ALONG THE NORTH LINE OF SAID SOUTH 188TH STREET, NORTH 88 DEGREES 10'06"
WEST 495.05 FEET TO THE EASTERLY LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY 99) AS
ESTABLISHED IN KING COUNTY SUPERIOR COURT CAUSE NO. 181371;
THENCE ALONG SAID EASTERLY LINE, NORTH 1 DEGREES 42'50" WEST 1,252.79 FEET TO
THE NORTH LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID NORTH LINE, SOUTH 88 DEGREES 37'38" EAST 817.18 FEET TO THE
EAST LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID EAST LINE, SOUTH 3 DEGREES 04'29" WEST 1,027.23 FEET TO THE
TRUE POINT OF BEGINNING;
EXCEPT THOSE PORTIONS CONVEYED TO KING COUNTY FOR ROAD PURPOSES BY DEEDS
RECORDED JUNE 8, 1982 UNDER RECORDING NOS. 8206080659 AND 8206080664;
ALSO EXCEPT THE FOLLOWING DESCRIBED PARCEL OF LAND;
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST LINE OF STATE ROAD NO. 1 (U.S.
HIGHWAY NO. 99) AS ESTABLISHED IN KING COUNTY SUPERIOR COURT NO. 181371; WITH
THE NORTH LINE OF SOUTH 188TH STREET AS ESTABLISHED BY DEEDS RECORDED UNDER
RECORDING NOS. 2522597 AND 5350935;
<PAGE> 122
THENCE NORTH 01 DEGREES 42'50" WEST ALONG SAID EAST LINE OF STATE ROAD NO. 1, A
DISTANCE OF 1,053.40 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING NORTH 01 DEGREES 42'50" WEST, ALONG SAID EAST LINE OF STATE
ROAD NO. 1, A DISTANCE OF 199.39 FEET TO THE NORTH LINE OF SAID NORTHEAST
QUARTER;
THENCE SOUTH 88 DEGREES 37'38" EAST, ALONG SAID NORTH LINE, A DISTANCE OF
220.00 FEET;
THENCE SOUTH 17 DEGREES 50'30" WEST, A DISTANCE OF 208.17 FEET;
THENCE NORTH 88 DEGREES 25'22" WEST, A DISTANCE OF 150.25 FEET TO THE TRUE
POINT OF BEGINNING;
ALSO EXCEPT THE FOLLOWING DESCRIBED PARCEL OF LAND:
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST LINE OF STATE ROAD NO. 1 (U.S.
HIGHWAY NO. 99) AS ESTABLISHED IN KING COUNTY SUPERIOR COURT CAUSE NO. 181371,
WITH THE NORTH LINE OF SOUTH 188TH STREET, AS ESTABLISHED BY DEEDS RECORDED
UNDER RECORDING NOS. 2522597 AND 5350935;
THENCE NORTH 01 DEGREES 55'06" WEST ALONG SAID EAST LINE OF STATE ROAD NO. 1, A
DISTANCE OF 818.40 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING NORTH 01 DEGREES 55'06" WEST ALONG SAID EAST LINE OF STATE
ROAD NO. 1, A DISTANCE OF 235.00 FEET;
THENCE SOUTH 88 DEGREES 37'38" EAST, A DISTANCE OF 150.25 FEET;
THENCE SOUTH 01 DEGREES 55'06" EAST A DISTANCE OF 171.04 FEET;
THENCE SOUTH 67 DEGREES 49'54" WEST, A DISTANCE OF 159.88 FEET TO THE TRUE
POINT OF BEGINNING.
PARCEL B:
LOT 1, KING COUNTY SHORT PLAT NO. 477027, AS RECORDED UNDER KING COUNTY
RECORDING NO. 7802270909.
PARCEL C:
THAT PORTION OF LOT 7, BLOCK 1, BOW VISTA NO. 4, ACCORDING TO THE PLAT THEREOF
RECORDED IN VOLUME 57 OF PLATS, PAGE 1, RECORDS OF KING COUNTY, WASHINGTON, AND
THAT PORTION OF LOT 1, BLOCK 3, BOW VISTA NO. 2, ACCORDING TO THE PLAT THEREOF
RECORDED IN VOLUME 53 OF PLATS, PAGES 46 AND 47, RECORDS OF KING COUNTY,
WASHINGTON, LYING NORTHWESTERLY OF A LINE DRAWN BETWEEN THE SOUTHWEST CORNER OF
SAID LOT 7 AND THE NORTHEAST CORNER OF SAID LOT 1, THE BEARING AND DISTANCE OF
SAID LINE BEING NORTH 42 DEGREES 53'49" EAST FOR 210.04 FEET.
<PAGE> 123
ALL SITUATE IN THE COUNTY OF KING, STATE OF WASHINGTON.
TAX PARCEL NUMBERS: 332304-9207-00 AND 342304-9234-09
<PAGE> 124
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Vancouver/Inn at the Quay, WA)
PARCEL A
THAT CERTAIN PORTION OF THE AMOS SHORT DONATION LAND CLAIM, AND ABUTTING TIDE
LAND LOCATED IN SECTION 27, TOWNSHIP 2 NORTH, RANGE 1 EAST OF THE WILLAMETTE
MERIDIAN, IN THE COUNTY OF CLARK, STATE OF WASHINGTON, BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WEST LINE OF COLUMBIA STREET THAT IS SOUTH 0
DEGREES 44'45" WEST 43.00 FEET FROM THE INTERSECTION OF THE NORTHERLY LINE OF
THE PUBLIC LEVEE WITH THE WEST LINE OF SAID STREET RUNNING THENCE SOUTH 0
DEGREES 44'45" WEST 396.81 FEET TO THE INNER HARBOR LINE; THENCE NORTH 64
DEGREES 25'39" WEST, ALONG SAID LINE 508.35 FEET; THENCE NORTH 25 DEGREES
34'21" EAST 77.37 FEET; THENCE SOUTH 68 DEGREES 52'14" EAST 91.22 FEET; THENCE
NORTH 29 DEGREES 11' EAST 229.00 FEET; THENCE SOUTH 75 DEGREES 44'12" EAST
241.01 FEET TO THE POINT OF BEGINNING. EXCEPTING, HOWEVER, A STRIP OF LAND 30
FEET WIDE TO BE USED AS ACCESS ROAD PURPOSES, BEING 15 FEET ON EITHER SIDE OF
THE FOLLOWING DESCRIBED CENTER LINE: BEGINNING AT A POINT ON THE WEST LINE OF
SAID COLUMBIA STREET THAT IS SOUTH 0 DEGREES 44'45" WEST 92.53 FEET FROM THE
NORTHERLY LINE OF THE AFOREMENTIONED LEVEE; THENCE SOUTHWESTERLY ALONG THE ARC
OF A CURVE TO THE RIGHT, HAVING A RADIUS OF 165.02 FEET; THROUGH A CENTRAL
ANGLE OF 41 DEGREES 57'58" AN ARC DISTANCE OF 120.87 FEET; THENCE SOUTH 78
DEGREES 32'58" WEST 104.05 FEET; THENCE ALONG THE ARC OF A CURVE TO THE RIGHT,
HAVING A RADIUS OF 288.43 FEET THROUGH A CENTRAL ANGLE OF 27 DEGREES 13'22," AN
ARC LENGTH OF 137.46 FEET TO THE WESTERLY LINE OF THE ABOVE DESCRIBED PROPERTY,
AND THE TERMINUS OF SAID LINE.
PARCEL B
BEGINNING AT THE POINT OF INTERSECTION OF THE EAST LINE OF COLUMBIA STREET AND
THE INNER HARBOR LINE, SAID POINT BEING NORTH 93.05 FEET AND WEST 510.8 FEET
FROM THE SOUTHEAST CORNER OF THE AMOS SHORT DONATION LAND CLAIM; THENCE NORTH
64 DEGREES 25'39" WEST 170.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH
25 DEGREES 34'21" WEST 150.00 FEET TO THE OUTER HARBOR LINE; THENCE NORTH 64
DEGREES 25'39" WEST ALONG SAID OUTER HARBOR LINE 426.50 FEET; THENCE NORTH 25
DEGREES 34'21" EAST 150.00 FEET TO THE AFOREMENTIONED INNER HARBOR LINE; THENCE
SOUTH 64 DEGREES 25'39" EAST 426.50 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL C
<PAGE> 125
BEGINNING AT A POINT ON THE WEST LINE OF COLUMBIA STREET THAT IS SOUTH 0
DEGREES 44'45" WEST 43.00 FEET FROM THE INTERSECTION OF SAID WEST LINE WITH THE
NORTHERLY LINE OF THE PUBLIC LEVEE SHOWN ON THE PLAT OF THE TOWN OF VANCOUVER,
RECORDED IN VOLUME "B" OF PLATS, PAGE 40, IN CLARK COUNTY, WASHINGTON; THENCE
CONTINUING SOUTH 0 DEGREES 44'45" WEST 396.81 FEET TO THE INNER HARBOR LINE;
THENCE NORTH 64 DEGREES 25'39" WEST ALONG SAID LINE 508.35 FEET; THENCE NORTH
25 DEGREES 34'21" EAST 77.37 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH
68 DEGREES 52'14" EAST 91.22 FEET; THENCE NORTH 29 DEGREES 11'00" EAST 229.00
FEET; THENCE NORTH 75 DEGREES 44'12" WEST 107.46 FEET; THENCE SOUTH 25 DEGREES
34'21" WEST 214.54 FEET TO THE AFORESAID TRUE POINT OF BEGINNING.
PARCEL D
THE SOUTH HALF OF LOTS 1, 2, 3 AND 4 AND THE WEST 25 FEET OF THE NORTH HALF OF
LOT 4, ALL OF LOTS 5, 6, 7 AND 8 IN BLOCK 17, PLAT OF THE CITY OF VANCOUVER
(COMMONLY KNOWN AS WEST VANCOUVER) ACCORDING TO THE PLAT THEREOF APPEARING IN
BOOK "A" OF GENERAL RECORDS, AT PAGE 84.
TOGETHER WITH TRACTS 27 AND 28 OF VANCOUVER TIDELANDS AS SHOWN ON THE PLAT OF
STATE LAND COMMISSION APPROVED MAY 8, 1906.
EXCEPTING FROM THE ABOVE DESCRIBED PROPERTY THAT PORTION TAKEN BY THE UNITED
STATES OF AMERICA FOR THE SHIPYARD ACCESS ROAD, PURSUANT TO SUPERIOR COURT
CAUSE NO. 24115, AND EXCEPTING THAT PORTION TAKEN BY THE STATE OF WASHINGTON
FOR THE INTERSTATE BRIDGE APPROACHES, PURSUANT TO SUPERIOR COURT CAUSE NO.
32160.
<PAGE> 126
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Wenatchee, WA)
Situated in the County of Chelan, State of Washington, described as follows:
Lots 1, 2, 3 and 4, Block 11, SUBURBAN HOME ADDITION TO WENATCHEE, Chelan
County, Washington, according to the plat thereof recorded in Volume 1 of
Plats, Page 22, EXCEPT the Southerly 76.9 feet of said Lots 3 and 4.
Tax Parcel Number: 23-20-34-860080
<PAGE> 127
EXHIBIT B
LEASE ALLOCATION
<TABLE>
<CAPTION>
================================================================================
ALLOCATED PERCENTAGE OF
PROPERTY AMOUNT OF TOTAL BASE BASE REVENUE
BASE RENT RENT
- --------------------------------------------------------------------------------
<S> <C> <C>
Astoria 181,115 1.21%
- --------------------------------------------------------------------------------
Bend North 144,820 0.97%
- --------------------------------------------------------------------------------
Boise 404,423 2.70%
- --------------------------------------------------------------------------------
Coos Bay 118,450 0.79%
- --------------------------------------------------------------------------------
Durango 860,668 5.74%
- --------------------------------------------------------------------------------
Eugene 417,660 2.78%
- --------------------------------------------------------------------------------
Kelso 360,342 2.40%
- --------------------------------------------------------------------------------
Medford 578,378 3.86%
- --------------------------------------------------------------------------------
Missoula 145,220 0.97%
- --------------------------------------------------------------------------------
Pendleton 434,170 2.89%
- --------------------------------------------------------------------------------
Rohnert Park/Sonoma 733,106 4.89%
- --------------------------------------------------------------------------------
Sacramento 1,352,228 9.01%
- --------------------------------------------------------------------------------
Salt Lake 2,687,691 17.92%
- --------------------------------------------------------------------------------
San Diego 1,122,198 7.48%
- --------------------------------------------------------------------------------
Seatac 4,503,580 30.02%
- --------------------------------------------------------------------------------
Vancouver 586,220 3.91%
- --------------------------------------------------------------------------------
Wenatchee 369,731 2.46%
- --------------------------------------------------------------------------------
TOTALS 15,000,000 100.00%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
CONTACT: WILLIAM L. PEROCCHI Exhibit 99.1
EXECUTIVE VP AND CFO
602-220-6810
FOR IMMEDIATE RELEASE
DOUBLETREE CORPORATION COMPLETES ACQUISITION
OF RED LION HOTELS
PHOENIX, ARIZONA, November 8, 1996 -- Doubletree Corporation (NASDAQ: TREE)
announced today that it has completed its previously announced acquisition of
Red Lion Hotels, Inc. following approval of the transaction by Red Lion's
shareholders at a meeting held earlier today.
Doubletree is now one of the largest hotel management companies in the United
States, with 1995 proforma revenues of about $600 million and revenues under
management of $1.4 billion. As contemplated under the transaction, most Red
Lion locations will be converted to the Doubletree brand name, enhancing
Doubletree's position as a leading full service national lodging brand. The
combined operation as of September 30, 1996 had a portfolio of 236 properties
totaling 55,497 rooms either owned or under lease, management contract, or
franchise agreement throughout the U.S., Mexico, and the Caribbean (net of four
properties totaling 1,798 rooms that will be terminated as a result of
contractual conflicts).
<PAGE> 2
2
"We are delighted to welcome Red Lion hotel managers, employees and guests into
the Doubletree family," said Richard M. Kelleher, President and Chief Executive
Officer of Doubletree Hotels Corporation. "As we have said from the outset,
this acquisition launches us on a new phase of growth as our enhanced
organization capitalizes on opportunities in the upscale, full-service segment
of the North American lodging industry. Our first priority is to engineer a
smooth integration of our two operations, building a bigger, better hotel
management company that draws from the best of both organizations in order to
continue to execute our business strategy of maximizing the value of our
owners' hotels.
"We believe that Doubletree is extremely well positioned to grow as a national
brand in a consolidating industry over the long-term," Mr. Kelleher said.
Doubletree Corporation is a leading hotel management company and the exclusive
franchisor of Doubletree Hotels(R), Doubletree Guest Suites(R), and Club Hotels
by Doubletree(R) hotel brands.
# # #
<PAGE> 1
Exhibit 99.2
CONTACT: DAVID TRUMBLE
602-220-6822
FOR IMMEDIATE RELEASE
DOUBLETREE CORPORATION NAMES RICHARD KELLEHER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PHOENIX, November 13, 1996 - Doubletree Corporation (NASDAQ: TREE) today
announced that Richard M. Kelleher has been named president and chief executive
officer of the Company. Kelleher is currently president and chief executive
officer of Doubletree's operating subsidiary, Doubletree Hotels Corporation,
and is a member of Doubletree Corporation's Board of Directors.
"With our recent acquisition of Red Lion Hotels we have dramatically increased
our size and scope, and it is important for us to have a chief executive at the
holding company level with responsibility for overseeing the newly combined
corporation and exploring additional avenues for growth," said Richard J.
Ferris, co-chairman of Doubletree Corporation. "Rick has done an exceptional
job building and leading a top-notch management team and overseeing our hotel
operations during a period of great change, and he will continue to be
instrumental in solidifying Doubletree's position as a premier brand name in
upscale lodging."
Kelleher has served as president and chief executive officer of Doubletree
Hotels Corporation since December 1993 and as a director of the Company since
July 1995. Kelleher co-founded Beacon Hotel Corporation in 1983 and became the
president of Guest Quarters Hotel in 1986, after its merger with Beacon Hotels.
Doubletree Corporation is a leading hotel management company and the exclusive
franchisor of Doubletree Hotels, Doubletree Guest Suites and Club Hotels by
Doubletree hotel brands.
# # #
<PAGE> 1
Exhibit 99.3
CONTACT: DAVID TRUMBLE
602-220-6822
FOR IMMEDIATE RELEASE
DOUBLETREE CORPORATION NAMES
WILLIAM L. PEROCCHI TO BOARD
PHOENIX, November 13, 1996 -- Doubletree Corporation (NASDAQ: TREE) announced
today that William L. Perocchi, executive vice president, chief financial
officer and treasurer, has been named a director of the Company, increasing the
size of the Board to eleven.
"Bill has played a critical role in executing the Company's growth strategy
over the past few years and was a key player in the recently completed RFS and
Red Lion transactions," said Richard J. Ferris, co-chairman of Doubletree
Corporation. "This appointment is a reflection of his invaluable leadership as
we continued to build one of the premier hotel management companies in the
industry."
Perocchi joined the Company in 1992 and has held his current position since
December 1993. Previously he spent 10 years with the General Electric Company
in a variety of financial management positions.
Doubletree Corporation is a leading hotel management company and the exclusive
franchisor of Doubletree Hotels, Doubletree Guest Suites and Club Hotels by
Doubletree hotel brands.
###
