<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-24250
FELCOR SUITE HOTELS, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 72-2541756
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
(972) 444-4900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
The number of shares of Common Stock, par value $.01 per share, of
FelCor Suite Hotels, Inc. outstanding on November 1, 1996 was 23,495,057.
- --------------------------------------------------------------------------------
<PAGE> 2
FELCOR SUITE HOTELS, INC.
INDEX
PART I. -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FELCOR SUITE HOTELS, INC.
Condensed Consolidated Balance Sheets -- September 30, 1996 (Unaudited)
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations -- For the Three and Nine Months
Ended September 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -- For the Nine Months
Ended September 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . 7
DJONT OPERATIONS, L.L.C.
Consolidated Balance Sheets -- September 30, 1996 (Unaudited)
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consolidated Statements of Operations -- For the Three and Nine Months
Ended September 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 13
Consolidated Statements of Cash Flows -- For the Nine Months
Ended September 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . 14
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . 15
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PART II. -- OTHER INFORMATION
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
2
<PAGE> 3
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FELCOR SUITE HOTELS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1996 1995
----------- --------
(UNAUDITED)
<S> <C> <C>
Investment in hotel properties, net . . . . . . . . . . . . . . . . . . . . . $ 804,097 $325,155
Investment in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . 44,941 13,819
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 8,083 166,821
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,616 35,317
Due from Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,755 2,396
Deferred expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,409 1,713
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,012 3,138
----------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 866,913 $548,359
=========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Distributions payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,949 $ 4,918
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . 1,152 3,552
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,550 8,410
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 13,339 11,256
Minority interest in Partnership, 2,787 and 2,695 units issued and
outstanding at September 30, 1996 and December 31, 1995,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,220 58,837
----------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 207,210 86,973
----------- --------
Commitments and contingencies (Note 2)
Shareholders' equity:
Preferred stock, $.01 par value, 10,000 shares authorized, 6,050 shares
issued and outstanding at September 30, 1996 . . . . . . . . . . . . . . 151,250
Common stock, $.01 par value, 50,000 shares authorized, 23,501 and
21,135 shares issued and outstanding at September 30, 1996
and December 31, 1995, respectively . . . . . . . . . . . . . . . . . . 235 211
Additional paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . 504,791 463,524
Unearned officers' and directors' compensation . . . . . . . . . . . . . . . (1,646) (473)
Earnings in excess (deficient) of distributions . . . . . . . . . . . . . . . 5,073 (1,876)
----------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . 659,703 461,386
----------- --------
Total liabilities and shareholders' equity . . . . . . . . . . . . $ 866,913 $548,359
=========== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE> 4
FELCOR SUITE HOTELS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ---------------------
1996 1995 1996 1995
------- ------ ------- -------
<S> <C> <C> <C> <C>
Revenues:
Percentage lease revenue . . . . . . . . . . . . . . . . . $25,263 $6,138 $72,648 $17,487
Other revenue . . . . . . . . . . . . . . . . . . . . . . . 163 215 937 432
Income from unconsolidated subsidiaries . . . . . . . . . . 927 290 1,412 290
------- ------ ------- -------
Total revenue . . . . . . . . . . . . . . . . . . 26,353 6,643 74,997 18,209
------- ------ ------- -------
Expenses:
General and administrative . . . . . . . . . . . . . . . . 458 215 1,307 640
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 7,529 1,455 17,833 3,691
Taxes, insurance and other . . . . . . . . . . . . . . . . 3,260 616 9,859 1,755
Interest expense . . . . . . . . . . . . . . . . . . . . . 1,760 143 6,273 1,061
Minority interest . . . . . . . . . . . . . . . . . . . . . 1,477 724 4,619 2,392
------- ------ ------- -------
Total expenses . . . . . . . . . . . . . . . . . . 14,484 3,153 39,891 9,539
------- ------ ------- -------
Net income before extraordinary charge . . . . . . . . . . . 11,869 3,490 35,106 8,670
Extraordinary charge from write off of deferred financing fees 2,354 2,354
------- ------ ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . 9,515 3,490 32,752 8,670
Preferred dividends . . . . . . . . . . . . . . . . . . . . . 2,949 4,784
------- ------ ------- -------
Net income applicable to common shareholders . . . . . . . . $ 6,566 $3,490 $27,968 $ 8,670
======= ====== ======= =======
Per common share information:
Net income applicable to common shareholders
before extraordinary charge . . . . . . . . . . . . . . $ 0.38 $ 0.43 $ 1.32 $ 1.39
Extraordinary charge . . . . . . . . . . . . . . . . . . . (0.10) (0.10)
------- ------ ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 0.28 $ 0.43 $ 1.22 $ 1.39
======= ====== ======= =======
Weighted average number of common shares outstanding . . . 23,276 8,170 22,933 6,255
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 5
FELCOR SUITE HOTELS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1996 1995
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,752 $ 8,670
Adjustments to reconcile net income to net cash provided by
operating activities, net of effects of acquisitions:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 18,417 3,966
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . 4,619 2,392
Income from unconsolidated subsidiaries . . . . . . . . . . . . . . . (1,412) (290)
Extraordinary charge for write off of deferred financing fees . . . . 2,354
Changes in assets and liabilities:
Due from Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,359) 50
Deferred expenses and other assets . . . . . . . . . . . . . . . . . . 423 (1,202)
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . (3,142) (1,740)
-------- -------
Net cash flow provided by operating activities . . . . . . . . 52,652 11,846
-------- -------
Cash flows from investing activities:
Acquisition of hotel properties and related accounts . . . . . . . . . . . . (287,715) (54,853)
Acquisition of unconsolidated subsidiaries . . . . . . . . . . . . . . . . . (28,204) (13,221)
Cash distributions from unconsolidated subsidiaries . . . . . . . . . . . . 896
Prepayment under purchase agreement . . . . . . . . . . . . . . . . . . . . (15,000)
Improvements and additions to hotel properties . . . . . . . . . . . . . . . (44,960) (3,337)
-------- -------
Net cash flow used in investing activities . . . . . . . . . . (359,983) (86,411)
-------- -------
Cash flows from financing activities:
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 185,350 40,100
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . (190,954) (35,949)
Loan costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,402)
Proceeds from sale of common stock . . . . . . . . . . . . . . . . . . . . . 44,978 81,011
Proceeds from sale of preferred stock . . . . . . . . . . . . . . . . . . . 144,251
Distributions paid to limited partners . . . . . . . . . . . . . . . . . . . (3,960) (2,212)
Distributions paid to preferred shareholders . . . . . . . . . . . . . . . . (1,835)
Distributions paid to common shareholders . . . . . . . . . . . . . . . . . (24,835) (7,729)
-------- -------
Net cash flow provided by financing activities . . . . . . . . 148,593 75,221
-------- -------
Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . (158,738) 656
Cash and cash equivalents at beginning of periods . . . . . . . . . . . . . . . . . 166,821 1,118
-------- -------
Cash and cash equivalents at end of periods . . . . . . . . . . . . . . . . . . . . $ 8,083 $ 1,774
======== =======
Supplemental cash flow information --
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,971 $ 452
======== =======
</TABLE>
Supplemental disclosure of noncash financing activities:
In the first nine months of 1996 the Company provided for the grant of an
aggregate of 53,000 shares of restricted common stock to officers and directors
which, at date of issuance, were valued at $26.50 to $31.375 per share.
5
<PAGE> 6
FELCOR SUITE HOTELS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
Supplemental disclosure of noncash financing activities: -- (continued)
In connection with certain unit and common stock transactions, $4.2
million was allocated to minority interest in Partnership from additional paid
in capital.
In the first nine months of 1996 the Company purchased certain assets and
assumed certain liabilities of hotel properties. These purchases were recorded
under the purchase method of accounting. The fair value of the acquired assets
and liabilities recorded at the date of acquisition are as follows:
<TABLE>
<S> <C>
Assets acquired . . . . . . . . . . . . . . . . $451,617
Application of prepayments to acquisition
of hotel properties . . . . . . . . . . . . (35,455)
Debt assumed . . . . . . . . . . . . . . . . . (108,744)
Capital equipment leases assumed . . . . . . . (2,823)
Partnership units issued . . . . . . . . . . . (10,880)
Common stock issued . . . . . . . . . . . . . . (6,000)
--------
Net cash paid . . . . . . . . . . . . . $287,715
========
</TABLE>
During the third quarter of 1996 the Company purchased interests in
unconsolidated subsidiaries that hold hotel properties. The hotel properties
associated with these unconsolidated subsidiaries are located in, Marin County,
California; Parsippany, New Jersey; Charlotte, North Carolina; and
Indianapolis, Indiana. These purchases were recorded under the equity method
of accounting. The value of the assets recorded at the date of acquisition are
as follows:
<TABLE>
<S> <C>
Assets acquired . . . . . . . . . . . . . . . . $ 30,772
Partnership units issued . . . . . . . . . . . (2,568)
---------
Net cash paid . . . . . . . . . . . . . $ 28,204
=========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
<PAGE> 7
FELCOR SUITE HOTELS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND ACQUISITIONS
FelCor Suite Hotels, Inc., formed as a self-administered real estate
investment trust ("REIT"), was incorporated on May 16, 1994 and commenced
operations on July 28, 1994. At the commencement of operations, FelCor Suite
Hotels, Inc. ("FelCor") acquired an equity interest of approximately 74% in
FelCor Suites Limited Partnership (the "Partnership"), which owned six Embassy
Suites(R) hotels (the "Initial Hotels") with an aggregate of 1,479 suites. At
September 30, 1996, FelCor owned, through its 89.4% ownership of the
Partnership and its consolidated subsidiaries (collectively the "Company"),
interests in 41 hotels with an aggregate of 9,593 suites (collectively the
"Hotels"). The Company owns 100% equity interests in 35 of the Hotels, a 97%
interest in the partnership that owns the Los Angeles International Airport
hotel and 50% interests in separate partnerships that own five hotels. Of the
Hotels, 17 were Embassy Suites hotels at the time of acquisition, and at
September 30, 1996, 19 hotels had been converted to either Embassy Suites
hotels (17) or to Doubletree Guest Suites(R) hotels (2), 4 hotels were in the
process of being upgraded or renovated in preparation for their conversion to
Embassy Suites hotels and one was a Hilton Suites(R) hotel. The following table
provides certain information regarding the Company's Hotels acquired through
September 30, 1996:
<TABLE>
<CAPTION>
NUMBER OF HOTELS NUMBER OF SUITES AGGREGATE
Quarter Acquired Acquired Purchase Price
------- ---------------- ---------------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Initial Hotels 6 1,479 $ 81.5
4th Quarter 1994 1 251 25.8
1st Quarter 1995 2 350 27.4
2nd Quarter 1995 1 100 9.4
3rd Quarter 1995 3 542 31.3
4th Quarter 1995 7 1,657 169.0
1st Quarter 1996 14 3,501 383.5
2nd Quarter 1996 3 708* 68.1
3rd Quarter 1996 4 1,005 30.8
-- ----- ------
41 9,593 $826.8
== ===== ======
</TABLE>
*Includes 17 suites constructed by the Company at one of the hotels
following acquisition.
In addition, the Company has started construction on additions to two of
the acquired properties which include an aggregate of 160 net additional
suites, meeting rooms and other public area upgrades, at an estimated aggregate
cost of $19.3 million.
The Company leased all of the Hotels to DJONT Operations, L.L.C. or a
wholly-owned subsidiary (collectively the "Lessee") under operating leases
providing for the payment of percentage rent (the "Percentage Leases"). Hervey
A. Feldman and Thomas J. Corcoran, Jr., the Chairman of the Board and Chief
Executive Officer of the Company, respectively, beneficially own 50% of the
Lessee. The remaining 50% of the Lessee is beneficially owned by the children
of Charles N. Mathewson, a director of the Company. The Lessee has entered
into management agreements pursuant to which 36 of the Hotels are managed by
Promus Hotels, Inc. ("Promus"), two of the Hotels are managed by a subsidiary
of Doubletree Hotel Corporation ("Doubletree"), two of the Hotels are managed
by American General Hospitality, Inc. ("AGHI") and one is managed by Coastal
Hotel Group, Inc. ("Coastal").
A brief discussion of the hotel assets acquired and other significant
transactions occurring in the third quarter of 1996 follows:
On July 16, 1996, Promus purchased 165,569 shares of the Company's common
stock for $4.4 million relating to the Company's acquisition of the Mandalay
Beach and Napa hotels on May 8, 1996 pursuant to an existing subscription
agreement.
7
<PAGE> 8
FELCOR SUITE HOTELS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND ACQUISITIONS -- (CONTINUED)
On July 22, 1996, the Company acquired a 50% interest in a 235-suite
Embassy Suites hotel in San Rafael, Marin County, California, located across
the bay from San Francisco. The Company paid approximately $4.1 million for
its fifty percent interest, subject to a 50% share of $20.1 million in existing
nonrecourse debt. Promus will continue to hold the remaining 50% interest in
this hotel.
On August 1, 1996, the Company acquired a 50% interest in a 274-suite
Embassy Suites hotel in Parsippany, New Jersey for approximately $15.4 million.
Promus will continue to hold the remaining 50% interest in this hotel.
On September 12, 1996, the Company acquired 50% interests in two
partnerships owning Embassy Suite hotels located in Charlotte, North Carolina
and Indianapolis, Indiana. The Company's 50% interests in the 274-suite
Charlotte and the 222-suite Indianapolis hotels were acquired for an aggregate
purchase price of $11.3 million, including funds for renovations, and are
subject to a 50% share of $30.0 million in existing nonrecourse debt on the
properties.
On September 30, 1996, the Company closed a $250 million, three year,
unsecured revolving line of credit, initially priced at LIBOR plus 175 basis
points. Simultaneous with the closing of the unsecured revolving line of
credit, the Company retired a $65 million secured term loan through the
replacement of an existing $100 million secured revolving credit facility with
an $85 million four-year secured term loan at an interest rate of LIBOR plus
150 basis points. In conjunction with the retirement of the existing debt, the
Company recorded an extraordinary charge of approximately $2.4 million for the
write off of deferred financing fees that related to the retired term loan and
the retirement of the secured revolving credit facility.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC") and
should be read in conjunction with the financial statements and notes thereto
of the Company and the Lessee included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 (the "10-K"). The notes to
the financial statements included herein highlight significant changes to the
notes included in the 10-K and present interim disclosures required by the SEC.
Certain reclassifications have been made to the 1995 and 1996 financial
statements to conform to the third quarter presentation. The reclassifications
have no effect on previously reported shareholder's equity or net income. The
accompanying financial statements reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements. All such adjustments are of a normal and recurring nature.
2. COMMITMENTS AND CONTINGENCIES
Upon completion of the capital upgrade and renovation program discussed
below, and the conversion of the remaining Crown Sterling Suites(R) hotels
("CSS Hotels"), the Hotels will operate as Embassy Suites (38), Doubletree
Guest Suites (2) and Hilton Suites (1). The Embassy Suites hotels and Hilton
Suites hotel will operate pursuant to franchise license agreements which
require the payment of fees based on a percentage of suite revenue. These fees
are paid by the Lessee. There are no separate franchise license agreements
with respect to the Doubletree Guest Suites hotels.
The Hotels are managed by Promus (36), Doubletree (2), AGHI (2) and
Coastal (1) on behalf of the Lessee. The Lessee pays the managers a base
management fee based on a percentage of total revenue and an incentive
management fee based on the Lessee's net income before overhead expenses.
8
<PAGE> 9
FELCOR SUITE HOTELS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
The Lessee has future lease commitments to the Company under the
Percentage Leases which expire in 2004 (7 hotels), 2005 (12 hotels) and 2006
(17 hotels). The lease commitment under the Percentage Leases between the
Lessee and the partnerships that own the Chicago-Lombard, Marin County,
Parsippany, Charlotte and Indianapolis hotels, of which the Company owns 50%,
are payable to the respective partnerships and as such are not included in the
following schedule of future lease commitments to the Company. Minimum future
rental income (i.e., base rents) under these noncancellable operating leases
(excluding the hotels owned by the previously noted partnerships) at September
30, 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
Year
----
<S> <C>
Remainder of 1996 . . . . . . . . . . . . . . . . . . . . . $ 13,869
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,477
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,477
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,477
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,477
2001 and thereafter . . . . . . . . . . . . . . . . . . . . 264,637
--------
$500,414
========
</TABLE>
The Company has a capital upgrade and renovation program for the 18
CSS Hotels and 6 of the other hotels acquired since September 1995 and has
committed approximately $64 million to be invested in 1995, 1996, and early
1997 for this program. The Company had invested approximately $35.4 million on
such capital improvements through the end of the third quarter of 1996 and
expects to substantially complete the renovation of the CSS Hotels by the end
of 1996 and the renovation of the other 6 hotels in early 1997.
3. DEBT AND CAPITAL LEASE OBLIGATIONS
Debt and capital lease obligations at September 30, 1996 and December 31,
1995 consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Secured term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,000
Renovation loan facility . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Promus note related to CSS purchase . . . . . . . . . . . . . . . . . . . $ 7,500
Other debt payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,550 910
Capital equipment lease obligations . . . . . . . . . . . . . . . . . . . 3,582 1,213
Capital land and building lease obligations . . . . . . . . . . . . . . . 9,757 10,043
-------- -------
$124,889 $19,666
======== =======
</TABLE>
On September 30, 1996, the Company obtained a $250 million unsecured
revolving credit facility ("Line of Credit"). Under this facility, the Company
has the right to borrow up to $250 million based upon its ownership of
qualifying unencumbered hotel assets, until October 1, 1999 at which time the
principal amount then outstanding will be due and payable. Interest payable on
borrowings is variable, based on a ratings based pricing matrix, initially set
at LIBOR plus 175 basis points. Additionally, the Company is required to pay
an unused commitment fee which is variable, based on a ratings based pricing
matrix, initially set at 0.35%. There were no borrowings outstanding under the
Line of Credit at September 30, 1996.
9
<PAGE> 10
FELCOR SUITE HOTELS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. DEBT AND CAPITAL LEASE OBLIGATIONS -- (CONTINUED)
Simultaneous with the closing of the Line of Credit, the Company retired
a $65 million secured term loan and replaced an existing $100 million secured
revolving credit facility with an $85 million four-year secured term loan.
This term loan bears interest at LIBOR plus 150 basis points and is secured by
interests in nine of the Company's hotel properties. Principal payments
commence on October 1, 1997 and are based on a 15 year amortization schedule,
adjusted annually for the then current interest rates. All outstanding
principal and accrued interest is due and payable on September 30, 2000.
The Company has a $25 million loan facility ("Renovation Loan") which has
been used to fund a portion of the renovation cost of the CSS Hotels being
converted to Embassy Suites hotels. The facility is guaranteed by Promus and
at September 30, 1996, the loan bears interest at LIBOR plus 52.5 basis points,
requires quarterly principal payments of $1.25 million beginning June 1999 and
matures in June 2000. The Company had drawn the full $25 million under this
loan facility at September 30, 1996.
Under its loan agreements the Company is required to satisfy various
affirmative and negative covenants. The Company was in compliance with these
covenants at September 30, 1996.
4. PRO FORMA INFORMATION
The following unaudited Pro Forma Consolidated Statements of Operations
for the nine months ended September 30, 1996 and 1995 are presented as
if the acquisition of the Company's interest in all the Hotels and the
consummation of the Company's securities offerings through September 30, 1996
had occurred on January 1, 1995, and all of the 41 hotels had been leased to
Lessee pursuant to the Percentage Leases since that date. Such pro forma
information is based in part upon the Statements of Operations of Lessee
included elsewhere in this Quarterly Report on Form 10-Q. Such information
should be read in conjunction with the financial statements listed in the Index
on page 2. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made. The pro forma information does
not include earnings on the Company's cash and short term investments and does
not purport to represent what the actual results of operations of the Company
would have been if the previously mentioned transactions had occurred on such
date or to project the results of operations of the Company for any future
period.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1996 1995
------- -------
<S> <C> <C>
REVENUES:
Percentage lease revenue . . . . . . . . . . . . . . . . . . . . . . . . $77,276 $72,953
Income from unconsolidated subsidiaries . . . . . . . . . . . . . . . . 2,201 1,720
------- -------
Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,477 74,673
------- -------
EXPENSES:
General and administrative . . . . . . . . . . . . . . . . . . . . . . . 1,366 1,282
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,301 18,083
Taxes, insurance and other . . . . . . . . . . . . . . . . . . . . . . . 10,386 10,160
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,039 7,535
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,175 3,987
------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,210 33,626
Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 8,847 8,847
------- -------
Net income applicable to common shareholders . . . . . . . . . . . . . . $26,363 $24,779
======= =======
Net income per common share . . . . . . . . . . . . . . . . . . . . . . $ 1.12 $ 1.06
======= =======
Weighted average number of common shares outstanding . . . . . . . . . . 23,474 23,439
</TABLE>
10
<PAGE> 11
FELCOR SUITE HOTELS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. SUBSEQUENT EVENTS
On October 3, 1996, the Company declared dividends of $0.50 per share of
common stock and $0.4875 per share of preferred stock for the third quarter of
1996, which dividends were paid on October 31, 1996 to holders of record on
October 15, 1996.
On October 17, 1996 the Company purchased the 317-suite Embassy Suites -
Atlanta Buckhead hotel for approximately $48.5 million. Promus will continue
to manage the hotel under the Embassy Suites brand.
On October 21 and November 4, 1996 the Company entered into two separate
interest rate swaps to fix the interest rate on an aggregate of $75 million of
the Company's floating rate secured term loan for three years at a rate of
7.611% for $50 million and 7.455% for $25 million.
11
<PAGE> 12
DJONT OPERATIONS, L.L.C.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
------- --------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,478 $ 5,345
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . 8,851 3,129
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740 532
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722 288
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462 305
------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,253 $ 9,599
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, trade . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,168 $ 1,393
Accounts payable, other . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,970 605
Due to FelCor Suite Hotels, Inc. . . . . . . . . . . . . . . . . . . . . . . 3,755 2,396
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . 15,025 5,978
------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 22,918 10,372
------- --------
Shareholders' equity (deficit):
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
Retained deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,666) (774)
------- --------
Total shareholders' equity (deficit) . . . . . . . . . . . . . . . . . (3,665) (773)
------- --------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . $19,253 $ 9,599
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
12
<PAGE> 13
DJONT OPERATIONS, L.L.C.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenue:
Suite revenue . . . . . . . . . . . . . . . . . . . . . $63,393 $16,699 $168,950 $43,923
Food and beverage revenue . . . . . . . . . . . . . . . 3,091 351 11,235 1,641
Food and beverage rent . . . . . . . . . . . . . . . . . 743 132 1,742 319
Other revenue . . . . . . . . . . . . . . . . . . . . . 4,617 1,055 12,457 2,573
------- ------- -------- -------
Total revenues . . . . . . . . . . . . . . . . . . 71,844 18,237 194,384 48,456
------- ------- -------- -------
Expenses:
Property operating costs and expenses . . . . . . . . . 18,427 4,725 46,878 12,082
General and administrative . . . . . . . . . . . . . . . 5,292 1,447 14,033 3,591
Advertising and promotion . . . . . . . . . . . . . . . 4,957 1,379 12,807 3,635
Repair and maintenance . . . . . . . . . . . . . . . . . 4,044 1,019 10,031 2,572
Utilities . . . . . . . . . . . . . . . . . . . . . . . 3,654 942 8,801 2,207
Management fee . . . . . . . . . . . . . . . . . . . . . 1,747 394 4,761 1,019
Franchise fee . . . . . . . . . . . . . . . . . . . . . 1,631 668 3,852 1,757
Food and beverage expenses . . . . . . . . . . . . . . . 3,336 527 11,748 1,739
Percentage lease payments . . . . . . . . . . . . . . . 29,152 6,787 78,307 18,135
Lessee overhead expenses . . . . . . . . . . . . . . . . 421 208 1,148 595
Liability insurance . . . . . . . . . . . . . . . . . . 476 128 1,276 291
Conversion costs . . . . . . . . . . . . . . . . . . . . 787 96 2,174 128
Other . . . . . . . . . . . . . . . . . . . . . . . . . 608 140 1,460 356
------- ------- -------- -------
Total expenses . . . . . . . . . . . . . . . . . . 74,532 18,460 197,276 48,107
------- ------- -------- -------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $(2,688) $ (223) $ (2,892) $ 349
======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
13
<PAGE> 14
DJONT OPERATIONS, L.L.C.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ($2,892) $ 349
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Changes in assets and liabilities:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . (5,722) (1,270)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (208) (130)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (434) (259)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (157) (130)
Due to FelCor Suite Hotels, Inc. . . . . . . . . . . . . . . . . . . . . 1,359 11,950
Accounts payable, accrued expenses and other liabilities . . . . . . . . 11,187 2,525
------- -------
Net cash flow provided by operating activities . . . . . . . . . . . 3,133 13,035
------- -------
Cash flows from investing activities:
Hotel purchase deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,000)
------- -------
Net cash flow used in investing activities . . . . . . . . . . . . . . . . . . (12,000)
------- -------
Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . 3,133 1,035
Cash and cash equivalents at beginning of periods . . . . . . . . . . . . . . . . . 5,345 3,259
------- -------
Cash and cash equivalents at end of periods . . . . . . . . . . . . . . . . . . . . $ 8,478 $ 4,294
======= =======
</TABLE>
The accompany notes are an integral part of these consolidated financial
statements.
14
<PAGE> 15
DJONT OPERATIONS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
DJONT Operations, L.L.C. is a Delaware limited liability company
(together with its wholly owned subsidiary, the "Lessee") which was formed on
June 29, 1994 and began operations on July 28, 1994. All of the voting Class A
membership interest in Lessee (representing a 50% equity interest) is owned by
Hervey A. Feldman and Thomas J. Corcoran, Jr. who serve as directors and
officers of FelCor Suite Hotels, Inc. (the "Company") and as managers and
officers of the Lessee. All of the non-voting Class B membership interest in
Lessee (representing the remaining 50% equity interest) is owned by RGC
Leasing, Inc., a Nevada corporation owned by the children of Mr. Mathewson, a
director of the Company. The Lessee leases each of the 41 hotels in which
FelCor Suites Limited Partnership (the "Partnership") had an ownership interest
at September 30, 1996 (the "Hotels"), pursuant to percentage leases
("Percentage Leases").
Messrs. Feldman and Corcoran, as the beneficial owners of an aggregate
50% of the Lessee, have entered into an agreement with the Company pursuant to
which they have agreed that, for a period of ten years, any distributions
received by them from the Lessee (in excess of their tax liabilities with
respect to the income of the Lessee) will be utilized to purchase common stock
from the Company annually, at a price based upon a formula approved by the
independent directors of the company relating to the then current market
prices. The agreement stipulates that Messrs. Feldman and Corcoran are
restricted from selling any stock so acquired for a period of two years from
the date of purchase. RGC Leasing, Inc., which owns the other 50% of the
Lessee, may elect to purchase common stock or units of Partnership interest
upon similar terms, at its option. The independent directors of the Company
may suspend or terminate such agreement at any time.
Thirty-six of the Hotels are, and two are expected to be converted, by
year end, to Embassy Suites(R) hotels, 36 of which are being managed for the
Lessee by a subsidiary of Promus Hotel Corporation ("Promus"). The two
remaining Embassy Suites hotels are managed for the Lessee by American General
Hospitality, Inc. ("AGHI") and Coastal Hotel Group, Inc. ("Coastal"). Two of
the Hotels are operated as Doubletree Guest Suites(R) hotels and managed by a
subsidiary of Doubletree Hotels Corporation ("Doubletree"). One of the Hotels
is operated under a Hilton Suites(R) hotel franchise and managed by AGHI.
2. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Lessee has future lease commitments under the Percentage Leases
which expire in 2004 (7 hotels), 2005 (13 hotels) and 2006 (21 hotels).
Minimum future rental payments are computed based on the base rent as defined
under these noncancellable operating leases and are as follows (in thousands):
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
Remainder of 1996 . . . . . . . . . . . $ 16,398
1997 . . . . . . . . . . . . . . . . . 65,594
1998 . . . . . . . . . . . . . . . . . 65,594
1999 . . . . . . . . . . . . . . . . . 65,594
2000 . . . . . . . . . . . . . . . . . 65,594
2001 and thereafter . . . . . . . . . . 320,197
--------
$598,971
========
</TABLE>
Under the franchise agreements, the Lessee typically remits to Promus
a franchise fee of 4% of suite revenue, a marketing and reservation
contribution (for the benefit of Embassy Suites hotels system wide) of 3.5% of
suite revenue, and certain additional fees for each of the Hotels operated as
an Embassy Suites hotel. With regard to the properties acquired as Crown
Sterling Suites(R) hotels (the "CSS Hotels"), in the first and second year of
operations, Promus has agreed to reduced franchise fees of 1.5% and 3.5% of
suite revenue, respectively. Additionally, with regard to the CSS Hotels,
Promus has agreed to reductions in the marketing and reservations contribution
for the first three years of operations to 2%, 2.5% and 3% of suite revenue,
respectively.
15
<PAGE> 16
DJONT OPERATIONS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. COMMITMENTS AND RELATED PARTY TRANSACTIONS -- (CONTINUED)
The franchise fees will revert to 4% of suite revenue beginning with the third
year of operations of the CSS Hotels and the marketing and reservation
contribution will return to 3.5% of suite revenue beginning in the fourth year.
The Lessee pays Hilton Inns, Inc. a franchise fee of 5% of suite revenue and an
advertising fee of 1.0% of suite revenue for the Lexington Hilton Suites hotel.
There are no separate franchise fees for the properties operated as Doubletree
Guest Suites hotels; however, the Lessee pays a marketing and reservation
contribution of 3.5% of suite revenue under the management agreements.
The Lessee generally pays a base management fee of 2% of adjusted
gross revenue for each hotel managed by Promus, AGHI, Doubletree and Coastal
(collectively the "Hotel Managers"). In addition, the Lessee pays the Hotel
Managers an incentive management fee, which typically ranges from 50% to 75% of
a hotel's net income (after lease payments but before Lessee overhead expenses)
up to a maximum of 2% to 3% of revenues. In association with the acquisition
of the CSS Hotels, Promus and Doubletree have made their base management fees
and incentive management fees subordinate to the Percentage Lease payments for
a period of two years.
3. PRO FORMA INFORMATION (UNAUDITED)
The following unaudited Pro Forma Consolidated Statements of
Operations for the nine months ended September 30, 1996 and 1995 are presented
as if Lessee had leased and operated all of the Hotels beginning on January 1,
1995. Such information should be read in conjunction with the financial
statements listed in the Index on page 2. In management's opinion, all
adjustments necessary to reflect the effects of these transactions have been
made. The Pro Forma Consolidated Statements of Operations do not purport to
represent what actual results of operations would have been if such hotels had
been operated by Lessee pursuant to the Percentage Leases since such date or
to project the results of operations for any future periods.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues $226,523 $218,481
Expenses:
Property operating costs and expenses . . . . . . . . . . . . . . . . . . . . 54,475 52,607
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . 16,272 16,131
Advertising and promotion . . . . . . . . . . . . . . . . . . . . . . . . . . 15,085 13,692
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,910 10,828
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,049 9,893
Management fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,709 5,885
Franchise fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,322 5,326
Food and beverage expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 13,462 13,320
Percentage lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . 91,047 85,762
Lessee overhead expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,151 1,085
Liability insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,607 1,748
Conversion costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,315
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,728 1,026
-------- --------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228,817 219,618
-------- --------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,294) $ (1,137)
======== ========
</TABLE>
16
<PAGE> 17
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
For background information relating to the Company and the definitions
of certain capitalized terms used herein, reference is made to Note 1 of Notes
to Condensed Consolidated Financial Statements of FelCor Suite Hotels, Inc.
appearing elsewhere herein.
In the first nine months of 1995 and the comparable period of 1996,
the Company's revenues increased from approximately $18.2 million to
approximately $75.0 million, net income applicable to common stockholders
increased from approximately $8.7 million to approximately $28.0 million after
an extraordinary charge of $2.4 million related to the write off of deferred
financing fees in the third quarter of 1996. Net income per common share
decreased from $1.39 to $1.22 primarily as a result of increased depreciation
from the acquired properties and the extraordinary charge previously noted. The
Initial Hotels experienced increases of 8.6% in suite revenues, and on a
proforma basis, suite revenue increases ranged from 10% on the first seven
hotels acquired after the Initial Hotels ("Pre-CSS Hotels" and collectively
with the Initial Hotels the "Original Hotels"), to 1.9% for the 18 Crown
Sterling Suites(R) hotels ("CSS Hotels"), to 4.2% for the remaining hotels
acquired ("1996 Acquisitions").
During the first nine months of 1996, the Company acquired interests
in 21 hotels with 5,197 suites for an aggregate purchase price of approximately
$482.4 million. Of the hotels so acquired during the first nine months of
1996, seven were and will remain Embassy Suites hotels, one was and will remain
a Hilton Suites hotel and 13 hotels have been or are in the process of being
converted to the Embassy Suites brand. Twelve of the hotels acquired by the
Company during the first nine months that have been or will be converted into
Embassy Suites hotels had been part of the Crown Sterling Suites chain that the
Company acquired.
The Company has undertaken a $64 million plan for the upgrade and
renovation of the 18 CSS Hotels and 6 of the other hotels acquired since
September 1995. Through September 30, 1996, the Company had invested
approximately $35.4 million under such plan and expects to substantially
complete the renovation of the CSS Hotels by the end of 1996 and the renovation
of the other 6 hotels in early 1997. In addition, the Company has added 17
suites at its Flagstaff hotel and is in the process of adding a net of 160
additional suites, adding meeting rooms and other public area upgrades to two
of its other hotels at an estimated aggregate cost of approximately $19.3
million.
In order for the Company to qualify as a REIT, neither the Company
nor the Partnership can operate hotels. Therefore, the Partnership leases the
Hotels to the Lessee. The Partnership's and, therefore, the Company's
principal sources of revenue are lease payments by the Lessee under the
Percentage Leases. Of the aggregate pro forma Percentage Lease revenue from the
Hotels under the Percentage Leases for the nine months ended September 30,
1996, approximately 97% was derived from suite revenues and 3% was derived from
food and beverage operations. The Lessee's ability to make payments to the
Company under the Percentage Leases is dependent on the operations of the
Hotels.
RESULTS OF OPERATIONS
The Company -- Actual
Nine Months Ended September 30, 1996 and 1995
For the nine months ended September 30, 1996 and 1995, the Company had
revenues of $75.0 million and $18.2 million, respectively, consisting of
Percentage Lease revenues of $72.6 million and $17.5 million, other revenue
(made up primarily of interest income) of $937,000 and $432,000 and income from
unconsolidated subsidiaries of $1.4 million and $290,000, respectively.
The 315% increase in Percentage Lease revenue is attributable
primarily to the Company's acquisition and subsequent leasing, pursuant to
Percentage Leases, of 29 of the 34 hotels acquired in 1995 and through
September 1996. The remaining five properties represent the acquisition of 50%
interests in unconsolidated subsidiaries. As previously noted, Percentage
Lease revenue is dependent on the operations of the Hotels, primarily suite
revenue. The Initial Hotels experienced suite revenue growth of 8.6% and
increases of revenue per available suite ("REVPAR") of 8.2%.
17
<PAGE> 18
RESULTS OF OPERATIONS -- (CONTINUED)
All of the Initial Hotels experienced increases in REVPAR, with the increases
ranging from 1.6% to 12.1% over the prior year.
Management believes that the acquired hotels will generally experience
increases in suite revenues (and accordingly, provide the Company with
increases in Percentage Lease revenues) after the completion of the current
renovation and upgrade programs; however, as individual hotels undergo such
renovations, their performance has been, and may continue to be, adversely
affected by such temporary factors as suites out of service and disruptions of
hotel operations. (A more detailed discussion of hotel suite revenue is
contained in "The Hotels - Actual" section of this Management's Discussion and
Analysis of Financial Condition and Results of Operations.)
Total expenses increased $30.4 million in the nine months ended
September 30, 1996 from $9.5 million to $39.9 million compared to the same
period in 1995. The primary components of this increase were: depreciation;
taxes, insurance and other; and interest expense.
Depreciation expense increased to $17.8 million in the nine months
ended September 30, 1996 from $3.7 million in the same period of 1995. The
increase resulted from the acquisition of hotels in 1995 and 1996 and capital
expenditures made on existing and acquired hotels.
Taxes, insurance and other expenses increased $8.1 million from $1.8
million in the first nine months of 1995 to $9.9 million in the first nine
months of 1996. This increase is primarily attributed to the additional hotel
properties acquired in 1995 and 1996.
Interest expense increased from $1.1 million for the nine months ended
September 30, 1995 to $6.3 million for the nine months ended September 30,
1996. The increase in interest expense is primarily associated with debt
assumed or incurred in connection with the hotels purchased during the fourth
quarter of 1995 and the nine months of 1996.
Minority interest in earnings increased from $2.4 million for the nine
months of 1995 to $4.6 million for the same period in 1996. The percentage of
income attributable to minority interests was 11.7% for the nine months ended
September 30, 1996 and 21.3% for the same period in 1995. The decrease in the
minority interest percentage was primarily the result of the Company's
contribution to the Partnership of the proceeds from the common stock issued
during May and December 1995 in registered public offerings partially offset by
additional units of limited partnership interest in the Partnership issued to
Promus and the sellers of acquired hotels.
In the third quarter, the Company recorded an extraordinary charge for
the write off of deferred financing fees of $2.4 million. This write off was
the result of the retirement of debt.
Three Months Ended September 30, 1996 and 1995
For the three months ended September 30, 1996 and 1995, the Company
had revenues of $26.4 million and $6.6 million, respectively, consisting of
Percentage Lease revenues of $25.3 million and $6.1 million, other revenue made
up primarily of interest income of $163,000 and $215,000 and income from
unconsolidated subsidiaries of $927,000 and $290,000, respectively.
The increase in Percentage Lease revenue was attributable primarily to
the Company's acquisition and subsequent leasing, pursuant to Percentage
Leases, of 26 of the 31 hotels acquired in 1995 and through September 1996. The
remaining five properties represent the acquisition of 50% interests in
unconsolidated subsidiaries. As previously noted, Percentage Lease revenue is
dependent on the operations of the Hotels, primarily suite revenue. The
Initial Hotels experienced suite revenue and REVPAR growth of 9.4%. All of the
Initial Hotels experienced increases in REVPAR, with the increases ranging from
3.7% to 18.9% over the prior year. A more detailed discussion of hotel suite
revenue is contained in "The Hotels - Actual" section of this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
18
<PAGE> 19
RESULTS OF OPERATIONS -- (CONTINUED)
Total expenses increased $11.3 million in the three months ended
September 30, 1996 from $3.2 million to $14.5 million compared to the same
period in 1995. The primary components of this increase were: depreciation;
taxes, insurance and other; and interest expense. As previously discussed, the
primary reason for this increase is related to the increased number of hotel
properties owned by the Company, from 13 properties at September 30, 1995 to 41
properties at September 30, 1996.
During the period, the Company recorded an extraordinary charge for
the write off of deferred financing fees of $2.4 million. This write off was
the result of the retirement of debt.
Funds From Operations
The Company considers funds from operations to be a key measure of a
REIT's performance and should be considered along with, but not as an
alternative to, net income and cash flow as a measure of the Company's
operating performance and liquidity.
The following table computes "Funds From Operations" under the newly
adopted National Association of Real Estate Investment Trusts ("NAREIT")
definition. Funds From Operations under the NAREIT definition consists of net
income, computed in accordance with generally accepted accounting principles,
excluding gains or losses from debt restructuring and sales of property, plus
depreciation of real property (including furniture and equipment) and after
adjustments for unconsolidated partnerships and joint ventures.
<TABLE>
<CAPTION>
Three Months Ended NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ---------------------
1996 1995 1996 1995
------- ------ ------- -------
<S> <C> <C> <C> <C>
Funds From Operations (FFO):
----------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,515 $3,490 $32,752 $ 8,670
Less preferred dividends . . . . . . . . . . . . . . . . . . . . . . 2,949 4,784
------- ------ ------- -------
Net income available for common shares . . . . . . . . . . . . . . . 6,566 3,490 27,968 8,670
Add back:
Extraordinary charge from write off of deferred financing fees . . 2,354 2,354
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . 1,477 724 4,619 2,392
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,529 1,455 17,833 3,691
Depreciation for unconsolidated subsidiaries . . . . . . . . . . . 575 4 1,070 4
------- ------ ------- -------
FFO available to common shares and units . . . . . . . . . . . . . . 18,501 5,673 53,844 14,757
Add preferred dividends . . . . . . . . . . . . . . . . . . . . . . . 2,949 4,784
------- ------ ------- -------
FFO diluted for conversion of preferred stock . . . . . . . . . . . . $21,450 $5,673 $58,628 $14,757
======= ====== ======= =======
Weighted average common shares outstanding . . . . . . . . . . . . . 23,276 8,170 22,933 6,255
Weighted average units outstanding . . . . . . . . . . . . . . . . . 2,896 1,695 3,020 1,695
------- ------ ------- -------
Weighted average common shares and units outstanding . . . . . . . . 26,172 9,865 25,953 7,950
Weighted average common shares and units outstanding,
diluted for conversion of preferred stock . . . . . . . . . . . 30,862 9,865 28,555 7,950
Per share and unit data:
------------------------
FFO per common share and unit outstanding . . . . . . . . . . . . . . $ 0.71 $ 0.58 $ 2.07 $ 1.86
FFO per common share and units outstanding, diluted for
conversion of preferred stock . . . . . . . . .. . . . . . . . . . . $ 0.70 $ 0.58 $ 2.05 $ 1.86
</TABLE>
19
<PAGE> 20
RESULTS OF OPERATIONS -- (CONTINUED)
The Company -- Pro Forma Nine Months Ended September 30, 1996 and 1995
The following pro forma information is presented as if the acquisition
of all the Hotels and the consummation of the Company's securities offerings
through September 30, 1996 had occurred as of January 1, 1995.
For the nine months ended September 30, 1996, the Company's pro forma
Percentage Lease revenue increased $4.3 million. This increase is primarily
attributable to increases in suite revenue, despite the substantial number of
suites taken out of service for renovation and conversion to the Embassy Suites
brand during the second and third quarters of 1996. The historical suite
revenue increased by 4.6% for the 41 hotels included in the Pro Forma
Consolidated Statements of Operations included herein. (The historical hotel
revenue increase is more fully discussed in "The Hotels - Actual" section of
this Management's Discussion and Analysis of Financial Condition and Results of
Operations.)
Pro forma depreciation expenses increased by $3.2 million, primarily
reflecting the historical asset additions from property upgrades and
renovations made by the Company during 1995 and through the first nine months
of 1996. Pro forma taxes, insurance and other increased $200,000. Pro forma
interest expense declined by $500,000 reflecting the historical decrease in
LIBOR and the amortization of principal on the capital lease obligations.
Minority interest was $4.2 million and $4.0 million on a pro forma basis, for
1996 and 1995, respectively. Pro forma net income was $26.4 million and $24.8
million for the nine months ended September 30, 1996 and 1995, respectively.
The Lessee -- Actual
The Nine Months Ended September 30, 1996 and 1995
Total revenues increased 301% from $48.5 million for the nine months
ended September 30, 1995 to $194.4 million for the same period of 1996. The
primary reason for this increase is that the number of hotels operated by the
Lessee increased from 13 hotels at September 30, 1995 to 41 hotels at September
30, 1996. The increases in Percentage Lease expense, property operating costs
and other hotel expenses in the first nine months of 1996 compared to the same
period of 1995 relate primarily to the increased number of hotels operated by
the Lessee. The Lessee had a net loss of $2.9 million and a net income of
$349,000 for the nine months ended September 30, 1996 and 1995 respectively.
The principal reasons for this decline in net income for the nine months, is
related to costs of taking over operations of acquired hotels and of
converting, renovating and upgrading the 28 hotels acquired in the fourth
quarter of 1995 and the first nine months of 1996 and the lost revenues
associated with suites out of service for renovation. When these suites are
taken out of service (the Lessee had nearly 7% of total available suites taken
out of service in the second and third quarters of 1996 for renovation), the
Lessee typically experiences temporary reductions in suite revenues and
decreased operating margins.
The Three Months Ended September 30, 1996 and 1995
Total revenues increased 294% from $18.2 million in the third quarter
of 1995 to $71.8 million for the same period of 1996. The primary reason for
this increase is that the number of hotels operated by the Lessee increased
from 13 hotels at September 30, 1995 to 41 hotels at September 30, 1996. The
increases in Percentage Lease expense, property operating costs and other hotel
expenses in the third quarter of 1996 compared to the same period of 1995
relate primarily to the increased number of hotels operated by the Lessee. The
Lessee had a net loss of $2.7 million and $223,000 for the three months ended
September 30, 1996 and 1995 respectively. The principal reasons for this
increase in net loss is related to the start up costs of taking over the
operations of acquired hotels and of converting and upgrading the 28 hotels
acquired in the fourth quarter of 1995 and the first nine months of 1996,
including the lost revenue associated with rooms taken out of service for
renovation and seasonal declines in its Florida properties. The Lessee had
nearly 60,000 suite nights taken out of service in the third quarter
representing 7% of total available suites in the quarter.
The Hotels -- Actual
The following table sets forth historical suite revenue and percentage
changes therein between the periods presented for the 41 hotels included in the
pro forma financial information with respect to the Lessee. The following
table presents comparative information with respect to suite revenue,
occupancy, average daily rate ("ADR") and revenue per available suites
("REVPAR") for the 6 Initial Hotels, the 7 Pre-CSS hotels, the 18 CSS Hotels
and the 10 1996 Acquisitions through September 30, 1996.
20
<PAGE> 21
RESULTS OF OPERATIONS -- (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ---------------------
1996 1995 VARIANCE 1996 1995 VARIANCE
------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Suite Revenue (in thousands):
Initial Hotels (6) . . . . . . . . . $10,657 $ 9,740 9.4% $ 32,977 $ 30,361 8.6%
Pre-CSS Hotels (7) . . . . . . . . . 9,171 7,951 15.3% 26,377 23,975 10.0%
------- ------- -------- --------
Original Hotels (13) . . . . . . . . 19,828 17,691 12.1% 59,354 54,337 9.2%
CSS Hotels (18) . . . . . . . . . . 29,317 28,855 1.6% 89,287 87,605 1.9%
1996 Acquisitions (10) . . . . . . . 16,638 15,760 5.6% 48,735 46,792 4.2%
------- ------- -------- --------
Total FelCor Suite Hotels . . . . . $65,783 $62,306 5.6% $197,376 $188,733 4.6%
======= ======= ======== ========
Occupancy:
Initial Hotels . . . . . . . . . . . 77.2% 75.0% 2.2 pts. 78.7% 77.4% 1.3 pts.
Pre-CSS Hotels . . . . . . . . . . . 78.6% 74.3% 4.3 pts. 76.7% 75.5% 1.2 pts.
Original Hotels . . . . . . . . . 77.8% 74.6% 3.2 pts. 77.7% 76.6% 1.1 pts.
CSS Hotels . . . . . . . . . . . . . 68.3% 71.9% (3.6) pts. 68.4% 71.0% (2.6) pts.
1996 Acquisitions . . . . . . . . . 76.5% 75.9% 0.6 pts. 74.1% 75.5% (1.4) pts.
Total FelCor Suite Hotels . . . . . 72.9% 73.6% (0.7) pts. 72.4% 73.7% (1.3) pts.
Average Daily Rate (ADR):
Initial Hotels . . . . . . . . . . . $101.51 $ 95.47 6.3% $ 103.43 $ 97.11 6.5%
Pre-CSS Hotels . . . . . . . . . . . 100.69 93.54 7.6% 100.50 93.47 7.5%
Original Hotels . . . . . . . . . 101.13 94.60 6.9% 102.11 95.47 7.0%
CSS Hotels . . . . . . . . . . . . . 101.30 94.58 7.1% 103.21 98.00 5.3%
1996 Acquisitions . . . . . . . . . 105.49 100.67 4.8% 107.00 101.23 5.7%
Total FelCor Suite Hotels . . . . . 102.28 96.05 6.5% 103.78 98.03 5.9%
Revenue Per Available Suite (REVPAR):
Initial Hotels . . . . . . . . . . . $ 78.32 $ 71.58 9.4% $ 81.37 $ 75.20 8.2%
Pre-CSS Hotels . . . . . . . . . . . 79.12 69.47 13.9% 77.04 70.58 9.2%
Original Hotels . . . . . . . . . 78.69 70.62 11.4% 79.39 73.09 8.6%
CSS Hotels . . . . . . . . . . . . . 69.14 68.03 1.6% 70.60 69.61 1.4%
1996 Acquisitions . . . . . . . . . 80.72 76.46 5.6% 79.32 76.47 3.7%
Total FelCor Suite Hotels . . . . . 74.57 70.74 5.4% 75.14 72.20 4.1%
</TABLE>
The variance for suite revenue and REVPAR for the Pre-CSS Hotels in the
three months ended September 30, 1996 do notagree because the Company added 17
suites at one of the Pre-CSS Hotels in the second quarter of 1996. The
variance for suite revenue and REVPAR for the Hotels in the nine months ended
September 30, 1996 do not agree because the leap year in 1996 added one
additional day in the first quarter.
<TABLE>
<S> <C>
INITIAL HOTELS: Dallas (Park Central), TX, Jacksonville, FL, Nashville, TN, Orlando (North), FL, Orlando
--------------- (South), FL, Tulsa, OK.
PRE-CSS HOTELS: Boston - Marlborough, MA, Brunswick, GA, Chicago - Lombard, IL, Corpus Christi, TX, Dallas
--------------- (Love Field), TX, Flagstaff, AZ, New Orleans, LA.
CSS HOTELS: Anaheim, CA, Baton Rouge, LA, Birmingham, AL, Boca Raton, FL (1), Deerfield Beach, FL, Ft.
----------- Lauderdale, FL, Los Angeles (LAX), CA, Mandalay Beach, CA (3), Miami (Airport), FL, Milpitas,
CA, Minneapolis (Airport), MN, Minneapolis (Downtown), MN, Napa, CA (3), Phoenix (Camelback),
AZ, San Francisco (Airport North), CA, San Francisco (Airport South), CA, St. Paul, MN, Tampa
(Busch Gardens), FL (1).
1996 ACQUISITIONS: Beaver Creek Resort (Avon-Vail), CO, Boca Raton, FL, Charlotte, NC, Chicago (Deerfield), IL,
------------------ Cleveland, OH, Indianapolis, IN, Lexington, KY (2), Marin County, CA, Parsippany, NJ,
Piscataway, NJ.
</TABLE>
(1) Operating as a Doubletree Guest Suites hotel
(2) Operating as a Hilton Suites hotel
(3) In the process of conversion to Embassy Suites hotels
21
<PAGE> 22
RESULTS OF OPERATIONS -- (CONTINUED)
Comparison of The Hotels' Suite Revenues for the Three and Nine months
Ended September 30, 1996 and 1995
Suite revenues from the 41 Hotels included in the pro forma
information increased 4.6% for the nine months ended September 30, 1996 from
the comparative period of 1995. The Initial 6 Hotels increased 8.6%, the
Pre-CSS Hotels increased 10%, the CSS Hotels increased 1.9% and the 1996
Acquisition Hotels increased 4.2%.
Increases in suite revenues, particularly at the CSS Hotels, were
limited by the number of suites out of service for renovation and conversion
during the three and nine months ended September 30, 1996. The Company had
nearly 110,000 suite nights taken out of service during the second and third
quarters, which represents approximately 7% of the Company's normal suite
inventory for the period.
The increase in suite revenue is primarily the result of increases in
ADR, partially offset by decreases of 1.3 percentage points in occupancy. The
Initial Hotels increased in both ADR and occupancy. ADR increased 6.5% to
$103.43 and occupancy percentage increased from 77.4% to 78.7% (or 1.3
percentage points). The Pre-CSS Hotels increased in both occupancy (1.1
percentage points) and ADR (7.5%) for the nine months of 1996 compared to the
same period in 1995. The Company has committed to a capital program for all
Hotels that ensures that at least 4% of suite revenue will be available for
capital improvements, in addition to normal repair and maintenance
expenditures.
The CSS Hotels experienced an increase in ADR of 5.3% to $103.21 and
a 2.6 percentage point decrease in occupancy to 68.4%. The 1996 Acquisition
Hotels increased ADR by 5.7% to $107.00, which was partially offset by a 1.4
percentage point decrease in occupancy to 74.1%. The Company has committed to
a capital renovation and conversion program for the 18 CSS Hotels and 6 of the
1996 Acquisition Hotels of approximately $64 million and is also reserving 4%
of suite revenue for ongoing capital improvements in addition to making normal
repair and maintenance expenditures. The CSS Hotels either have been or are in
the process of being converted to Embassy Suites hotels (16) or Doubletree
Guest Suites hotels (2). At November 1, 1996, 16 of the 18 CSS Hotels had been
converted to the new franchise brands.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash to meet its cash requirements,
including distributions to stockholders, is its share of the Partnership's cash
flow from the Percentage Leases. For the nine months ended September 30, 1996,
cash flow provided by operating activities, consisting primarily of Percentage
Lease revenue, was $52.7 million and funds from operations, which is the sum of
net income, minority interest, depreciation of real property (including
furniture and equipment) and extraordinary charges, was $53.8 million. The
Lessee's obligations under the Percentage Leases are unsecured. The Lessee's
ability to make lease payments under the Percentage Leases and the Company's
liquidity, including its ability to make distributions to stockholders, are
substantially dependent on the ability of the Lessee to generate sufficient
cash flow from the operation of the Hotels.
The Company intends to acquire additional hotels and may incur
indebtedness to make such acquisitions, or to meet distribution requirements
imposed on a REIT under the Internal Revenue Code, to the extent that working
capital and cash flow from the Company's investments are insufficient to make
such distributions.
The Company's Charter limits consolidated indebtedness to 40% of the
Company's investment in hotel properties, at cost, on a consolidated basis,
after giving effect to the Company's use of proceeds from any indebtedness.
For purposes of this limitation, the Company's consolidated investment in hotel
properties, at cost, is its investment, at cost, in hotel properties, as
reflected in its consolidated financial statements plus (to the extent not
otherwise reflected) the value (as determined by the Board of Directors at the
time of issuance) of any equity securities issued, otherwise than for cash, by
the Company or any of its subsidiaries in connection with the acquisition of
hotel properties. Under this definition as of September 30, 1996, the
Company's investment in hotel properties at cost was $913 million.
Accordingly, the Company's maximum permitted indebtedness would have been
approximately $368 million (of which $125 million was borrowed at September 30,
1996). Assuming all of this additional debt capacity, together with the
Company's available cash and cash equivalents, were used for the acquisition of
additional hotel properties, the
22
<PAGE> 23
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
Company's investment in hotel properties would increase to approximately $1.5
billion and the maximum permitted indebtedness would increase to approximately
$614 million.
In September 1996, the Company executed an Amended and Restated Loan
Agreement with Boatmen's National Bank of Oklahoma (formerly Bank IV Oklahoma,
National Association) as Agent, and certain other Lenders, which replaced a
$100 million secured revolving line of credit with a term loan of $85 million.
The loan is secured by nine of the twelve hotels previously securing the $100
million line of credit. Interest accrues on the term loan at a rate equal to
150 basis points over LIBOR and the Company must make payments of principal and
interest, on a 15-year constant payment amortization schedule commencing
October 1997, adjusted annually to reflect the then current LIBOR rate. This
term loan matures on September 30, 2000.
On September 30, 1996, the Company obtained a $250 million unsecured
revolving credit facility from a group of lenders co-arranged by The Chase
Manhattan Bank and Wells Fargo Bank, National Association ("Line of Credit").
The Line of Credit has a term of three years ending October 1, 1999.
Borrowings under the Line of Credit bear interest, at the Company's option, (i)
at the higher of the base rate announced from time to time by The Chase
Manhattan Bank or the Federal funds rate plus 0.5%, in either case plus an
applicable margin of 0% to 0.5 %, or (ii) at a Eurodollar rate based upon the
30, 60, 90 or 6-month LIBOR rate plus an applicable margin of 1.25% to 2.0%.
The applicable margin varies depending upon the Company's long-term senior
unsecured implied debt rating. As of September 30, 1996, the Company had no
amounts outstanding under the Line of Credit which currently bears interest at
the LIBOR rate plus 1.75%. Up to 10% of the amount available under the Line of
Credit may be used for general corporate or working capital purposes. The
total amount available under the Line of Credit is limited to 40% of the
aggregate value of the Company's eligible hotels, which generally includes
hotels that are unencumbered. At September 30, 1996, the aggregate amount
available under the Line of Credit was approximately $215 million, which amount
will increase by 40% of the value of each additional eligible hotel acquired,
up to the maximum amount of $250 million. The agreements governing the Line of
Credit also contain various negative and affirmative covenants, including
limitations on total indebtedness, total secured indebtedness and cash
distributions, as well as obligations to maintain a certain minimum tangible
net worth and certain interest and debt service coverage ratios. At September
30, 1996, the Company was in compliance with all such covenants.
The Company has a $25 million Renovation Loan facility which has been
used to fund a portion of the renovation cost of the CSS Hotels being converted
to Embassy Suites hotels. The facility is guaranteed by Promus, bears interest
at LIBOR plus 52.5 basis points, requires quarterly principal payments of $1.25
million beginning June 1999 and matures in June 2000. At September 30, 1996
the Company had drawn the full $25 million under this loan facility.
At September 30, 1996, the Company had $8.1 million of cash and cash
equivalents and had not utilized any of the amount available under the
Company's $250 million unsecured revolving Line of Credit.
Following the end of the third quarter, FelCor entered into two
separate interest rate swap agreements to manage the relative mix of its debt
between fixed and variable rate instruments. These interest rate swap
agreements modify a portion of the interest characteristics of FelCor's
outstanding debt without an exchange of the underlying principal amount and
effectively convert variable rate debt to a fixed rate. The fixed rates to be
paid, the effective fixed rate, and the initial variable rate to be received by
FelCor are summarized in the following table:
<TABLE>
<CAPTION>
Swap Rate
Received
Swap Rate Effective (Variable) at Swap
Notional Amount Paid (Fixed) Fixed Rate 11/5/96 Maturity
--------------- ------------ ---------- -------------- -------------
<S> <C> <C> <C> <C>
--
$50 million 6.11125% 7.61125% 5.53516% October 1999
$25 million 5.95500% 7.45500% 5.5000% November 1999
</TABLE>
23
<PAGE> 24
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
The differences to be paid or received by the Company under the terms
of the interest rate swap agreements will be accrued as interest rates change
and recognized as an adjustment to interest expense over the life of the
agreement by the Company pursuant to the terms of its interest rate agreement
and will have a corresponding effect on its future cash flows. Agreements such
as these contain a credit risk that the counterparties may be unable to meet
the terms of the agreement. The Company minimizes that risk by evaluating the
creditworthiness of its counterparties, which is limited to major banks and
financial institutions, and does not anticipate nonperformance by the
counterparties.
To provide for additional financing flexibility, FelCor has registered
up to an aggregate of $500 million in common stock, preferred stock or debt
securities pursuant to a shelf registration declared effective by the
Securities Exchange Commission. The terms and conditions of the stock or debt
securities will be determined by market conditions at the time of issuance. A
total of 6,050,000 shares of preferred stock at $25.00 per share were issued in
the second quarter of 1996 pursuant to this shelf registration.
The Company has a capital upgrade and renovation program for the 18
CSS Hotels and 6 of the other hotels acquired since September 1995 and has
committed approximately $64 million to be invested in 1995, 1996 and 1997 for
this program. The Company has invested approximately $35.4 million on such
capital improvements through the first nine months of 1996 and expects to
substantially complete the renovation of the CSS Hotels by the end of 1996 and
the renovation of the other 6 hotels in early 1997. These capital
improvements will be funded partially through (i) the $25 million Renovation
Loan facility, (ii) the proceeds of the Series A Preferred Stock offering, and
(iii) the Company's Line of Credit. As individual hotels undergo such upgrade
and renovation, their performances may be adversely affected, although such
effects are expected to be temporary.
The Company constructed and opened 17 additional suites at the
Flagstaff hotel and will complete construction on 32 additional suites at the
New Orleans hotel by year end. Construction has also begun on a net addition
of 128 suites at the Boston-Marlborough hotel. The suite additions, additional
meeting rooms and other public area upgrades for these hotels is projected at
an aggregate cost of approximately $19.3 million.
During 1995, the Company and Promus entered into a subscription
agreement under which Promus has purchased an aggregate of 1,886,792 shares of
Common Stock at a price per share of $26.50, the offering price per share in
the Company's public offering of common stock in December 1995. Such
investment was made in increments in conjunction with the Company's acquisition
of the CSS Hotels and other qualifying hotels. Through September 30, 1996, the
Company had issued an aggregate of 1,886,792 shares of Common Stock to Promus
pursuant to this subscription agreement for an aggregate investment of
approximately $50 million of which $5 million was invested in 1995.
The Company's cash flow from financing activities of
approximately $148.6 million for the nine months ended September 30, 1996
resulted from the issuance of the Series A Preferred Stock for $144.3 million,
the sale of common stock to Promus under the subscription agreement for $45.0
million, net repayments of $5.6 million under a prior secured line of credit
and other borrowing facilities, distributions of $30.6 million and additional
loan costs of $4.4 million.
INFLATION
Operators of hotels, in general, possess the ability to adjust room
rates periodically to reflect the effects of inflation. Competitive pressures
may, however, limit the Lessee's ability to raise room rates.
SEASONALITY
The Hotels' operations historically have been seasonal in nature,
reflecting higher occupancy rates primarily during the first three quarters of
each year. This seasonality can be expected to cause fluctuations in the
Company's quarterly lease revenue to the extent that it receives Percentage
Rent. To the extent the cash flow from operations are insufficient during any
quarter, due to temporary or seasonal fluctuations in lease revenue, the
Company expects to utilize other cash on hand or borrowings under the Line of
Credit to make distributions to its stockholders.
24
<PAGE> 25
PART II. -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
In September 1996, the Company entered into an Amended and Restated
Loan Agreement with Boatmen's National Bank of Oklahoma as Agent replacing a
$100 million revolving line of credit with a term loan of $85 million ("Term
Loan"), and entered into its $250 million unsecured Line of Credit. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in Item 2 of Part I of this Quarterly Report on Form 10-Q
for more information regarding the Term Loan and the Line of Credit, which
information is incorporated by reference herein. Pursuant to the Line of
Credit, the Company, unless otherwise required in order to maintain its status
as a REIT, is restricted from declaring or making any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account or in respect of any of its capital stock, provided, that, during any
period of four consecutive fiscal quarters, (i) the Company may make such
payments in an aggregate amount not to exceed 85% of its funds from operations
(with certain adjustments) for such period and (ii) the aggregate amount of
such payments may not exceed 100% of the Company's "free cash flow" for such
period (generally meaning adjusted funds from operations less aggregate
reserves for furniture, fixtures and equipment and scheduled principal payments
on indebtedness). Similarly, the Term Loan restricts declaration and payment of
dividends and similar distributions in any fiscal year to an amount not to
exceed the greater of (x) 85% of the Company's consolidated funds from
operations attributable to such year and (y) the amount necessary in order for
the Company to maintain its status as a REIT.
ITEM 5. OTHER INFORMATION.
For information relating to hotel acquisitions and certain other
transactions by the Company through September 30, 1996, see Note 1 of Notes to
Consolidated Financial Statements of FelCor Suite Hotels, Inc. contained in
Item 1 of Part I of this Quarterly Report on Form 10-Q. Such information is
incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
10.2.2 -- Schedule of executed Lease Agreements identifying material variations from the form of
Lease Agreement with respect to hotels acquired by the Registrant through October 30,
1996.
10.3.4 -- Amended and Restated Loan Agreement dated as of September 26, 1996, among the
Registrant and the Partnership, as Borrowers, Boatmen's National Bank of Oklahoma, as
Agent and Lender, and First Tennessee Bank National Association, Liberty Bank and
Trust Company of Tulsa, National Association, Bank One, Texas, N.A., First National
Bank of Commerce, and AmSouth Bank of Alabama, as Lenders.
</TABLE>
25
<PAGE> 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. -- (CONTINUED)
<TABLE>
<S> <C> <C>
10.31 -- Amended and Restated Revolving Credit Agreement dated as of October 18, 1996 among the
Registrant and the Partnership, as Borrower, the Lenders party thereto, The Chase
Manhattan Bank, as Administrative Agent , and Wells Fargo Bank, National Association,
as Documentation Agent.
27 -- Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
None
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1996
FELCOR SUITE HOTELS, INC.
By: \s\ Lester C. Johnson
-------------------------------------
Lester C. Johnson
Vice President and Controller
(Principal Accounting Officer)
27
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
10.2.2 -- Schedule of executed Lease Agreements identifying material variations from the form of
Lease Agreement with respect to hotels acquired by the Registrant through October 30,
1996.
10.3.4 -- Amended and Restated Loan Agreement dated as of September 26, 1996, among the
Registrant and the Partnership, as Borrowers, Boatmen's National Bank of Oklahoma, as
Agent and Lender, and First Tennessee Bank National Association, Liberty Bank and
Trust Company of Tulsa, National Association, Bank One, Texas, N.A., First National
Bank of Commerce, and AmSouth Bank of Alabama, as Lenders.
10.31 -- Amended and Restated Revolving Credit Agreement dated as of October 18, 1996 among the
Registrant and the Partnership, as Borrower, the Lenders party thereto, The Chase
Manhattan Bank, as Administrative Agent , and Wells Fargo Bank, National Association,
as Documentation Agent.
27 -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.2.2
SCHEDULE OF EXECUTED LEASE AGREEMENTS
SHOWING MATERIAL VARIATIONS FROM
FORM OF LEASE AGREEMENT
(AS OF OCTOBER 30, 1996)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Annual
Percentage Rent
Hotel Location/Franchise/ --------------- Suite
- ------------------------- Commencement Annual First Second Revenue
Manager (1) Lessor (2) Date Base Rent (3) Tier (4) Tier (5) Breakpoint (3)
- ----------- ---------- --------------- ------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dallas (Park Central), TX - 7/28/94 $1,477 17% 65% $3,590
Jacksonville, FL - 7/28/94 882 17% 65% 3,490
Nashville, TN - 7/28/94 1,667 17% 65% 4,290
Orlando (North), FL - 7/28/94 1,571 19% 65% 2,650
Orlando (South), FL - 7/28/94 1,413 17% 65% 4,580
Tulsa, OK - 7/28/94 1,268 19% 65% 2,770
New Orleans, LA - 12/1/94 1,960 19% 65% 4,290
Flagstaff, AZ - 2/15/95 570 17% 65% 1,160
Dallas (Love Field), TX (6) - 3/29/95 1,836 17% 65% 3,060
Boston-Marlborough, MA - 6/30/95 720 19% 65% 940
Corpus Christi, TX - 7/19/95 1,000 17% 65% 1,495
Brunswick, GA - 7/19/95 370 17% 65% 1,350
Chicago-Lombard, IL (7) 8/1/95 1,900 17% 65% 3,270
Burlingame (SF Airport), CA (8) 11/6/95 3,147 17% 65% 3,174
Minneapolis (Airport) MN (8) 11/6/95 2,778 17% 65% 2,138
Minneapolis (Downtown), MN (8) 11/15/95 1,387 17% 65% 2,091
St. Paul, MN (9) 11/15/95 1,085 17% 65% 3,115
Boca Raton, FL (10) (8) 11/15/95 654 17% 65% 1,421
Tampa (Busch Gardens), FL (10) (8) 11/15/95 786 17% 65% 1,287
Cleveland, OH (8) 11/17/95 1,258 17% 65% 4,929
Anaheim, CA (8) 1/3/96 1,272 17% 65% 2,062
Baton Rouge, LA (8) 1/3/96 1,204 17% 65% 2,281
Birmingham, AL (8) 1/3/96 1,898 17% 65% 1,273
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Annual
Percentage Rent
Hotel Location/Franchise/ --------------- Suite
- ------------------------- Commencement Annual First Second Revenue
Manager (1) Lessor (2) Date Base Rent (3) Tier (4) Tier (5) Breakpoint (3)
- ----------- ---------- --------------- ------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Deerfield Beach, FL (8) 1/3/96 2,163 17% 65% 2,568
Ft. Lauderdale, FL (8) 1/3/96 3,228 17% 65% 1,969
Miami (Airport), FL (8) 1/3/96 2,222 17% 65% 2,882
Milpitas, CA (8) 1/3/96 2,143 17% 65% 1,402
Phoenix (Camelback), AZ (8) 1/3/96 2,812 17% 65% 1,428
South San Francisco (SF Airport), CA (8) 1/3/96 1,876 17% 65% 3,103
Piscataway, NJ - 1/10/96 1,355 17% 65% 3,574
Lexington, KY (11) - 1/10/96 1,149 17% 65% 2,135
Beaver Creek, CO - 2/20/96 375 17% 65% 2,284
Boca Raton, FL - 2/28/96 1,368 17% 65% 3,670
Los Angeles (LAX), CA (12) 3/27/96 1,600 17% 65% 4,130
Mandalay Beach, CA (8) 5/8/96 1,927 17% 65% 2,909
Napa, CA (8) 5/8/96 1,215 17% 65% 3,145
Deerfield, IL (13) - 6/20/96 1,743 17% 65% 2,505
San Rafael, CA (14) 7/18/96 2,107 17% 65% 2,917
Parsippany, NJ (15) 7/31/96 2,440 17% 65% 3,930
Charlotte, NC (16) 9/12/96 2,200 17% 65% 3,352
Indianapolis, IN (17) 9/12/96 1,470 17% 65% 2,794
Atlanta (Buckhead), GA - 10/17/96 3,667 17% 65% 3,872
</TABLE>
____________________
(1) Unless otherwise noted, the hotels under each Lease Agreement
are operated as Embassy Suites(R) Hotels under a commitment or
license agreement with Promus Hotels, Inc.; the Manager as
defined in each Lease Agreement is Promus Hotels, Inc. or an
affiliate thereof unless otherwise noted.
(2) Lessor as defined in each Lease Agreement is FelCor Suites
Limited Partnership ("Partnership") unless otherwise noted.
(3) Represents the amount set forth in each Lease Agreement as the
annual Base Rent and the threshold suite revenue amount. Both
of these amounts are subject to adjustment for changes in the
consumer price index and may not represent the actual amount
currently required under each such Lease Agreement.
-2-
<PAGE> 3
(4) Represents percentage of suite revenue payable as Percentage
Rent up to suite revenue breakpoint.
(5) Represents percentage of suite revenue payable as Percentage
Rent in excess of suite revenue breakpoint.
(6) The Manager as defined in this Lease Agreement is American
General Hospitality, Inc.
(7) The Lessor as defined in this Lease Agreement is Embassy/GACL
Lombard Venture, a joint venture between the Partnership and
Promus Hotels, Inc.
(8) The Lessor as defined in these Lease Agreements is FelCor/CSS
Holdings, L.P., of which the Partnership is a 99% limited
partner.
(9) The Lessor as defined in this Lease Agreement is FelCor/St.
Paul Holdings, L.P., of which the Partnership is a 99% limited
partner and another subsidiary of the Company is a 1% general
partner.
(10) The hotels under these Lease Agreements are operated as
Doubletree Guest Suites(R) Hotels; the Manager as defined in
these Lease Agreements is DT Management, Inc.
(11) The hotel under this Lease Agreement is operated as a Hilton
Suites(R) Hotel under a franchise or license agreement with
Hilton Inns, Inc.; the Manager as defined in this Lease
Agreement is American General Hospitality, Inc.
(12) The Lessor as defined in this Lease Agreement is Los Angeles
International Airport Hotel Associates, a limited partnership
of which the Partnership is the sole general partner and of
which the Partnership has an aggregate approximately 97 %
partnership interest.
(13) The Manager as defined in this Lease Agreement is Coastal Hotel
Group, Inc.
(14) The Lessor as defined in this Lease Agreement is MHV Joint
Venture, a joint venture between the Partnership and Promus
Hotels, Inc.
(15) The Lessor as defined in this Lease Agreement is Embassy/Shaw
Parsippany Venture, a joint venture between the Partnership and
Promus Hotels, Inc.
(16) The Lessor as defined in this Lease Agreement is E.S.
Charlotte, a Minnesota limited partnership, of which the
Partnership owns a 49% limited partner interest and FelCor/CSS
Hotels, L.L.C., a Delaware limited liability company, owns a 1%
general partner interest.
(17) The Lessor as defined in this Lease Agreement is E.S. North, an
Indiana limited partnership, of which the Partnership owns a
49% limited partner interest and FelCor/CSS Hotels, L.L.C., a
Delaware limited liability company, owns a 1% general partner
interest.
-3-
<PAGE> 1
EXHIBIT 10.3.4
AMENDED AND RESTATED LOAN AGREEMENT
THIS Amended and Restated Loan Agreement (this "Agreement") is made
and entered into as of the 26th day of September, 1996, between and among: (i)
FELCOR SUITE HOTELS, INC. ("FLCO"), a Maryland corporation (successor-by-merger
to FelCor Suite Hotels, Inc., a Delaware corporation); (ii) FELCOR SUITES
LIMITED PARTNERSHIP (the "Partnership"), a Delaware limited partnership (FLCO
and Partnership being referred herein collectively as the "Borrowers"); and
(iii) BOATMEN'S NATIONAL BANK OF OKLAHOMA (the "Agent"), a national banking
association (formerly known as Bank IV Oklahoma, National Association); (iv)
FIRST TENNESSEE BANK NATIONAL ASSOCIATION ("First Tennessee"), a national
banking association; (v) LIBERTY BANK AND TRUST COMPANY OF TULSA, NATIONAL
ASSOCIATION ("Liberty"), a national banking association; (vi) BANK ONE, TEXAS,
N.A. ("Bank One"), a national banking association; (vii) FIRST NATIONAL BANK OF
COMMERCE ("Bank of Commerce"), a national banking association (the Agent, First
Tennessee, Liberty, Bank One and Bank of Commerce being referred to herein
collectively as the "Banks"); and (viii) AMSOUTH BANK OF ALABAMA, an Alabama
state banking corporation ("AmSouth").
WITNESSETH:
WHEREAS, the Agent, The Boatmen's National Bank of St. Louis
("Boatmen's"), First Tennessee and the Borrowers entered into a Loan Agreement
(the "Original Loan Agreement") dated as of September 28, 1994, whereby the
Agent, Boatmen's and First Tennessee agreed to establish a credit (the
"Credit") to provide general working capital funds and to provide funds for the
acquisition by the Borrowers of additional hotels (in addition to the 6 Embassy
Suites(R) Hotels then owned and to be subject to among other things a mortgage
lien in favor of the Agent, for itself and as the Agent for the ratable benefit
of Boatmen's and First Tennessee, securing payment of the loans made pursuant
to the Credit) in the amount of the Maximum Bank Commitment (as defined in the
Original Loan Agreement) with each Bank to be responsible for its separate and
proportionate share of all Loan Advances made pursuant to the Credit, all as
provided in the Original Loan Agreement; and
WHEREAS, in connection with the Original Loan Agreement, the Borrowers
executed and delivered to the Agent, as agent for itself, Boatmen's and First
Tennessee, that certain promissory note dated as of September 28, 1994 (the
"Prior Note"), in the maximum principal amount of $50,000,000; and
WHEREAS, to provide collateral and security for the payment of all of
the indebtedness, obligations and liabilities of the Borrowers incurred or
arising under the Original Loan Agreement, as amended, the Partnership
executed, acknowledged and delivered to the Agent for itself and as the Agent
for the ratable benefit of the Banks (as that term has been amended from time
to time): (A) one or more Mortgage, Deed of Trust, Assignment of Rents,
Security Agreement and Financing Statement (collectively the "Indenture")
encumbering certain real property located in Arizona, Florida, Georgia,
Louisiana, Massachusetts, Oklahoma, Tennessee and Texas together with all of
the hereditaments, appurtenances, tenements and easements appurtenant thereto,
all hotels and all other buildings and improvements located upon said real
property described in the Indenture along
<PAGE> 2
with all of the fixtures, equipment, rents, rentals and the inventories,
accounts and general intangibles relating thereto; (B) one or more Assignment
of Rents and Leases relating to the properties covered by the Indenture
(collectively the "Rent Assignment"); and (C) the Borrowers executed and
delivered to the Agent separate financing statements (the "Financing
Statements") relating to the collateral afforded by the Indenture. Attached
hereto as Exhibit B is a complete listing of the Indenture, Rent Assignment and
Financing Statements and the recordation/filing information for the same.
WHEREAS, on April 26, 1995, the Agent, Boatmen's, First Tennessee,
Bank One and the Borrowers entered into that certain First Amendment to Loan
Agreement wherein Bank One purchased an interest in the Credit, the Credit was
extended and increased to the maximum principal amount of $80,000,000 and other
terms of the Original Loan Agreement were amended;
WHEREAS, on November 10, 1995, the Agent, Boatmen's, First Tennessee,
Bank One, Liberty and the Borrowers entered into that certain Second Amendment
to Loan Agreement (the "Second Amendment") wherein Liberty purchased an
interest in the Credit, the Credit was extended and increased to the maximum
principal amount of $100,000,000, the maturity of the Credit was extended and
other terms of the Original Loan Agreement were amended;
WHEREAS, on August 26, 1996, the Agent, Boatmen's, First Tennessee,
Bank One, Liberty, AmSouth and the Borrowers entered into that certain Third
Amendment to Loan Agreement (the "Third Amendment") wherein AmSouth purchased
the interest of Boatmen's in the Credit and other terms of the Original Loan
Agreement were amended; and
WHEREAS, the parties hereto wish to amend and restate the Original
Loan Agreement to provide for a term loan, to reduce the maximum principal
amount of the Credit to $85,000,000, to add and substitute Banks, and to issue
restated Notes in renewal and modification of existing notes, on terms and
conditions acceptable to the parties, as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises, mutual covenants,
representations and agreements made herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
A. DEFINITION OF CERTAIN TERMS
As used in this Agreement the following words shall have the following
meanings:
(1) Accepted Appraised Value. The value assigned by the
Banks to each Hotel mortgaged and encumbered in favor of the Banks by
the Indenture. Attached hereto as Exhibit C is a listing of the
Accepted Appraised Values for the Hotels which are currently mortgaged
by the Indenture.
-2-
<PAGE> 3
(2) Account. As to any Person the right of such Person
to receive payment for goods sold or leased or service performed by
such Person.
(3) Affiliate. With respect to any Person (1) any other
Person which, directly or indirectly, is in control of, is controlled
by or is under common control with such Person. For purposes of this
Agreement, control of a Person by another Person shall be deemed to
exist if such other Person has the power, directly or indirectly,
either to (i) vote twenty percent (20%) or more of the securities
having the power to vote in an election of directors of such Person,
or (ii) direct the management of such Person, whether by contract or
otherwise and whether alone or in combination with others.
Notwithstanding the foregoing, the Lessee shall be an Affiliate of
Borrowers for purposes of this Agreement.
(4) Amendment Fee. The fee denominated as such in
Section 4.18 of this Agreement to be paid by the Borrowers to the
Banks.
(5) Bankruptcy Code. The United States Bankruptcy Code,
as the same may be amended.
(6) Business Day. A day other than a Saturday or Sunday
or any other day on which commercial banks located in Dallas, Texas;
Memphis, Tennessee; New Orleans, Louisiana and Tulsa, Oklahoma, are
authorized or required to close for business generally under the laws
of any of the above states or the United States of America.
(7) Capital Lease. Any lease obligation that has been or
is required by GAAP to be capitalized.
(8) Charter Documents. The articles or certificate of
incorporation and bylaws of a corporation; the articles of association
and bylaws of an unincorporated association; the certificate of
limited partnership and partnership agreement of a limited
partnership; the partnership agreement of a general partnership; the
operating agreement of a limited liability company; or the indenture
of a trust.
(9) Code. The Internal Revenue Code of 1986, as amended
from time to time, and all regulations of the Internal Revenue Service
("IRS") thereunder.
(10) Collateral shall mean all of the land, buildings and
other improvements presently located and which may be hereinafter
located upon the Lands described in the Indenture and shall include
all Hotels covered by the Indenture and each supplement thereto and
shall include all of the fixtures thereto appertaining (as such term
may be defined by the laws of the state in which the applicable Hotel
is located) and all of the present and future interests of the
Partnership in and to all Equipment located upon the Lands on which
any Hotel is located, all present and future interests of the
Partnership (if any) in respect of any Inventory used or to be used in
connection with the operation or maintenance of any Hotel, as well as
all rents, issues, profits, avails, room rents, receivables, accounts,
accounts receivable, profits, royalties, and income derived from the
Leases and any other leases
-3-
<PAGE> 4
covering a Hotel subject to the Indenture or any supplements thereto,
and any and all present and future interests of the Partnership in all
General Intangibles relating to any and all of the Hotels subject to
the Indenture or any supplements thereto, and all proceeds and
substitutions of the foregoing property; provided, however, that the
receivables of Lessee shall not constitute a part of the Collateral.
Equipment, General Intangibles and Inventory shall have the meanings
assigned to such terms by the Uniform Commercial Code.
(11) Contract. Any contract, note, deed or other
agreement or undertaking of any Person.
(12) Credit. Shall have the meaning specified in the
first introductory paragraph of this Agreement and shall include all
previous extensions and modifications thereto.
(13) Effective Date. Shall have the meaning specified in
Article III of this Agreement.
(14) Employment Law. The Employee Retirement Income
Security Act ("ERISA"), the Occupational Safety and Health Act, the
Fair Labor Standards Act or any other law pertaining to the terms or
conditions or employment, labor or safety in the work place.
(15) Encumbrance. As to any item of real or personal
property (including without limitation all intangible personal
property), any easement, right of way, license, condition, restrictive
covenant, reservation, encroachment or other adverse possession or
other zoning or similar restriction, that is not a Lien but is
enforceable by any Person other than the record owner of such property
or Lessee.
(16) Environmental Law. The Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Toxic Substances Control Act, the Clean Water
Act, the Clean Air Act, or any other Law pertaining to environmental
quality or remediation of releases of Hazardous Waste, or that imposes
liability or establishes standards of conduct with respect to
Hazardous Waste.
(17) Environmental Property Transfer Act. Any Law that
conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer,
sale or lease of any property or deed or title for any property for
environmental reasons including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property
Transfer Acts".
(18) EPA. The United States Environmental Protection
Agency.
(19) Existing Indebtedness. Shall have the meaning
specified paragraph (c) of Article III of this Agreement.
-4-
<PAGE> 5
(20) Financing Statements. Shall have the meaning
specified in the third introductory paragraph of this Agreement.
(21) Fiscal Year. The fiscal year of each Borrower for
financial accounting and reporting purposes and for each Borrower its
fiscal year is a year of twelve calendar months ending on the 31st of
December of each year.
(22) GAAP. Those generally accepted accounting principals
from time to time announced in Statements of the Financial Accounting
Standards Board and in Opinions of the American Institute of Certified
Public Accountants or which have other substantial substantive support
in the United States of America and are applicable in the particular
circumstances to which GAAP relates, as applied on a consistent basis.
(23) Governmental Authority. The federal government or
the United States of America; any state of the United States; any
local government or municipality within the territory or under the
jurisdiction of any of the foregoing; any department, agency,
division, or instrumentality of any of the foregoing; and any court
whose orders or judgments are enforceable by or within the territory
of any of the foregoing.
(24) Hazardous Waste. Any hazardous, explosive,
corrosive, reactive, radioactive, or toxic material or substance, or
any other substance, whether in solid, liquid or gaseous form, whose
manufacture, storage, transportation, release or disposal is subject
to regulation or control under an Environmental Law, or which is
defined or treated as being hazardous, explosive, corrosive, reactive,
radioactive, or toxic in any Law.
(25) Hotel(s). Those buildings and all related
facilities, which provide temporary or extended housing to patrons or
guests, located on the Lands covered by the Indenture.
(26) Indebtedness. As to any Person at any particular
date, any obligation enforceable against such Person (a) to repay
borrowed money; (b) to pay the deferred purchase price of property or
services; (c) to make payments or reimbursements with respect to bank
acceptances or to a factor; (d) to make payments or reimbursements
with respect to letters of credit or drawings thereunder; (e) that is
secured by any Lien on any property of such Person; (f) to make any
payment or contribution to a Multi-Employer Plan; (g) that is
evidenced by a note, bond, debenture or similar instrument; (h) under
any conditional sale agreement or title retention agreement; or (i) to
pay interest or fees with respect to any of the foregoing.
(27) Indenture. Shall have the meaning specified in the
third introductory paragraph of this Agreement.
(28) Indirect Obligation. As to any Person, (a) any
guaranty by such Person of any Obligation of another person; (b) any
Lien on any property of such Person that secures any Obligation of
another Person, (c) any enforceable contractual obligation that such
Person (i) purchase an Obligation of another Person or any property
that is security for such
-5-
<PAGE> 6
Obligation, (ii) advance or contribute funds to another Person for the
payment of an Obligation of such other Person or to maintain the
working capital, net worth or solvency of such other Person as
required in any documents evidencing an Obligation of such other
Person, (iii) purchase property, securities or services from another
Person for the purpose of assuring the beneficiary of any Obligation
of such other Person that such other Person has the ability to timely
pay or discharge such Obligation, (iv) grant a Lien on any property of
such Person to secure any Obligation of another Person, or (v)
otherwise assure or hold harmless the beneficiary of any Obligation of
another Person against loss in respect thereof; and (d) any other
contractual requirement enforceable against such Person that has the
same substantive effect as any of the foregoing. The term "Indirect
Obligation" does not, however, include the indorsement by a Person of
instruments for deposit or collection in the ordinary course of
business or the liability of a general partner of a partnership for
Obligations of such partnership. The amount of any Indirect
Obligation of a Person shall be deemed to be the stated or
determinable amount of the Obligation in respect of which such
Indirect Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.
(29) Insurance/Condemnation Proceeds. Insurance proceeds
payable as a consequence of damage or destruction occurring to or in
respect of any Collateral and proceeds payable as a consequence of any
condemnation or sale or transfer in lieu of condemnation of any
Collateral.
(30) Interest Period. Shall mean each period commencing
on the date a Loan Advance is made (or if no Loan Advance is made, the
date the prior Interest Period ended) and ending on the last day of
the period selected by the Borrowers pursuant to the provisions below.
The duration of each such Interest Period shall be one, two, three or
six months, in each case as the Borrowers may designate, upon notice
received by Agent not later than 11:00 a.m. (Tulsa, Oklahoma time) on
the third Business Day prior to the first day of such Interest Period.
Whenever any Interest Period commences on the last London Business Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) that
Interest Period shall end on the last London Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing,
any Interest Period that would otherwise end on a day which is not a
London Business Day shall end on the next succeeding London Business
Day (or, if such next succeeding London Business Day falls in the next
succeeding calendar month, on the next preceding London Business Day).
(31) Journal. Shall mean The Wall Street Journal.
(32) Lands. Shall refer to those real properties on which
Hotels are located and covered by the Indenture. A complete listing
of all the real properties constituting the Lands is attached hereto
as Exhibit A.
-6-
<PAGE> 7
(33) Law. Any statute, ordinance, code, rule, regulation,
order, judgment, award or decree of any Governmental Authority which
is applicable to or governs, directly or indirectly, the situation,
conduct or Person in question.
(34) Leases. All those Leases presently in effect between
the Partnership and the Lessee as described or referred to in the Rent
Assignment and which may at any time hereafter be in effect covering
or applying to any Hotel covered by the Indenture or any amendment,
supplement or restatement thereof, as amended, modified, restated or
replaced from time to time with approval of the Banks.
(35) Lessee. DJONT Operations, L.L.C., the limited
liability company organized under the laws of the State of Delaware
which is presently the Lessee under a separate Lease of each Hotel
covered by the Indenture executed by the Partnership as the Lessor.
(36) Libor-Rate. For any day, as used herein, shall
mean the rate of interest quoted for the "London Interbank Offered
Rates (LIBOR)" category of the "Money Rates" column in the Journal on
the date of the commencement of a new Interest Period (or, if no
Journal is published on such day, the next previous publication date
thereof) as the average of quotations at major money center banks for
the Interest Period, two London Business Days prior to the first day
of such Interest Period. The Agent shall give prompt notice to the
Borrowers of the Libor-Rate so determined or adjusted, which
determination or adjustment shall be conclusive if made in good faith.
If the Journal shall cease to publish such Libor-Rate quotations, the
Agent shall determine such rates as the average of such Libor-Rate
quotations of three major New York money center banks of whom the
Agent shall inquire.
(37) License. Each agreement between Promus Hotels, Inc.,
or any successor as the licensor, and either the Partnership or the
Lessee as the licensee permitting the use of the Embassy Suites(R),
Inc. trademarks, trade names and any related rights in connection
with the ownership or operation of any Hotel at any time covered by
the Indenture.
(38) Lien. As to any item of real or personal property,
any interest therein that secures payment or performance of an
Obligation or Indirect Obligation of any Person, whether created by
statute (such as but not limited to a statutory lien for work or
materials) or under a mortgage, deed of trust, security agreement,
financing statement, pledge, hypothecation agreement, assignment, or
other document, or which arises under any form of preferential or
title retention agreement or arrangement (including but not limited to
a conditional sale agreement or a lease) that has substantially the
same economic effect as any of the foregoing.
(39) Loan. The loan to be made by the Banks to the
Borrowers pursuant to the provisions of this Agreement and each
amendment and supplement hereto and shall refer to all advances of
funds made by the Banks to or for the account of the Borrowers.
(40) Loan Account. Shall have the meaning specified in
Section 4.13 of this Agreement.
-7-
<PAGE> 8
(41) Loan Advance. All funds advanced and to be advanced
by the Banks to the Borrowers under the provisions of this Agreement
and each amendment and supplement hereto.
(42) Loan Documents. Shall refer to the Restated Notes,
Indenture, Rent Assignment, Financing Statements, Supplemental
Security Documents, this Agreement and each writing at any time
executed by the Borrowers, or either of them, to further evidence any
Indebtedness or Obligation of the Borrowers, or either of them, to the
Agent or to the Banks or purporting to provide any collateral or
surety for the payment of such Indebtedness or Obligations.
(43) Loan Facility Fee. The fee denominated as such in
Section 4.17 of this Agreement to be paid by the Borrowers to the
Banks.
(44) Loan Proceeds. All funds advanced by the Banks to
the Borrowers upon the Loan pursuant to the provisions of this
Agreement.
(45) London Business Day. Shall mean a day for dealing in
deposits in Dollars by and among banks in the London interbank market
which is also a Business Day.
(46) Manager. Shall have the meaning specified in Section
1.21 of this Agreement.
(47) Management Agreements. All existing Management
Agreements between the Lessee and Manager as applicable to each of the
Hotels covered by the Indenture and any like or similar agreements at
any time in effect providing for management services to be provided by
Manager or any other management organization approved by the Banks in
respect of any Hotel presently or hereafter covered by the Indenture.
(48) Material Agreement. Any Contract whose violation by
a Person could have a Material Adverse Effect with respect to such
Person.
(49) Material Adverse Effect. As to any Person and with
respect to any event or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, investigation or
proceeding), a material adverse effect on the business, operations,
revenues, financial condition, property, or business prospects of such
Person or the ability of such Person to timely pay or perform such
Person's Obligations generally, or in the case of Borrower,
specifically the ability of such Borrower to pay or perform any of
such Borrower's Obligations to the Banks.
(50) Material Law. Any Law whose violation by a Person
reasonably could have a Material Adverse Effect with respect to such
Person.
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<PAGE> 9
(51) Material License. (a) As to any Person, any license,
permit or consent from a Governmental Authority or other Person and
any registration, filing with a Governmental Authority or other Person
which if not obtained, held or made by such Person reasonably could
have a Material Adverse Effect with respect to such Person or any
other Person including, without limitation, any occupancy permits and
liquor licenses, and (b) as to any Person who is a party to this
Agreement or any of the other Loan Documents, any license, permit or
consent from a Governmental Authority or other Person and any
registration or filing with a Governmental Authority or other Person
that is necessary for the execution or performance by such party, or
the validity or enforceability against such party, of this Agreement
or such other Loan Document.
(52) Material Obligation. As to any Person, an Obligation
which if not fully and timely paid or performed reasonably could have
a Material Adverse Effect on such Person.
(53) Material Proceeding. Any litigation, investigation
or other proceeding by or before any Governmental Authority (a) which
includes any of the Loan Documents or any of the transactions
contemplated thereby or involves a Borrower as a party or any property
of a Borrower, and reasonably could have a Material Adverse Effect
with respect to such Borrower if adversely determined; (b) in which
there has been issued any injunction, writ, temporary restraining
order or any other order of any nature which purports to restrain or
enjoin the making of any Loan Advance, the consummation of any other
transaction contemplated by the Loan Documents or the enforceability
of any of the Loan Documents, (c) which involves the actual or alleged
breach or violation by Borrower of, or default by a Borrower under,
any Material Agreement; or (d) which involves the alleged or actual
violation by any Borrower of any Material Law.
(54) Maximum Bank Commitment. Shall have the meaning
specified in Section 2.1 of this Agreement.
(55) Multi-Employer Plan. A Pension Benefit plan which is
a multi-employer plan as defined in Section 4001(a)(3) of ERISA.
(56) Note(s). The term "Note" or "Notes" shall refer to
the Prior Note, the Replacement Notes and any substitutions,
modifications and amendments thereof, including the Restated Notes to
be executed herewith.
(57) Obligation. As to any Person, any Indebtedness of
such Person and any other contractual duty or obligation enforceable
against such person which would involve the expenditure of money by
such Person if complied with or enforced, including but not limited to
any Indirect Obligation of such Person.
(58) Original Loan Agreement. Shall have the meaning
specified in the first introductory paragraph of this Agreement.
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<PAGE> 10
(59) Permitted Encumbrances. Those Encumbrances referred
to in the Indenture as being not forbidden or prohibited thereby.
(60) Person. Any individual, partnership, corporation,
trust, unincorporated association, joint venture, limited liability
company, Governmental Authority, estate or other organization in any
form that has the legal capacity to sue or be sued. If the context
does not indicate otherwise or so implies, the term includes a
Borrower.
(61) Prior Note. Shall have the meaning specified in the
first introductory paragraph of this Agreement.
(62) Real Estate Investment Trust. Shall have the meaning
specified in the Code. Real Estate Investment Trust also may be
referred herein as "REIT."
(63) Rent Assignment. Shall have the meaning specified in
the third introductory paragraph of this Agreement.
(64) Replacement Notes. Shall have the meaning specified
in the Second Amendment and the Third Amendment. The Replacement
Notes represent an amendment and modification of the Prior Note,
wherein each individual Bank received its own Note representing its
proportionate share in the Maximum Bank Commitment.
(65) Restated Notes. Shall have the meaning specified in
paragraph (c) of Article III of this Agreement.
(66) Responsible Officer. As to any Person that is not an
individual, partnership or trust, the chairman of the board of
directors, the president, the chief executive officer, the chief
operating officer, the chief financial officer, the treasurer, any
assistant treasurer, any senior vice president or any vice president
in charge of a principal business unit; as to any partnership or
limited liability company, any individual who is a general partner
thereof or any individual who has general management or administrative
authority over all or any principal unit of the business of the
partnership or limited liability company; and as to any trust, any
individual who is a trustee.
(67) Second Amendment. Shall have the meaning specified
in the fifth introductory paragraph of this Agreement.
(68) Secured Indebtedness. Shall mean any and all of the
Obligations and Indirect Obligations of the Borrowers (or either or
them) to the Agent and the Banks arising and which may arise under or
pursuant to any of the Loan Documents or any extension, renewal,
modification, rearrangement, restatement or supplement to any thereof
and, without limitation, shall include the following:
(a) All Indebtedness from time to time evidenced
by the Restated Notes;
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<PAGE> 11
(b) All Indebtedness and Obligations of the
Borrowers, or either of them, which may arise or be incurred
under, pursuant to or by virtue of any of the Loan Documents
including the Amendment Fee and Loan Facility Fee;
(c) The amount of all Obligations incurred and
amounts reasonably expended by the Agent or the Banks for the
purpose of remedying or attempting to remedy any default(s) on
the part of the Borrowers, or either of them, in the due and
timely payment, observance, compliance with or performance of
any Indebtedness, undertaking or Obligation of the Borrowers,
or either of them, under or pursuant to or by virtue of any of
the Loan Documents;
(d) The amount of all Obligations incurred and
amounts reasonably expended by the Agent or the Banks for the
purpose of exercising or attempting to exercise any right(s)
or remedy(ies) consequent upon any default(s) on the part of
the Borrowers, or either of them in the due and timely
payment, observance, compliance with and performance of any
indebtedness, undertaking or obligation of the Borrowers, or
either of them, under or pursuant to or by virtue of any of
the Loan Documents, including but not limited to reasonable
attorneys' fees and attorneys' expenses (whether or not there
is litigation), court costs and all costs in connection with
any proceedings under the Bankruptcy Code pertaining thereto;
and
(e) Interest upon all amounts expended by the
Agent or any of the Banks for any of the purposes specified in
(iii) or (iv) immediately hereinabove computed at the Default
Rate specified in the Restated Notes upon the amount of each
such expenditure from the date thereof and all such amounts
shall be payable upon demand.
(69) Solvent. As to any Person, when (a) the fair value
of such Person's assets is in excess of the total amount of its debts
(including Indirect Obligations); (b) such Person is able to pay its
debts as they mature; and (c) such Person does not have unreasonably
small capital for the business in which it is engaged or for any
business or transaction in which it is about to engage; or (d) such
Person is not "insolvent" as such term is defined in Section 101(32)
of the Bankruptcy Code.
(70) Subsidiary. Any Person of which at least 50% of the
capital stock or equity interests having ordinary voting power for the
election of directors or other governing body of, or at least 50% of
the general partner interest in, such Person is owned by FLCO or the
Partnership, either directly or through one or more Subsidiaries.
(71) Supplemental Security Documents. Shall have the
meaning specified in paragraph (d) of Article III of this Agreement.
(72) Third Amendment. Shall have the meaning specified in
the sixth introductory paragraph of this Agreement.
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<PAGE> 12
(73) UCC. The Uniform Commercial Code as in effect from
time to time in the State of Oklahoma or as to matters governed by the
laws of another jurisdiction, as in effect in such jurisdiction.
(74) Wall Street Journal Rate. Shall mean that annual
rate of interest published in each issue of Journal as the "Prime
Rate" under the column "Money Rates" and referred to as the base rate
for corporate loans posted by at least 75% of the nation's 30 largest
commercial banks. If the Journal should cease to publish a Prime Rate
of interest (or during any period when publication of the Journal
should be suspended for any indefinite period or a period in excess of
10 days) the Wall Street Journal Rate shall mean that variable annual
rate of interest which, in the good faith opinion of Agent, represents
the nearest and most practical equivalent of the Wall Street Journal
Rate.
Other terms are defined in this Agreement (i.e., "Event of Default")
and the other Loan Documents. Any term in this Agreement expressed with
initial capital letters and not specifically defined herein but which is
specifically defined in such other Loan Document shall have the meaning
ascribed to such term by such other Loan Document. Each reference to this
Agreement or any other Loan Document shall include a reference to each
appendix, exhibit, schedule, plat or other writing thereto (whether or not
attached thereto), as amended, modified, restated or replaced from time to
time.
I. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
To induce the Banks to enter into this Agreement, the Borrowers
severally represent and warrant to each of the Banks as follows:
1.1 Organization and Existence. FLCO is duly organized and
existing under and by virtue of the laws of and is in good standing in the
state of Maryland; Partnership is duly formed and existing under and by virtue
of the laws of the state of Delaware, and each Borrower is duly qualified to do
business and is in good standing in every state where the nature or extent of
its business or properties require it to be qualified to do business, except
where the failure to so qualify will not have a Material Adverse Effect. Each
Borrower has the power and authority to own its properties and carry on its
business as now being conducted.
1.2 Authorization. Each Borrower is duly authorized to execute
and perform every Loan Document to which such Borrower is a party, and each
Borrower is duly authorized to borrow hereunder, and this Agreement and the
other Loan Documents have been duly authorized by all requisite corporate and
partnership action of each Borrower. No consent, approval or authorization of,
or declaration or prior filing with, any Governmental Authority, and no consent
of any other Person, is required in connection with each Borrower's execution,
delivery or performance of the Loan Documents to which such Borrower is a
party, except for those already duly obtained.
1.3 Due Execution. Every Loan Document to which a Borrower is a
party has been executed on behalf of such Borrower by a duly authorized
Responsible Officer.
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<PAGE> 13
1.4 Enforceability of Obligations. Each of the Loan Documents to
which a Borrower is a party constitutes a legal, valid and binding obligation
of such Borrower enforceable against such Borrower in accordance with its
terms, except to the extent that the enforceability thereof against such
Borrower may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally or by equitable
principles of general application.
1.5 Burdensome Obligations. No Borrower is a party to or bound by
any Contract or is subject to any provision in the Charter Documents of such
Borrower which would, if performed by such Borrower, result in an Event of
Default either immediately or upon the elapsing of time.
1.6 Legal Restraints. The execution of any Loan Document by a
Borrower will not violate or constitute a default under the Charter Documents
of such Borrower, any Material Agreement of such Borrower, or any Material Law,
and will not, except as expressly contemplated or permitted in this Agreement,
result in any Lien being imposed on any of such Borrower's property. The
performance by any Borrower of its obligations under any Loan Document to which
it is a party will not violate or constitute a default under the Charter
Documents of such Borrower, any Material Agreement of such Borrower, or any
Material Law, and will not, except as expressly contemplated or permitted in
this Agreement, result in any Lien being imposed on any of such Borrower's
property.
1.7 No Material Proceedings. There are no Material Proceedings
pending or, to the best knowledge of either Borrower, threatened.
1.8 Material Licenses. All Material Licenses have been obtained
or exist for each Borrower.
1.9 Compliance with Laws. Each Borrower is in compliance in all
material respects with all Material Laws. Without limiting the generality of
the foregoing:
(a) Compliance. The operations of every Borrower comply
in all material respects with all applicable Environmental Laws and
Employment Laws.
(b) Proceedings. None of the operations of any Borrower
are the subject of any judicial or administrative complaint, order or
proceeding alleging the violation of any applicable Environmental Laws
or Employment Laws which reasonably could be expected to have a
Material Adverse Effect.
(c) Investigations. None of the operations of any
Borrower are the subject of investigation known to the Borrowers by
any Governmental Authority regarding the improper transportation,
storage, disposal, generation or release into the environment of any
Hazardous Waste, the results of which may have a Material Adverse
Effect on such Borrower, on the value of the Collateral, or on the
overall assets of such Borrower.
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<PAGE> 14
(d) Notices; Reports. No notice or report under any
Environmental Law indicating a past or present spill or release into
the environment of any Hazardous Waste has been filed, or is required
to be filed, by any Borrower.
(e) Real Property. No Borrower, nor to the best of each
Borrower's knowledge, any other Person, has, in violation of
Environmental Laws, at any time transported, stored, disposed of,
generated or released any Hazardous Waste on the surface, below the
surface, or within the boundaries of any Lands or any improvements
thereon. Except as set forth in environmental audits delivered to
Banks, the Borrowers have no knowledge of any Hazardous Waste on the
surface, below the surface, or within the boundaries of the Lands and
Hotels comprising part of the Collateral. The Lands and Hotels which
comprise part of the Collateral and all other real property and
improvements located thereon owned by a Borrower are not subject to a
Lien in favor of any Governmental Authority for any liability under
any Environmental Law or damages arising from or costs incurred by
such Governmental Authority in response to a spill or release of
Hazardous Waste into the environment.
(f) Environmental Property Transfer Acts. No
Environmental Property Transfer Acts are applicable to the
transactions contemplated by this Agreement or the other Loan
Documents and each Borrower has provided all notices and obtained all
necessary environmental permits, transfers and consents, if any,
required in order to consummate the transactions contemplated by this
Agreement or the other Loan Documents, to perfect the Banks' Liens on
the Collateral contemplated herein, and to operate each Borrower's
business as presently or proposed to be operated.
1.10 Other Names. No Borrower has used any name other than the
full name which identifies such Borrower in this Agreement. The only trade
name or style under which a Borrower transacts business is the name which
identifies such Borrower in this Agreement.
1.11 REIT Documents. FLCO has delivered to each of the Banks
executed documents (or, if not executed, certified by a Government Authority)
evidencing its qualification to become a Real Estate Investment Trust under the
Code. Such documentation has been duly authorized and executed and constitutes
the valid and binding obligation of FLCO and the other parties (if any) thereto
and the terms, provisions, covenants and undertakings of FLCO therein all of
which are enforceable in accordance with such terms and provisions. FLCO has
performed all obligations, duties, covenants and conditions required as
conditions to the consummation of the transactions contemplated by such
documentation.
1.12 Solvency. Each Borrower is Solvent prior to and after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents.
1.13 Financial Statements. The consolidated financial statements
of the Borrowers previously delivered to the Banks by the Borrowers pursuant to
the Original Loan Agreement, as amended, are complete and correct, have been
prepared in accordance with GAAP, and fairly reflect
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<PAGE> 15
the financial condition, results of operations and cash flows of the Borrowers
covered thereby as of the dates and for the periods stated therein.
1.14 No Change in Condition. Since the date of the last financial
statements delivered to the Banks there has been no change which would have a
Material Adverse Effect on any Borrower.
1.15 No Defaults. No Borrower has breached or violated or is in
default under any Material Agreement, or is in default with respect to any
Material Obligation of such Borrower. No default has occurred under the
Original Loan Agreement, as amended, which is continuing and no Event of
Default has occurred under this Agreement.
1.16 Encumbrances. None of the Lands comprising the Collateral
purported to be owned by a Borrower including, without limitation, any of the
Hotels, is subject to any material Encumbrances except Permitted Encumbrances.
1.17 Condominium. None of the Hotels is part of a condominium,
except as previously disclosed in writing to the Banks.
1.18 Planned Unit Development. None of the Lands or Hotels are
part of a planned unit development, except as previously disclosed in writing
to the Banks.
1.19 Capital Leases. No Borrower has an interest as a lessee under
any Capital Lease exceeding $150,000 with respect to any Hotel.
1.20 Tax Liabilities; Governmental Charges. Each Borrower has
filed or caused to be filed all tax reports and returns required to be filed by
it with any Governmental Authority, except where extensions have been properly
obtained, and has paid or made adequate provision for payment of all taxes,
assessments, fees and other charges levied upon it or upon its income or
properties by any Governmental Authority which are due and payable, including
interest and penalties, except such taxes, assessments, fees and other charges,
if any, as are being diligently contested in good faith by appropriate
proceedings and as to which such Borrower has established adequate reserves in
conformity with GAAP on the books of such Borrower. No Liens for any such
taxes, assessments, fees or other charges have been filed and no claims are
being asserted with respect to any such taxes, assessments, fees or other
charges which, if adversely determined, would have a Material Adverse Effect on
such Borrower. There are no material unresolved issues concerning any tax
liability of a Borrower which, if adversely determined, would have a Material
Adverse Effect on such Borrower.
1.21 Management Agreements and Licenses. The Management Agreements
and Licenses are in full force and effect, are fully enforceable by and against
the Lessee and Promus Hotels, Inc. or any Affiliate thereof ("Manager"), and
have not been modified, amended or supplemented in any way. There are no other
agreements (oral or written) or understandings between the Borrowers and/or the
Lessee and Manager with respect to the operation and management of the Hotels
other than the Management Agreements and Licenses with Manager, copies of
which have been furnished to the Banks, provided, however, Manager has
delivered certain comfort letters to Agent and
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<PAGE> 16
Partnership, evidencing its willingness to continue management of the Hotels in
the Event of a Default by the Borrowers or Lessee under any License or
Management Agreement.
1.22 Real Estate; Leases. Exhibits A and D set forth a correct and
complete list of (i) the Lands; and (ii) the Leases. Each of such Leases
itemized in Exhibit D is valid and enforceable in accordance with its terms and
is in full force and effect. No default by any party to any of the Leases
described in Exhibit D exists.
1.23 State of Collateral. The Partnership has good and marketable
title to the Lands and the Hotels presently located upon the Lands, and each
Borrower has good and marketable or merchantable title to the Collateral.
There are no Liens on the Collateral except as expressly permitted by this
Agreement and the other Loan Documents. Each item of tangible personal
property comprising part of the Collateral purported to be owned by a Borrower
is in good operating condition and repair, ordinary wear and tear alone
excepted and is suitable for the use to which it is customarily put by its
owner.
1.24 Chief Place of Business, Location of Collateral. As of the
date of this Agreement the chief executive office of each Borrower is located
at 545 E. John Carpenter Frwy., Suite 1300, Irving, Texas 75062, and such
address is the address of the principal place of business of each Borrower.
Such address is the place where the principal books and records of each
Borrower concerning its Accounts are located and neither Borrower has any other
regular place of business except to the extent that the Partnership owns the
Lands and the Hotels covered by the Indenture, each of which is leased to the
Lessee and managed by Manager with no officers or employees of either Borrower
regularly stationed to work in any of the Hotels.
1.25 Negative Pledges. Neither Borrower is a party to or is bound
by any Contract which prohibits the existence of any Lien upon or assignment or
conveyance of any of the Lands or the Hotels covered by the Indenture or any
other Collateral except for restrictions on assignment set forth in the
Management Agreements and Licenses.
1.26 Security Documents.
(a) The Indenture. The Indenture is effective to grant
to the "Mortgagee" named therein legal, valid and enforceable first
mortgage or deed of trust liens upon the Collateral described therein,
including, without limitation, the Hotels located upon the Lands
described therein. The Mortgagee thereunder has a fully perfected
first priority lien upon the Hotels and Lands subject only to
Permitted Encumbrances. The security agreement language in the
Indenture is effective to grant the Mortgagee thereunder an
enforceable security interest in all rights, titles and interests of
the Borrowers in the personal property described therein. As to all
personal property in which a security interest may be perfected under
a state's UCC by the filing of a financing statement, the Mortgagee
named in the Indenture has a fully perfected first priority security
interest in the personal property described as Collateral in the
Indenture, subject only to Permitted Encumbrances and security
interests covering after acquired collateral or securing future
advances in which priority may be obtained by other
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<PAGE> 17
Persons under the UCC, the tax lien provisions of the Code and certain
provisions of the Bankruptcy Code.
(b) The Rent Assignment. The Rent Assignment is
effective to grant to the Agent thereunder an enforceable Lien on the
assigned rents described therein. The Agent has a fully perfected
first priority lien on the assigned rents referred to in the Rent
Assignment.
1.27 True and Complete Disclosure. All factual information (taken
as a whole) heretofore or concurrently herewith furnished by the Borrowers, or
either of them, to any Bank (including, without limitation, information
contained in any of the Loan Documents) for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and accurate in
all material respects as of the date of which such information is dated or
certified and not incomplete by any omission to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time in the light of the circumstances under which such information was
provided.
1.28 Margin Stock Securities Matters. Neither Borrower is engaged
or will engage, principally or as one of its important activities in the
business of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System) and no proceeds of any Loan Advance obtained by
either of the Borrowers will be used to purchase or carry any such margin stock
or for any purpose which violates, or would be inconsistent with, the
provisions of Regulation U or Regulation G and no proceeds of any Loan Advance
will be used by either Borrower to acquire any security in any transaction
which is the subject of Sections 13 and 14 of the Securities Exchange Act of
1934, as amended. Neither Borrower is an "Investment Company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
or a company "controlled" (within the meaning of such Investment Company Act)
by such an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended. No Borrower is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or any other Law (other than the Code)
limiting or regulating its ability to incur Indebtedness for money borrowed.
1.29 Pension Benefit Plans, etc. Neither Borrower is a party to or
is covered as an "employer" by or under any pension benefit plan which is a
multi-employer plan as defined in Section 3(2) of Title I of ERISA which is
subject to Title IV of ERISA and in respect of which a Covered Period or a
Commonly Controlled Entity of such Covered Period of an "employer" as defined
in Section 3(5) of ERISA, except as disclosed in writing to the Banks.
1.30 Retiree Benefits. Neither Borrower has any obligation to
provide any Person with any medical, life insurance, or similar benefit
following such Person's retirement or termination of employment (or to such
Person's beneficiary subsequent to such Person's death) other than as required
by law or by employment agreements previously disclosed in writing to the
Banks.
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<PAGE> 18
1.31 Subsidiaries. Attached hereto as Exhibit E is a true and
complete list of the Borrowers' Subsidiaries as of the date hereof.
1.32 Survival of Representations and Warranties. All of the
representations and warranties in this Agreement and all representations and
warranties in any certificate or other writing delivered by either of the
Borrowers to the Agent or any of the Banks pursuant hereto or in connection
with the application of the Borrowers for the Credit established by this
Agreement shall survive the execution and delivery of each of the Loan
Documents and the making of Loan Advances hereunder. Each representation and
warranty may be relied upon by each of the Banks as being true and correct as
of the date hereof until all of the Secured Indebtedness shall be paid in full.
II. THE TERM LOAN
2.1 Credit Available. For the purposes of this Agreement, the
Maximum Bank Commitment shall be the lesser of: (i) $85,000,000.00; or (ii) an
amount equal to 50% of the Accepted Appraised Value of all of the Hotels and
the related Collateral covered by the Indenture as of the time the Maximum Bank
Commitment is to be determined. Bank of Commerce agrees to purchase, and the
other Banks and AmSouth hereby agree to so assign an interest in the Credit
owed to the other Banks in such amount as is necessary to cause each Bank's
proportionate share of the Maximum Bank Commitment to be as follows (AmSouth
shall have no interest in the Credit from and after the date of this Agreement,
provided, however, AmSouth shall have the right to receive payment pursuant to
Section 4.17 of this Agreement):
<TABLE>
<CAPTION>
Proportionate Share of
----------------------
Bank Maximum Bank Commitment
---- -----------------------
<S> <C>
First Tennessee 3/17
The Agent 6/17
Bank One 3/17
Liberty 2/17
Bank of Commerce 3/17
</TABLE>
The Accepted Appraised Value assigned to the Hotels and related Collateral
covered by the Indenture shall be deemed to be the value of each Hotel and
related Collateral during the term hereof unless a Hotel be substantially
damaged and destroyed while not insured as required in accordance with this
Agreement and the Indenture, or a Hotel be sold or released from the Indenture,
as provided herein, or all of the Banks should approve a change in such value
based upon one or more FIRREA appraisals. Except as provided in Section 4.15
hereof, the Banks shall bear the costs of any appraisals obtained hereunder.
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<PAGE> 19
2.2 Security. The Agent, acting for itself and the other Banks,
shall be entitled to proceed against Collateral upon any Event of Default in
such order as the Banks shall deem suitable. All Collateral as to which the
liens and security interests in favor of the Banks shall have been perfected by
filing and recording shall secure the payment of all Secured Indebtedness
regardless of the Hotel to which the Collateral may be attributed for Maximum
Bank Commitment purposes. In the event of an insured loss or condemnation with
respect to any Hotel, all Insurance/Condemnation Proceeds relating thereto
shall be applied as provided in the Indenture.
2.3 Loan Advances. On the date of this Agreement, the Banks shall
make Loan Advances to the Borrowers in an amount up to the Maximum Bank
Commitment minus the then unpaid principal amount of all prior Loan Advances to
the Borrowers made under the Original Loan Agreement, as amended.
2.4 Partial Releases of Indenture and Rent Assignment. The Banks
do hereby consent to the Agent releasing, and Agent agrees to release, any
Hotel and related Collateral from the lien of the Indenture and from the Rent
Assignment upon receipt of a written request on behalf of the Borrowers if,
after giving effect thereto, the Accepted Appraised Values of the remaining
Hotels and related Collateral covered by the Indenture and Rent Assignment
equal at least $170,000,000.00.
2.5 Collateral To Continue Unimpaired. The Loan is a continuation
of the Loan represented by the Original Loan Agreement, as amended, and is not
a new loan. There shall not occur any interruption of priority in respect of
the Liens and security interests securing payment of the Secured Indebtedness.
2.6 Loan Advances To Be Made To Partnership Account. Each Loan
Advance to be made under this Agreement shall be made by deposit of the amount
thereof to the Loan Account in the name of the Partnership with the Agent who
shall receive from the other Banks their ratable share of each Loan Advance to
be made.
2.7 Each Bank Responsible For Its Proportionate Share of Maximum
Bank Commitment. Subject to the terms and conditions of this Agreement and the
other Loan Documents, each Bank shall be responsible for funding its ratable
portion of each Loan Advance which the Borrowers shall be entitled to receive
under this Agreement and no Bank shall in any manner be liable to the Borrowers
for or on account of the default of any other Bank in providing its
proportionate share of any Loan Advance.
2.8 Interest Rates and Prepayments. Subject to the provisions
hereof, the Secured Indebtedness shall bear interest at a rate per annum (based
on a year of 360 days and actual days elapsed) for each day of an Interest
Period equal to the Libor-Rate for such Interest Period plus 150 basis points.
Prepayments shall be allowed during any Interest Period provided that the
Borrowers indemnify the Agent and the Banks against any loss or expenses
(including loss of margin) which the Agent or the Banks sustain or incur as a
consequence thereof. If the outstanding Secured Indebtedness should exceed the
Maximum Bank Commitment at any time, then the Borrowers shall have 2 days after
notice thereof to pay the Banks, in care of the Agent, that amount by which the
Secured Indebtedness exceeds the Maximum Bank Commitment.
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<PAGE> 20
2.9 Default Rate. Any installment or amounts due under the
Restated Notes, this Agreement or pursuant to any Loan Document which are not
paid when due shall bear interest at the Default Rate. "Default Rate" shall be
that annual rate of interest equal to four percentage points (4%) plus the Wall
Street Journal Rate in effect as of the date of said default.
2.10 Payments and Maturity. As provided in the Restated Notes, (i)
accrued interest only shall be payable monthly on the last Business Day of the
month (or on the last day of each Interest Period if other than the last
Business Day of such month), during the period from the date hereof through
September 30, 1997, commencing on October 31, 1996; (ii) payments of principal
and accrued interest shall be payable monthly during the period from October 1,
1997 through September 30, 2000, commencing on October 31, 1997; (iii) such
principal and interest payments shall be calculated on a 15 year (constant
payment) amortization schedule and adjusted annually (as of September 30th) to
reflect the then current Libor-Rate, and (iv) all principal and accrued
interest shall be due and payable in full on September 30, 2000. Payment of
the Secured Indebtedness is subject to the terms and conditions of the Restated
Notes executed and delivered in connection herewith.
III. CONDITIONS PRECEDENT
3. Effective Date. This Agreement shall be effective as of the
date first above written (the "Effective Date") when all of the following shall
have occurred:
(a) Amended and Restated Loan Agreement. This Agreement
shall have been executed and delivered by the Borrowers and the Banks.
(b) Assignment. The purchase by Bank of Commerce, and an
assignment by the other Banks and AmSouth, an interest in the Credit
owed to the other Banks in such amount as is necessary to cause each
Bank's proportionate share of Maximum Bank Commitment to be equal to
the percentages set forth opposite such Bank's name as set forth in
Section 2.1 of this Agreement.
(c) Restated Notes. The Borrowers shall have executed
and delivered to the order of the Banks, in care of the Agent, the
promissory notes in the form attached hereto as Exhibit F (the
"Restated Notes"). The Restated Notes shall represent a modification
of the Prior Note and Replacement Notes previously issued pursuant to
the Original Loan Agreement, as amended, and shall be issued to the
order of each Bank in a principal amount equal to the amount of its
proportionate share of the Maximum Bank Commitment. The Restated
Notes, as a whole, shall represent the Maximum Bank Commitment. The
Indebtedness outstanding under the Original Loan Agreement, as
amended, immediately before the issuance of the Restated Notes (the
"Existing Indebtedness") shall not be extinguished by the issuance of
the Restated Notes, rather it shall remain outstanding and be
evidenced by the Restated Notes. All payments hereafter made on the
Credit shall be applied first to indebtedness advanced after the
Effective Date then to the Existing Indebtedness.
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The Banks shall return to the Borrowers all Replacement Notes marked
"canceled by renewal" upon the Agent's receipt of the Restated Notes.
(d) Supplemental Security Documents. The Borrowers shall
have executed and delivered to the Agent, on behalf of the Banks,
amendments to the Indenture, Rent Assignment and Financing Statements,
in form satisfactory to the Agent, granting to the Agent, on behalf of
the Banks, first perfected Liens (subject to no other Liens other than
Permitted Encumbrances), on and in all of the Hotels located on the
Lands and reflecting of record that the Restated Notes are part of
the Secured Indebtedness (said supplemental and amended Loan
Documents, being herein referred to as the "Supplemental Security
Documents").
(e) Opinion Letters and Title Insurance. The Banks shall
have received (i) an opinion letter of the Borrowers' counsel as to
due organization of the Borrowers and authorization of appropriate
officers to execute and deliver this Agreement and the Supplemental
Security Documents, (ii) good standing certificates for all states
where the Lands are located, and (iii) opinion letters from local
counsel and/or title insurance endorsements, at the option and
absolute discretion of the Agent, as to the validity, priority and
enforceability of the Indenture, Rent Assignment and Financing
Statements, as amended and supplemented by the Supplemental Security
Documents covering the Hotels and related Collateral, all in form and
content satisfactory to the Banks.
(f) Resolutions. The Banks shall have received a true
and correct copy of the resolutions adopted by the board of directors
of FLCO duly authorizing the execution, delivery and performance by
FLCO, individually and as general partner of the Partnership, of this
Agreement, the Restated Notes and the Supplemental Security Documents
and all transactions contemplated therein, to which FLCO is a party,
both individually and as general partner of the Partnership.
(g) Incumbency Certificate. The Banks shall have
received certificates executed by the duly elected and acting
corporate secretary or assistant secretary of FLCO as to the officers
of FLCO authorized to execute and deliver this Agreement.
(h) Amendment Fee Payment. The Borrowers shall pay to
the Agent $200,000.00 of the Amendment Fee as provided for in Section
4.18 of this Agreement. The Agent shall be authorized to release and
distribute the $200,000.00 to the Banks in accordance with each
Bank's proportionate share in the Maximum Bank Commitment.
IV. AFFIRMATIVE COVENANTS AND AGREEMENTS
Each Borrower covenants and agrees that for so long as any Secured
Indebtedness shall remain outstanding and unpaid it will do and cause the other
Borrower (where appropriate) to do, or to be done the following:
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4.1 Corporate and Partnership Existence. Each Borrower shall
maintain its corporate or partnership existence, as the case may be, in good
standing and its right to transact business in those states in which it is now
or hereafter doing business. Each Borrower shall obtain and maintain all
Material Licenses for such Borrower. FLCO will diligently preserve its
qualification as a REIT.
4.2 Maintenance of Collateral. Each Borrower shall maintain in
good condition and working order, and repair and replace as required, the
Collateral.
4.3 Insurance. Each such Borrower shall at all times keep and
maintain or cause to be maintained in force policies of insurance covering the
Hotels issued by reputable insurers with minimum Best's ratings of A:1 and in
amounts customarily carried and maintained by reputable owners and operators of
major hotel properties in urban centers. Such policies shall be those required
by the Partnership to be maintained under each of the Management Agreements (as
presently in effect) or to be maintained by the Manager. All insurance
policies covering any Collateral shall comply in all respects with the
provisions of the Indenture and shall contain broad form mortgagee clauses
making losses payable to the Agent as Mortgagee. All general liability
policies covering the Hotels shall name the Agent for the ratable benefit of
the Banks as an additional insured. The Borrowers shall furnish copies of each
policy of insurance covering the Hotels carried or maintained by either of
them, or certificates in lieu thereof, to the Agent and if any policy(ies) of
insurance covering any Collateral shall be obtained, carried or maintained by
the Lessee, then said policies shall meet all of the requirements of the
Indenture and this Agreement and copies thereof shall be furnished to the
Agent.
4.4 Payment of Taxes and Other Obligations. Each Borrower shall
promptly pay and discharge or cause to be paid and discharged, prior to
delinquency, any and all income taxes, federal or otherwise, lawfully assessed
and imposed upon it, and any and all lawful taxes, rates, levies, and
assessments whatsoever upon any of the Collateral and every part thereof, or
upon the income or profits therefrom and all claims of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons for labor, materials,
supplies, storage or other items or services which if unpaid might be or become
a Lien or charge upon any of the Collateral; provided, however, that nothing
herein contained shall be construed as prohibiting a Borrower from diligently
contesting in good faith by appropriate proceedings the validity of any such
taxes, rates, levies, assessments or claims, provided such Borrower has
established adequate reserves therefor in conformity with GAAP on the books of
such Borrower, and no Lien, other than a Permitted Exception, results from such
non-payment.
4.5 Compliance With Laws. Each Borrower shall comply in all
material respects with all Material Laws. Without limiting the generality of
the foregoing:
(a) Environmental Laws. Each Borrower shall comply and shall
use commercially reasonable efforts to ensure compliance by all
tenants, subtenants and other occupants, if any, of the Lands and/or
the Hotels with all Environmental Laws.
(b) Employment Laws. Each Borrower shall comply with all
requirements of all Employment Laws applicable to such Borrower.
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4.6 Discovery and Clean-Up of Environmental Work.
(a) In General. Upon any Borrower's receiving notice or
otherwise acquiring knowledge of any violation of any Environmental
Law relating or pertaining to any Hotel or related facility(ies) at
any time, now or hereafter, constituting Collateral for the payment of
any Secured Indebtedness which would result in any material liability
under any Environmental Law, such Borrower shall (i) promptly take
such acts as may be required to prevent danger or harm to the property
or any person therein as a result of such Hazardous Waste; (ii) at the
request of the Banks, and at the Borrowers' sole cost and expense,
obtain and deliver to the Agent promptly, but in no event later than
90 days after such request, a then currently dated environmental
assessment of the property certified to the Banks and any future
holder of the Restated Notes or any Secured Indebtedness, a proposed
plan for responding to any environmental problems described in such
assessment, and an estimate of the costs thereof; and (iii) take all
necessary steps to initiate and expeditiously complete all removal,
remedial, responsive, corrective and other action to eliminate any
such environmental problems, and keep the Agent informed of such
actions and the results thereof.
(b) Asbestos Clean-Up. In the event that the Borrowers are
informed that any of the Hotels at any time covered by the Indenture
or any amendment or supplement thereto, contains asbestos or
asbestos-containing materials ("ACM"), the Borrowers shall develop and
implement or cause to be developed and implemented, as soon as
reasonably possible, an Operations and Maintenance Program (as
required by EPA guidance document entitled "Managing Asbestos in
Place; A Building Owner's Guide to Operations and Maintenance Programs
for Asbestos- Containing Materials") for managing in place the ACM,
and deliver a true, correct and complete copy of such Operations and
Maintenance Program to the Agent. In the event that the asbestos
survey done in connection with developing the Operations and
Maintenance Program reveals ACM which, due to its condition, location
or planned building renovation, is recommended to be encapsulated or
removed, the Borrowers shall promptly cause the same to be
encapsulated or removed and disposed of offsite, in either case by a
licensed and experienced asbestos contractor, all in accordance with
applicable state, federal and local Laws. Upon completion of any such
encapsulation or removal, the Borrowers shall deliver to the Agent a
certificate in such form as is then customarily available signed by
the consultant overseeing the activity certifying to the Banks that
the work has been completed in compliance with all applicable Laws
regarding notification, encapsulation, removal and disposal and that
no airborne fibers beyond permissible exposure limits remain on site.
All costs of such inspection, testing and remedial actions shall be
paid by the Borrowers.
4.7 Notice to Agent of Material Events. The Borrowers shall,
promptly upon any Responsible Officer of Borrower obtaining knowledge or notice
thereof, give notice to the Agent of any (i) breach of any of the covenants
herein; (ii) Event of Default; (iii) the commencement of any Material
Proceeding; (iv) any loss of or damage to any assets of a Borrower that is
likely to result in a Material Adverse Effect; and (v) any loss or damage to,
or institution of any proceeding for the condemnation or other taking of, any
of the Collateral, to the extent that such loss, damage or
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<PAGE> 24
proceeding is likely to give rise to Insurance/Condemnation Proceeds in an
amount in excess of $100,000.00 or to result in a Material Adverse Effect. In
addition,
(a) The Borrowers shall furnish to the Agent from time to
time all information which the Agent reasonably requests with respect
to the status of any Material Proceeding.
(b) The Borrowers shall within 5 days inform the Agent of
its receipt of, and deliver to the Agent a copy of, any (i) notice
that any violation of any Environmental Law or Employment Law may have
been committed or is about to be committed by any Borrower with
respect to any of the Hotels, (ii) notice that any administrative or
judicial complaint or order has been filed or is about to be filed
against any Borrower alleging violations of any Environmental Law or
Employment Law or requiring such Borrower to take any action in
connection with the release of any Hazardous Waste into the
environment with respect to any of the Hotels, (iii) notice from a
federal, state, or local Governmental Authority or private party
alleging that a Borrower may be liable or responsible for costs
associated with a response to or cleanup of a release of Hazardous
Waste into the environment with respect to any of the Hotels or any
damages caused thereby, (iv) notice that a Borrower is subject to
federal, state or local investigation regarding the improper
transportation, storage, disposal, generation or release into the
environment of any Hazardous Waste with respect to any of the Hotels,
or (v) notice that any of the Hotels at any time covered by the
Indenture or any amendment or supplement thereto, are subject to a
Lien in favor of any Governmental Authority for any liability under
any Environmental Law or damages arising from or costs incurred by
such Governmental Authority in response to a release of Hazardous
Waste into the environment.
(c) The Borrowers shall, within 10 days after it occurs,
deliver to the Agent notice of any default or event of default, or the
occurrence of any event which would with the passage of time, giving
of notice or otherwise, constitute a default or event of default with
respect to any Material Obligation.
(d) The Borrowers shall deliver notice to the Agent of
any change in any Borrower's name, state of incorporation, form of
organization, trade names or styles under which such Borrower will
transact business, at least 30 days prior to such change.
(e) The Borrowers shall, immediately after becoming aware
thereof, deliver notice to the Agent of any Material Adverse Effect
upon any of Borrower's property, business, operations or condition
(financial or otherwise).
(f) The Borrowers shall, immediately after becoming aware
thereof, deliver notice to the Agent of any violation of any Law
applicable to any Borrower or its properties which may have a Material
Adverse Effect.
4.8 Maintenance of Liens of Security Documents.
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(a) Preservation and Perfection of Liens. The Borrowers
shall promptly, upon the reasonable request of the Agent and at the
Borrowers' expense, execute, acknowledge and deliver, or cause the
execution, acknowledgment and delivery of, and thereafter file or
record in the appropriate governmental office, any document or
instrument supplementing or confirming the Indenture and each Loan
Document, or otherwise deemed necessary by the Agent to create,
preserve or perfect any Lien purported to be created by the Indenture
and each Loan Document or to fully consummate the transactions
contemplated by the Loan Documents.
(b) Compliance with Terms of Loan Documents. Comply and
cause every other Borrower to comply with all of the terms, conditions
and covenants in the Loan Documents to which such Borrower is a party.
4.9 Borrower Financial Statements and Compliance Certificates.
For so long as any Secured Indebtedness shall remain outstanding and unpaid the
Borrowers will furnish to the Agent, financial statements as follows:
(a) Whether or not FLCO is subject to the reporting
requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended ("Reporting Provisions"), Borrowers will furnish
to the Agent, within 5 days following the date upon which any annual,
quarterly or current report required by the Reporting Provisions is,
or would be (if FLCO was subject to the Reporting Provisions),
required to be filed with the Securities and Exchange Commission
("SEC"), 5 copies of each such report, without exhibits, or, if FLCO
is not then subject to the Reporting Provisions, copies of the
financial statements and any reports of independent public accountants
thereon that would be required to be included in such report if FLCO
was subject to the Reporting Provisions. All financial statements and
reports thereon required to be included (or which would be required to
be included if FLCO was subject to the Reporting Provisions) in any
such report shall be furnished to the Agent and shall be prepared in
compliance, in all material respects, with the rules and regulations
promulgated by the SEC applicable (or which would be applicable if
FLCO was subject to the Reporting Provisions) to such financial
statements. Each annual and quarterly report so furnished, or the
financial statements provided in lieu thereof (if FLCO is not subject
to the Reporting Provisions), shall include, without limitation,
financial statements of Lessee prepared in compliance, in all material
respects, with the rules and regulations promulgated by the SEC
applicable (or which would be applicable if FLCO was subject to the
Reporting Provisions) to such financial statements. The Reporting
Provisions shall include, at a minimum, delivery of a balance sheet,
income statement and cash flow statement.
(b) Upon receipt of any request from time to time by the
Agent, each Borrower will furnish in response to such request and
within a reasonable time following receipt thereof such other
un-audited financial information concerning such Borrower and its
operations or concerning the Collateral at any time covered by the
Indenture and such other matters pertaining to compliance with the
Loan Documents as reasonably may be requested;
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<PAGE> 26
(c) To the extent quarterly financial statements
delivered by the Borrowers hereunder do not encompass operating
statements (including income statements) prepared in accordance with
GAAP for each of the Hotels, the Borrowers shall furnish to the Agent
5 copies of said statements within 45 days following the close of each
fiscal quarter of each Fiscal Year.
(d) In connection with the delivery of financial
statements as provided in this Section 4.9, the Borrowers also shall
deliver to the Agent a certificate, in form satisfactory to the Banks,
certifying that the Borrowers are in compliance with Sections 5.1,
5.12 and 5.13 of this Agreement.
4.10 Recordkeeping; Rights of Inspection. Each Borrower will: (i)
keep and cause every other Borrower to keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to such Borrower's property, businesses and activities
and which shall be in conformity with GAAP, (ii) permit Persons authorized by
the Agent to visit and inspect its property or the property of any other
Borrower, and to inspect its books of record and account and the books of
record and account of any every other Borrower and to make photocopies and
abstracts thereof, to review the accounts of every Borrower and to discuss the
affairs, finances and accounts of every Borrower with such Borrower's partners,
officers and managers and independent public accountants, during normal
business hours and as often as the Agent may reasonably request, and (iii)
permit the Agent to perform audits, on a periodic basis as determined by the
Banks at any time that an Event of Default exists, of such books and records of
account, in each case, at the Borrowers' expense (including paying the
out-of-pocket expenses of the Banks).
4.11 Material Agreements. The Borrowers shall fully perform all of
their respective obligations under all of the Material Agreements, and shall
enforce all of their respective rights and remedies thereunder as they each
deem appropriate in their reasonable business judgment; provided, however, that
neither Borrower shall take any action or fail to take any action which would
result in a waiver or other loss of any material right or remedy of said
Borrower thereunder, except as otherwise approved by the board of directors of
FLCO.
4.12 Further Assurances. The Borrowers shall execute and deliver,
or cause to be executed and delivered, to the Agent such documents and
agreements, and shall take or cause to be taken such actions, as the Agent may
from time to time reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents.
4.13 Separate Bank Account for Loan Advances, Payments. The
Borrowers will arrange for the Partnership to establish and maintain a separate
bank account (the "Loan Account") in the name of the Partnership with the Agent
into which all Loan Proceeds shall be from time to time deposited to be
withdrawn by specially designated representatives of the Partnership and all
payments of principal, interest, loan fees and reimbursements made on behalf of
the Borrowers to the Agent or the Banks for expenses incurred by them in
respect of which the Borrowers have agreed to reimburse the Agent or the Banks
shall be deposited by the Agent to the Loan Account.
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Notwithstanding any other terms or provisions herein to the contrary, all Loan
Advances which the Banks are required to make hereunder shall be funded into
the Loan Account and no other.
4.14 Banks May Fund. If the Borrowers, or either of them, should
fail to satisfy any condition precedent to the right of the Borrowers to
receive any requested Loan Advance, any Bank may (but shall in no event be
required to do so) make a requested Loan Advance and the amount thereof shall
be evidenced by the Restated Notes if funded.
4.15 Expenses of and Claims Against the Banks. Whether or not any
Loan Advance is made hereunder the Borrowers will pay upon demand all
reasonable expenses incurred in connection with the transactions contemplated
by the Loan Documents, including reasonable fees and expenses of legal counsel
for the Agent and/or any of the Banks in connection with the preparation,
filing and recording of any Loan Documents and the furnishing to the Agent of
any opinions reasonably requested by or for them concerning the Loan Documents;
provided, however, that the Borrowers shall not be responsible for the fees or
out-of-pocket expenses of officers or employees of any of the Banks. The
Borrowers shall pay all premiums which may be required for any title insurance
endorsements reasonably required by the Banks covering property constituting
Collateral. To the extent not prohibited by applicable law or the limitations
set forth in the immediately preceding sentence, the Borrowers will pay all
costs and expenses of every character heretofore incurred or expended and
heretofore incurred or expended from time to time by the Agent or any Bank to
or for third parties and not for general administrative overhead or in-house
consultants or employees of the Agent or any Bank (including expenses for
appraisals and environmental assessments if any Event of Default shall have
occurred or if the Agent believes that any Hotel has been materially damaged or
is the subject of a violation of an Environmental Law) in connection with the
making of the Loan to the Borrowers or any transaction contemplated by the Loan
Documents, the evaluation, monitoring and protection of the Collateral and the
operation, perfection and realization upon the Agent's security interests in
and liens on the Collateral. The Borrowers also will promptly reimburse the
Agent and the Banks for any reasonable expenses relating to the Agent or any
Bank exercising any of their respective rights or remedies under or, in aid of
enforcement of, any of the Loan Documents including all inspection and
appraisal fees in connection therewith, fees of receivers, title examination
and abstract fees, legal fees, recording and filing fees (other than the
Oklahoma Real Estate Mortgage Registration Tax paid in connection with the
recording of the Indenture in Oklahoma) Uniform Commercial Code and related
lien search fees, taxes (except for income taxes and franchise taxes), escrow
fees, court costs, auctioneer fees and all other professional fees and expenses
and travel expenses in connection with actions and proceedings consequent on
default, all in every case to the extent reasonable and not prohibited by law.
4.16 Legal Compliance, Indemnification. The Partnership shall
cause the Lessee to operate or to assure the operation by the Manager of the
Collateral (or such other property manager as may be approved in writing by the
Banks) in full compliance with all Laws, ordinances, regulations and
governmental requirements as may from time to time be applicable to the
particular Collateral and the Borrowers shall indemnify the Agent and each of
the Banks for and hold each of them harmless against any losses, costs or
expenses incurred by reason of, arising out of or related to any failure or
omission of either of the Borrowers or the Lessee, as applicable, to comply
with any provision of the Loan Documents, the Leases or any of the Management
Agreements and Licenses
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<PAGE> 28
between the Lessee and Manager, including but not limited to attorneys' fees
and court and settlement costs.
4.17 Loan Facility Fee. The Borrowers shall pay to the Agent for
the benefit of the Banks a "Loan Facility Fee" in the sum of $500,000.00, due
and payable on October 6, 1996. Such fee shall be apportioned among the Banks
as follows: $125,000.00 to AmSouth, $125,000.00 to Bank One, $75,000 to First
Tennessee, $50,000.00 to Liberty and $125,000.00 to the Agent.
4.18 Amendment Fee. The Borrowers shall pay to the Agent for the
ratable benefit of the Banks an "Amendment Fee" in the sum of $425,000.00
payable as follows:
(a) $200,000.00 upon execution of this Agreement;
(b) three annual payments of $75,000.00 each commencing
on September 30, 1997, provided, however, in the event the Loan is
prepaid in whole or part, then any remaining portion of the Amendment
Fee is due and payable in full.
4.19 Enforcement of the Leases, Licenses and Management Agreements.
Each of the Hotels presently constructed upon the Lands described in the
Indenture as Collateral is leased to the Lessee under one of the Leases
described as an Exhibit to the Rent Assignment and is the subject of a License
with Manager and is managed and operated for the Lessee pursuant to a
Management Agreement between the Lessee and Manager. The Partnership will take
all actions and do all things necessary or required to cause the Lessee to
keep, observe, comply with and perform all of the terms, provisions, covenants
and undertakings on its part required by each License, each sublease and
Management Agreement relating to any Hotel comprising Collateral. The
Partnership also will do all things and take all actions necessary or required
to cause the Lessee to enforce the provisions of each License and each
Management Agreement. The Partnership will prohibit the Lessee from entering
into any material amendments of any Lease, License or Management Agreement
without the prior written consent of the Banks and will cause the Lessee to
execute and deliver a subordination agreement in form and substance
satisfactory to Banks wherein Lessee subordinates its interests in the Lease to
the Loan and the interests of the Banks in the Hotels. The Partnership may not
substitute any lessee under any Lease without the prior written approval of the
Banks, which approval will not be unreasonably withheld or delayed, provided,
however, any approved substitute lessee must execute a subordination agreement
in form and substance satisfactory to the Banks.
V. NEGATIVE COVENANTS AND AGREEMENTS
The Borrowers covenant and agree with the Agent and the Banks that for
so long as any Secured Indebtedness shall remain outstanding and unpaid, the
Borrowers shall not, directly or indirectly, do any of the following without
the prior written consent of the Banks:
5.1 Debt Service Coverage. Suffer or permit the Debt Service
Coverage to be less than 1.60. "Debt Service Coverage" shall be the ratio of
Net Income attributable to those Hotels and related Collateral during any 12
month period divided by the sum of interest expense attributable to
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said Hotels during such 12 month period plus Imputed Debt Maturities. As used
herein, "Net Income" shall be that amount which would be shown as net income of
the Hotels and related Collateral on profit and loss statements (calculated on
a trailing 12 month basis) of the Hotels and related Collateral prepared in
accordance with GAAP plus the amount of all interest expense, depreciation and
amortization expenses less and except any Furniture, Fixtures and Equipment
Allowance provided in Article XL of each of the Leases (calculated on the basis
of 4% of Suites Revenues, as defined in the Leases, whether or not actually
paid or reserved). As used herein, "Imputed Debt Maturities" shall be the
amount of principal which would be due over the next 12 months if the Secured
Indebtedness was amortized on a 15 year mortgage amortization basis at an
assumed annual rate of interest equal to the greater of the actual interest
rate or 8% per annum.
5.2 Mergers; Acquisitions. Merge or consolidate with any Person
except (i) as approved by the Banks or (ii) if a Borrower is the surviving
entity in such merger, no Event of Default hereunder shall occur as a result of
such merger, and Borrowers are in compliance with their obligations hereunder
following such merger.
5.3 Liens and Encumbrances. Create, incur, assume or allow to
exist any Lien or Encumbrance upon any of the Lands or Hotels at any time
covered by the Indenture or any of the other Collateral, except the following
(the "Permitted Exceptions"):
(a) Permitted Encumbrances.
(b) Encumbrances in existence on the date hereof that
were listed as exceptions to title on title insurance policies
previously obtained by Agent with respect to the Lands or otherwise
previously disclosed in writing to Agent.
(c) Leases and concession agreements covering portions of
the Hotels for the operation of restaurants, bars, telephone systems,
personal communications service system facilities, and other similar
uses, each of which lease or concession agreement is or shall be
subordinate to the Indenture.
(d) Easement grants which do not interfere with the
operations of the Hotels.
(e) Liens for taxes, assessments or governmental charges
not delinquent or being diligently contested in good faith and by
appropriate proceedings and for which adequate book reserves in
accordance with GAAP are maintained.
(f) Liens arising out of deposits in connection with
worker's compensation, unemployment insurance, old age pensions, or
other social security or retirement benefits legislation.
(g) Deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds, and other obligations
of like nature arising in the ordinary course of business.
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(h) Liens imposed by any Law, such as mechanics',
workmen's, materialmen's, landlords', carriers', or other like Liens
arising in the ordinary course of business which secure payment of
obligations which are not past due or which are being diligently
contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP are maintained on the
Borrowers' books.
5.4 Disposal of Property. Except as permitted herein, sell,
transfer, exchange, lease or otherwise dispose of the Collateral or
substantially all of its assets other than in the ordinary course of business.
5.5 Change of Control. The Banks have made their determination to
enter into this Agreement and the transactions reflected herein on the basis of
reliance upon the experience, expertise and reputations of Messrs. Hervey A.
Feldman and Thomas J. Corcoran, Jr. as experts in the management of Embassy
Suites(R) Hotels and neither of the Borrowers will suffer or permit their
business to be without the full time management of at least one of such
gentlemen and will not suffer or permit any Person other than FLCO or such
gentlemen to become a general partner of the Partnership.
5.6 Change of Business or Entity Structure. Engage in any
business other than the business substantially conducted by them on the date of
this Agreement or permit FLCO to change the form of its corporate structure or
the Partnership to effect any substantial change in its partnership structure.
The Borrowers agree that (a) at least 80% of their hotel "keys" shall be in
"suite type" hotels, (b) at least 75% of their suites shall be run under or be
converted to the Embassy Suites(R) flag, and (c) at least 70% of their suites
will be managed by Manager.
5.7 Transactions with Affiliates. Except as permitted herein,
enter into or be a party to any transaction or arrangement, including without
limitation, the purchase, sale or exchange of property of any kind or the
rendering of any service, with any Affiliate (other than Lessee), or make any
loans or advances to any Affiliate (other than Lessee under the Leases);
provided, however, that if no Event of Default has occurred and is continuing,
any Borrower may engage in the foregoing transactions in the ordinary course of
business and pursuant to the reasonable requirements of its business and on
fair and reasonable terms substantially as favorable to it as those which it
could obtain in a comparable arm's-length transaction with a non-Affiliate.
5.8 Conflicting Agreements. Enter into any agreement, that would,
if fully complied with by it, result in an Event of Default either immediately
or upon the elapsing of time.
5.9 Breach of Terms or Leases. Breach any term or provision nor
permit Lessee to breach any term or provision of the Leases, Management
Agreements, Licenses or any amendment or supplement thereto, or any other
agreements for the lease or sublease of any interest in the Hotels at any time
covered by the Indenture.
5.10 Amendments to Documents. Enter into or otherwise consent to
any material amendment or modification of the Charter Documents of either
Borrower as presently in effect, or
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<PAGE> 31
any material amendment or modification to any Material Agreement directly
affecting any of the Collateral.
5.11 Certain Material Agreements. Enter into or become obligated
to enter into any material lease, sublease, license or other agreement for the
use, management or operation of any Hotel at any time covered by the Indenture
other than such agreements presently in effect with respect to the Hotels
described in the Indenture
5.12 Debt to Worth. At no time shall the Partnership allow its
Debt to be greater than its Adjusted Net Worth. For purposes of this section,
"Adjusted Net Worth" shall be defined as the sum of (a) its total partners'
equity, plus (b) its accumulated depreciation each as reflected on the
Partnership's balance sheet and presented in accordance with GAAP; and "Debt"
shall be defined as the sum of (a) all liabilities of the Partnership which
would appear on the balance sheet of the Partnership, plus (b) all Indirect
Obligations of the Partnership.
5.13 Dividends. During any Fiscal Year, the Borrowers may declare
and pay dividends and similar distributions in an amount not to exceed 85% of
their consolidated funds from operations attributable to such Fiscal Year;
provided, however, said distributions may exceed said 85% maximum if said
distributions are required in order for FLCO to maintain its status as a REIT.
VI. EVENTS OF DEFAULT, REMEDIES
6.1 Events of Default. If any one or more of the following events
should occur or conditions exist (each an "Event of Default"):
(a) Any event should occur under the provisions of this
Agreement or any other Loan Document which would constitute an Event
of Default specified as such therein or would authorize the holder of
the Restated Notes to accelerate the maturity thereof or exercise any
right or remedy to collect any Secured Indebtedness;
(b) Any payment of principal or interest, or both, due
upon the Secured Indebtedness should not be paid as and when due and
payable, and said payment failure shall continue for more than 10 days
after Agent shall have sent notice of said payment failure to the
Borrowers;
(c) Borrowers fail to pay any of the Secured Indebtedness
(other than principal of the Loan or interest accrued thereon) when
due and said payment failure shall continue for more than 10 days
after Agent shall have sent notice of said payment failure to the
Borrowers;
(d) Any representation or warranty made or deemed to be
made by the Borrowers in this Agreement, or any statement or
representation made or deemed to be made in any of the other Loan
Documents or any certificate, report, opinion or other document
delivered pursuant to this Agreement, is discovered to have been false
in any material respect when made;
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<PAGE> 32
(e) Any Borrower shall fail to pay any outstanding
recourse Indebtedness (other than the Secured Indebtedness or
Indebtedness between Borrowers) in the principal amount of at least
$10,000,000, individually or when aggregated with all such
Indebtedness of Borrower and its Subsidiaries so in default, when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or if any other
event shall occur or condition shall exist under any such agreement or
instrument relating to outstanding recourse Indebtedness of any
Borrower in the principal amount of at least $10,000,000, which event
or condition shall result in the acceleration of the maturity of such
Indebtedness;
(f) Any one or more judgments or orders is entered
against either Borrower or any attachment or other levy is made
against the property of either Borrower with respect to a claim or
claims involving in the aggregate liabilities (not paid or fully
covered by insurance, less the amount of reasonable deductibles in
effect on the date of this Agreement) in excess of $5,000,000.00,
becomes final and non-appealable or if timely appealed is not fully
bonded and collection thereof stayed pending the appeal;
(g) Either Borrower files a certificate of dissolution
under applicable state law or is liquidated or dissolved or suspends
or terminates the operation of its business, or has commenced against
it any action or proceeding for its liquidation or dissolution or the
winding up of its business, or takes any corporate action in
furtherance thereof, or FLCO fails to qualify or is deemed by the IRS
to not qualify as a Real Estate Investment Trust under Sections
856-860 of the Code, and all regulations thereunder of the IRS;
(h) All or any part of any Hotel is nationalized,
expropriated or condemned, seized or otherwise appropriated, or
custody or control of such property or of such Borrower shall be
assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority and such
nationalization, expropriation, condemnation, seizure, appropriation,
or assumption has or will have a Material Adverse Effect on any
Borrower or on such Hotel, except where contested in good faith by
proper proceedings diligently pursued where a stay of enforcement is
in effect;
(i) There is filed against any Borrower by any
Governmental Authority any civil or criminal action, suit or
proceeding under any federal or state racketeering statute (including,
without limitation, the Racketeer Influenced and Corrupt Organization
Act of 1970), which action, suit or proceeding is not dismissed within
120 days and reasonably could be expected to result in the
confiscation or forfeiture of any material portion of the Collateral;
(j) Except as otherwise provided in the Indenture, any
loss, theft, damage or destruction of any item or items of Collateral
occurs which has a Material Adverse Effect on
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<PAGE> 33
the operation of either Borrower's business or is material in amount
and is not adequately covered by insurance;
(k) The Borrowers should fail to keep, observe, comply
with or perform any term, provision, covenant or undertaking on the
part of the Borrowers, or either of them, required by this Agreement
to be kept, observed, complied with or performed unless such failure
would otherwise constitute an Event of Default under any of Sections
6.1(a)-(j) and except for Borrower's failure to comply with or observe
the terms of Sections 5.3, 5.5, 5.6 and 5.12; provided that the
failure to comply or observe the terms of such sections shall be an
automatic Event of Default hereunder if such default should not be
remedied within 30 days of the first to occur of the following:
(i) the date on which one or both of the
Borrowers first became aware of such default; or
(ii) the date on which the Agent or any of the
Banks shall notify the Borrowers of such default;
(l) A custodianship, trusteeship, receivership or
assignment for the benefit of creditors shall be imposed upon either
Borrower or any of the Collateral (or a substantial part thereof) and
not dismissed within 21 days or shall be sought by either Borrower or
by any other person at any time obligated upon any Secured
Indebtedness or a petition for relief under any state or federal
bankruptcy, reorganization or insolvency law, including the Bankruptcy
Code, shall be filed against or by either Borrower or by such other
Person and the same shall not have been dismissed or withdrawn within
60 days after said filing,
then, and in such event the Agent or the Banks shall be entitled to declare all
Secured Indebtedness to be immediately owing and to exercise any and all rights
and remedies to collect the Secured Indebtedness contained in this Agreement
and the Loan Documents, all without demand, presentment, notice of dishonor,
protest or other notice or demand of any kind, the same being hereby expressly
waived by the Borrowers. Any Event of Default under this Agreement will
constitute an event of default or default, as the case may be, under each of
the other Loan Documents, whether or not such is an event of default or default
specified therein.
6.2 Remedies Cumulative. All remedies for collection of Secured
Indebtedness shall be cumulative and no exercise or attempted exercise of any
right or remedy consequent upon any Event of Default shall preclude the
subsequent, concurrent or alternative exercise of any other right or remedy and
no delay or omission of the Agent in the giving of any notice of default or
exercising any remedy consequent upon any Event of Default shall be deemed to
constitute a waiver thereof. Upon the occurrence of any Event of Default and
at any time and from time to time thereafter, each of the Banks is hereby
irrevocably authorized, without notice to the Borrowers (any such notice being
expressly waived by each Borrower), to setoff and apply against any and all
Obligations of the Borrowers owed to the Banks under this Agreement, the
Restated Notes and the other Loan
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<PAGE> 34
Documents, any and all deposits (general or special, time, demand, provisional
or final) at any time held, or any other Indebtedness at any time owed by any
of the Banks to or for the credit or the account of either or both of the
Borrowers, irrespective of whether or not any of the Banks shall have made any
demand under this Agreement, the Restated Notes or any other Loan Document and
although such Obligation of the Borrowers may be unmatured. The rights of the
Banks in respect of such setoff(s) shall be cumulative to any and all other
rights and remedies in favor of the Banks consequent upon an Event of Default.
VII. GENERAL
7.1 Governing Law. This Agreement is executed in the state of
Oklahoma, all Loan Proceeds are advanced to the Borrowers in the state of
Oklahoma and all of the Secured Indebtedness is payable in the state of
Oklahoma. The Borrowers agree to and with the Agent and the Banks that this
Agreement shall be governed by and interpreted in accordance with the laws of
the state of Oklahoma without regard to any conflict or choice of law
provisions of Oklahoma law except only to the extent that remedies for
enforcement may be limited by the laws of one or more other states where
Collateral may be located in respect of realizing upon Collateral in such state
or states.
7.2 Provisions Cumulative, Partial Invalidity. All provisions
pertaining to the Secured Indebtedness and the collection thereof which are
contained in this Agreement and any of the other Loan Documents are intended to
be cumulative. If any term or provision of this Agreement or any other Loan
Document should be determined to be in any respect invalid or unenforceable
under the laws or decisions of any State such provision shall be deemed to have
been deleted insofar as it may affect any Collateral or any remedy available in
such state and this Agreement shall be enforced and deemed valid as to all
other provisions.
7.3 No Usury. It is the intent of this Agreement and all of the
Loan Documents that the rate(s) of interest or loan finance charge to be
received by the Banks shall not violate any provision of any usury law
applicable to payment of the Secured Indebtedness with all payments received by
the Agent for the Banks or by the Banks and the Agent in respect of the Loan in
excess of the maximum amount which may be received by the Banks in payment upon
the Secured Indebtedness to be applied in reduction of the principal.
7.4 Notices. Any notice required or permitted by this Agreement
to be given to the Borrowers shall be given by written notice sent by
registered or certified mail by the United States Postal Service with all
postage prepaid and addressed as follows:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
Attn: Thomas J. Corcoran, Jr.
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<PAGE> 35
with copies to:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
Attn: Chief Financial Officer
and
FelCor Suite Hotels, Inc.
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
Attn: General Counsel
and
Bracewell & Patterson, L.L.P.
500 N. Akard, Suite 4000
Dallas, Texas 75201
Attn: Robert W. Dockery
and if to Agent, Bank of Commerce, AmSouth, First Tennessee, Liberty or Bank
One shall be given by written notice sent by registered or certified mail by
the United States Postal Service with all postage prepaid and addressed as
follows:
If to Agent:
Boatmen's National Bank of Oklahoma
7137 S. Yale
Tulsa, Oklahoma 74136
Attention: R. Carl Hudgins
If to Bank of Commerce:
First National Bank of Commerce
210 Baronne Street
New Orleans, Louisiana, 70160
Attention: Louis Ballero, Sr. Vice President.
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<PAGE> 36
If to AmSouth:
AmSouth Bank Of Alabama
P.O. Box 11007
Birmingham, Alabama 35288
Attention: Commercial Real Estate Department
If to First Tennessee:
First Tennessee Bank National Association
165 Madison, First Floor
Memphis, TN 38103
Attention: Tanya Novarese
If to Bank One:
Bank One, Texas, N.A.
1717 Main
Dallas, Texas 75201
Attention: Dale Renner
If to Liberty:
Liberty Bank and Trust Company of Tulsa,
National Association
P.O. Box One
15 E. 5th Street
Tulsa, Oklahoma 74103
Attention: Wm. A. Bowman
Notice may be given to such Borrowers and Banks, addressed to
each to the attention of the Persons named above, by
facsimile transmission as follows:
FelCor Suite Hotels, Inc.
(972) 444-4949
Bracewell & Patterson, L.L.P.
(214) 740-4010
Boatmen's National Bank of Oklahoma
(918) 492-5762
First National Bank of Commerce
(504) 561-1738
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<PAGE> 37
AmSouth Bank of Alabama
(205) 326-4075
First Tennessee Bank National Association
(901) 523-4032
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<PAGE> 38
Bank One, Texas, N.A.
(214) 290-2275
Liberty Bank and Trust Company of Tulsa,
National Association
(918) 586-5952.
7.5 Successor, Alternate Trustees. The Indenture has designated
individuals to act as deed of trust trustees in the states of Tennessee and
Texas. If for any reason any person designated in the Indenture to act as such
a trustee should die, resign or be otherwise unavailable to act in such
capacity the Agent is hereby irrevocably authorized by the Partnership to
appoint one or more alternate or successor trustees to act without notice.
7.6 Borrowers' Indemnity. The Borrowers shall pay, indemnify and
hold harmless each of the Banks and their respective directors, officers,
employees, agents, and representatives (the "Indemnified Parties") for, from
and against, and promptly to reimburse the Indemnified Parties for, any and all
claims, damages, liabilities, losses, costs and expenses (including, without
limitations, reasonable attorneys' fees and expenses and amounts paid in
settlement) (the "Indemnified Liabilities") incurred, paid or sustained by the
Indemnified Parties in connection with, arising out of, based upon or otherwise
involving or resulting from any threatened, pending or completed action, suit,
investigation or other proceeding by, against or otherwise involving the
Indemnified Parties and in any way dealing with, relating to or otherwise
involving this Agreement, any of the other Loan Documents, or any transaction
contemplated hereby or thereby (each a "Triggering Event"); provided, however,
that the Borrowers shall have no obligation to indemnify the Indemnified
Parties hereunder with respect to any Indemnified Liabilities arising from the
gross negligence, bad faith or willful misconduct of any of the Indemnified
Parties. The Borrowers shall pay, indemnify and hold harmless the Indemnified
Parties for, from and against, and promptly reimburse the Indemnified Parties
for, any and all claims, damages, liabilities, losses, costs and expenses
(including, without limitations, reasonable attorneys' and consultant fees and
expenses, investigation and laboratory fees, removal, remedial, response and
corrective action costs, and amounts paid in settlement) incurred, paid or
sustained by the Indemnified Parties as a result of the manufacture, storage,
transportation, release or disposal of any Hazardous Waste on, from, over or
affecting any of the Collateral or any of the assets, properties, or operations
of either or both of the Borrowers or any predecessor in interest, directly or
indirectly. The obligations of the Borrowers under this Section 7.6 shall
survive the termination of the Credit, the payment and satisfaction of all of
the Secured Indebtedness, and the release of the Collateral. To the extent
that any of the indemnities set forth in this Section 7.6 may be unenforceable
because it is violative of any Law or public policy, the Borrowers shall pay
the maximum portion which they are permitted to pay under applicable Law.
7.7 Joint and Several Obligations. Unless the context clearly
indicates otherwise, each covenant, agreement, undertaking, condition or other
matter stated herein as a covenant, agreement, undertaking or matter involving
the Borrowers shall be jointly and severally binding upon both of the
Borrowers. The breach or violation of any covenant, agreement, undertaking or
matter expressly stated in the singular as a Borrower covenant, agreement or
undertaking on the part of a Borrower
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<PAGE> 39
(e.g., "each Borrower") the effect of which would (with lapse of any time or
giving of any notice or both) constitute an event of default in respect of any
Loan Document shall constitute such an event in respect of both the Borrowers.
7.8 Successors and Assigns, No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, but this provision shall not
authorize either of the Borrowers to assign or transfer any right to receive
any advance of Loan Proceeds, or other benefit hereunder or confer any right or
action upon any persons not a party hereto.
7.9 Counterparts; Controlling Agreement. This Agreement is
executed in multiple counterparts. One or more of the parties hereto may
execute a counterpart not executed by the other parties. Each party executing
a counterpart shall execute at least 8 counterparts. At such time as the Agent
shall receive 8 counterparts signed, collectively, by all parties, it shall
promptly furnish a copy hereof together with execution pages signed (though
separately by all parties) to each Bank and each Borrower. All such copies
shall be deemed to constitute an original copy. In the event of actual
conflict between the terms and provisions of this Agreement and the terms and
provisions of the Indentures or any other Loan Documents, the terms and
provisions of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in multiple copies, each of which shall constitute an original copy,
to be effective as of the Effective Date.
"Borrowers" "Banks"
FELCOR SUITE HOTELS, INC. BOATMEN'S NATIONAL BANK OF OKLAHOMA
By By
---------------------------------- ------------------------------------
Thomas J. Corcoran, Jr., President R. Carl Hudgins, Sr. Vice President
FIRST TENNESSEE BANK,
FELCOR SUITES LIMITED NATIONAL ASSOCIATION
PARTNERSHIP, By its Sole General
Partner, FELCOR SUITE HOTELS, INC.
By
-----------------------------------
Tanya Novarese, Vice President
By
----------------------------------
Thomas J. Corcoran, Jr., President
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<PAGE> 40
BANK ONE, TEXAS, N.A.
By
------------------------------------
Dale Renner, Vice President
LIBERTY BANK AND TRUST COMPANY OF TULSA,
NATIONAL ASSOCIATION
By
------------------------------------
Wm. A. Bowman, Vice President
AMSOUTH BANK OF ALABAMA
By
------------------------------------
Arthur J. Sharbel, Jr., Vice President
FIRST NATIONAL BANK OF COMMERCE
By
------------------------------------
Louis Ballero, Sr. Vice President
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<PAGE> 1
EXHIBIT 10.31
U.S. $250,000,000
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of October 18, 1996
Among
FELCOR SUITE HOTELS, INC.
and FELCOR SUITES LIMITED PARTNERSHIP
as Borrower
and
THE LENDERS PARTY HERETO
and
THE CHASE MANHATTAN BANK
as Administrative Agent
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Documentation Agent
________________________________________________________________________________
THE CHASE MANHATTAN BANK
and WELLS FARGO BANK, NATIONAL ASSOCIATION
as Co-Arrangers
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1.4. Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.1. The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.2 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.3 Making the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.5. Reduction and Termination of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.6. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.7. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.8. Conversion/Continuation Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.9. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.10. Interest Rate Determination and Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.11. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.12. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.13. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.14. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.16. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.17. Swing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE III
</TABLE>
I
<PAGE> 3
<TABLE>
<S> <C>
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.1. Conditions Precedent to Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.2. Additional Conditions Precedent to Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.3. Conditions Precedent to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.1. Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.2. Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.4. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.5. Financial Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.7. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.8. Ownership of Borrower and DJONT; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.10. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.11. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.12. No Burdensome Restrictions; No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.13. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.14. Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.16. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.17. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.18. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.19. Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.20. Contractual Obligations Concerning Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.21. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.22. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.23. Status as REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.24. Operator: Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.25. Operating Leases, Licenses and Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.26. FF&E Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE V
FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
II
<PAGE> 4
<TABLE>
<S> <C>
5.1. Gross Interest Expense Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.2. Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.3. Maintenance of Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.4 Limitations on Total Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.5 Limitations on Total Secured Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.1. Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.2. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.3. Payment of Taxes, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.4. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.5. Preservation of Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.6. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.7. Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.8. Maintenance of Properties, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.9. Performance and Compliance with Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.10. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.11. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.12. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.13. Leases and Operating Leases; Management Agreements and Licenses. . . . . . . . . . . . . . . . . . . 79
6.14. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.15. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.16. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.17. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
6.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
6.19. REIT Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
6.20. Maintenance of FF&E Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.21. Hotel Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.22. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.23. Borrowing Base Determination/Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE VII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.1. Restrictions on Creation of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
III
<PAGE> 5
<TABLE>
<S> <C>
7.2. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.3. Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.4. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.5. Mergers, Stock Issuances, Asset Sales, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
7.6 Restrictions on Construction/Budget Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
7.7. Change in Nature of Business or in Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . 87
7.8. Modification of Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
7.9. Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7.10. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7.11. Adverse or Speculative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7.12. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7.13. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7.14. Management Continuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
7.15. ERISA Plan Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE IX
THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.2. Administrative Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.3. Chase and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.4. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.1. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.2. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
10.3. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.4. Costs; Expenses; Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
</TABLE>
IV
<PAGE> 6
<TABLE>
<S> <C>
10.5. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.6. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.7. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.8. Governing Law; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.9. Submission to Jurisdiction; Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.10. Section Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.11. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10.12. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10.13. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10.14. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10.15. Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
V
<PAGE> 7
SCHEDULES
Schedule I - Commitments
Schedule II - Applicable Lending Offices and
Addresses for Notices
Schedule 4.8 - Subsidiaries and Unconsolidated Entities
Schedule 4.10 - Existing Indebtedness
Schedule 4.13 - Existing Investments
Schedule 4.19 - Environmental Protection
Schedule 4.22(a) - Owned Real Estate
Schedule 4.22(b) - Leased Real Estate
Schedule 6.23 - Initial Eligible Hotels
VI
<PAGE> 8
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion or Continuation
Exhibit D - Form(s) of Opinion(s) of Counsel for the
Loan Parties
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Borrowing Base Certificate
Exhibit G - Form of Compliance Certificate
Exhibit H - Form of Operating Lease
Exhibit I - Form of Subsidiary Guaranty
VII
<PAGE> 9
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
October 18, 1996, among FELCOR SUITE HOTELS, INC., a Maryland corporation
("FelCor") and FELCOR SUITES LIMITED PARTNERSHIP, a Delaware limited
partnership ("FelCor LP" and collectively with FelCor, the "Borrower"), the
financial institutions listed on the signature pages hereof (each individually
a "Lender" and collectively the "Lenders") and THE CHASE MANHATTAN BANK
("Chase"), as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Wells
Fargo") as documentation agent.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Revolving Credit Agreement
dated as of September 30, 1996, among the Borrower, the financial institutions
listed on the signature page thereof (the "Original Lenders"), the
Administrative Agent and Wells Fargo as documentation agent (the "Original
Revolving Credit Agreement"), the Original Lenders agreed to make to the
Borrower revolving credit advances of up to $250,000,000 in aggregate principal
amount outstanding at any one time, for the purposes and upon the terms and
subject to the conditions set forth therein;
WHEREAS, as of the date hereof Fifty-Two Million Dollars
($52,000,000) have been advanced to the Borrower, and are outstanding as Base
Rate Loans (as hereinafter defined), pursuant to the terms of the Original
Revolving Credit Agreement;
WHEREAS, immediately prior to the execution and delivery
hereof, the Original Lenders assigned portions of their respective Commitments
and Loans (as hereinafter defined) to the other Lenders; and
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<PAGE> 10
WHEREAS, the parties hereto have agreed to amend certain terms
and provisions of the Original Revolving Credit Agreement and to restate the
same as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto hereby agree that
the aforementioned recitals are true and correct and hereby incorporated herein
and that the Original Revolving Credit Agreement is hereby amended
2
<PAGE> 11
and restated in its entirety so that all of the terms and conditions contained
in this Agreement shall supersede and control the terms and conditions of the
Original Revolving Credit Agreement.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjusted EBITDA" means, for any Person for any period, EBITDA
of such Person for such period less the aggregate FF&E Reserves for such period
in respect of each Hotel owned or leased by such Person or its Subsidiaries.
"Adjusted Funds From Operations" means, for any Person, for
any period, Net Income (Loss) of such Person for such period plus (a) the sum
of the following amounts of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP to the extent
included in the determination of such Net Income (Loss): (i) depreciation
expense, (ii) amortization expense and other non-cash charges of such Person
and its Subsidiaries with respect to their real estate assets for such period,
(iii) losses from Asset Sales of such Person and its Subsidiaries, losses
resulting from restructuring of Indebtedness of such Person and its
Subsidiaries and other extraordinary losses, and (iv) minority interests
attributable to FelCor LP's partnership units; less (b) the sum of the
following amounts of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP to the extent
included in the determination of such Net Income (Loss): (i) gains from Asset
Sales of such Person and its Subsidiaries, gains resulting from restructuring
of Indebtedness of such Person and its Subsidiaries and other
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<PAGE> 12
extraordinary gains, and (ii) the applicable share of Net Income (Loss) of such
Person's Unconsolidated Entities; plus (c) such Person's Pro Rata Share of
Adjusted Funds From Operations of such Person's Unconsolidated Entities.
"Adjusted NOI" means, with respect to any Hotel owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint Ventures,
for any period, the Net Operating Income for such Hotel for such period less
the FF&E Reserve for such Hotel for such period.
"Affiliate" means, to any Person, any Subsidiary of such
Person and any other Person which, directly or indirectly, controls, is
controlled by or is under common control with such Person and includes each
executive officer, director, trustee, limited liability company manager or
general partner of such Person, and each Person who is the beneficial owner of
10% or more of any class of voting Stock of such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Aggregate Value" means, with respect to the Eligible Hotels,
at any date, the aggregate value thereof to be calculated as follows:
(a) For Eligible Hotels owned or leased for four
(4) Fiscal Quarters or more, Adjusted NOI on a consolidated basis from such
Eligible Hotels for the preceding four (4) Fiscal Quarters divided by ten
percent (10%); and
(b) For Eligible Hotels owned or leased for less
than four (4) Fiscal Quarters, the Borrower's Investment in such Eligible
Hotels.
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<PAGE> 13
provided that in no event shall more than (i) 20% of the Aggregate Value be
attributable to Joint Venture Hotels, or (ii) 15% of the Aggregate Value be
attributable to Eligible Hotels leased pursuant to Qualified Leases.
"Agreement" means the Original Revolving Credit Agreement,
together with all Exhibits and Schedules thereto, as amended and restated by
this Amended and Restated Revolving Credit Agreement, together with all
Exhibits and Schedules hereto and as the same may be further amended,
supplemented or otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each
Lender, its Domestic Lending Office in the case of a Base Rate Loan and its
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
"Applicable Margin" means, with respect to each Loan at any
date, the applicable percentage per annum set forth below based upon the Status
then in effect, it being understood that the Applicable Margin for (i) Base
Rate Loans shall be the percentage set forth under the column "Base Rate
Loans", (ii) Eurodollar Rate Loans shall be the percentage set forth under the
column "Eurodollar Rate Loans", and (iii) the Commitment Fee shall be the
percentage set forth under the column "Commitment Fee":
<TABLE>
<CAPTION>
Base Rate Eurodollar Commitment
Loans Rate Loans Fee
--------- ---------- ----------
<S> <C> <C> <C>
Level I Status 0% 1.25% 0.25%
Level II Status 0% 1.375% 0.275%
Level III Status 0% 1.5% 0.3%
</TABLE>
5
<PAGE> 14
<TABLE>
<CAPTION>
Base Rate Eurodollar Commitment
Loans Rate Loans Fee
--------- ---------- ----------
<S> <C> <C> <C>
Level IV Status 0.125% 1.625% 0.325%
Level V Status 0.25% 1.75% 0.35%
Level VI Status 0.375% 1.875% 0.375%
Level VII Status 0.5% 2.0% 0.5%
</TABLE>
"Asset Sale" means any sale, conveyance, transfer, assignment,
lease or other disposition (including, without limitation, by merger or
consolidation, and by condemnation, eminent domain, loss, damage, or
destruction, and whether by operation of law or otherwise) by the Borrower or
any of its Subsidiaries to any Person (other than to Borrower or any of its
Subsidiaries) of any Stock of any of its Subsidiaries, any Stock Equivalents of
any of its Subsidiaries or any Hotel, but excluding Operating Leases.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit E.
"Available Credit" means, at any time, an amount equal to (a)
the lower of (i) the then effective Commitments of the Lenders and (ii) the
Borrowing Base at such time less the sum of any Indebtedness of the Borrower or
any of its Subsidiaries plus their respective Pro Rata Shares of Indebtedness
of their Eligible Joint Ventures (excluding (A) Indebtedness evidenced by the
Notes, (B) Indebtedness secured by first priority mortgages on Hotels provided
that with respect to each such secured Indebtedness the ratio of
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<PAGE> 15
such Indebtedness to the Borrower's Investment in such Hotel, is less than 65%,
and (C) Non-Recourse Indebtedness), minus (b) the aggregate of the outstanding
principal amount of the Loans at such time.
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall
be equal at all times to the higher of:
(a) the rate of interest announced publicly by Chase at its
principal office, from time to time, as Chase's base rate; and
(b) the sum (adjusted to the nearest 1/8 of one percent or, if
there is no nearest 1/8 of one percent, to the next higher 1/8 of one percent)
of (i) 1/2 of one percent per annum plus (ii) the Federal Funds Rate.
"Base Rate Loan" means any outstanding principal amount of the
Loans of any Lender that bears interest with reference to the Base Rate, other
than Swing Advances.
"Borrower's Investment" means, with respect to any Hotel, the
Borrower's or any of its Subsidiaries' investment in such Hotel (including all
investments constituting, evidencing or secured by an interest in property,
whether tangible or intangible and whether real, personal or mixed, that is
used or intended for use in, or in any manner connected with or relating to,
the ownership or leasing of such Hotel, specifically including, without
limitation, investments in Subsidiaries and Unconsolidated Entities owning or
leasing Hotels), at cost, on a consolidated basis, provided that in determining
the cost of such investments, there shall be included (i) the amount of all
cash paid and the value (as determined by the Board of Directors of FelCor for
purposes of such investment) of any other property transferred therefor by the
Borrower or its Subsidiary, (ii) the
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<PAGE> 16
amount of all indebtedness and other obligations assumed or incurred by the
Borrower or its Subsidiary or to which the Borrower or its Subsidiary takes
subject, and (iii) the value (as determined by the Board of Directors of FelCor
for the purposes of such investment) of all equity securities of which the
issuer is an entity that is, or upon such investment will be, included within
the Borrower or its Subsidiary and which are issued (otherwise than for cash)
to, or retained by, any person other than the Borrower or its Subsidiary in
connection with such investment. For purposes of this definition only
"indebtedness" of the Borrower or its Subsidiary shall mean the consolidated
liabilities of the Borrower and its Subsidiaries for borrowed money (including
all notes payable and drafts accepted representing extensions of credit) and
all obligations evidenced by bonds, debentures, notes or other similar
instruments on which interest charges are customarily paid, including
obligations under Capitalized Leases.
"Borrowing" means a borrowing consisting of Loans made on the
same day by the Lenders ratably according to their respective Commitments.
"Borrowing Base" means, at any time, the sum of 40% of the
Aggregate Value of Eligible Hotels.
"Borrowing Base Certificate" means a certificate of the
Borrower substantially in the form of Exhibit F.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and California and, if the
applicable Business Day relates to a Eurodollar Rate Loan, a day on which
dealings are also carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period,
the aggregate of all expenditures by such Person and its Subsidiaries, except
interest capitalized during
8
<PAGE> 17
construction, during such period for property, plant or equipment, including,
without limitation, renewals, improvements, replacements and capitalized
repairs, that would be reflected as additions to property, plant or equipment
on a consolidated balance sheet of such Person and its Subsidiaries prepared in
conformity with GAAP. For the purpose of this definition, the purchase price
of equipment which is acquired simultaneously with the trade-in of existing
equipment owned by such Person or any of its Subsidiaries or with insurance
proceeds shall be included in Capital Expenditures only to the extent of the
gross amount of such purchase price less the credit granted by the seller of
such equipment being traded in at such time or the amount of such proceeds, as
the case may be.
"Capitalized Lease" means, as to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in conformity with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in conformity
with GAAP.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"Commitment" means, as to each Lender, the commitment of such
Lender to make Loans to the Borrower pursuant to Section 2.1 in the aggregate
principal amount outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule I under the caption "Commitment", as such amount may
be reduced or modified pursuant to this Agree-
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ment, and "Commitments" means the aggregate Commitments of all Lenders.
"Commitment Fee" has the meaning specified in Section 2.4(a).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness or Contractual Obligation of another Person, if the
purpose or intent of such Person in incurring the Contingent Obligation is to
provide assurance to the obligee of such Indebtedness or Contractual Obligation
that such Indebtedness or Contractual Obligation will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder
of such Indebtedness or Contractual Obligation will be protected (in whole or
in part) against loss in respect thereof. Contingent Obligations of a Person
include, without limitation, (a) the direct or indirect guarantee, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of an
obligation of another Person (including, in the case of any Guarantor, its
obligations under its Subsidiary Guaranty), and (b) any liability of such
Person for an obligation of another Person through any agreement (contingent or
otherwise) (i) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such obligation or to assure
the
10
<PAGE> 19
holder of such obligation against loss, or (v) to supply funds to or in any
other manner invest in such other Person (including, without limitation, to pay
for property or services irrespective of whether such property is received or
such services are rendered), if in the case of any agreement described under
subclause (i), (ii), (iii), (iv) or (v) of this sentence the primary purpose or
intent thereof is as described in the preceding sentence. Anything herein to
the contrary notwithstanding, no agreement entered into by the Borrower or any
of its Subsidiaries or Unconsolidated Entities with respect to its acquisition
of any direct or indirect interest in any Hotel shall, prior to the
satisfaction in full of all conditions precedent to the obligations of such
Person pursuant to the agreement, be deemed or construed to constitute a
"Contingent Obligation" or "Indebtedness" of such Person hereunder, provided
that pursuant to any such agreement, the Borrower or its Subsidiary or
Unconsolidated Entity is not liable or responsible for, and does not assume
any, development or construction risks. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported.
"Contractual Obligation" of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such
Person or of any agreement (including, without limitation, any management or
franchise agreement), undertaking, contract, lease, indenture, mortgage, deed
of trust or other instrument (excluding a Loan Document) to which such Person
is a party or by which it or any of its property is bound or to which any of
its properties is subject.
"Debt Service" means, for any Person for any period, (a) Gross
Interest Expense for such period plus (b) the aggregate amount of scheduled
principal payments on the Total Indebtedness of such Person (excluding optional
prepayments and scheduled principal payments in respect of any
11
<PAGE> 20
such Total Indebtedness which is payable in a single installment at final
maturity) required to be made during such period.
"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
"DJONT" means DJONT Operations, L.L.C., a Delaware limited
liability company.
"DOL" means the United States Department of Labor, or any
successor thereto.
"Dollars" and the sign "$" each mean the lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule II or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Administrative Agent.
"EBITDA" means, for any Person for any period, the Net Income
(Loss) of such Person for such period taken as a single accounting period, plus
(a) the sum of the following amounts of such Person and its Subsidiaries for
such period determined on a consolidated basis in conformity with GAAP to the
extent included in the determination of such Net Income (Loss): (i)
depreciation expense, (ii) amortization expense and other non-cash charges,
(iii) interest expense, (iv) income tax expense, (v) extraordinary losses (and
other losses on Asset Sales not otherwise included in extraordinary losses
determined on a consolidated basis in conformity with GAAP), and (vi) minority
interests attributable to FelCor LP's partnership units, less (b) the sum of
the following amounts of such Person and its Subsidiaries determined
12
<PAGE> 21
on a consolidated basis in conformity with GAAP to the extent included in the
determination of such Net Income (Loss): (i) extraordinary gains (and in the
case of the Borrower, other gains on Asset Sales not otherwise included in
extraordinary gains determined on a consolidated basis in conformity with
GAAP), (ii) the applicable share of Net Income (Loss) of such Person's
Unconsolidated Entities; plus (c) such Person's Pro Rata Share of EBITDA of
such Person's Unconsolidated Entities.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $5,000,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the OECD, or a political
subdivision of any such country, and having total assets in excess of
$5,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD or the Cayman Islands; (iii) the central bank of any
country which is a member of the OECD; corporation organized under the laws of
the United States, or any State thereof, and having total assets in excess of
$3,000,000,000; (iv) an insurance company organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$5,000,000,000; (v) any Lender; (vi) any Affiliate of any Lender; and (vii) any
Person other than an Affiliate of a Loan Party, in each case acceptable (a) to
the Administrative Agent, and (b) provided no Default or Event of Default
exists, to the Borrower, which acceptance will not be unreasonably withheld,
conditioned or delayed.
"Eligible Hotels" means, collectively, (a) such of the Hotels
owned or leased by the Borrower or any of its direct or indirect wholly-owned
Subsidiaries, and (b) such of the Joint Venture Hotels, as shall meet at any
time and from time to time, each of the following minimum criteria:
13
<PAGE> 22
(a) such Hotel is Unencumbered;
(b) such Hotel is free of all material structural and
title defects and other material adverse matters;
(c) such Hotel is (i) in compliance, in all material
respects, with all applicable Environmental Laws, and
(ii) not subject to any material Environmental
Liabilities and Costs, in each case as initially
verified by a written report of an environmental
consultant reasonably acceptable to the
Administrative Agent;
(d) such Hotel is fully-operating with less than 20% of
"keys" out of service due to casualty or condemnation
loss or as a consequence of a material structural
repair, alteration or addition;
(e) such Hotel is (i) leased to the Operating Lessee
pursuant to an Operating Lease, (ii) managed by a
Manager pursuant to a Management Agreement, and (iii)
operated pursuant to and has the benefit of, a
License; and no material defaults exist under such
Operating Lease, Management Agreement or License;
(f) such Hotel is (i) owned in fee simple or (ii) leased
pursuant to a Qualified Lease in favor of, the
Borrower or its direct or indirect wholly owned
Subsidiary or an Eligible Joint Venture
"Eligible Hotel Documents" means, with respect to any Eligible
Hotel, the documents described in Section 6.23(b).
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<PAGE> 23
"Eligible Joint Venture" means any joint venture, corporation,
partnership or other business entity (a) in which the Borrower (i) owns
directly or indirectly a JV% of at least 50% and (ii) is the managing general
partner or equivalent thereof for such entity, and (b) which owns a single
Hotel.
"Environmental Claim" means any accusation, allegation, notice
of violation, action, claim, Environmental Lien, demand, abatement or other
Order or direction (conditional or otherwise) by any Governmental Authority or
any other Person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restriction, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden accidental or non-accidental Releases)
of, or exposure to, any Hazardous Material or other nuisance (to the extent the
same relates to any Hazardous Materials), or other Release in, into or onto the
environment (including, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to any property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures or any
activities or operations thereof; (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with any property owned or leased by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or their operations or facilities; or
(iii) the violation, or alleged violation, of any Environmental Laws, Orders or
Environmental Permits of or from any Governmental Authority relating to
environmental matters connected with any property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures.
15
<PAGE> 24
"Environmental Laws" means any applicable federal, state,
local or foreign law (including common law), statute, code, ordinance, rule,
regulation or other requirement having the force or effect of law relating to
the environment, natural resources, or public or employee health and safety and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.,
the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136
et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6901 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 Clean Water Act,
33 U.S.C. Section 1251 et seq., the Occupational Safety and Health Act,
29 U.S.C. Section 651 et seq. (to the extent the same relates to any Hazardous
Materials), and the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.,
as such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and all analogous state and local statutes.
"Environmental Liabilities and Costs" means, as to any Person,
all liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim or demand by any other Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
including, without limitation, any thereof arising under any Environmental Law,
Environmental Permit, order or agreement with any Governmental Authority or
other Person, and which relate to any environmental, health or safety
condition, or a Release or threatened Release, and result from the past,
present or
16
<PAGE> 25
future operations of, or ownership of property by, such Person or any of its
Subsidiaries or Eligible Joint Ventures.
"Environmental Lien" means any Lien in favor of any
Governmental Authority arising under any Environmental Law.
"Environmental Permit" means any Permit required under any
applicable Environmental Laws or Order and all supporting documents associated
therewith.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with any
Loan Party within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA Event" means (i) an event described in Sections
4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Pension
Plan; (ii) the withdrawal of any Loan Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (iii)
the complete or partial withdrawal of any Loan Party or any ERISA Affiliate
from any Multiemployer Plan or the insolvency of any Multiemployer Plan; (iv)
the filing of a notice of intent to terminate a Pension Plan or the treatment
of a plan amendment as a termination under Section 4041 of ERISA; (v) the
institution of proceedings by the PBGC to terminate or appoint a trustee to
administer a Pension Plan or Multiemployer Plan; (vi) the failure to make any
required contribution to a Pension Plan; (vii) any other event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
17
<PAGE> 26
any Pension Plan or Multiemployer Plan; (viii) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA; (ix) a prohibited transaction (as described in
Code Section 4975 or ERISA Section 406) shall occur with respect to any Plan;
or (x) any Loan Party or ERISA Affiliate shall request a minimum funding waiver
from the IRS with respect to any Pension Plan.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" below
its name on Schedule II (or, if no such office is specified, its Domestic
Lending Office) or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period, an interest
rate per annum equal to the rate per annum obtained by multiplying (a) a rate
per annum equal to the rate for U.S. dollar deposits with maturities comparable
to such Interest Period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, two (2) Business Days prior to the commencement of such Interest
Period, provided, however, that if such rate does not appear on Telerate Page
3750, the "Eurodollar Rate" applicable to a particular Interest Period shall
mean a rate per annum equal to the rate at which U.S. dollar deposits in an
amount approximately equal to the Principal Balance (or the portion thereof
which will bear interest at a rate determined by reference to the Eurodollar
Rate during the Interest Period to which such Eurodollar Rate is applicable in
accordance with the provisions hereof), and with maturities comparable to the
last day of the Interest Period with respect to which such Eurodollar Rate is
applicable, are offered in immediately available funds in the London Interbank
Market to the London office of Chase by leading banks in the Eurodollar market
at 11:00 a.m., London time, two (2) Business Days prior to the com-
18
<PAGE> 27
mencement of the Interest Period to which such Eurodollar Rate is applicable,
by (b) a fraction (expressed as a decimal) the numerator of which shall be the
number one and the denominator of which shall be the number one minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Loan" means any outstanding principal amount
of the Loans of any Lender that, for an Interest Period, bears interest at a
rate determined with reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" for any Interest Period
means the aggregate reserve percentages (expressed as a decimal) from time to
time established by the Board of Governors of the Federal Reserve System of the
United States and any other banking authority to which any of the Lenders are
now or hereafter subject, including, but not limited to any reserve on
Eurocurrency Liabilities as defined in Regulation D of the Board of Governors
of the Federal Reserve System of the United States at the ratios provided in
such Regulation from time to time, it being agreed that any portion of the
Principal Balance bearing interest at a rate determined by reference to the
Eurodollar Rate shall be deemed to constitute Eurocurrency Liabilities, as
defined by such Regulation, and it being further agreed that such Eurocurrency
Liabilities shall be deemed to be subject to such reserve requirements without
benefit of or credit for prorations, exceptions or offsets that may be
available to any of the Lenders from time to time under such Regulation and
irrespective of whether such Lender actually maintains all or any portion of
such reserve.
"Event of Default" has the meaning specified in Section 8.1.
"$100MM Facility" means that certain revolving credit facility
in the aggregate principal sum of $100,000,000 made by Boatmen's National Bank
of Oklahoma, as
19
<PAGE> 28
Agent for certain banks, as lenders, in favor of the Borrower, as borrowers.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it.
"FF&E Reserve" means, for any Person (or with respect to any
Hotel) for any period, a reserve equal to four percent (4%) of Suite Revenues
from any Hotel owned by such Person (or from such Hotel), for such Period,
plus, (a) for any Person, such Person's Pro Rata Share of any FF&E Reserve for
any Hotel owned by such Person's Unconsolidated Entities or, (b) with respect
to any Joint Venture Hotel, the FF&E Reserve for such Joint Venture Hotel
multiplied by the applicable JV%.
"Final Maturity Date" means October 1, 1999.
"Fiscal Quarter" means each of the three month periods ending
on March 31, June 30, September 30 and December 31.
"Fiscal Year" means the twelve month period ending on December
31.
"Free Cash Flow" means, for any Person for any period, the
Adjusted Funds From Operations for such period less (a) the aggregate FF&E
Reserves for such Person and its
20
<PAGE> 29
Subsidiaries for such period, and (b) the aggregate amount of scheduled
principal payments on the Total Indebtedness of such Person (excluding optional
prepayments and scheduled principal payments in respect of any such
Indebtedness which is payable in a single installment at final maturity)
required to be made during such period.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by
such other entity as may be in general use by significant segments of the
accounting profession, which are applicable to the circumstances as of the date
of determination except that, for purposes of Articles V and VII, GAAP shall be
determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the audited financial
statements referred to in Section 4.5.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity duly exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Interest Expense" means, for any Person for any period,
the sum of (a) the total interest expense in respect of all Indebtedness
(excluding all Contingent Obligations) of such Person and its Subsidiaries for
such period determined on a consolidated basis in conformity with GAAP, plus
capitalized interest of such Person and its Subsidiaries, plus (b) such
Person's Pro Rata Share of Gross Interest Expense of such Person's
Unconsolidated Entities.
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<PAGE> 30
"Guarantor" means each direct and indirect wholly owned
Subsidiary of the Borrower, comprising, as of the date hereof, (i) FelCor/CSS
Hotels, L.L.C., a Delaware limited liability company, (ii) FelCor/LAX Hotels,
L.L.C., a Delaware limited liability company, (iii) FelCor/CSS Holdings, L.P.,
a Delaware limited partnership, (iv) FelCor/St. Paul Holdings, L.P., a
Delaware limited partnership, and (v) FelCor/LAX Holdings, L.P., a Delaware
limited partnership.
"Hazardous Material" means any substance, material or waste
which is regulated by any Governmental Authority of the United States as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste,"
"toxic substance" or words of similar meaning or import under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"Hotel" means any Real Estate or Lease comprising an operating
facility offering hotel or other lodging services.
"Improvements" has the meaning specified in Section 4.22(c).
"Indebtedness" of any Person means, without duplication, the
principal amount of (i) all indebtedness of such Person for borrowed money
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured) or for the deferred purchase price of property or services, (ii)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments (including, in the case of the Borrower, the Loans outstanding),
(iii) all indebtedness of such
22
<PAGE> 31
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (iv) all
Capitalized Lease Obligations of such Person, (v) all Contingent Obligations of
such Person, (vi) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value (other than for other equity securities)
any Stock or Stock Equivalents of such Person, valued, in the case of
mandatorily redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (vii) all
Indebtedness referred to in clause (i), (ii), (iii), (iv), (v) or (vi) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and general intangibles) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, and (viii) all liabilities of such Person under
Title IV of ERISA.
"Indemnitees" has the meaning specified in Section 10.4.
"Interest Period" means, (a) in the case of any Eurodollar
Rate Loan, (i) initially, the period commencing on the date such Eurodollar
Rate Loan is made or on the date of conversion of a Base Rate Loan to such
Eurodollar Rate Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its Notice of Borrowing or Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.3 or 2.8,
and (ii) thereafter, if such Loan is continued, in whole or in part, as a
Eurodollar Rate Loan pursuant to Section 2.8, a period commencing on the last
day of the immediately preceding Interest Period therefor and ending one, two,
23
<PAGE> 32
three or six months thereafter, as selected by the Borrower in its Notice of
Conversion or Continuation given to the Administrative Agent pursuant to
Section 2.8; provided, however, that:
(A) if any Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless the
result of such extension would be to extend such Interest
Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding
Business Day;
(B) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(C) the Borrower may not select any Interest Period
which ends after the Final Maturity Date;
(D) until the earlier to occur of (i) such date upon
which the Commitment of the Administrative Agent hereunder has
been reduced to or below $30,000,000, or (ii) such date as is
90 days after the Closing Date, the Borrower may only select a
one month Interest Period in its Notice of Borrowing or Notice
of Conversion or Continuation.
(E) the Borrower may not select any Interest Period
in respect of Loans having an aggregate principal amount of
less than $5,000,000; and
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<PAGE> 33
(F) there shall be outstanding at any one time no
more than five (5) Interest Periods in the aggregate.
"Interest Rate Contracts" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates.
"Investment" means, with respect to any Person, (a) any loan
or advance to any other Person, (b) the ownership, purchase or other
acquisition of, any Stock, Stock Equivalents, other equity interest,
obligations or other securities of, (i) any other Person, (ii) or all or
substantially all of the assets of any other Person, or (iii) all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any other Person, or (c) any joint venture or
partnership with, or any capital contribution to, or other investment in, any
other Person or any real property.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"Joint Venture Hotel" means any Hotel owned by an Eligible
Joint Venture
"JV%" means, with respect to any Eligible Joint Venture, the
percentage ownership interest of Borrower in such Eligible Joint Venture.
"Leases" means, with respect to the Borrower or any of its
Subsidiaries or Eligible Joint Ventures, all of those leasehold estates in real
property owned by the Borrower or such Subsidiary or Eligible Joint Venture, as
lessee, as such may be amended, supplemented or otherwise
25
<PAGE> 34
modified from time to time to the extent permitted by this Agreement.
"Legal Proceedings" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private) or governmental
proceedings.
"License" means an agreement in favor of either the Borrower
or the Operating Lessee as licensee, permitting the use of hotel system
trademarks, trade names and any related rights in connection with the ownership
or operation of any Hotel.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the Uniform Commercial Code or comparable law of any jurisdiction, of any
financing statement naming the owner of the asset to which such Lien relates as
debtor.
"Loan" or "Loans" means the revolving credit loan or loans
made or to be made by a Lender to the Borrower pursuant to Article II.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Subsidiary Guaranties and each certificate, agreement or document
executed by a Loan Party and delivered to the Administrative Agent or any
Lender in connection with or pursuant to any of the foregoing.
26
<PAGE> 35
"Loan Party" means each of the Borrower and each Guarantor.
"Majority Lenders" means, at any time, Lenders holding at
least 51% of the then aggregate unpaid principal amount of Loans (excluding
Loans held by Non-Funding Lenders) or, if no such Loans are then outstanding,
Lenders having at least 51% of the Commitments of all Lenders (excluding
Non-Funding Lenders).
"Management Agreement" means an agreement relating to the
operation and/or management of any Hotel between the Operating Lessee and the
Manager.
"Manager" means Promus, DT Management, Inc., American General
Hospitality, Inc., Coastal Hotel Group, Inc., or such other manager as shall be
reasonably approved by the Borrower and engaged by the Operating Lessee, as
manager under the Management Agreement.
"Material Adverse Change" means a material adverse change in
any of (i) the condition (financial or otherwise), business, performance,
prospects, operations or properties of (A) any Borrower, (B) the Borrower and
its Subsidiaries taken as one enterprise or (C) DJONT (ii) the legality,
validity or enforceability of any Loan Document, or any material Operating
Lease or the Operating Leases taken as a whole, (iii) the ability of the
Borrower or its Significant Subsidiaries to repay the Obligations or to perform
its obligations under any Loan Document, (iv) the ability of DJONT to perform
its obligations under any material Operating Lease or the Operating Leases
taken as a whole, or (v) the rights and remedies of the Lenders or the
Administrative Agent under the Loan Documents.
"Material Adverse Effect" means an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, a Material
Adverse Change.
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"Minimum Tangible Net Worth" means, with respect to the
Borrower, at any time, the sum of $500,000,000 plus (a) 75% of the sum of (i)
cumulative positive Net Income of the Borrower for each Fiscal Quarter after
June 30, 1996 through the date of determination less (ii) cumulative dividends
paid by the Borrower or its Subsidiaries after June 30, 1996 during all such
Fiscal Quarters; plus (b) 50% of the aggregate net proceeds received by the
Borrower or any of its Subsidiaries after June 30, 1996 in connection with any
offering of Stock or Stock Equivalents of the Borrower and its Subsidiaries
taken as a whole.
"Moody's" means Moody's Investor Service Inc.
"Multiemployer Plan" means, as of any applicable date, a
multiemployer plan, as defined in Section 4001(a)(3) of ERISA, and to which any
Loan Party, any of its Subsidiaries or any ERISA Affiliate is making, is
obligated to make, or within the six-year period ending at such date, has made
or been obligated to make, contributions on behalf of participants who are or
were employed by any of them.
"Net Income (Loss)" means, for any Person for any period, the
aggregate of net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP.
"Net Operating Income" means, with respect to any Hotel, for
any period, the sum of the following (without duplication) (a) all gross
income, revenues, receipts and all other consideration received by the lessor
under the Operating Lease for such Hotel, including, without limitation, base
rent, percentage and similar rentals, late charges and interest payments, but
excluding extraordinary income and, until earned, security deposits, prepaid
rents and other refundable receipts, minus (b) all expenses incurred by the
owner of such Hotel during such period pursuant to its obligations as lessor
under the Operating
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Lease for such Hotel, including, without limitation, real estate taxes,
personal property taxes, maintenance and repair costs of a non-capital nature
for the structural portions of such Hotel and premiums payable for insurance
required to be carried by the lessor on or with respect to such Hotels pursuant
to the Operating Lease therefor, but excluding extraordinary expenses; provided
that, with respect to any Joint Venture Hotel, "Net Operating Income" shall
mean the Net Operating Income from such Hotel multiplied by the applicable JV%.
"Non-Funding Lender" has the meaning specified in Section
2.14(f).
"Non-Recourse Indebtedness" of any Person means all
Indebtedness of such Person with respect to which recourse for payment is
limited to specific assets encumbered by a Lien securing such Indebtedness;
provided, however, that personal recourse of a holder of Indebtedness against
any obligor with respect thereto for fraud, misrepresentation, misapplication
of cash, waste and other circumstances customarily excluded from non-recourse
provisions in non-recourse financing of real estate shall not, by itself,
prevent any Indebtedness from being characterized as Non-Recourse Indebtedness,
provided further that if a personal recourse claim is made in connection
therewith, such claim shall not constitute Non-Recourse Indebtedness for the
purposes of this Agreement).
"Non-Suite Hotel" means a Hotel that is not a Suite Hotel.
"Note" means a promissory note of the Borrower payable to the
order of any Lender in a stated principal amount equal to the amount of such
Lender's Commitment as originally in effect, in substantially the form of
Exhibit A, evidencing the aggregate Indebtedness of the Borrower to
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such Lender resulting from the Loans made by such Lender, and "Notes" means,
collectively, the Notes.
"Notice of Borrowing" has the meaning specified in Section
2.3(a).
"Obligations" means the Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to the
Administrative Agent, any Lender, any Affiliate of any of them or any
Indemnitee, of every type and description, present or future, arising under
this Agreement or under any other Loan Document, whether direct or indirect
(including, without limitation, those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term "Obligations" includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and disbursements and any other sum
then payable by the Borrower under this Agreement or any other Loan Document.
"OECD" means the Organization for Economic Cooperation and
Development.
"Operating Lease" means a lease or sublease relating to any
Hotel, between the Borrower or any of its Subsidiaries or Eligible Joint
Ventures, as lessor, and the Operating Lessee, as lessee, substantially in the
form of the lease annexed as Exhibit H hereto or such other form as shall be
approved by the Lender.
"Operating Lessee" means DJONT or its wholly owned subsidiary,
as lessee under an Operating Lease.
"Operator" means the Operating Lessee and/or the Manager or
both (as the case may be) responsible for the operation and management of any
Hotel.
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"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award.
"Other Taxes" has the meaning specified in Section 2.15(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" means a plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA or Code Section 412 and which any Loan
Party, any of its Subsidiaries or any ERISA Affiliate maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Permit" means any permit, approval, authorization, license,
variance, registration, permission or consent required from a Governmental
Authority under an applicable Requirement of Law.
"Permitted Liens" means, collectively, (a) Liens arising by
operation of law in favor of materialmen, mechanics, warehousemen, carriers,
lessors or other similar Persons incurred by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures in the ordinary course of business
which secure its obligations to such Person; provided, however, that (i) the
Borrower or such Subsidiary or Eligible Joint Venture is not in default with
respect to such payment obligation to such Person, or (ii) the Borrower or such
Subsidiary or Eligible Joint Venture is in good faith and by appropriate
proceedings diligently contesting such obligation and adequate provision is
made for the payment thereof; (b) Liens (excluding Environmental Liens)
securing taxes, assessments or governmental charges or levies; provided,
however, that neither the Borrower nor any of its Subsidiaries or Eligible
Joint Ventures is in default in respect of any payment obligation with respect
thereto
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unless the Borrower or such Subsidiary or Eligible Joint Venture is in good
faith and by appropriate proceedings diligently contesting such obligation and
adequate provision is made for the payment thereof; and (c) Zoning
restrictions, subleases, licenses or concessions for restaurants, bars, gift
shops, antennas, communications equipment and similar agreements entered into
in the ordinary course of such Person's business in connection with the
ownership and operation of a hotel; and easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of the property or assets of the Borrower or any of its Subsidiaries or
Eligible Joint Venture or impair, in any material manner, the use of such
property for the purposes for which such property is held by the Borrower or
any such Subsidiary or Eligible Joint Venture.
"Person" means an individual, partnership, corporation
(including, without limitation, a business trust), limited liability company,
joint stock company, trust, unincorporated association, joint venture or other
entity, or a Governmental Authority.
"Plan" means an employee benefit plan, as defined in Section
3(3) of ERISA, which any Loan Party or any of its Subsidiaries maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Principal Balance" means, collectively, the outstanding
principal balances of the Notes from time to time.
"Projections" means those financial projections covering the
fiscal years ending in 1996 through 2000, inclusive, delivered to the Lenders
by the Borrower.
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"Promus" means Promus Hotels, Inc., a Delaware corporation or
any Subsidiary thereof that is a Manager.
"Pro Rata Share" means, for any Person, with respect to such
Person's Unconsolidated Entities (including, without limitation, any Eligible
Joint Ventures), the percentage ownership interest of such Person in such
Unconsolidated Entity, provided that, in the event that such Person is the
general partner of such Unconsolidated Entity, such Person's Pro Rata Share
with respect to such Unconsolidated Entity shall be the percentage of the
general partner interests owned by such Person in such Unconsolidated Entity
with respect to any Indebtedness for which recourse may be made against any
general partner of such Unconsolidated Entity.
"Qualified Lease" means any Lease (a) which is a direct ground
lease granted by the fee owner of real property, (b) which may be transferred
and/or assigned without the consent of the lessor (or as to which the Lease
expressly provides that (i) such Lease may be transferred and/or assigned with
the consent of the lessor and (ii) such consent shall not be unreasonably
withheld or delayed), (c) which has a remaining term (including any renewal
terms exercisable at the sole option of the lessee) of at least 40 years, (d)
under which no material default has occurred and is continuing, (e) with
respect to which a security interest may be granted without the consent of the
lessor, and (f) which contains lender protection provisions reasonably
acceptable to the Administrative Agent including, without limitation,
provisions to the effect that (i) the lessor shall notify any holder of a
security interest in such Lease of the occurrence of any default by the lessee
under such Lease and shall afford such holder the right to cure such default,
and (ii) in the event that such Lease is terminated, such holder shall have the
option to enter into a new lease having terms substantially identical to those
contained in the terminated Lease. Upon the submission to
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<PAGE> 42
the Administrative Agent of a written request for approval of the lender
protection provisions and other terms of a proposed Qualified Lease, the
Administrative Agent shall respond by accepting or rejecting such proposal
within ten Business Days following receipt of such request.
"Ratable Portion" or "ratably" means, except as otherwise
specifically provided herein, with respect to any Lender, the quotient obtained
by dividing the Commitment of such Lender by the Commitments of all Lenders and
that payments of principal of the Loans and interest thereon shall be made pro
rata in accordance with the respective unpaid principal amounts of the Loans
held by the Lenders.
"Real Estate" means all of those plots, pieces or parcels of
land now owned or hereafter acquired by the Borrower or any of its Subsidiaries
or Eligible Joint Ventures (the "Land"), including, without limitation, those
listed on Schedule 4.22(a), together with the right, title and interest of the
Borrower or such Subsidiary or Eligible Joint Venture, if any, in and to the
streets, the land lying in the bed of any streets, roads or avenues, opened or
proposed, in front of, adjoining or abutting the Land to the center line
thereof, the air space and development rights pertaining to the Land and the
right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including, without limitation, all alley, vault,
drainage, mineral, water, oil and gas rights, together with all of the
buildings and other improvements now or hereafter erected on the Land, and any
fixtures appurtenant thereto.
"Register" has the meaning specified in Section 10.7.
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"Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration on or into the indoor or outdoor environment
or into or out of any property.
"Remedial Action" means all actions, including without
limitation any Capital Expenditures, required or necessary to (i) clean up,
remove, treat or in any other way address any Hazardous Material or other
substance in the indoor or outdoor environment, (ii) prevent the Release or
threat of Release, or minimize the further Release, of any Hazardous Material
or other substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and care,
or (iv) bring facilities on any property owned or leased by the Borrower or any
of its Subsidiaries into compliance with all Environmental Laws and
Environmental Permits.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and all federal, state and local laws, rules and regulations,
including, without limitation, federal, state or local securities, antitrust
and licensing laws, all food, health and safety laws, and all applicable trade
laws and requirements, including, without limitation, all disclosure
requirements of Environmental Laws, ERISA and all orders, judgments, decrees or
other determinations of any Governmental Authority or arbitrator, applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
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"Responsible Officer" means, with respect to any Person, any
of the principal executive officers or general partners of such Person.
"Restricted Payments" has the meaning specified in Section
7.4.
"S&P" means Standard & Poor's Ratings Group and its
successors.
"Significant Subsidiary" means, at any date of determination,
(i) any Subsidiary of the Borrower which, or (ii) any group of Subsidiaries of
the Borrower which when aggregated, at such date, directly or indirectly own(s)
or lease(s) one or more Hotels having an aggregate value (calculated on the
basis of the Borrower's Investment therein) in excess of $75,000,000.
"Solvent" means, with respect to any Person, that the value of
the assets of such Person (at fair value) is, on the date of determination,
greater than the total amount of liabilities (including, without limitation,
contingent and unliquidated liabilities) of such Person as of such date and
that, as of such date, such Person is able to pay all liabilities of such
Person as such liabilities mature and does not have unreasonably small capital.
In computing the amount of contingent or unliquidated liabilities at any time,
such liabilities will be computed at the amount which, in 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.
"Status" means the existence of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status, Level VI Status or
Level VII Status, as the case may be.
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As used in this definition:
"Level I Status" exists at any date if, at such date,
either Borrower has a long-term senior unsecured actual or
implied debt rating of A- or better by S&P and A3 or better by
Moody's;
"Level II Status" exists at any date if, at such
date, either Borrower has a long-term senior unsecured actual
or implied debt rating of BBB+ by S&P and Baa1 by Moody's;
"Level III Status" exists at any date if, at such
date, either Borrower has a long-term senior unsecured actual
or implied debt rating of BBB by S&P and Baa2 by Moody's;
"Level IV Status" exists at any date if, at such
date, either Borrower has a long-term senior unsecured actual
or implied debt rating of BBB- or by S&P and Baa3 by Moody's;
"Level V Status" exists at any date if, at such date,
either Borrower has a long-term senior unsecured actual or
implied debt rating of BB+ by S&P and Ba1 by Moody's;
"Level VI Status" exists at any date if, at such
date, either Borrower has a long-term senior unsecured actual
or implied debt rating of BB by S&P and Ba2 by Moody's; and
"Level VII Status" exists at any date if, at such
date, either Borrower has a long-term senior unsecured actual
or implied debt rating of BB- or lower by S&P and Ba3 or lower
by Moody's.
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provided that (i) if S&P and/or Moody's shall cease to issue ratings of debt
securities of real estate investment trusts generally, then the Administrative
Agent and the Borrower shall negotiate in good faith to agree upon a substitute
rating agency or agencies (and to correlate the system of ratings of each
substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency or agencies are agreed
upon, Status shall be determined on the basis of the rating assigned by the
other rating agency (or, if both S&P and Moody's shall have so ceased to issue
such ratings, on the basis of the Status in effect immediately prior thereto)
and (b) after such substitute rating agency or agencies are agreed upon, Status
shall be determined on the basis of the rating assigned by the other rating
agency and such substitute rating agency or the two substitute rating agencies,
as the case may be; (ii) if the long term senior unsecured actual or implied
debt ratings of either Borrower by S&P and Moody's are not equivalent, the
higher rating will apply for the purposes of determining Status; and (iii) if
the long term senior unsecured actual or implied debt ratings of either Borrower
by S&P and Moody's are two or more Levels apart, the rating one Level below the
higher rating will apply for the purposes of determining Status.
"Stock" means shares of capital stock, beneficial or
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation or equivalent entity, whether voting or
non-voting, and includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities (other than Stock)
convertible into or exchangeable for Stock and all warrants, options or other
rights to purchase or subscribe for any stock, whether or not presently
convertible, exchangeable or exercisable.
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"Subsidiary" means, with respect to any Person (other than
FelCor LP with respect to FelCor), at any date, any corporation, partnership or
other business entity the accounts of which would be consolidated with those of
such Person in its consolidated financial statements in accordance with GAAP,
if such statements were prepared as of such date.
"Subsidiary Guaranty" means a guaranty, in substantially the
form of Exhibit I, executed by each Guarantor, as such guaranty may be amended,
supplemented or otherwise modified from time to time.
"Suite Hotel" means a Hotel offering substantially all suite
accommodations.
"Suite Revenues" has the meaning ascribed to such term in the
form of Operating Lease attached as Exhibit H hereto.
"Super Majority Lenders" means, at any time, Lenders holding
at least 66-2/3% of the then aggregate unpaid principal amount of Loans
(excluding Loans held by Non-Funding Lenders) or, if no such Loans are then
outstanding, Lenders having at least 66-2/3% of the Commitments of all Lenders
(excluding Non-Funding Lenders).
"Swing Advance" has the meaning set forth in Section 2.17.
"Swing Advance Bank" means Chase.
"Tangible Net Worth" means, with respect to the Borrower at
any date, (a) the sum of (i) the total shareholders' equity of FelCor, and (ii)
the value of all partnership interests in FelCor LP owned by Persons other than
FelCor; minus (b) the sum of all intangible assets of
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<PAGE> 48
FelCor, each as shown on the consolidated balance sheet of FelCor as of such
date.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of
such Person, and (ii) any Affiliate of such Person with which such Person files
or is eligible to file consolidated, combined or unitary tax returns.
"Tax Return" has the meaning specified in Section 4.3.
"Taxes" has the meaning specified in Section 2.15(a).
"Telerate Page 3750" means the display designated as "Page
3750" on the Associated Press-Dow Jones Telerate Service (or such other page as
may replace Page 3750 on the Associated Press-Dow Jones Telerate Service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association interest settlement rates for U.S. Dollar deposits). Any
Eurodollar Rate determined on the basis of the rate displayed on Telerate Page
3750 in accordance with the provisions hereof shall be subject to corrections,
if any, made in such rate and displayed by the Associated Press-Dow Jones
Telerate Service within one hour of the time when such rate is first displayed
by such Service.
"Termination Date" means the earliest of (i) October 15, 1996
unless the Closing Date occurs prior thereto, (ii) the Final Maturity Date, and
(iii) the date of termination in whole of the Commitments pursuant to Section
2.5 or 8.2.
"Total Assets" of any Person means, at any date, the total
assets of such Person and its Subsidiaries at such
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date determined on a consolidated basis in conformity with GAAP.
"Total Indebtedness" of any Person means the sum of the
following (without duplication): (a) all Indebtedness of such Person and its
Subsidiaries determined on a consolidated basis in conformity with GAAP, plus
(b) such Person's Pro Rata Share of Indebtedness (excluding Non-Recourse
Indebtedness) of such Person's Unconsolidated Entities.
"Total Secured Indebtedness" of any Person means any Total
Indebtedness of such Person for which the obligations thereunder are secured by
a pledge of or other encumbrance on any assets of such Person or its
Subsidiaries or Unconsolidated Entities.
"Unconsolidated Entity" means, with respect to any Person, at
any date, any other Person in whom such Person holds an Investment, which
Investment is accounted for in the financial statements of such Person on an
equity basis of accounting and whose financial results would not be consolidated
under GAAP with the financial results of such Person on the consolidated
financial statements of such Person, if such statements were prepared as of such
date.
"Unencumbered" means, with respect to any Hotel, at any date
of determination, the circumstance that such Hotel on such date:
(a) is not subject to any Liens (including restrictions on
transferability or assignability) of any kind (including any such Lien or
restriction imposed by (i) any agreement governing Indebtedness, and (ii) the
organizational documents of the Borrower or any of its Subsidiaries or Eligible
Joint Ventures, but excluding Permitted Liens and, in the case of any Qualified
Lease (to the extent permitted by the definition thereof),
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restrictions on transferability or assignability in respect of such Lease);
(b) is not subject to any agreement (including (i) any agreement
governing Indebtedness, and (ii) if applicable, the organizational documents of
the Borrower or any of its Subsidiaries or Eligible Joint Ventures) which
prohibits or limits the ability of the Borrower or any of its Subsidiaries or
Eligible Joint Ventures to create, incur, assume or suffer to exist any Lien
upon such Hotel, other than Permitted Liens (excluding any agreement or
organizational document which limits generally the amount of Indebtedness which
may be incurred by the Borrower or its Subsidiaries or Eligible Joint
Ventures); and
(c) is not subject to any agreement (including any agreement
governing Indebtedness) which entitles any Person to the benefit of any Lien
(other than Permitted Liens) on such Hotel, or would entitle any Person to the
benefit of any such Lien upon the occurrence of any contingency (including,
without limitation, pursuant to an "equal and ratable" clause).
For the purposes of this Agreement, any Joint Venture Hotel or Hotel owned by a
Subsidiary or Eligible Joint Venture of the Borrower shall not be deemed to be
Unencumbered unless both (i) such Hotel and (ii) all Stock owned directly or
indirectly by Borrower in such Eligible Joint Venture or Subsidiary, is
Unencumbered.
1.2. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including".
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1.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
1.4. Certain Terms. (a) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement. References herein to an Exhibit, Schedule, Article, Section,
subsection or clause refer to the appropriate Exhibit or Schedule to, or
Article, Section, subsection or clause in this Agreement.
(b) The terms "Lender" and "Administrative Agent" include
their respective successors and the term "Lender" includes each assignee of
such Lender who becomes a party hereto pursuant to Section 10.7.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. The Loans. On the terms and subject to the conditions
contained in this Agreement, each Lender severally agrees to make loans (each a
"Loan") to the Borrower from time to time on any Business Day during the period
from the date hereof until the Termination Date in an aggregate amount not to
exceed at any time outstanding such Lender's Commitment; provided, however,
that at no time shall any Lender be obligated to make a Loan in excess of such
Lender's Ratable Portion of the Available Credit. Within the limits of each
Lender's Commitment, amounts prepaid pursuant to Section 2.7(b) may be
reborrowed under this Section 2.1. The Loans of each Lender shall be evidenced
by the Note to the order of such Lender.
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2.2 Intentionally Omitted.
2.3 Making the Loans. (a) Each Borrowing shall be made
on notice, given by the Borrower to the Administrative Agent not later than (i)
11:00 A.M. (New York City time) on the third (3rd) Business Day prior to the
date of the proposed Borrowing in the case of Eurodollar Rate Loans, and (ii)
11:00 A.M. (New York City time) on the Business Day prior to the date of the
proposed Borrowing in the case of Base Rate Loans. Each such notice (a "Notice
of Borrowing") shall be in substantially the form of Exhibit B, specifying
therein (i) the date of such proposed Borrowing, (ii) the aggregate amount of
such proposed Borrowing, (iii) the amount thereof, if any, requested to be
Eurodollar Rate Loans, and (iv) the initial Interest Period or Periods for any
such Eurodollar Rate Loans. The Loans shall be made as Base Rate Loans unless
(subject to Section 2.12) the Notice of Borrowing specifies that all or a pro
rata portion thereof shall be Eurodollar Rate Loans; provided, however, that
the aggregate of the Eurodollar Rate Loans for each Interest Period must be in
an amount of not less than $5,000,000 or an integral multiple of $500,000 in
excess thereof.
(b) The Administrative Agent shall give to each Lender
prompt notice of the Administrative Agent's receipt of a Notice of Borrowing
and, if Eurodollar Rate Loans are properly requested in such Notice of
Borrowing, the applicable interest rate under Section 2.9, and each Lender's
Ratable Portion of the proposed Borrowing. Each Lender shall, before 12:00
Noon (New York City time) on the date of the proposed Borrowing, make available
for the account of its Applicable Lending Office to the Administrative Agent at
its address referred to in Section 10.2, in immediately available funds, such
Lender's Ratable Portion of such proposed Borrowing. By 12:00 Noon (New York
City time) in the case of Eurodollar Rate Loans and Base Rate Loans, on the
date specified by the Borrower in the
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Notice of Borrowing, subject to fulfillment of the applicable conditions set
forth in Article III, the Administrative Agent will make such funds available
to the Borrower at the Administrative Agent's aforesaid address; provided that
in the event that the Administrative Agent shall have received notice from a
Lender prior to the date of any proposed Borrowing that such Lender will not
make available to the Administrative Agent such Lender's Ratable Portion of
such Borrowing, the Administrative Agent shall be under no obligation to fund
such Lender's Ratable Portion of such Borrowing.
(c) Each Base Rate Loan shall be in an aggregate amount
of not less than $1,000,000 or an integral multiple of $100,000 in excess
thereof.
(d) Intentionally omitted.
(e) Each Notice of Borrowing shall be irrevocable and
binding on the Borrower. In the case of any proposed Borrowing which the
related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Loans, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in such Notice of Borrowing for such proposed
Borrowing the applicable conditions set forth in Article III, including,
without limitation, any loss (including, without limitation, loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund any
Eurodollar Rate Loan to be made by such Lender as part of such proposed
Borrowing when such Eurodollar Rate Loan, as a result of such failure, is not
made on such date.
(f) Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any proposed Borrowing that such
Lender will not make available
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to the Administrative Agent such Lender's Ratable Portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such Ratable
Portion available to the Administrative Agent on the date of such Borrowing in
accordance with this Section 2.3 and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender
and the Borrower severally agree to repay to the Administrative Agent forthwith
on demand such corresponding amount together with interest thereon, for each
day from the date such amount is made available to the Borrower until the date
such amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Loan as part of such Borrowing
for purposes of this Agreement. If the Borrower shall repay to the
Administrative Agent such corresponding amount, such payment shall not relieve
such Lender of any obligation it may have to the Borrower hereunder.
(g) The failure of any Lender to make the Loan to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender on the date of any Borrowing.
2.4. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, a commitment fee (the
"Commitment Fee") equal to the Applicable Margin times the average daily unused
portion of
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such Lender's Commitment, from the date hereof until the Termination Date,
payable in arrears with respect to each full calendar quarter on (i) the last
day of each calendar quarter during the term of such Lender's Commitment,
commencing December 31, 1996, (ii) on the date of any reduction of the
Commitments pursuant to Section 2.5 and (iii) on the Termination Date. For
purposes of this Section 2.4, Swing Advances shall be included as part of the
unused portion of the Commitments.
(b) The Borrower has agreed to pay to Chase additional fees,
the amount and dates of payment of which are embodied in a separate agreement
between the Borrower and Chase.
2.5. Reduction and Termination of the Commitments. The
Borrower may, upon at least three Business Days' prior notice to the
Administrative Agent, terminate in whole or reduce ratably in part the unused
portions of the respective Commitments of the Lenders; provided, however, that
each partial reduction shall be in the aggregate amount of not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof.
2.6. Repayment. The Borrower shall repay the entire unpaid
principal amount of the Loans on the Termination Date.
2.7. Prepayments. (a) The Borrower shall have no right to
prepay the principal amount of any Loan other than as provided in this Section
2.7.
(b) The Borrower may, upon at least two (2) Business Days'
prior notice to the Administrative Agent, stating the proposed date and
aggregate principal amount of the prepayment, prepay the outstanding principal
amount of the Loans in whole or ratably in part, together with accrued interest
to the date of such prepayment on the principal
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amount prepaid; provided, however, that any prepayment of any Eurodollar Rate
Loan made other than on the last day of an Interest Period for such Loan shall
be subject to payment by the Borrower to the Administrative Agent of any costs,
fees or expenses incurred by any Lender in connection with such prepayment
including without limitation any costs to unwind any Eurodollar Rate contracts;
and, provided, further, that each partial prepayment shall be in an aggregate
principal amount not less than $3,000,000 or integral multiples of $100,000 in
excess thereof. Upon the giving of such notice of prepayment, the principal
amount of the Loans specified to be prepaid shall become due and payable on the
date specified for such prepayment.
(c) If at any time the aggregate principal amount of Loans
outstanding at such time exceeds the lower of the Borrowing Base or the
Commitments at such time (a "Borrowing Base Imbalance"), the Borrower shall
prepay the Loans then outstanding in an amount equal to such excess, together
with accrued interest as follows:
(i) in the event that the Borrowing Base Imbalance
is due to (A) any sale, conveyance, transfer, assignment or other
disposition of an Eligible Hotel, or (B) a financing secured by an
Eligible Hotel, the prepayment shall be made within one (1) Business
Day of such event occurring;
(ii) in the event that the Borrowing Base Imbalance
is due to any (A) condemnation or taking by eminent domain of an
Eligible Hotel, or (B) loss, damage or destruction by casualty to any
Eligible Hotel, the prepayment shall be made within one (1) Business
Day after receipt by the Borrower or its Subsidiary or Eligible Joint
Venture of the condemnation award or insurance proceeds relating to
such event; or
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(iii) in the event that the Borrowing Base
Imbalance is due to (A) a decrease in the value of any Eligible
Hotels, or (B) any of the Eligible Hotels ceasing, for whatever
reason, to meet the requirements for Eligible Hotels set forth herein,
the prepayment shall be made within 180 days of such event.
2.8. Conversion/Continuation Option. (a) Swing Advances
shall be automatically converted to Base Rate Loans on the Business Day
following the date of borrowing thereof.
(b) The Borrower may elect (i) at any time to convert Base
Rate Loans or any portion thereof to Eurodollar Rate Loans, (ii) at any time to
convert Swing Advances or any portion thereof to Base Rate Loans or Eurodollar
Rate Loans, or (iii) at the end of any Interest Period with respect thereto, to
convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans, or
to continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; provided, however, that the aggregate of the Eurodollar Loans
for each Interest Period therefor must be in the amount of $5,000,000 or an
integral multiple of $500,000 in excess thereof. Each conversion or
continuation shall be allocated among the Loans of all Lenders in accordance
with their Ratable Portion. Each such election shall be in substantially the
form of Exhibit C hereto (a "Notice of Conversion or Continuation") and shall
be made by giving the Administrative Agent at least three (3) Business Days'
prior written notice thereof specifying (A) the amount and type of conversion
or continuation, (B) in the case of a conversion to or a continuation of
Eurodollar Rate Loans, the Interest Period therefor, and (C) in the case of a
conversion, the date of conversion (which date shall be a Business Day and, if
a conversion from Eurodollar Rate Loans, shall also be the last day of the
Interest Period therefor). The Administrative Agent shall promptly notify each
Lender of its receipt of a Notice of Conversion or Continuation and of the
contents thereof
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and such Lender's Ratable Portion of the Loans to be converted. Notwithstanding
the foregoing, no conversion in whole or in part of Base Rate Loans or Swing
Advances to Eurodollar Rate Loans, and no continuation in whole or in part of
Eurodollar Rate Loans upon the expiration of any Interest Period therefor, shall
be permitted at any time at which a Default or an Event of Default shall have
occurred and be continuing. If, within the time period required under the terms
of this Section 2.8, the Administrative Agent does not receive a Notice of
Conversion or Continuation from the Borrower containing a permitted election to
continue any Eurodollar Rate Loans for an additional Interest Period or to
convert any such Loans, then, upon the expiration of the Interest Period
therefor, such Loans will be automatically converted to Base Rate Loans. Each
Notice of Conversion or Continuation shall be irrevocable.
2.9. Interest. (a) The Borrower shall pay interest on the
unpaid principal amount of each Loan from the date thereof until the principal
amount thereof shall be paid in full, at the following rates per annum:
(i) For Base Rate Loans, at a rate per annum equal
at all times to the Base Rate in effect from time to time plus the
Applicable Margin, payable monthly on the first day of each month, on
the Termination Date and on the date any Base Rate Loan is converted
or paid in full.
(ii) For Eurodollar Rate Loans, at a rate per annum
equal at all times during the applicable Interest Period for each
Eurodollar Rate Loan to the sum of the Eurodollar Rate for such
Interest Period plus the Applicable Margin in effect on the first day
of such Interest Period, payable on the last day of such Interest
Period, on the Termination Date and, if such Interest Period has a
duration of more than three
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months, on the last day of each calendar quarter during such Interest
Period commencing on December 31, 1996.
(b) If the principal indebtedness is declared immediately
due and payable by the Administrative Agent pursuant to the provisions of this
Agreement or any other Loan Document, or if the Loans are not paid in full on
the Termination Date, the Borrower shall thereafter, unless and until such
date, if any, as the Super Majority Lenders may elect, in their sole and
absolute discretion, to waive, in writing, all or any portion of such default
rate interest, pay interest on the principal sum then remaining unpaid from the
date of such declaration or the Termination Date, as the case may be, until the
date on which the principal sum then outstanding is paid in full (whether
before or after judgment), at a rate per annum (calculated for the actual
number of days elapsed on the basis of a 360-day year) equal to the greater, on
a daily basis, of (a) 13% or (b) 4% plus the Base Rate, provided, however, that
such interest rate shall in no event exceed the maximum interest rate which the
Borrower may by law pay.
2.10. Interest Rate Determination and Protection. (a) The
Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be
determined by the Administrative Agent two Business Days before the first day
of such Interest Period.
(b) The Administrative Agent shall give prompt notice to the
Borrower and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.9(a) or (b).
(c) If, with respect to Eurodollar Rate Loans, the Majority
Lenders in good faith notify the Administrative Agent that the Eurodollar Rate
for any Interest Period therefor will not adequately reflect the cost to such
Majority Lenders of making such Loans or funding or
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maintaining their respective Eurodollar Rate Loans for such Interest Period,
the Administrative Agent shall forthwith so notify the Borrower and the
Lenders, whereupon
(i) each Eurodollar Loan will automatically, on the
last day of the then existing Interest Period therefor, convert into a
Base Rate Loan; and
(ii) the obligations of the Lenders to make Eurodollar
Rate Loans or to convert Base Rate Loans into Eurodollar Rate Loans
shall be suspended until the Administrative Agent shall notify the
Borrower that such Lenders have determined that the circumstances
causing such suspension no longer exist.
2.11. Increased Costs. If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation (other than any change by way of imposition or increase of reserve
requirements included in determining the Eurodollar Rate Reserve Percentage) or
(ii) compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding
or maintaining any Eurodollar Rate Loans, then the Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower and the Administrative Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error. If the
Borrower so notifies the Administrative Agent within five Business Days after
any Lender notifies the Borrower of any increased cost pursuant to the
foregoing provisions of this Section 2.11, the Borrower may either (A) prepay
in full all Eurodollar Rate Loans of such Lender then outstanding in
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accordance with Section 2.7(b) and, additionally, reimburse such Lender for
such increased cost in accordance with this Section 2.11 or (B) convert all
Eurodollar Rate Loans of all Lenders then outstanding into Base Rate Loans in
accordance with Section 2.8 and, additionally, reimburse such Lender for such
increased cost in accordance with this Section 2.11.
2.12. Illegality. Notwithstanding any other provision of
this Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to make Eurodollar Rate Loans or to
continue to fund or maintain Eurodollar Rate Loans, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Administrative
Agent, (i) the obligation of such Lender to make or to continue Eurodollar Rate
Loans and to convert Base Rate Loans into Eurodollar Rate Loans shall terminate
and (ii) the Borrower shall forthwith prepay in full all Eurodollar Rate Loans
of such Lender then outstanding, together with interest accrued thereon, unless
the Borrower, within five Business Days of such notice and demand, converts all
Eurodollar Rate Loans of all Lenders then outstanding into Base Rate Loans.
2.13. Capital Adequacy. If (i) the introduction of or any
change in or in the interpretation of any law or regulation, (ii) compliance
with any law or regulation, or (iii) compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having
the force of law) affects or would affect the amount of capital required or
expected to be maintained by any Lender or any corporation controlling any
Lender and such Lender reasonably determines that such amount is based upon the
existence of such Lender's Commitments and Loans and its other commitments and
loans of this type, then, upon demand
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by such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to the Administrative Agent for the account of such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender in the light of such circumstances, to the extent that
such Lender reasonably determines such increase in capital to be allocable to
the existence of such Lender's Commitments and Loans. A certificate as to such
amounts submitted to the Borrower and the Administrative Agent by such Lender
shall be conclusive and binding for all purposes absent manifest error.
2.14. Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Notes not later than 11:00 A.M. (New
York City time) on the day when due, in Dollars, to the Administrative Agent at
its address referred to in Section 10.2 in immediately available funds without
set-off or counterclaim. The Administrative Agent will promptly thereafter
cause to be distributed immediately available funds relating to the payment of
principal or interest or fees (other than amounts payable pursuant to Section
2.11, 2.12, 2.13, 2.15 or 2.17) to the Lenders, in accordance with their
respective Ratable Portions, for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms of this
Agreement. To the extent the foregoing payments are received by the
Administrative Agent prior to 11:00 A.M. (New York City time) and are not
distributed to the Lenders on the same day, the Administrative Agent shall pay
to each Lender in addition to the amount distributed to such Lender, interest
thereon, for each day from the date such amount is received by the
Administrative Agent until the date such amount is distributed to such Lender,
at the Federal Funds Rate. Payment received by the Administrative Agent after
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11:00 A.M. (New York City time) shall be deemed to be received on the next
Business Day.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under any
Loan held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate, the
Eurodollar Rate or the Federal Funds Rate and of fees shall be made by the
Administrative Agent on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or fee, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of any Eurodollar Rate Loan to be made in the next
calendar month, such payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due
hereunder to the Lenders that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such
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assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to the Administrative Agent, each
Lender shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such Lender
repays such amount to the Administrative Agent, at the Federal Funds Rate.
(f) If any Lender (a "Non-Funding Lender") has (x) failed to
make a Loan required to be made by it hereunder, and the Administrative Agent
has determined that such Lender is not likely to make such Loan or (y) given
notice to the Borrower or the Administrative Agent that it will not make, or
that it has disaffirmed or repudiated any obligation to make, Loans, in each
case by reason of the provisions of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 or otherwise, (i) such Non-Funding Lender shall
lose any and all voting rights hereunder, and (ii) any payment made on account
of the principal of the Loans outstanding shall be made as follows:
(A) in the case of any such payment made on any
date when and to the extent that, in the determination of the
Administrative Agent, the Borrower would be able, under the terms and
conditions hereof, to reborrow the amount of such payment under the
Commitments and to satisfy any applicable conditions precedent set
forth in Article III to such reborrowing, such payment shall be made
on account of the outstanding Loans held by the Lenders other than the
Non-Funding Lender pro rata according to the respective outstanding
principal amounts of the Loans of such Lenders;
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(B) otherwise, such payment shall be made on account
of the outstanding Loans held by the Lenders pro rata according to the
respective outstanding principal amounts of such Loans; and
(C) any payment made on account of interest on the Loans
shall be made pro rata according to the respective amounts of accrued
and unpaid interest due and payable on the Loans with respect to which
such payment is being made.
2.15. Taxes. (a) Any and all payments by the Borrower under
each Loan Document shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Administrative Agent, taxes measured by its net income,
and franchise taxes imposed on it, by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or
any political subdivision thereof and, in the case of each Lender, taxes
measured by its net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities (excluding, in the case of such Lender or
the Administrative Agent, taxes imposed by reason of any failure of such Lender
or the Administrative Agent, if such Lender or the Administrative Agent is
entitled at such time to a total or partial exemption from withholding that is
required to be evidenced by a United States Internal Revenue Service Form 1001
or 4224 or any successor or additional form, to deliver to the Administrative
Agent or the Borrower, from time to time as required by the Administrative
Agent or the Borrower, such Form 1001 or 4224 (as applicable) or any successor
or additional form, completed in a manner reasonably satisfactory to the
Administrative Agent or the
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Borrower) being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including, without limitation, deductions applicable to additional sums
payable under this Section 2.15) such Lender or the Administrative Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law, and (iv) the
Borrower shall deliver to the Administrative Agent evidence of such payment to
the relevant taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies of the United States or any political subdivision
thereof or any applicable foreign jurisdiction which arise from any payment
made under any Loan Document or from the execution, delivery or registration
of, or otherwise with respect to, any Loan Document (collectively, "Other
Taxes").
(c) The Borrower will indemnify each Lender and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.15) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including, without
limitation, for penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Lender or the Administrative Agent (as the case may be) makes written
demand therefor.
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(d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Borrower will furnish to the Administrative Agent, at its
address referred to in Section 10.2, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.15 shall survive the payment in full of
the Obligations.
(f) Prior to the Closing Date in the case of each Lender that
is a signatory hereto, and on the date of the Assignment and Acceptance pursuant
to which it becomes a Lender in the case of each other Lender and from time to
time thereafter if requested by the Borrower or the Administrative Agent, each
Lender organized under the laws of a jurisdiction outside the United States that
is entitled to an exemption from United States withholding tax, or that is
subject to such tax at a reduced rate under an applicable tax treaty, shall
provide the Administrative Agent and the Borrower with an IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS
certifying as to such Lender's entitlement to such exemption or reduced rate
with respect to all payments to be made to such Lender hereunder and under the
Notes. Unless the Borrower and the Administrative Agent have received forms or
other documents satisfactory to them indicating that payments hereunder or under
any Note are not subject to United States withholding tax or are subject to such
tax at a rate reduced by an applicable tax treaty, the Borrower or the
Administrative Agent shall withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Lender organized under the
laws of a jurisdiction outside the United States.
(g) Any Lender claiming any additional amounts payable
pursuant to this Section 2.15 shall use its best
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efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable Lending Office if
the making of such a change would avoid the need for, or reduce the amount of,
any such additional amounts which may thereafter accrue and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.
2.16. Sharing of Payments, Etc.. (a) If any Lender (other
than the Swing Advance Bank) shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set off or otherwise) on
account of Loans made by it (other than pursuant to Section 2.13 or 2.15), and
there is any Swing Advance outstanding in respect of which the Swing Advance
Bank has not received payment in full from the Lenders pursuant to Section
2.17(d) or (e), such Lender (a "Purchasing Lender") shall purchase a
participation in all such Swing Advances in an amount equal to the lesser of
such payment and the amount of such Swing Advances for which the Swing Advance
Bank has not so received payment in full. If, after giving effect to the
foregoing, any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of the
Loans made by it (other than pursuant to Sections 2.13 or 2.15) in excess of
its Ratable Portion of payments on account of the Loans obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in their Loans as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them.
2.17. Swing Advances. (a) The Swing Advance Bank, on the
terms and subject to the conditions contained in this Agreement, shall make
advances (each a "Swing Advance") to the Borrower from time to time on any
Business Day during the period from the date hereof until the day preceding the
Termination Date in an aggregate amount not to exceed at any time outstanding
the lesser of (i)
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$15,000,000, and (ii) the Available Credit; provided that the Swing Advance
Bank shall not be requested to make a Swing Advance to refinance an outstanding
Swing Advance. The Swing Advance Bank shall be entitled to rely on the most
recent Borrowing Base Certificate delivered to the Administrative Agent.
Within the limits set forth above, Swing Advances repaid may be reborrowed
under this Section 2.17.
(b) Each Swing Advance shall be made upon a Notice of
Borrowing for a Swing Advance being given by the Borrower to the Swing Advance
Bank by no later than 11:00 A.M. (New York City time) on the Business Day of
the proposed Swing Advance. Upon fulfillment of the applicable conditions set
forth in Article III, the Swing Advance Bank will make each Swing Advance
available on the same day to the Borrower at the Agent's address referred to in
Section 10.2. All Swing Advances shall bear interest at the same rate, and be
payable on the same basis, as Base Rate Loans and shall be converted to Base
Rate Loans pursuant to Section 2.8(a).
(c) Each Swing Advance shall be in an aggregate amount of
not less than $1,000,000.00 or an integral multiple of $100,000.00 in excess
thereof.
(d) The Administrative Agent shall give to each Lender
prompt notice of the Administrative Agent's receipt of a Notice of Borrowing
for a Swing Advance and each Lender's Ratable Portion thereof. Each Lender
shall before 12:00 Noon (New York City time) on the next Business Day (the
"Settlement Date") make available to the Administrative Agent, in immediately
available funds, the amount of its Ratable Portion of the principal amount of
such Swing Advance. Upon such payment by a Lender, such Lender shall be deemed
to have made a Loan to the Borrower in the amount of such payment. The
Administrative Agent shall use such funds to repay the Swing Advance to the
Swing Advance Bank.
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To the extent that any Lender fails to make such payment to the Swing Advance
Bank, the Borrower shall repay such Swing Advance on demand and in any event on
the Termination Date.
(e) During the continuance of a Default under Section
8.1(e), each Lender shall acquire, without recourse or warranty, an undivided
participation in each Swing Advance otherwise required to be repaid by such
Lender pursuant to the preceding paragraph, which participation shall be in a
principal amount equal to such Lender's Ratable Portion of such Swing Advance,
by paying to the Swing Advance Bank on the date on which such Lender would
otherwise have been required to make a payment in respect of such Swing Advance
pursuant to the preceding paragraph, in immediately available funds, an amount
equal to such Lender's Ratable Portion of such Swing Advance. If such amount
is not in fact made available to the Swing Advance Bank on the date when the
Swing Advance would otherwise be required to be made pursuant to the preceding
paragraph, the Swing Advance Bank shall be entitled to recover such amount on
demand from that Lender together with interest accrued from such date at the
Federal Funds Rate. From and after the date on which any Lender purchases an
undivided participation interest in a Swing Advance pursuant to this paragraph
(e), the Swing Advance Bank shall promptly distribute to such Lender such
Lender's Ratable Portion of all payments of principal and of interest on such
Swing Advance, other than those received from a Lender pursuant to Section 2.16
or this or the preceding paragraph (d). If any payment made by or on behalf of
the Borrower and received by the Swing Advance Bank with respect to any Swing
Advance is rescinded or must otherwise be returned by the Swing Advance Bank
for any reason and the Swing Advance Bank has made a payment to the
Administrative Agent, on account thereof, each Lender shall, upon notice to the
Swing Advance Bank, forthwith pay over to the Swing Advance Bank an amount
equal to such Lender's pro rata share of the payment so rescinded or returned
based on the respective amounts paid in respect
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thereof to the Lenders pursuant to the preceding paragraph (d).
ARTICLE III
CONDITIONS OF LENDING
3.1. Conditions Precedent to Initial Loans. The obligation
of each Lender to make its initial Loan is subject to satisfaction of the
conditions precedent that the Administrative Agent shall have received, on the
Closing Date, the following, each dated the Closing Date unless otherwise
indicated, in form and substance satisfactory to the Administrative Agent and
(except for the Notes) in sufficient copies for each Lender:
(a) The Notes to the order of the Lenders, respectively.
(b) A certificate of the Secretary or an Assistant Secretary
of each Loan Party (or, as applicable, of such Loan Party's partners)
certifying (i) the resolutions of its Board of Trustees or Directors, as
appropriate, approving each Loan Document to which it is a party, (ii) all
documents evidencing other necessary trust, partnership or corporate action, as
appropriate, and required governmental and third party approvals, licenses and
consents with respect to each Loan Document to which it is a party and the
transactions contemplated thereby, (iii) a copy of its and each of its
Subsidiaries' and Eligible Joint Ventures' declaration of trust, certificates
of incorporation, by-laws, partnership agreements and certificates of
partnership as appropriate, as of the Closing Date, and (iv) the names and true
signatures of each of its officers who has been authorized to execute and
deliver any Loan Document or other document required hereunder to be executed
and delivered by or on behalf of such Person.
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(c) A copy of the declaration of trust or articles or
certificate of incorporation or partnership agreement or certificate of
partnership, as appropriate, of each Loan Party and of each of its Subsidiaries
and Eligible Joint Ventures which is not a Loan Party certified as of a recent
date by the Secretary of State of the state of formation of such Loan Party or
Subsidiary, together with certificates of such official attesting to the good
standing of each such Loan Party, Subsidiary and Eligible Joint Ventures.
(d) Favorable opinion(s) of counsel to the Loan Parties, in
substantially the form(s) of Exhibit D, and as to such other matters as any
Lender through the Administrative Agent may reasonably request.
(e) A certificate of the chief financial officer of the
Borrower, stating that the Borrower is Solvent after giving effect to the
initial Loans, the application of the proceeds thereof in accordance with
Section 6.10 and the payment of all estimated legal, accounting and other fees
related hereto and thereto.
(f) Evidence that the insurance required by Section 6.4 is in
full force and effect.
(g) Such additional documents, information and materials as
any Lender, through the Administrative Agent, may reasonably request.
(h) A certificate, signed by a Responsible Officer of the
Borrower, stating that the following statements are true and correct on the
Closing Date:
(i) The statements set forth in Section 3.3 are
true after giving effect to the Loans being made on the Closing Date.
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(ii) All costs and accrued and unpaid fees and
expenses (including, without limitation, legal fees and expenses)
required to be paid to the Lenders on or before the Closing Date,
including, without limitation, those referred to in Sections 2.4 and
10.4, to the extent then due and payable, have been paid.
(iii) All necessary governmental and third party
approvals required to be obtained by any Loan Party in connection with
the transactions contemplated hereby have been obtained and remain in
effect, and all applicable waiting periods have expired without any
action being taken by any competent authority which restrains,
prevents, impedes, delays or imposes materially adverse conditions
upon any of the transactions contemplated hereby.
(iv) There exists no judgment, order, injunction
or other restraint prohibiting or imposing materially adverse
conditions upon any of the transactions contemplated hereby.
(v) There exists no claim, action, suit,
investigation or proceeding (including, without limitation,
shareholder or derivative litigation) pending or, to the knowledge of
the Borrower, threatened in any court or before any arbitrator or
Governmental Authority which relates to the Loan Documents or the
financing hereunder or which, if adversely determined, would have a
Material Adverse Effect.
(vi) There has been no Material Adverse Change
since June 30, 1996 in the corporate, capital or legal structure of
the Borrower or any of its Subsidiaries without the consent of the
Administrative Agent.
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(vii) The Borrower's Tangible Net Worth is not less
than $500,000,000.
(i) A Borrowing Base Certificate, executed by a Responsible
Officer of the Borrower, satisfactory to the Administrative Agent, together
with copies of the Eligible Hotel Documents in respect of each of the Eligible
Hotels shown listed thereon.
(j) A Compliance Certificate, executed by the Chief Financial
Officer of the Borrower substantially in the form attached as Exhibit G hereto.
(k) The Subsidiary Guaranties, duly executed by each
Guarantor.
3.2. Additional Conditions Precedent to Initial Loans. The
obligation of each Lender to make its initial Loan is subject to the further
conditions precedent that:
(a) No Lender in its sole judgment exercised reasonably shall
have determined (i) that there has been any Material Adverse Change since June
30, 1996 or (ii) that there has occurred any adverse change which such Lender
deems material in the financial markets generally, since June 30, 1996 or (iii)
that there is any claim, action, suit, investigation, litigation or proceeding
(including, without limitation, shareholder or derivative litigation) pending
or threatened in any court or before any arbitrator or Governmental Authority
which, if adversely determined, would have a Material Adverse Effect; and
nothing shall have occurred since June 30, 1996 which, in the judgment of any
Lender, has had a Material Adverse Effect.
(b) Each Lender shall be satisfied, in its sole judgment,
exercised reasonably, with the corporate, capital, legal and management
structure of the Borrower and its Subsidiaries, and shall be satisfied, in its
sole judgment
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exercised reasonably, with the nature and status of all Contractual
Obligations, securities, labor, tax, ERISA, employee benefit,
environmental, health and safety matters, in each case, involving or
affecting the Borrower or any of its Subsidiaries.
(c) The $100MM Facility shall have been converted to a
secured term loan in an aggregate principal sum not exceeding $85,000,000 with
a final maturity of September 30, 2000 and all material documentation
evidencing such conversion, in form and substance satisfactory to the
Administrative Agent, shall have been received by the Administrative Agent.
3.3. Conditions Precedent to Each Loan. The obligation of
each Lender to make any Loan (including the Loan being made by such Lender on
the Closing Date) shall be subject to the further conditions precedent that:
(a) The following statements shall be true on the date of
such Loan, before and after giving effect thereto and to the application of the
proceeds therefrom (and the acceptance by the Borrower of the proceeds of such
Loan shall constitute a representation and warranty by the Borrower that on the
date of such Loan such statements are true):
(i) The representations and warranties of the
Borrower contained in Article IV and of each Loan Party in the other
Loan Documents are correct on and as of such date as though made on
and as of such date (it being understood and agreed that any
representation or warranty which by its terms is made on a specified
date shall be required to be true and correct only as of such
specified date); and
(ii) No Default or Event of Default exists or will result
from the Loans being made on such date.
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(b) The making of the Loans on such date does not violate any
Requirement of Law and is not enjoined, temporarily, preliminarily or
permanently.
(c) The Administrative Agent shall have received a Borrowing
Base Certificate, executed by a Responsible Officer of the Borrower,
satisfactory to the Administrative Agent, together with (to the extent not
previously delivered) copies of the Eligible Hotel Documents in respect of each
of the Eligible Hotels shown listed thereon.
(d) The Administrative Agent shall have received such
additional documents, information and materials as any Lender, through the
Administrative Agent, may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Administrative Agent to enter
into this Agreement, the Borrower represents and warrants to the Lenders and
the Administrative Agent that:
4.1. Existence; Compliance with Law. Each Loan Party and
each of its Subsidiaries and Eligible Joint Ventures (i) is a real estate
investment trust or a corporation, limited liability company or limited
partnership, as specified herein, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation; (ii) is duly
qualified as a foreign corporation, limited liability company or limited
partnership and in good standing under the laws of each jurisdiction where such
qualification is necessary, except for failures which in the aggregate have no
Material Adverse Effect; (iii) has all requisite corporate, limited liability
company or partnership power and authority and the legal
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right to own, pledge and mortgage its properties, to lease (as lessee) the
properties that it leases as lessee, to lease or sublease (as lessor) the
properties it owns and/or leases (as lessee) and to conduct its business as now
or currently proposed to be conducted; (iv) is in compliance with its
declaration of trust or certificate of or formation and by- laws, regulations
or partnership agreement, as appropriate; (v) is in compliance with all other
applicable Requirements of Law except for such non-compliances as in the
aggregate have no Material Adverse Effect; and (vi) has all necessary licenses,
permits, consents or approvals from or by, has made all necessary filings with,
and has given all necessary notices to, each Governmental Authority having
jurisdiction, to the extent required for such ownership, leasing and conduct,
except for licenses, permits, consents or approvals which can be obtained by
the taking of ministerial action to secure the grant or transfer thereof or
failures which in the aggregate have no Material Adverse Effect.
4.2. Power; Authorization; Enforceable Obligations. (a) The
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party and the consummation of the transactions related to the
financing contemplated hereby:
(i) are within such Loan Party's corporate, partnership
or trust powers, as appropriate;
(ii) have been duly authorized by all necessary
corporate, partnership or trust action, as appropriate, including,
without limitation, the consent of stockholders and general and/or
limited partners where required;
(iii) do not and will not (A) contravene any Loan Party's
or any of its Subsidiaries' or Eligible Joint Ventures' respective
declaration of trust,
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certificate of incorporation or formation or by-laws, regulations,
partnership agreement or other comparable governing documents, (B)
violate any other applicable Requirement of Law (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System), or any order or decree of any Governmental
Authority or arbitrator, (C) conflict with or result in the breach of,
or constitute a default under, or result in or permit the termination
or acceleration of, any material Contractual Obligation of any Loan
Party or any of its Subsidiaries or Eligible Joint Ventures, or (D)
result in the creation or imposition of any Lien upon any of the
property of any Loan Party or any of its Subsidiaries or Eligible
Joint Ventures; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those which
have been obtained or made and copies of which have been or will be
delivered to the Administrative Agent pursuant to Section 3.1, and
each of which on the Closing Date will be in full force and effect.
(b) This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to Section 3.1, duly
executed and delivered by each Loan Party party thereto. This Agreement is,
and the other Loan Documents will be, when delivered hereunder, the legal,
valid and binding obligation of each Loan Party party thereto, enforceable
against it in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting the
enforcement of creditor's rights and remedies generally.
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4.3. Taxes. All federal, state, local and foreign tax
returns, reports and statements (collectively, the "Tax Returns") required to be
filed by the Borrower or any of its Tax Affiliates have been filed with the
appropriate governmental agencies in all jurisdictions in which such Tax
Returns, are required to be filed, all such Tax Returns are true and correct in
all material respects, and all taxes, charges and other impositions due and
payable have been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for non-payment thereof,
except where contested in good faith and by appropriate proceedings if (i)
adequate reserves therefor have been established on the books of the Borrower or
such Tax Affiliate in conformity with GAAP and (ii) all such non-payments in the
aggregate have no Material Adverse Effect. Proper and accurate amounts have
been withheld by the Borrower and each of its respective Tax Affiliates from
their respective employees for all periods in full and complete compliance with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities. None of the Borrower or any of
its Tax Affiliates has (i) executed or filed with the IRS any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any charges; (ii) agreed or been requested to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise; or (iii) any obligation under any written tax sharing
agreement.
4.4. Full Disclosure. No written statement prepared or
furnished by or on behalf of any Loan Party or any of its Affiliates in
connection with any of the Loan Documents or the consummation of the
transactions contemplated thereby, and no financial statement delivered
pursuant hereto or thereto, contains any untrue statement of a material fact or
omits to state a material fact necessary
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to make the statements contained herein or therein not misleading.
4.5. Financial Matters. (a) The consolidated balance sheet
of the Borrower and its Subsidiaries as at December 31, 1995, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, certified by
Coopers & Lybrand, L.L.P. and the consolidated balance sheets of the Borrower
and its Subsidiaries as at June 30, 1996, and the related consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the six months then ended, certified by the chief financial
officer of the Borrower, copies of which have been furnished to each Lender,
fairly present, subject, in the case of said balance sheets as at June 30,
1996, and said statements of income, retained earnings and cash flows for the
six months then ended, to year-end audit adjustments, the consolidated
financial condition of the Borrower and its Subsidiaries as at such dates and
the consolidated results of the operations of the Borrower and its Subsidiaries
for the period ended on such dates, all in conformity with GAAP.
(b) Since June 30, 1996, there has been no Material Adverse
Change and there have been no events or developments that in the aggregate have
had a Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries had at
June 30, 1996 any material obligation, contingent liability or liability for
taxes, long-term leases or unusual forward or long-term commitment which is not
reflected in the balance sheet at such date referred to in subsection (a) above
or in the notes thereto.
(d) The Projections that have been delivered to each Lender,
were prepared on the basis of the assumptions
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expressed therein, which assumptions the Borrower believed to be reasonable
based on the information available to the Borrower at the time so furnished and
on the Closing Date.
(e) The Borrower is, and on a consolidated basis the Borrower
and its Subsidiaries are, Solvent.
4.6. Litigation. There are no pending or, to the knowledge
of the Borrower, threatened actions, investigations or proceedings affecting
the Borrower, any of its Subsidiaries or Eligible Joint Ventures, or (to the
best knowledge of the Borrower) any Operating Lessee or any of their respective
properties or revenues before any court, Governmental Authority or arbitrator,
other than those that in the aggregate, if adversely determined, would have no
Material Adverse Effect. The performance of any action by (a) any Loan Party
required or contemplated by any of the Loan Documents or (b) any Operator
required or contemplated by any Operating Lease or Management Agreement is not,
to the best knowledge of the Borrower, restrained or enjoined (either
temporarily, preliminarily or permanently), and, to the best knowledge of the
Borrower, no material adverse condition has been imposed by any Governmental
Authority or arbitrator upon any of the foregoing transactions contemplated by
the aforementioned documents.
4.7. Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Borrowing will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
4.8. Ownership of Borrower and DJONT; Subsidiaries. (a) The
authorized capital stock of FelCor consists of (i) 50,000,000 shares of common
stock, $.01 par
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value per share, of which 23,495,057 shares are issued and outstanding as of
the date hereof, and (ii) 10,000,000 shares of preferred stock, $.01 par value
per share, of which 6,050,000 shares, designated as $1.95 Series A Cumulative
Convertible Preferred Stock, $25.00 per share liquidation preference, are
outstanding as of the date hereof. All of the outstanding capital stock of
FelCor has been validly issued, is fully paid and non-assessable. At least
200,000 shares of FelCor common stock, and/or units of limited partner interest
in FelCor LP that are redeemable for common stock of FelCor is owned, in the
aggregate, beneficially by Hervey A. Feldman and Thomas J. Corcoran, Jr., free
and clear of all Liens.
(b) FelCor is the sole general partner of FelCor LP and, as
of the date hereof, owns beneficially and of record at least 88.2% of the
partnership interests of FelCor LP free and clear of all Liens.
(c) As of the date hereof, the membership interests of
DJONT consist of 50% voting Class A membership interests, 50% non-voting Class
B membership interests, and non-voting Class C and Class D membership
interests, each of which provides for limited distributions based solely upon
the operations of a single Hotel. Hervey A. Feldman and Thomas J. Corcoran,
Jr. each own, beneficially, 25% of the voting Class A membership interests in
DJONT, free and clear of all Liens.
(d) Set forth on Schedule 4.8 hereto is a complete and
accurate list showing, as of the date hereof, all Subsidiaries and
Unconsolidated Entities of the Borrower and, as to each such Subsidiary and
Unconsolidated Entity, the jurisdiction of its formation and the percentage of
the outstanding Stock of each class owned (directly or indirectly) by the
Borrower. No Stock of any Subsidiary or Unconsolidated Entity of the Borrower
is subject to any outstanding option, warrant, right of conversion or purchase
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or any similar right. All of the outstanding capital Stock of each such
Subsidiary and Unconsolidated Entity owned by the Borrower has been validly
issued, is fully paid and (except for partnership interests) non-assessable,
and all outstanding capital Stock of its Subsidiaries and Unconsolidated
Entities owned by the Borrower is free and clear of all Liens. Neither the
Borrower nor any such Subsidiary or Unconsolidated Entity is a party to, or has
knowledge of, any agreement restricting the transfer or hypothecation of any
shares of Stock of any such Subsidiary or Unconsolidated Entity, other than
those imposed by Requirements of Law, or the Loan Documents.
4.9. ERISA. (a) There are no Multiemployer Plans.
(b) Each Plan and any related trust intended to qualify under
Code Section 401 or 501 has been determined by the IRS to be so qualified and
to the best knowledge of the Borrower nothing has occurred which would cause
the loss of such qualification.
(c) None of the Borrower, any of its Subsidiaries or any
ERISA Affiliate, with respect to any Pension Plan, has failed to make any
contribution or pay any amount due as required by Section 412 of the Code or
Section 302 of ERISA or the terms of any such plan, and all required
contributions and benefits have been paid in accordance with the provisions of
each such plan.
(d) There are no pending or, to the knowledge of the
Borrower, threatened claims, actions or proceedings (other than claims for
benefits in the normal course), relating to any Plan other than those that in
the aggregate, if adversely determined, would have no Material Adverse Effect.
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(e) No Pension Plan has any unfunded accrued benefit
liabilities, as determined by using reasonable actuarial assumptions utilized
by such plan's actuary for funding purposes. Within the last five years none
of the Borrower, any of its Subsidiaries or any ERISA Affiliate has caused a
Pension Plan with any such liabilities to be transferred outside of its
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA).
(f) No Plan provides for continuing health, disability,
accident or death benefits or coverage for any participant or his or her
beneficiary after such participant's termination of employment (except as may
be required by Section 4980B of the Code and at the sole expense of the
participant or the beneficiary) which would result in the aggregate under all
Plans in a liability in an amount which would have a Material Adverse Effect.
(g) None of the assets of any of the Loan Parties are subject
to Title I of ERISA because they consist of "plan assets" within the meaning of
DOL Regulation Section 2510.3-101 by reason of an equity investment in any of
the Loan Parties.
4.10. Indebtedness. Except as disclosed on Schedule 4.10, as
of the date hereof, none of the Borrower or any of its Subsidiaries or
Unconsolidated Entities has any Indebtedness.
4.11. Restricted Payments. From and after the Closing Date,
the Borrower has not declared or made any Restricted Payments (other than those
permitted pursuant to Section 7.4).
4.12. No Burdensome Restrictions; No Defaults. (a) No Loan
Party nor any of its Subsidiaries or Eligible Joint Ventures (i) is a party to
any Contractual Obligation the compliance with which would have a Material
Adverse
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Effect or the performance of which by any thereof, either unconditionally or
upon the happening of an event, will result in the creation of a Lien on the
property or assets of any such Loan Party or its Subsidiaries, or (ii) is
subject to any charter or corporate restriction which has a Material Adverse
Effect.
(b) No Loan Party or Subsidiary or Eligible Joint Venture of
any Loan Party is in default under or with respect to any Contractual
Obligation owed by it and, to the knowledge of the Borrower, no other party is
in default under or with respect to any Contractual Obligation owed to any Loan
Party or to any Subsidiary or Eligible Joint Venture of a Loan Party, other
than those defaults which in the aggregate have no Material Adverse Effect.
(c) No Event of Default or Default has occurred and is
continuing.
(d) There is no Requirement of Law the compliance with which
by any Loan Party would have a Material Adverse Effect.
(e) As of the date hereof, no Subsidiary or Eligible Joint
Venture of the Borrower is subject to any Contractual Obligation (other than as
set forth in the governing documents thereof) restricting or limiting its
ability to transfer its assets to the Borrower or to declare or make any
dividend payment or other distribution on account of any shares of any class of
its Stock or its ability to purchase, redeem, or otherwise acquire for value or
make any payment in respect of any such shares or any shareholder rights.
4.13. Investments. Except as disclosed on Schedule 4.8 or
4.13, the Borrower and its Subsidiaries considered as a single enterprise, is
not engaged in any
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joint venture or partnership with any other Person nor does it maintain any
Investment, as of the date hereof.
4.14. Government Regulation. Neither the Borrower nor any of
its Subsidiaries or Eligible Joint Ventures is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act
of 1940, as amended, or subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or any
other federal or state statute or regulation such that its ability to incur
Indebtedness is limited, or its ability to consummate the transactions
contemplated hereby or by any other Loan Document, or the exercise by the
Administrative Agent or any Lender of rights and remedies hereunder or
thereunder, is impaired. The making of the Loans by the Lenders, the
application of the proceeds and repayment thereof by the Borrower and the
consummation of the transactions contemplated by the Loan Documents will not
cause the Borrower or any of its Subsidiaries or Eligible Joint Ventures to
violate any provision of any of the foregoing or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder.
4.15. Insurance. All policies of insurance of any kind or
nature owned by or issued to or for the benefit of any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures, or issued in respect of any real
property owned or leased by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures including, without limitation, policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers' compensation and employee health and welfare insurance, are
in full force and effect and are of a nature and provide such coverage as is
sufficient and as is customarily carried by companies of the size and character
of such Person. No Loan Party or any of its Subsidiaries or
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Eligible Joint Ventures has been refused insurance for which it applied or had
any policy of insurance terminated (other than at its request).
4.16. Labor Matters. (a) There are no strikes, work
stoppages, slowdowns or lockouts pending or threatened against or involving the
Borrower or its Subsidiaries or their respective Hotels, other than those which
in the aggregate have no Material Adverse Effect.
(b) There are no unfair labor practice charges, arbitrations
or grievances pending against or involving, or to the knowledge of the Borrower
threatened against or involving the Borrower or its Subsidiaries or Eligible
Joint Ventures, other than those which, in the aggregate, if resolved adversely
to the Borrower or such Subsidiary or Eligible Joint Venture, would have no
Material Adverse Effect.
(c) As of the Closing Date, neither the Borrower nor any of
its Subsidiaries or Eligible Joint Ventures are parties to, or have any
obligations under, any collective bargaining agreement.
(d) There is no organizing activity involving the Borrower or
any of its Subsidiaries or Eligible Joint Ventures pending or, to the
Borrower's knowledge, threatened by any labor union or group of employees,
other than those which in the aggregate have no Material Adverse Effect. There
are no representation proceedings pending or, to the Borrower's knowledge,
threatened with the National Labor Relations Board, and no labor organization
or group of employees of the Borrower or any of its Subsidiaries or Eligible
Joint Ventures have made a pending demand for recognition, other than those
which in the aggregate have no Material Adverse Effect.
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4.17. Force Majeure. Neither the business nor the properties
of any Loan Party or any of their respective Subsidiaries or Eligible Joint
Ventures are currently suffering from the effects of any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), other than those which in the aggregate
have no Material Adverse Effect.
4.18. Use of Proceeds. The proceeds of the Loans will be
used by the Borrower solely as follows: (a) subject to the limitations set
forth herein, to fund any direct or indirect investment in existing Hotels, in
Hotels and/or interests in Hotels which are to be acquired by the Borrower or
any of its Subsidiaries, and for the payment of related transaction costs, fees
and expenses, and (b) as to the sum of up to $25,000,000 only, for general
corporate or working capital purposes.
4.19. Environmental Protection. Except as disclosed on
Schedule 4.19 (and the Borrower represents and warrants to the Lenders and the
Administrative Agent that the matters disclosed in the reports identified on
Schedule 4.19 would not reasonably be expected to have a Material Adverse
Effect):
(a) to the best knowledge of Borrower and its
Subsidiaries, all real property leased or owned by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures is free from contamination by any
Hazardous Material which could reasonably be expected to subject the Borrower
or any of its Subsidiaries to Environmental Liabilities and Costs of $1,000,000
or more;
(b) the operations of the Borrower and each of its
Subsidiaries or Eligible Joint Ventures, and the operations at any real
property leased or owned by the
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Borrower or any of its Subsidiaries or Eligible Joint Ventures are in material
compliance in all respects with all applicable Environmental Laws;
(c) neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures have liabilities with respect to Hazardous Materials
and, to the best knowledge of the Borrower and its Subsidiaries, no facts or
circumstances exist which could give rise to liabilities with respect to
Hazardous Materials which could reasonably be expected to subject the Borrower
or any of its Subsidiaries to Environmental Liabilities and Costs of $1,000,000
or more;
(d) (i) the Borrower and its Subsidiaries and Eligible Joint
Ventures and all real property owned or leased by the Borrower or its
Subsidiaries and Eligible Joint Ventures have all Environmental Permits
necessary for the operations at such real property and are in material
compliance with such Environmental Permits, (ii) there are no Legal Proceedings
pending nor, to the best knowledge of the Borrower and its Subsidiaries,
threatened to revoke, or alleging the violation of, such Environmental Permits,
and (iii) neither the Borrower nor any of its Subsidiaries or Eligible Joint
Ventures or to the best knowledge of the Borrower and its Subsidiaries the
Operators have received any notice from any source to the effect that there is
lacking any Environmental Permit required in connection with the current use or
operation of any property leased or owned by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures;
(e) neither the Borrower's nor any of its Subsidiaries'
or Eligible Joint Ventures' current facilities and operations, nor, to the best
knowledge of the Borrower and its Subsidiaries, any Operator, any predecessor
of the Borrower or any of its Subsidiaries or Eligible Joint Ventures, nor any
of the Borrower's or its Subsidiaries' or
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Eligible Joint Ventures' past facilities and operations, nor to the best
knowledge of the Borrower and its Subsidiaries, any owner of premises leased or
operated by the Borrower and its Subsidiaries and Eligible Joint Ventures, are
subject to any outstanding written Order or Contract, including Environmental
Liens, with any Governmental Authority or other Person, or to any federal,
state, local, foreign or territorial investigation respecting (i) Environmental
Laws, (ii) Remedial Action, (iii) any Environmental Claim, or (iv) the Release
or threatened Release of any Hazardous Material;
(f) neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures or, to the best knowledge of the Borrower and its
Subsidiaries, Operators are subject to any pending Legal Proceeding alleging
the violation of any Environmental Law with respect to a Hotel nor, to the best
knowledge of the Borrower and its Subsidiaries, are any such proceedings
threatened;
(g) neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures nor, to the best knowledge of the Borrower and its
Subsidiaries, any Operators or predecessor of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures, nor to the best knowledge of the
Borrower and its Subsidiaries any owner of premises leased by the Borrower or
any of its Subsidiaries or Eligible Joint Ventures, have filed any notice under
federal, state or local, territorial or foreign law indicating past or present
treatment, storage, or disposal of or reporting a Release of Hazardous Material
into the environment;
(h) none of the operations of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or, to the best knowledge of the
Borrower and its Subsidiaries, of any Operators or predecessor of the Borrower
or any of its Subsidiaries or Eligible Joint Ventures, or, to the best
knowledge of the Borrower and its Subsidiaries, of any owner
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of premises leased by the Borrower or any of its Subsidiaries or Eligible Joint
Ventures, involve or previously involved the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R.
Part 261.3 (in effect as of the date of this Agreement) or any state, local,
territorial or foreign equivalent; and
(i) there is not now, nor to the best knowledge of the
Borrower and its Subsidiaries, has there been in the past, on, in or under any
real property leased or owned by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures, to the best knowledge of the Borrower and its
Subsidiaries or any of their predecessors (i) any underground storage tanks or
surface tanks, dikes or impoundments (other than for surface water), (ii) any
friable asbestos-containing materials, (iii) any polychlorinated biphenyls, or
(iv) any radioactive substances other than naturally-occurring radioactive
material.
4.20. Contractual Obligations Concerning Assets. As of the
date hereof, neither the Borrower nor any of its Subsidiaries owns or holds, or
is obligated under or a party to, any option, right of first refusal, or other
contractual right to purchase or acquire, or any Contractual Obligation to
effect an Asset Sale of, any Hotel owned or leased by the Borrower or any of
its Subsidiaries, except those that in the aggregate would not have a Material
Adverse Effect whether or not exercised.
4.21. Intellectual Property. The Loan Parties and its
Subsidiaries and Eligible Joint Ventures or the Operating Lessee own or license
or otherwise have the right to use all material licenses, permits, patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, copyright applications, franchises, authorizations and other
intellectual property
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rights that are necessary for the operations of their respective businesses,
without infringement upon or conflict with the rights of any other Person with
respect thereto, including, without limitation, the Licenses and all trade
names associated with any private label brands of any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures. To the best knowledge of the
Borrower, no material slogan or other advertising device, product, process,
method, substance, part or component, or other material now employed, or now
contemplated to be employed, by any Loan Party or any of their respective
Subsidiaries or Eligible Joint Ventures or the Operating Lessee infringes upon
or conflicts with any rights owned by any other Person, and no claim or
litigation regarding any of the foregoing is pending or threatened.
4.22. Title. (a) Each Loan Party and their respective
Subsidiaries and Eligible Joint Ventures own good and marketable fee simple
absolute title to all of the Real Estate purported to be owned by them, which
Real Estate is at the date hereof described in Schedule 4.22(a), and good and
marketable title to, or valid leasehold interests in, all other properties and
assets purported to be leased by any Loan Party or any of their respective
Subsidiaries or Eligible Joint Ventures, including, without limitation, valid
leasehold interests pursuant to the Leases and all property reflected in the
balance sheet referred to in Section 4.5(a). Each Loan Party and its
respective Subsidiaries or Eligible Joint Ventures received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and have duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect such Loan Party's and their respective Subsidiaries' or Eligible Joint
Ventures' right, title and interest in and to all such property except for such
documents or actions the failure to obtain or accomplish which would not have a
Material Adverse Effect.
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(b) All material real property leased at the date hereof by
the Borrower or any of their respective Subsidiaries or Eligible Joint Ventures
is listed on Schedule 4.22(b). Each of such leases is valid and enforceable in
accordance with its terms and is in full force and effect. The Borrower has
delivered to the Administrative Agent true and complete copies of each of such
leases and all documents affecting the rights or obligations of the Borrower or
any of its Subsidiaries or Eligible Joint Ventures which is a party thereto,
including, without limitation, any non- disturbance and recognition agreements,
subordination agreements, attornment agreements and agreements regarding the
term or rental of any of the leases. None of the Borrower or any of its
respective Subsidiaries or Eligible Joint Ventures nor, to the knowledge of the
Borrower, any other party to any such lease is in default of its obligations
thereunder or has delivered or received any notice of default under any such
lease, nor has any event occurred which, with the giving of notice, the passage
of time or both, would constitute a default under any such lease, except for
defaults which in the aggregate have no Material Adverse Effect.
(c) All components of all improvements included within the
Hotels owned or leased, as lessee, by any Loan Party or Eligible Joint Venture
(collectively, "Improvements"), including, without limitation, the roofs and
structural elements thereof and the heating, ventilation, air conditioning,
plumbing, electrical, mechanical, sewer, waste water, storm water, paving and
parking equipment, systems and facilities included therein, are in good working
order and repair, subject to such exceptions which are not reasonably likely to
have, in the aggregate, a Material Adverse Effect. All water, gas, electrical,
steam, compressed air, telecommunication, sanitary and storm sewage lines and
systems and other similar systems serving the Hotels owned or leased by any
Loan Party or any of their respective Subsidiaries or
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Eligible Joint Ventures are installed and operating and are sufficient to
enable the real property owned or leased by any Loan Party and their respective
Subsidiaries or Eligible Joint Ventures to continue to be used and operated in
the manner currently being used and operated, and no Loan Party or any of its
Subsidiaries or Eligible Joint Ventures has any knowledge of any factor or
condition that reasonably could be expected to result in the termination or
material impairment of the furnishing thereof. No Improvement or portion
thereof is dependent for its access, operation or utility on any land, building
or other Improvement not included in the real property owned or leased by any
Loan Party or any of its Subsidiaries or Eligible Joint Ventures other than for
access provided pursuant to a recorded easement or other right of way
establishing the right of such access.
(d) All Permits required to have been issued or appropriate
to enable all real property owned or leased by any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures to be lawfully occupied and used for
all of the purposes for which they are currently occupied and used have been
lawfully issued and are in full force and effect, other than those which in the
aggregate have no Material Adverse Effect.
(e) No Loan Party or any of its Subsidiaries or Eligible
Joint Ventures has received any notice, or has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any real property
owned or leased by any Loan Party or any of its Subsidiaries or Eligible Joint
Ventures or any part thereof, or any proposed termination or impairment of any
parking at any such owned or leased real property or of any sale or other
disposition of any real property owned or leased by any Loan Party or any of
its Subsidiaries or Eligible Joint Ventures or any part thereof in lieu of
condemnation, which in the
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aggregate, are reasonably likely to have a Material Adverse Effect.
(f) Except for events or conditions not reasonably likely to
have, in the aggregate, a Material Adverse Effect, (i) no portion of any real
property owned or leased by any Loan Party or any of its Subsidiaries or
Eligible Joint Ventures has suffered any material damage by fire or other
casualty loss which has not heretofore been completely repaired and restored to
its condition prior to such casualty, and (ii) no portion of any real property
owned or leased by any Loan Party or any of its Subsidiaries or Eligible Joint
Ventures is located in a special flood hazard area as designated by any Federal
Governmental Authorities.
4.23. Status as REIT. The Borrower is organized in
conformity with the requirements for qualification as an equity-oriented real
estate investment trust under the Code. Borrower has met all of the
requirements for qualification as an equity-oriented real estate investment
trust under the Code for its Fiscal Year ended December 31, 1995. The Borrower
is in a position to qualify for its current Fiscal Year as a real estate
investment trust under the Code and its proposed methods of operation will
enable it to so qualify.
4.24. Operator: Compliance with Law. To the best knowledge
of the Borrower and its Subsidiaries, each Operator (i) has full power and
authority and the legal right to own, lease (or sublease), manage and operate
(as applicable) the properties it operates and to conduct the business in which
it is currently engaged with respect to any real property owned or leased by
the Borrower or any of its Subsidiaries or Eligible Joint Ventures (ii) is duly
qualified or licensed and is in good standing under the laws of each
jurisdiction where its ownership, lease (or sublease), management or operation
of any real property
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owned or leased by the Borrower or any of its Subsidiaries or Eligible Joint
Ventures requires such qualification, and (iii) is in compliance with all
Requirements of Law applicable to the real property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures, or applicable
to the operation or management thereof except to the extent that the failure to
comply therewith is not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
4.25. Operating Leases, Licenses and Management Agreement.
(a) Each of the Hotels (i) is leased to an Operating Lessee under an Operating
Lease (ii) is the subject of a License, and (iii) is managed and operated for
the Operating Lessee pursuant to a Management Agreement.
(b) Each of the Operating Leases, Licenses and Management
Agreements in respect of the Hotels (i) is in full force and effect, (ii) is a
legally valid and binding obligation of each of the parties thereto, subject to
such exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect, and (iii) has not been modified, amended or
supplemented in any material or adverse way. Neither the Borrower nor any of
its Subsidiaries or Eligible Joint Ventures has collected any rents becoming
due under any Operating Lease more than 30 days in advance. All rent and other
sums and charges payable by any Operating Lessee under each Operating Lease to
which it is a party are current, no notice of default or termination under any
such Operating Lease is outstanding, no termination event or condition or
uncured default on the part of the Operating Lessee exists under any Operating
Lease, and no event of default has occurred which, with the giving of notice or
the lapse of time or both, would constitute such a default or termination event
or condition or uncured default on the part of the Borrower or its Subsidiaries
or Eligible Joint Ventures or the Operators (as the case may be), subject to
such exceptions which are not reasonably likely to have, in
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the aggregate, a Material Adverse Effect. As to all of the Leases, Borrower
and each of its Subsidiaries or Eligible Joint Ventures has performed all of
its repair and maintenance obligations (if any) and, to the best knowledge and
belief of Borrower, each Operating Lessee under each Operating Lease to which
it is a party has performed all of its repair and maintenance obligations,
subject to such exceptions which are not reasonably likely to have, in the
aggregate, a Material Adverse Effect.
4.26. FF&E Reserves. An FF&E Reserve has been established in
respect of each of the Hotels and the Borrower or its Subsidiaries or Eligible
Joint Ventures have made any contributions to such FF&E Reserve as required by
the terms of the Operating Lease and/or the Management Agreement relating
thereto.
ARTICLE V
FINANCIAL COVENANTS
As long as any of the Obligations or Commitments remain
outstanding, unless the requisite Lenders specified in Section 10.1 otherwise
consent in writing, the Borrower agrees with the Lenders and the Administrative
Agent that:
5.1. Gross Interest Expense Coverage. The Borrower shall
maintain at the end of each Fiscal Quarter, commencing with the Fiscal Quarter
ending on September 30, 1996, a ratio of (a) Adjusted EBITDA to (b) Gross
Interest Expense, in each case determined on the basis of the four (4) Fiscal
Quarters ending on the date of determination, of not less than 3:1.
5.2. Debt Service Coverage Ratio. The Borrower shall
maintain at the end of each Fiscal Quarter commencing with the Fiscal Quarter
ending on September 30, 1996, a
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ratio of (a) Adjusted EBITDA to (b) Debt Service, in each case determined on
the basis of the four (4) Fiscal Quarters ending on the date of determination,
of not less than 2.5:1.0.
5.3. Maintenance of Tangible Net Worth. The Borrower shall
maintain during each Fiscal Quarter a Tangible Net Worth of not less than the
Minimum Tangible Net Worth.
5.4 Limitations on Total Indebtedness. The Borrower shall
not, during each Fiscal Quarter on a consolidated basis, permit the Total
Indebtedness (including, without limitation, the Obligations and all
Capitalized Lease Obligations) of the Borrower for borrowed money to exceed the
lesser of:
(i) the sum of (A) for Hotels owned for four (4) Fiscal
Quarters or more, Adjusted NOI on a consolidated
basis from such Hotels for the preceding four (4)
Fiscal Quarters multiplied by four (4), and (B) for
Hotels owned for less than four (4) Fiscal Quarters
(including newly acquired Hotels and Hotels to be
immediately acquired using the proceeds from any
Indebtedness), 40% of the Borrower's Investment in
such Hotels; or
(ii) 40% of the Borrower's Investment in Hotels (including
newly acquired Hotels and Hotels to be immediately
acquired using the proceeds from any Indebtedness);
provided that, in no event shall the Borrower permit the Total Indebtedness of
the Borrower to exceed the limitation on indebtedness set forth in Article IX
of the Charter of FelCor as in effect on the date hereof.
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5.5 Limitations on Total Secured Indebtedness. The Borrower
shall not, during each Fiscal Quarter on a consolidated basis, permit the Total
Secured Indebtedness (including, without limitation, secured Obligations and
Capitalized Lease Obligations) of the Borrower, to exceed the lesser of:
(i) the sum of (A) for Hotels owned for four (4) Fiscal
Quarters or more, Adjusted NOI on a consolidated
basis from such Hotels for the preceding four (4)
Fiscal Quarters multiplied by 1.5, and (B) for Hotels
owned for less than four (4) Fiscal Quarters
(including newly acquired Hotels and Hotels to be
immediately acquired using the proceeds from any
Indebtedness), 15% of the Borrower's Investment in
such Hotels; or
(ii) 15% of the Borrower's Investment in Hotels (including
newly acquired Hotels and Hotels to be immediately
acquired using the proceeds from any Indebtedness).
ARTICLE VI
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, unless the Majority Lenders otherwise consent in writing, the
Borrower agrees with the Lenders and the Administrative Agent that:
6.1. Compliance with Laws, Etc. The Borrower shall comply,
and shall cause each of its Subsidiaries and Eligible Joint Ventures to comply,
in all material respects with all Requirements of Law, Contractual Obligations,
commitments, instruments, licenses, permits and franchises,
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including, without limitation, all Permits; provided, however, that the
Borrower shall not be deemed in default of this Section 6.1 if all such
non-compliances in the aggregate have no Material Adverse Effect.
6.2. Conduct of Business. The Borrower shall (a) conduct,
and shall cause each of its Subsidiaries and Eligible Joint Ventures to
conduct, its business in the ordinary course and consistent with past practice;
(b) use, and cause each of its Subsidiaries and Eligible Joint Ventures to use,
its reasonable efforts, in the ordinary course and consistent with past
practice, to (i) preserve its business and the goodwill and business of the
customers, advertisers, suppliers and others having business relations with the
Borrower or any of its Subsidiaries or Eligible Joint Ventures, and (ii) keep
available the services and goodwill of its present employees; (c) preserve, and
cause each of its Subsidiaries and Eligible Joint Ventures to preserve, all
registered patents, trademarks, trade names, copyrights and service marks with
respect to its business; and (d) perform and observe, and cause each of its
Subsidiaries and Eligible Joint Ventures to perform and observe, all the terms,
covenants and conditions required to be performed and observed by it under its
Contractual Obligations (including, without limitation, to pay all rent and
other charges payable under any lease and all debts and other obligations as
the same become due), and do, and cause its Subsidiaries and Eligible Joint
Ventures to do, all things necessary to preserve and to keep unimpaired its
rights under such Contractual Obligations; provided, however, that, in the case
of each of clauses (a) through (d), the Borrower shall not be deemed in default
of this Section 6.2 if all such failures in the aggregate have no Material
Adverse Effect.
6.3. Payment of Taxes, Etc. The Borrower shall pay and
discharge, and shall cause each of its Subsidiaries and Eligible Joint
Ventures, as appropriate, to pay and
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discharge, before the same shall become delinquent, all lawful governmental
claims, taxes, assessments, charges and levies, except where contested in good
faith, by proper proceedings, if adequate reserves therefor have been
established on the books of the Borrower or the appropriate Subsidiary or
Eligible Joint Venture in conformity with GAAP; provided, however, that the
Borrower shall not be deemed in default of this Section 6.3 if all such
non-payments in the aggregate have no Material Adverse Effect.
6.4. Maintenance of Insurance. The Borrower shall maintain,
and shall cause each of its Subsidiaries and Eligible Joint Ventures to
maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks (including, without
limitation, fire, extended coverage, vandalism, malicious mischief, public
liability, product liability, and business interruption) as is usually carried
by companies engaged in similar businesses and owning similar properties in the
same general areas in which the Borrower or such Subsidiary or Eligible Joint
Venture. The Borrower will furnish to the Lenders from time to time such
information as may be requested as to such insurance.
6.5. Preservation of Existence, Etc. The Borrower shall
preserve and maintain, and shall cause each of its Subsidiaries and Eligible
Joint Ventures to preserve and maintain, its corporate or partnership
existence, rights (charter and statutory) and franchises, except as permitted
under Section 7.5.
6.6. Access. The Borrower shall, at any reasonable time and
from time to time, permit the Administrative Agent or any of the Lenders, or
any agents or representatives thereof, at the expense of the Lenders (but such
expense to be reimbursed by the Borrower in the event that any of the following
reveal a material Default by the Borrower), to (a) examine and make copies of
and abstracts
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from the records and books of account of the Borrower and each of its
Subsidiaries and Eligible Joint Ventures, (b) visit the properties of the
Borrower and each of its Subsidiaries and Eligible Joint Ventures, (c) discuss
the affairs, finances and accounts of the Borrower and each of its Subsidiaries
and Eligible Joint Ventures with any of their respective officers or directors,
and (d) communicate directly with the Borrower's independent certified public
accountants.
6.7. Keeping of Books. The Borrower shall keep, and shall
cause each of its Subsidiaries and Eligible Joint Ventures to keep, proper
books of record and account, in which proper entries shall be made of all
financial transactions and the assets and business of the Borrower and each
such Subsidiary or Eligible Joint Venture.
6.8. Maintenance of Properties, Etc. The Borrower shall
maintain and preserve, and shall cause each of its Subsidiaries and Eligible
Joint Ventures to maintain and preserve, (i) all of its properties which are
used or useful or necessary in the conduct of its business in good working
order and condition, and (ii) all rights, permits, licenses, approvals and
privileges (including, without limitation, all Permits) which are used or
useful or necessary in the conduct of its business; provided, however, that the
Borrower shall not be deemed in default of this Section 6.8 if all such
failures in the aggregate have no Material Adverse Effect.
6.9. Performance and Compliance with Other Covenants. The
Borrower shall perform and comply with, and shall cause each of its
Subsidiaries and Eligible Joint Ventures to perform and comply with, each of
the covenants and agreements set forth in each Contractual Obligation to which
it or any of its Subsidiaries or Eligible Joint Ventures is a party; provided,
however, that the Borrower shall not be deemed in default of this Section 6.9
if all
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such failures in the aggregate have no Material Adverse Effect.
6.10. Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 4.18.
6.11. Financial Statements. The Borrower shall furnish to
the Lenders:
(a) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each Fiscal Year,
consolidated balance sheets of the Borrower and its Subsidiaries and DJONT as
of the end of such quarter and consolidated statements of income, retained
earnings and cash flow of the Borrower and its Subsidiaries and DJONT for the
period commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Quarter, all prepared in conformity with GAAP and certified
by the chief financial officer of the Borrower or the chief financial officer
of DJONT, as appropriate, as fairly presenting the financial condition and
results of operations of the Borrower and its Subsidiaries and DJONT at such
date and for such period, together with (i) a certificate of said officer
stating that no Default or Event of Default has occurred and is continuing or,
if a Default or an Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which the Borrower or DJONT, as
appropriate, proposes to take with respect thereto, (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the
Borrower or DJONT, as appropriate, in determining compliance with all financial
covenants contained herein, and (iii) a written discussion and analysis by the
management of the Borrower or DJONT, as appropriate, of the financial
statements furnished in respect of such Fiscal Quarter;
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(b) as soon as available and in any event within 90 days
after the end of each Fiscal Year, consolidated balance sheets of the Borrower
and its Subsidiaries and DJONT as of the end of such year and consolidated
statements of income, retained earnings and cash flow of the Borrower and its
Subsidiaries and DJONT for such Fiscal Year, all prepared in conformity with
GAAP and certified, in the case of such consolidated financial statements, in a
manner reasonably acceptable to the Administrative Agent without qualification
as to the scope of the audit by Coopers & Lybrand or other independent public
accountants of recognized national standing together with (i) a schedule in
form satisfactory to the Administrative Agent of the computations used by the
Borrower in determining, as of the end of such Fiscal Year, the Borrower's or
DJONT's, as appropriate, compliance with all financial covenants contained
herein, and (ii) a written discussion and analysis by the management of the
Borrower or DJONT, as appropriate, of the financial statements furnished in
respect of such Fiscal Year; and
(c) promptly after the same are received by the Borrower, a
copy of each management letter provided to the Borrower by its independent
certified public accountants which refers in whole or in part to any
inadequacy, defect, problem, qualification or other lack of fully satisfactory
accounting controls utilized by the Borrower or any of its Subsidiaries.
(d) within 45 days after the end of each Fiscal Quarter, (i)
a Borrowing Base Certificate as of the end of such Fiscal Quarter, executed by
a Responsible Officer of the Borrower, together with (to the extent not
previously delivered) copies of the Eligible Hotel Documents in respect of each
of the Eligible Hotels shown listed thereon, and (ii) a Compliance Certificate
as of the end of such Fiscal Quarter, executed by the Chief Financial Officer
of the Borrower.
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6.12. Reporting Requirements. The Borrower shall furnish to
the Lenders:
(a) prior to any Asset Sale generating proceeds in excess of
10% of the value of Total Assets of the Borrower, a notice (i) describing the
assets being sold, (ii) stating the estimated Asset Sales proceeds in respect
of such Asset Sale and (iii) accompanied by a Borrowing Base Certificate and a
certificate of the chief financial officer of the Borrower stating that before
and after giving effect to such Asset Sale, the Borrower shall be in compliance
with all of its covenants set forth in the Loan Documents and that no Default
or Event of Default will result from such Asset Sale.
(b) as soon as available and in any event within 90 days
after the end of each Fiscal Year (or earlier if approved earlier by the Board
of Directors of the Borrower), an annual budget of the Borrower and its
Subsidiaries for the succeeding Fiscal Year, displaying on a monthly and
quarterly basis anticipated balance sheets, forecasted Capital Expenditures,
working capital requirements, revenues, net income, cash flow, EBITDA, all on a
consolidated basis;
(c) promptly and in any event within 30 days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, a written statement of the chief
financial officer or other appropriate officer of the Borrower describing such
ERISA Event or waiver request and the action, if any, which the Borrower, its
Subsidiaries and ERISA Affiliates propose to take with respect thereto and a
copy of any notice filed by or with the PBGC or the IRS pertaining thereto;
(d) promptly and in any event within 10 days after receipt
thereof, a copy of any adverse notice,
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determination letter, ruling or opinion the Borrower, any of its Subsidiaries
or any ERISA Affiliate receives from the PBGC, DOL or IRS with respect to any
Plan, other than those which, in the aggregate, do not have any reasonable
likelihood of resulting in a Material Adverse Change;
(e) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any domestic or foreign Governmental
Authority or arbitrator, affecting the Borrower or any of its Subsidiaries,
except those which in the aggregate, if adversely determined, would have no
Material Adverse Effect;
(f) promptly and in any event within two Business Days after
the Borrower becomes aware of the existence of (i) any Default or Event of
Default, (ii) any breach or non-performance of, or any default under, any
Operating Lease, Management Agreement or any Contractual Obligation which is
material to the business, prospects, operations or financial condition of the
Borrower and its Subsidiaries taken as one enterprise, or (iii) any Material
Adverse Change or any event, development or other circumstance which has any
reasonable likelihood of causing or resulting in a Material Adverse Change,
telephonic or telecopied notice in reasonable detail specifying the nature of
the Default, Event of Default, breach, non-performance, default, event,
development or circumstance, including, without limitation, the anticipated
effect thereof, which notice shall be promptly confirmed in writing within five
days;
(g) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to its security holders generally, and
copies of all reports and registration statements which the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange or the National Association of Securities Dealers,
Inc.;
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(h) promptly upon the request of any Lender, through the
Administrative Agent, copies of all federal tax returns and reports filed by
the Borrower or any of its Subsidiaries in respect of taxes measured by income
(excluding sales, use and like taxes);
(i) promptly and in any event within ten days of the Borrower
or any Subsidiary learning of any of the following, written notice to the
Administrative Agent of any of the following:
(i) the Release or threatened Release of any
Hazardous Material on or from any property owned or leased by the
Borrower of any of its Subsidiaries or Eligible Joint Ventures and any
written order, notice, permit, application or other written
communication or report received by the Borrower, any of its
Subsidiaries or Eligible Joint Ventures in connection with or relating
to any such Release or threatened Release, unless such Release or
threatened Release is not reasonably likely to subject the Borrower or
any of its Subsidiaries to Environmental Liabilities and Costs of
$500,000 or more;
(ii) any notice or claim to the effect that the
Borrower, any of its Subsidiaries or any Eligible Joint Ventures is or
may be liable to any Person as a result of the Release or threatened
Release of any Hazardous Material into the environment;
(iii) receipt by the Borrower, any of its
Subsidiaries or Eligible Joint Ventures or any Operator of
notification that any real or personal property of the Borrower or any
of its Subsidiaries is subject to an Environmental Lien;
(iv) any Remedial Action taken by the Borrower or
any of its Subsidiaries or Eligible Joint
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Ventures or any other Person on their behalf in response to any
Hazardous Material on, under or about any real property owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint
Ventures, unless such Remedial Action is not reasonably likely to
subject the Borrower or any of its Subsidiaries or Eligible Joint
Ventures to Environmental Liabilities and Costs of $500,000 or more;
(v) receipt by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures of any notice of violation of,
or knowledge by the Borrower or any of its Subsidiaries or any
Eligible Joint Ventures that there exists a condition which may result
in a violation by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures of, any Environmental Law, unless such violation is not
reasonably likely to subject the Borrower or any of its Subsidiaries
to Environmental Liabilities and Costs of $500,000 or more;
(vi) any proposed Capital Expenditure by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures
intended or designed to implement any existing or additional Remedial
Action, unless such expenditures are not reasonably likely to exceed
$500,000;
(vii) the commencement of any judicial or
administrative proceeding or investigation alleging a violation of any
Environmental Law; or
(viii) any proposed acquisition of stock, assets or
real property, or any proposed leasing of property by the Borrower, or
any of its Subsidiaries or Eligible Joint Ventures, unless such action
is not reasonably likely to subject the Borrower and its Subsidiaries
to Environmental Liabilities and Costs to the Borrower in excess of
$500,000;
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(j) promptly, such additional financial and other information
respecting the financial or other condition of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or the Operating Lessee or the status
or condition of any real property owned or leased by the Borrower or its
Subsidiaries or Eligible Joint Ventures, or the operation thereof which the
Borrower is entitled to or can otherwise reasonably obtain, as the
Administrative Agent from time to time reasonably requests; and
(k) upon written request by any Lender through the
Administrative Agent, a report providing an update of the status of any
Environmental Claim, Remedial Action or any other issue identified in any
notice or report required pursuant to this Section 6.12.
6.13. Leases and Operating Leases; Management Agreements and
Licenses. (a) The Borrower shall provide the Administrative Agent with a copy
of each Qualified Lease and each Operating Lease relating to an Eligible Hotel.
The Borrower shall, and shall cause each of its Subsidiaries and Eligible Joint
Ventures to, (i) comply in all material respects with all of their respective
obligations under all of their respective Leases and Operating Leases now or
hereafter held respectively by them with respect to real property, including,
without limitation, the Leases set forth in Schedule 4.22(b); (ii) not modify,
amend, cancel, extend or otherwise change in any materially adverse manner any
of the terms, covenants or conditions of any such Leases or Operating Leases;
(iii) not assign any Leases or sublet any portion of the premises if such
assignment or sublet would have a Material Adverse Effect; (iv) provide the
Administrative Agent with a copy of each notice of default under any Lease or
Operating Lease received by the Borrower or any Subsidiary or Eligible Joint
Venture of the Borrower immediately upon receipt thereof and deliver to the
Administrative Agent a copy of each notice of default sent by the Borrower or
any Subsidiary or Eligible Joint Venture
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of the Borrower under any Lease or Operating Lease simultaneously with its
delivery of such notice under such Lease or Operating Lease except to the
extent that such defaults, in the aggregate, would not have a Material Adverse
Effect; (v) notify the Administrative Agent, not later than 30 days prior to
the date of the expiration of the term of any Qualified Lease, of the
Borrower's or any Subsidiary or Eligible Joint Venture of the Borrower's
intention either to renew or to not renew any such Qualified Lease, and, if the
Borrower or any Subsidiary or Eligible Joint Venture of the Borrower intends to
renew such Qualified Lease, the terms and conditions of such renewal; and (vi)
maintain each Operating Lease in full force and effect and enforce the
obligations of the Operating Lessee thereunder, in a timely manner except to
the extent that the failure to do so, in the aggregate, would not have a
Material Adverse Effect.
(b) The Borrower shall take all actions and do all things
within its power or control necessary or required to cause each Operating
Lessee to (i) keep, observe, comply with and perform all of the terms,
provisions, covenants and undertakings on its part required by each Operating
Lease, each License, each sublease and Management Agreement relating to any
Hotel, and (ii) to enforce the provisions of each License and each Management
Agreement, if the failure to comply or enforce such agreements would be
reasonably likely, in the aggregate, to have a Material Adverse Effect.
6.14. Intentionally Omitted.
6.15. Employee Plans. For each Plan and any related trust
hereafter adopted or maintained by a Loan Party or any of its ERISA Affiliates
intended to qualify under Code Section 125, 401 or 501, the Borrower shall (i)
seek, and cause such of its ERISA Affiliates to seek, and receive determination
letters from the IRS to the effect
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that such plan is so qualified; and (ii) cause such plan to be so qualified.
6.16. Intentionally Omitted.
6.17. Fiscal Year. The Borrower shall maintain as its Fiscal
Year the twelve month period ending on December 31 of each year.
6.18. Environmental Matters. (a) The Borrower shall comply
and shall cause each of its Subsidiaries and Eligible Joint Ventures and each
property owned or leased by such parties to comply in all material respects
with all applicable Environmental Laws currently or hereafter in effect.
(b) If Administrative Agent or Lenders at any time have a
reasonable basis to believe that there may be a material violation of any
Environmental Law by the Borrower or any of its Subsidiaries and Eligible Joint
Ventures or any Operator related to any real property owned or leased by the
Borrower or any of its Subsidiaries and Eligible Joint Ventures, or real
property adjacent to such real property, then the Borrower agrees, upon request
from the Administrative Agent, to provide the Administrative Agent, at the
Borrower's expense, with such reports, certificates, engineering studies or
other written material or data as the Administrative Agent or Lenders may
reasonably require so as to reasonably satisfy the Administrative Agent and
Lenders that the Borrower or such Subsidiary, Eligible Joint Venture or real
property owned or leased by them is in material compliance with all applicable
Environmental Laws. Furthermore, Administrative Agent shall have the right to
inspect during normal business hours any real property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures if at any time
Administrative Agent or Lenders have a reasonable basis to believe that there
may be such a material violation of Environmental Law.
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(c) The Borrower shall, and shall cause each of its
Subsidiaries and Eligible Joint Ventures and each Operating Lessee to, take
such Remedial Action or other action as required by Environmental Laws, as any
Governmental Authority requires, except to the extent contested in good faith
and by proper proceedings, or as is appropriate and consistent with good
business practice.
6.19. REIT Requirements. The Borrower shall operate its
business at all times so as to satisfy all requirements necessary to qualify as
an equity-oriented real estate investment trust under Sections 856 through 860
of the Code. The Borrower will maintain adequate records so as to comply with
all record-keeping requirements relating to the qualification of the Borrower
as an equity-oriented real estate investment trust as required by the Code and
applicable regulations of the Department of the Treasury promulgated thereunder
and will properly prepare and timely file with the IRS all returns and reports
required thereby. The Borrower will request from its shareholders all
shareholder information required by the Code and applicable regulations of the
Department of Treasury promulgated thereunder.
6.20. Maintenance of FF&E Reserves. The Borrower shall cause
to be maintained the FF&E Reserves pursuant to the terms of the Operating
Leases.
6.21. Hotel Requirements. The Borrower shall cause:
(a) at least 80% of the "keys" to be maintained and operated
as Suite Hotels;
(b) at least 75% of the "suites" to be maintained and
operated under "Embassy Suites" Licenses or to be in the process of conversion
to "Embassy Suites" Hotels.
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(c) at least 70% of the "suites" to be managed by Promus.
6.22. Further Assurances. At any time upon the request of
the Administrative Agent, the Borrower will, promptly and at its expense,
execute, acknowledge and deliver such further documents and do such other acts
and things as the Administrative Agent may reasonably request to evidence the
Loans made hereunder and interest thereon in accordance with the terms of this
Agreement;
6.23. Borrowing Base Determination/Requirements. (a)
Subject to compliance with the terms and conditions of Section 3.1, the
Administrative Agent has accepted the Hotels listed on Schedule 6.23 as
Eligible Hotels for the purposes of the Borrowing Base as of the Closing Date,
provided that the parties acknowledge and agree that (i) the Embassy Suites
Hotel located at Los Angeles Airport, CA is subject to a mortgage in favor of
FelCor LP but the Administrative Agent has agreed, as a one time waiver only,
to accept such Hotel as an Eligible Hotel provided that such Hotel shall cease
to be an Eligible Hotel, inter alia, in the event that FelCor LP assigns its
mortgage to any other Person, and (ii) the Administrative Agent's acceptance of
the Hotels listed on Schedule 6.23 is based on outdated title insurance
policies for such Hotels. The Borrower covenants and agrees to deliver to the
Administrative Agent within 45 days of the Closing Date, title updates with
respect to each of the Hotels listed on Schedule 6.23 and, to the extent that
such title updates reveal that any of such Hotels are not Unencumbered, such
Hotels shall cease to qualify as Eligible Hotels.
(b) If the Borrower desires that the Administrative Agent
accept an additional Hotel as an Eligible Hotel for the purposes of the
Borrowing Base, the Borrower shall so notify the Administrative Agent in
writing. The Administrative Agent's acceptance of such Hotel in the Borrowing
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Base shall not be unreasonably withheld, conditioned or delayed, provided such
Hotel shall meet the requirements for Eligible Hotels specified herein and
unless and until the Borrower shall have delivered to the Administrative Agent
the following, in form and substance reasonably satisfactory to the
Administrative Agent:
(i) A description of such Hotel, such description to
include the age, location and number of rooms or suites of
such Hotel;
(ii) Details of the Borrower's Investment in such Hotel
and, if such Hotel has been owned for more than four (4)
Fiscal Quarters or more, details of the Adjusted NOI of such
Hotel for the prior four (4) Fiscal Quarters;
(iii) A copy of the most recent ALTA Owner's Policy of
Title Insurance (or commitment to issue such a policy to the
Loan Party (or Eligible Joint Venture) owning or to own such
Hotel) relating to such Hotel showing the identity of the fee
titleholder thereto and all matters of record as of its date;
(iv) Copies of each of the Operating Lease, Management
Agreement and License relating to such Hotel;
(v) Copies of all engineering, mechanical,
structural and maintenance studies performed by third party
consultants with respect to such Hotel;
(vi) A "Phase I" environmental assessment of such Hotel
prepared by an environmental engineering firm acceptable to
the Administrative Agent, and any additional environmental
studies or
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assessments available to the Borrower performed with respect
to such Hotel;
(vii) If such Hotel is owned pursuant to a Qualified
Lease, a copy of such Lease together with all and any
amendments thereto or modifications thereof;
(viii) A Borrowing Base Certificate setting forth on
a pro forma basis the Available Credit assuming that such
Hotel is accepted as an Eligible Hotel for the purposes of the
Borrowing Base; and
(ix) Such other information as the Administrative
Agent may reasonably request in order to evaluate the Hotel.
(c) The Borrower shall promptly notify the Administrative
Agent in writing in the event that at any time the Borrower or any of its
Subsidiaries receives or otherwise gains knowledge that (i) any Hotel included
in a prior Borrowing Base Certificate as an Eligible Hotel, ceases, for any
reason whatsoever, to be an Eligible Hotel, or (ii) that the Aggregate Value of
the Eligible Hotel is less than 90% of the Aggregate Value reflected in the
most recent Borrowing Base Certificate delivered pursuant hereto, or (iii) the
Loans outstanding at such time exceed the Available Credit at such time as a
result of any decrease in the Borrowing Base, and the amount of such excess.
(d) The Administrative Agent, at the expense of the Lenders,
which expense shall not exceed $10,000 without the consent of the Majority
Lenders (but such expense to be reimbursed by the Borrower in the event that a
Hotel fails to meet requirements for an Eligible Hotel in any material respect)
may make physical and other verifications of any Hotels included as Eligible
Hotels in any reasonable manner
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and through any medium that the Administrative Agent considers advisable, and
the Borrower shall furnish all such assistance and information as the
Administrative Agent may require in connection therewith.
(e) Notwithstanding anything to the contrary set forth
herein, a Hotel shall cease to be an Eligible Hotel if it shall cease to comply
with the requirements therefor set forth herein.
ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or Commitments remain
outstanding, without the written consent of the Administrative Agent, the
Borrower agrees with the Lenders and the Administrative Agent that:
7.1. Restrictions on Creation of Subsidiaries. The Borrower
shall not create or acquire any direct or indirect Subsidiary after the Closing
Date unless, concurrently with the creation or acquisition thereof, such
Subsidiary executes and delivers to the Administrative Agent a Subsidiary
Guaranty.
7.2. Intentionally Omitted.
7.3. Lease Obligations. (a) The Borrower shall not create
or suffer to exist, or permit any of its Subsidiaries or Eligible Joint
Ventures to create or suffer to exist, any obligations as lessee for the rental
or hire of real or personal property of any kind under other leases or
agreements to lease entered into otherwise than in the ordinary course of
business.
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(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to, become or remain liable as lessee
or guarantor or other surety with respect to any lease, whether an operating
lease or a Capitalized Lease, of any property (whether real or personal or
mixed), whether now owned or hereafter acquired, which (i) the Borrower or any
of its Subsidiaries or Eligible Joint Ventures has sold or transferred or is to
sell or transfer to any other Person, or (ii) the Borrower or any of its
Subsidiaries or Eligible Joint Ventures intends to use for substantially the
same purposes as any other property which has been or is to be sold or
transferred by that entity to any other Person in connection with such lease.
7.4. Restricted Payments. The Borrower, unless otherwise
required in order to maintain FelCor's status as a real estate investment trust
in accordance with the written advice of independent counsel to the Borrower,
the Borrower shall not declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account or in respect of any of its Stock or Stock Equivalents (collectively,
"Restricted Payments"); provided, that, notwithstanding the foregoing, during
any period of four consecutive Fiscal Quarters, (i) the Borrower may make
Restricted Payments in an aggregate amount not to exceed 85% of the
consolidated Adjusted Funds From Operations of the Borrower for such period and
(ii) the aggregate amount of Restricted Payments made shall not exceed 100% of
Free Cash Flow of the Borrower for such period.
7.5. Mergers, Stock Issuances, Asset Sales, Etc. (a) The
Borrower shall not sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets or properties, and shall not, and shall not
permit any of its Subsidiaries or Eligible Joint Ventures to, (i) merge with
any Person, or (ii) consolidate with any Person, unless the Borrower or its
Subsidiary or Eligible Joint Venture is the surviving or resulting entity and,
following such merger
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or consolidation, no Default or Event of Default shall have occurred.
(b) The Borrower shall not and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to effect, enter into, consummate or
suffer to exist any Asset Sale(s) of any Hotel(s) generating proceeds
aggregating more than 25% of the value of the Hotels owned by the Borrower, its
Subsidiaries and Eligible Joint Ventures as at the Closing Date and shown
listed on Schedules 4.22(a) and (b).
(c) The Borrower shall not sell or otherwise dispose of, or
factor at maturity or collection, or permit any of its Subsidiaries or Eligible
Joint Ventures to sell or otherwise dispose of, or factor at maturity or
collection, any accounts receivables.
7.6 Restrictions on Construction/Budget Hotels. The Borrower
shall not, and shall not permit any of its Subsidiaries or Eligible Joint
Ventures to (a) engage in the construction of new hotels (provided that nothing
herein shall prohibit expansions to existing Hotels), (b) make investments in
any Non-Suite Hotels that will not be maintained as first class full service
hotels, (c) make Investments in any budget hotels, or (d) enter into any
commitments or agreements to purchase any Hotels under, or to be under,
original construction (provided that nothing herein shall limit commitments or
agreements for expansions to existing Hotels), pursuant to which (i) such
Persons' obligations, in the aggregate, exceed 15% of the Total Assets of the
Borrower as of the end of the Fiscal Quarter immediately preceding the date of
any such commitment or agreement, or (ii) any such Person is or may be liable
for, or otherwise assumes, any risks relating to the development or
construction (but not operation) of such Hotel, whether by way of providing any
guaranties of completion, payment of any construction loans, payment of
construction cost overruns, or otherwise.
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7.7. Change in Nature of Business or in Capital Structure.
(a) The Borrower shall not make, and shall not permit any of its Subsidiaries
or Eligible Joint Ventures to make, any material change in the nature or
conduct of its business as carried on at the date hereof.
(b) The Borrower shall not make, and shall not permit any of
its Subsidiaries or Eligible Joint Ventures to make, any change in its capital
structure (including, without limitation, in the terms of its outstanding
Stock) or amend its declaration of trust, certificate of incorporation or
by-laws or other equivalent documents other than for changes or amendments
which in the aggregate have no Material Adverse Effect.
7.8. Modification of Material Agreements. The Borrower shall
not, and shall not permit any of its Subsidiaries or Eligible Joint Ventures
to, alter, amend, modify, rescind, terminate, supplement or waive any of their
respective rights under, or fail to comply in all material respects with, any
of its material Contractual Obligations unless approved by the Administrative
Agent, which approval shall not be unreasonably withheld, conditioned or
delayed; provided, however, that, with respect to any such failure to comply
with any Contractual Obligation, the Borrower shall not be deemed in default of
this Section 7.8 if all such failures in the aggregate would have no Material
Adverse Effect; and provided, further, that in the event of any breach or event
of default by a Person other than the Borrower or any of its Subsidiaries or
Eligible Joint Ventures, the Borrower shall promptly notify the Administrative
Agent of any such breach or event of default and take all such action as may be
reasonably necessary in order to endeavor to avoid having such breach or event
of default have a Material Adverse Effect.
7.9. Accounting Changes. The Borrower shall not make, nor
permit any of its Subsidiaries to make, any change
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in accounting treatment and reporting practices or tax reporting treatment,
except as required by GAAP or law and disclosed to the Lenders and the
Administrative Agent.
7.10. Transactions with Affiliates. The Borrower shall not,
and shall not permit any of its Subsidiaries or Eligible Joint Ventures, to
enter into any transaction or series of related transactions, including,
without limitation, any Asset Sale or the rendering of any service, with any
Affiliate (other than among the Borrower and its wholly owned Subsidiaries)
unless (a) no Default or Event of Default would occur as a result thereof, and
(b) such transaction is (i) in the ordinary course of the Borrower's or such
Subsidiary's or Eligible Joint Venture's business, and (ii) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary or
Eligible Joint Venture, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
7.11. Adverse or Speculative Transactions. The Borrower
shall not and shall not permit any of its Subsidiaries or Eligible Joint
Ventures to engage in any transaction involving contracts for commodity options
or futures contracts other than Interest Rate Contracts.
7.12. Environmental Matters. (a) The Borrower shall not,
and shall not permit any of its Subsidiaries or Eligible Joint Ventures or any
Operating Lessee, or, to the extent reasonably practicable, any other Person to
dispose of any Hazardous Material by placing it in or on the ground or waters
of any property owned or leased by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures, or, to the extent practicable,
authorize any other Person to, dispose or to arrange for the disposal of any
Hazardous Material on behalf of the Borrower or any of its Subsidiaries or
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Eligible Joint Ventures except in material compliance with all applicable
Environmental Laws currently and hereinafter in effect.
7.13. Intentionally Omitted.
7.14. Management Continuity. The Borrower acknowledges that
the Lenders have made their determination to enter into this Agreement and the
transactions contemplated herein on the basis of reliance upon the experience,
expertise and reputations of Messrs. Hervey A. Feldman and Thomas J. Corcoran,
Jr. as experts in the ownership and asset management of Suite Hotels, and the
Borrower will not suffer or permit its business to be without the active
management of at least one such Person, provided that, in the event of death,
incapacitation or dismissal of both Messrs. Hervey A. Feldman and Thomas J.
Corcoran, Jr. a replacement management team shall be appointed for the
Borrower, such team to be (i) proposed by the Borrower within 120 days of the
event referred to above, and (ii) approved by the Majority Lenders in their
sole and absolute discretion.
7.15. ERISA Plan Assets. The Borrower shall not and shall
not permit any of its Subsidiaries to have any of their assets become subject
to Title I of ERISA because they constitute "plan assets" within the meaning of
the DOL Regulation Section 2510.3-101 and by reason of an investment in the
Borrower or any Subsidiary.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default. Each of the following events shall
be an Event of Default:
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(a) The Borrower shall fail to pay any principal (including,
without limitation, mandatory prepayments of principal) of, or
interest on, any Loan, any fee, any other amount due hereunder or
under the other Loan Documents or other of the Obligations when the
same becomes due and payable; or
(b) Any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its
officers) in connection with any Loan Document shall prove to have
been incorrect in any material respect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement or in any
other Loan Document if such failure shall remain unremedied for thirty
days after the earlier of the date on which (A) a Responsible Officer
of the Borrower becomes aware of such failure or (B) written notice
thereof shall have been given to the Borrower by the Administrative
Agent or any Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Recourse
Indebtedness of such Loan Party or Subsidiary having a principal
amount of $10,000,000 or more (excluding Indebtedness evidenced by the
Notes and any Non-Recourse Indebtedness), when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or any other event shall occur or
condition shall exist under any agreement or instrument relating to
any such Indebtedness, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall become or be declared to
be due and payable, or required to be prepaid (other than by a
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regularly scheduled required prepayment), or any Loan Party or any of
its Subsidiaries shall be required to repurchase or offer to
repurchase such Indebtedness, prior to the stated maturity thereof; or
(e) The Borrower or any of its Significant Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or any proceeding
shall be instituted by or against the Borrower or any of its
Significant Subsidiaries seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a custodian, receiver, trustee or
other similar official for it or for any substantial part of its
property and, in the case of any such proceedings instituted against
the Borrower or any of its Significant Subsidiaries (but not
instituted by it), either such proceedings shall remain undismissed or
unstayed for a period of 60 days or any of the actions sought in such
proceedings shall occur; or the Borrower or any of its Significant
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess
of $10,000,000 to the extent not fully covered by insurance shall be
rendered against any Loan Party or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or (ii) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment
or
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order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) An ERISA Event shall occur which, in the reasonable
determination of the Majority Lenders, has a reasonable possibility of
a liability, deficiency or waiver request of the Borrower or any ERISA
Affiliate, whether or not assessed, exceeding $1,000,000; or
(h) The Borrower or any of its Subsidiaries shall have
entered into any consent or settlement decree or agreement or similar
arrangement with an Governmental Authority or any judgment, order,
decree or similar action shall have been entered against the Borrower
or any of its Subsidiaries, in each case based on or arising from the
violation of or pursuant to any Environmental Law, or the generation,
storage, transportation, treatment, disposal or Release of any
Hazardous Material and, in connection with all the foregoing, the
Borrower and its Subsidiaries are likely to incur Environmental
Liabilities and Costs in excess of $1,000,000; or
(i) There shall occur a Material Adverse Change or an event
which is reasonably likely to have a Material Adverse Effect; or
(j) FelCor shall cease, for any reason, to maintain its
status as an equity-oriented real estate investment trust under
Sections 856 through 860 of the Code; or
(k) FelCor shall cease at any time to be the sole general
partner of FelCor LP; or
(l) Hervey A. Feldman and Thomas J. Corcoran, Jr. (or (i)
members of their respective families, (ii) entities controlled by
them, or (iii) trusts for the
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benefit of any of the foregoing) shall cease at any time to hold
beneficially, in the aggregate, at least 200,000 of the issued and
outstanding common shares of FelCor and/or units of limited partner
interests of FelCor LP redeemable for such number of shares of stock
(adjusted for any division, reclassification or stock dividend in
respect of common shares); or
(m) Hervey A. Feldman or Thomas J. Corcoran, Jr. shall sell,
transfer or encumber (otherwise than to (i) members of their
respective families, (ii) entities controlled by them, or (iii) trusts
for the benefit of any of the foregoing) their voting Class A
membership interest in DJONT; or
(n) Hervey A. Feldman and Thomas J. Corcoran, Jr. shall cease
to be active in the management of the Borrower or, in the event of
death, in-capacitation or dismissal of both such Persons either (i)
the Borrower shall fail to propose a replacement senior management
team, or (ii) the Majority Lenders shall not approve any proposed
replacement senior management team, in each case pursuant to and in
accordance with Section 7.14 hereof; or
(o) Any provision of any Subsidiary Guaranty after delivery
thereof under Section 3.1 shall for any reason cease to be valid and
binding on any Significant Subsidiary party thereto, or any
Significant Subsidiary Party shall so state in writing.
8.2. Remedies. (a) If there shall occur and be continuing
any Event of Default, the Administrative Agent (i) shall at the request, or may
with the consent, of the Majority Lenders by notice to the Borrower, declare
the obligation of each Lender to make Loans to be terminated, whereupon the
same shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority
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Lenders by notice to the Borrower, declare the Loans, all interest thereon and
all other amounts and Obligations payable under this Agreement to be forthwith
due and payable, whereupon the Notes, all such interest and all such amounts
and Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of the Event of Default specified in subparagraph 8.1(e) above, (A)
the obligation of each Lender to make Loans shall automatically be terminated
and (B) the Loans, all such interest and all such amounts and Obligations shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. In addition to the remedies set forth above, the Administrative
Agent may exercise any remedies provided by applicable law.
(b) If the Administrative Agent exercises any rights or
remedies pursuant to subparagraph 8.2(a), the Administrative Agent shall not,
without the consent of the Majority Lenders, rescind the exercise of said
rights or remedies.
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1. Authorization and Action. (a) Each Lender hereby
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents as are delegated to the Administrative Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental thereto.
Without limitation of the foregoing, each Lender hereby authorizes the
Administrative Agent to execute and deliver, and to perform its obligations
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under, each of the Loan Documents to which the Administrative Agent is a party,
and to exercise all rights, powers and remedies that the Administrative Agent
may have under such Loan Documents.
(b) As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action which the Administrative Agent in good faith believes exposes it to
personal liability or is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender prompt notice of (a) each
notice and, (b) to the extent the Administrative Agent grants any consents,
approvals, disapprovals or waivers to the Borrower pursuant to the directions
of the Majority Lenders or all of the Lenders as required hereunder, notice of
such consent, approval, disapproval or waiver, given to it by, or by it to, any
Loan Party pursuant to the terms of this Agreement or the other Loan Documents.
9.2. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent, nor any of its Affiliates or any of the respective
directors, officers, agents or employees of the Administrative Agent or any
such Affiliate shall be liable for any action taken or omitted to be taken by
it, him, her or them under or in connection with this Agreement or the other
Loan Documents, except for its, his, her or their own gross negligence or
wilful misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent (i) may treat the payee of any Note as the holder thereof
until such note has been assigned in accord-
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ance with Section 10.7; (ii) may rely on the Register to the extent set forth
in Section 10.7(c); (iii) may consult with legal counsel (including, without
limitation, counsel to the Borrower or any other Loan Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iv) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents; (v) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any of the other Loan
Documents on the part of the Borrower or any other Loan Party or to inspect the
property (including, without limitation, the books and records) of the Borrower
or any other Loan Party; (vi) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (vii) shall
incur no liability under or in respect of this Agreement or any of the other
Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable, telex or facsimile
transmission) believed by it to be genuine and signed or sent by the proper
party or parties.
9.3. Chase and Affiliates. With respect to its Commitment,
the Loans made by it and each Note issued to it, Chase shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Administrative Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Chase in its
individual capacity. Chase and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in
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any kind of business with, the Borrower or any other Loan Party or any of their
respective Subsidiaries and any Person who may do business with or own
securities of the Borrower or any other Loan Party or any of their respective
Subsidiaries, all as if Chase were not the Administrative Agent and without any
duty to account therefor to the Lenders.
9.4. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Article IV
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and other
Loan Documents.
9.5. Indemnification. The Lenders agree to indemnify the
Administrative Agent and its Affiliates, and their respective directors,
officers, employees, agents and advisors (to the extent not reimbursed by the
Borrower or other Loan Parties), ratably according to the respective principal
amounts of the Notes then held by each of them (or if no Notes are at the time
outstanding, ratably according to the respective amounts of the aggregate of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements (including, without limitation, fees and disbursements of legal
counsel) of any kind or nature whatsoever which may be imposed on, incurred by,
or asserted against, the Administrative Agent in any way relating to or arising
out of this Agreement or the other Loan Documents or any action taken or
omitted by the Administrative Agent under this Agreement or the other Loan
Docu-
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ments; provided, however, that no Lender 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 such Affiliate's gross negligence or wilful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Administrative
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including, without limitation, fees and disbursements of legal counsel)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of its rights or responsibilities under, this Agreement or
the other Loan Documents, to the extent that the Administrative Agent is not
reimbursed for such expenses by the Borrower or another Loan Party.
9.6. Successor Agent. The Administrative Agent may resign at
any time by giving written notice thereof to the Lenders and the Borrower and
may be removed by the Super Majority Lenders in the event that the
Administrative Agent commits a willful breach of, or is grossly negligent in
the performance of, its material obligations hereunder. Furthermore, in the
event that at any time the Administrative Agent assigns its entire interest as
a Lender hereunder to an Eligible Assignee as permitted by Section 10.7 hereof,
which Eligible Assignee is not an Affiliate of the Administrative Agent, then
the Administrative Agent shall resign as Administrative Agent. Upon any such
resignation or removal (which shall be effective upon such date as a successor
Agent accepts its appointment), the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Lenders, and shall have accepted such appointment, within 30
days after the retiring Administrative Agent's giving of notice of resignation
or the Super Majority Lenders' removal of the retiring
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Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State
thereof, having a combined capital and surplus of at least $50,000,000. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Agent, such successor Administrative Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
ARTICLE X
MISCELLANEOUS
10.1. Amendments, Etc. (a) No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders, and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided that, subject to Sections 10.1(b) and (c) below, the
Administrative Agent shall have the right to make non-material waivers of
non-economic provisions of this Agreement or consent to non- material
departures therefrom. The parties hereto agree that any non-material waiver of
any provision of this Agreement or any other Loan Document shall be effective
upon
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the execution by the party so charged of a written agreement to such effect.
(b) Notwithstanding anything set forth in subparagraph (a)
above, no amendment, waiver or consent shall, unless in writing and signed by
all the Lenders do any of the following: (i) waive any of the conditions
specified in Article III except as otherwise provided therein; (ii) increase
the Commitments of the Lenders or subject the Lenders to any additional
obligations; (iii) reduce the principal of, or interest on, the Loans or any
fees or other amounts payable hereunder; (iv) waive or postpone any date fixed
for any payment of principal of, or interest on, the Loans or any fees or other
amounts payable hereunder; (v) change the percentage of the Commitments, the
aggregate unpaid principal amount of the Loans, or the number of Lenders which
shall be required for the Lenders or any of them to take any action hereunder;
(vi) waive any of the financial covenants specified in Sections 5.1, 5.2 or
5.4; (vii) change the definitions of Available Credit, Borrowing Base or
Aggregate Value (provided that the foregoing shall not include changes in any
defined terms used in such definitions), (viii) release any Loan Party from its
obligations under any Note or any Subsidiary Guaranty, or (ix) amend this
Section 10.1; and provided, further, that no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Lenders required above to take such action, affect the rights or duties of
the Administrative Agent under this Agreement or the other Loan Documents.
(c) Notwithstanding anything set forth in subparagraph (a)
above, no amendment, waiver or consent shall, unless in writing and signed by
the Super Majority Lenders do any of the following: (i) waive any of the
covenants specified in Sections 5.3 or 5.5, (ii) change the definitions of
Eligible Hotels, Eligible Joint Venture or Qualified Lease (provided that the
foregoing shall not
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include changes in any defined terms used in such definitions), (iii) waive
payment of any default rate interest pursuant to Section 2.9(b), or (iv) remove
the Administrative Agent for a willful breach of, or gross negligence in the
performance of, its material obligations hereunder pursuant to Section 9.6.
(d) Each Lender shall reply promptly, but in any event within
ten (10) Business Days of receipt by such Lender of a request for consent,
approval, disapproval or waiver, from the Administrative Agent (the "Lender
Reply Period"). Unless a Lender shall give written notice to the
Administrative Agent that it objects to consenting, approving, disapproving or
waiving any matter as requested by the Administrative Agent (together with a
written explanation of the reasons behind such objection) within the Lender
Reply Period, such Lender shall be deemed to have consented, approved,
disapproved or waived such matters as specified in the Administrative Agent's
request.
10.2. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including, without limitation,
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand, if to the Borrower, at its
address at 545 East John Carpenter Freeway, Suite 1300, Irving, Texas 75062
(telecopy number: 972-444-4949) (telephone number: 972-444-4900), Attention:
Chief Financial Officer, with a copy to Attention: General Counsel; if to any
Lender, at its Domestic Lending Office specified opposite its name on Schedule
II; and if to the Administrative Agent, at its address at 380 Madison Avenue,
10th Floor, New York, New York 10017 (telecopy number: 212-622-3395) (telephone
number: 212-622-3275), Attention Denise Durham Williams; or, as to the Borrower
or the Administrative Agent, at such other address as shall be designated by
such party in a written notice to the other parties and, as to each other
party, at such other address as shall be desig-
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nated by such party in a written notice to the Borrower and the Administrative
Agent. All such notices and communications shall, when mailed, telegraphed,
telexed, telecopied, cabled or delivered, be effective when deposited in the
mails, delivered to the telegraph company, confirmed by telex answerback,
telecopied with confirmation of receipt, delivered to the cable company or
delivered by hand to the addressee or its agent, respectively, except that
notices and communications to the Administrative Agent pursuant to Article II
or IX shall not be effective until received by the Administrative Agent.
10.3. No Waiver; Remedies. No failure on the part of any
Lender or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder or under any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
10.4. Costs; Expenses; Indemnities. (a) The Borrower agrees
to pay on demand (i) all costs and expenses of the Administrative Agent and its
respective Affiliates in connection with the preparation, execution, delivery,
administration, syndication, modification and amendment of this Agreement, each
of the other Loan Documents and each of the other documents to be delivered
hereunder and thereunder, including, without limitation, the fees and
out-of-pocket expenses of counsel, accountants, appraisers, consultants or
industry experts retained by the Administrative Agent with respect thereto and,
as to the Administrative Agent, with respect to advising it as to its rights
and responsibilities under this Agreement and the other Loan Documents, and
(ii) all costs and expenses of the Administrative Agent or any of the Lenders
(including, without limitation, the fees and out-of-pocket expenses of counsel,
accountants, appraisers, consultants or industry experts retained by the
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Administrative Agent or any Lender) in connection with the restructuring or
enforcement (whether through negotiation, legal proceedings or otherwise) of
this Agreement and the other Loan Documents. Notwithstanding the foregoing,
the Borrower's liability to pay the fees and out-of-pocket expenses of counsel
to Chase in connection with the preparation, execution and delivery of the Loan
Documents shall be limited to payment of a sum not to exceed $175,000.
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender and their respective Affiliates, and the
directors, officers, employees, agents, attorneys, consultants and advisors of
or to any of the foregoing (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article III) (each of the foregoing being an
"Indemnitee") from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, fees and
disbursements of counsel to any such Indemnitee and experts, engineers and
consultants and the costs of investigation and feasibility studies) which may
be imposed on, incurred by or asserted against any such Indemnitee in
connection with or arising out of any investigation, litigation or proceeding,
whether or not any such Indemnitee is a party thereto, whether direct,
indirect, or consequential and whether based on any federal, state or local law
or other statutory regulation, securities or commercial law or regulation, or
under common law or in equity, or on contract, tort or otherwise, in any manner
relating to or arising out of or based upon or attributable to this Agreement,
any other Loan Document, any document delivered hereunder or thereunder, any
Obligation, or any act, event or transaction related or attendant to any
thereof, including, without limitation, (i) arising from any misrepresentation
or breach of warranty under Section 4.18 or any Environmental Claim or any
Environmental Lien or any Remedial
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Action arising out of or based upon anything relating to real property owned or
leased by the Borrower or any of its Subsidiaries (collectively, the
"Indemnified Matters"); provided, however, that the Borrower shall not have any
obligation under this Section 10.4(b) to an Indemnitee with respect to any
Indemnified Matter caused by or resulting from the gross negligence or willful
misconduct of that Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order.
(c) If any Lender receives any payment of principal of, or is
subject to a conversion of, any Eurodollar Rate Loan other than on the last day
of an Interest Period relating to such Loan, as a result of any payment or
conversion made by the Borrower or acceleration of the maturity of the Notes
pursuant to Section 8.2 or for any other reason, the Borrower shall, upon
demand by such Lender (with a copy of such demand to the Administrative Agent),
to the extent not previously paid to such Lender pursuant to any other
provision hereof, pay to the Administrative Agent for the account of such
Lender all amounts required to compensate such Lender for any additional
losses, costs or expenses which it may reasonably incur as a result of such
payment or conversion, including, without limitation, any loss (including,
without limitation, loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Loan.
(d) The Borrower shall indemnify the Administrative Agent and
the Lenders for, and hold the Administrative Agent and the Lenders harmless
from and against, any and all claims for brokerage commissions, fees and other
compensation made against the Administrative Agent and the Lenders for any
broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Loan Party or any of its Subsidiaries
in connection with the transactions contemplated by this Agreement.
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(e) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including,
without limitation, pursuant to this Section 10.4) or any other Loan Document
shall (i) survive payment of the Obligations and (ii) inure to the benefit of
any Person who was at any time an Indemnitee under this Agreement or any other
Loan Document.
10.5. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower against any and all
of the Obligations now or hereafter existing whether or not such Lender shall
have made any demand under this Agreement or any Note or any other Loan
Document and although such Obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
under this Section are in addition to the other rights and remedies (including,
without limitation, other rights of set-off) which such Lender may have.
10.6. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Lender that
such Lender has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Administrative Agent and each Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lenders.
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10.7. Assignments and Participations. (a) Each Lender may
sell, transfer, negotiate or assign to one or more other Lenders or Eligible
Assignees all or a portion of its Commitments, the Loans owing to it and the
Notes held by it and a commensurate portion of its rights and obligations
hereunder and under the other Loan Documents; provided, however, that (i) the
aggregate amount of the Commitments and Loans being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than the assignor's
entire interest, except (x) with the consent of the Borrower and the
Administrative Agent, or (y) during the continuance of an Event of Default, or
(z) a Lender may assign a portion of its Commitments and Loans to another
existing Lender or Lenders only, provided that the aggregate amount of the
Commitments and Loans retained by the assignor shall in no event be less than
$10,000,000, and (ii) each assignee hereunder shall also be an Eligible
Assignee. The parties to each assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording, an Assignment and
Acceptance, together with the Notes (or an Affidavit of Loss and Indemnity with
respect to such Notes satisfactory to the Administrative Agent) subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (A) the
assignee thereunder shall become a party hereto and, to the extent that rights
and obligations under the Loan Documents have been assigned to such assignee
pursuant to such Assignment and Acceptance, have the rights and obligations of
a Lender hereunder and thereunder, and (B) the assignor thereunder shall, to
the extent that rights and obligations under this Agreement have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights (except
those which survive the payment in full of the Obligations) and be released
from its obligations under the Loan Documents (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
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assigning Lender's rights and obligations under the Loan Documents, such Lender
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any of
the statements, warranties or representations made in or in connection with
this Agreement or any other Loan Document furnished pursuant thereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under this Agreement or any other Loan
Document or of any other instrument or document furnished pursuant hereto or
thereto; (iii) such assigning Lender confirms that it has delivered to the
assignee and the assignee confirms that it has received a copy of this
Agreement and each of the Loan Documents together with a copy of the most
recent financial statements delivered by the Borrower to the Lenders pursuant
to each of the clauses of Section 6.11 (or if no such statements have been
delivered, the financial statements referred to in Section 4.5 of this
Agreement) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is
an Eligible
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Assignee; (vi) such assignee appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitments of and principal amount of the
Loans owing to each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Loan Parties, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower, the Administrative Agent or any Lender at any reasonable time and
from time to time upon reasonable prior notice. The Administrative Agent shall
supply to the Borrower promptly after any amendment thereto, a copy of the
amended Register.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower, at its
132
<PAGE> 141
own expense, shall execute and deliver to the Administrative Agent, in exchange
for such surrendered Notes, new Notes to the order of such Eligible Assignee in
an amount equal to the Commitments assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained Commitments hereunder,
new Notes to the order of the assigning Lender in an amount equal to the
Commitments retained by it hereunder. Such new Notes shall be dated the same
date as the Surrendered Notes and be in substantially the form of Exhibit A
hereto.
(e) In addition to the other assignment rights provided in
this Section 10.7, each Lender may assign, as collateral or otherwise, any of
its rights under this Agreement (including, without limitation, rights to
payments of principal or interest on the Loans) to any Federal Reserve Bank
without notice to or consent of the Borrower or the Administrative Agent;
provided, however, that no such assignment shall release the assigning Lender
from any of its obligations hereunder. The terms and conditions of any such
assignment and the documentation evidencing such assignment shall be in form
and substance satisfactory to the assigning Lender and the assignee Federal
Reserve Bank.
(f) Each Lender may sell participations to one or more banks
or other Persons in or to all or a portion of its rights and obligations under
the Loan Documents (including, without limitation, all or a portion of its
Commitments, the Loans owing to it and the Notes held by it). The terms of
such participation shall not, in any event, require the participant's consent
to any amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights which such Lender
may have under or in respect of the Loan Documents (including, without
limitation, the right to enforce the obligations of the Loan Parties), except
if any such amendment, waiver or other modification or consent
133
<PAGE> 142
would reduce the amount, or postpone any date fixed for, any amount (whether of
principal, interest or fees) payable to such participant under the Loan
Documents, to which such participant would otherwise be entitled under such
participation. In the event of the sale of any participation by any Lender,
(i) such Lender's obligations under the Loan Documents (including, without
limitation, its Commitments) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of such Notes and
Obligations for all purposes of this Agreement, and; (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(g) Each participant shall be entitled to the benefits of
Sections 2.11, 2.13 and 2.15 as if it were a Lender; provided, however, that
anything herein to the contrary notwithstanding, the Borrower shall not, at any
time, be obligated to pay to any assignee or participant of any interest of any
Lender, under Section 2.11, 2.13 or 2.15, any sum in excess of the sum which if
the Borrower would not at the time of such assignment have been obligated to
pay to such assignor Lender any such amount in respect of such interest had
such assignment not been effected or had such participation not been sold.
(h) Notwithstanding the foregoing provisions of this Section
10.7, (i) the aggregate Commitments and Loans of Chase shall not be less than
$20,000,000, and (ii) the aggregate Commitments and Loans of Wells Fargo shall
not be less than $20,000,000; provided that, if an Event of Default exists,
either Chase or Wells Fargo may assign all or any portion of their respective
Commitments and Loans.
10.8. Governing Law; Severability. This Agreement and the
Notes and the rights and obligations of the
134
<PAGE> 143
parties hereto and thereto shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
10.9. Submission to Jurisdiction; Service of Process. (a)
Any legal action or proceeding with respect to this Agreement or the Notes or
any document related thereto 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 Agreement, the Borrower hereby accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably
waive any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which any of them may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) The Borrower irrevocably consents to the service of
process of any of the aforesaid 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 provided herein.
(c) Nothing contained in this Section 10.9 shall affect the
right of the agent, any Lender or any holder of a Note to serve process in any
other manner permitted by law or commence legal proceedings or otherwise
proceed against the Borrower in any other jurisdiction.
135
<PAGE> 144
10.10. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
10.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
10.12. Entire Agreement. This Agreement, together with all
of the other Loan Documents and all certificates and documents delivered
hereunder or thereunder, and the agreements referred to in Section 2.4(b)
embody the entire agreement of the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof.
10.13. Confidentiality. Each Lender and the Administrative
Agent agree to keep information obtained by it pursuant hereto and the other
Loan Documents confidential and agrees that it will only use such information
in connection with the transactions contemplated by this Agreement and not
disclose any of such information other than (i) to such Lender's or the
Administrative Agent's, as the case may be, employees, representatives and
agents who are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by this Agreement
and who are advised of the confidential nature of such information, (ii) to the
extent such information presently is or hereafter becomes available to such
Lender or the Administrative Agent, as the case may be, on a non- confidential
basis from a source other than the Borrower, (iii) to the extent disclosure is
required by law, regulation or judicial order or requested or required by bank
regulators or auditors, or (iv) to assignees or parti-
136
<PAGE> 145
cipants or potential assignees or participants who agree to be bound by the
provisions of this sentence.
10.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR
WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.
10.15. Joint and Several Obligations. Unless the context
clearly indicates otherwise each covenant, agreement, undertaking, condition or
other matter stated herein as a covenant, agreement, undertaking or matter
involving the Borrower shall be jointly and severally binding upon each of the
parties comprising Borrower.
137
<PAGE> 146
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
FELCOR SUITE HOTELS, INC.
By:
-----------------------------------
Name:
Title:
FELCOR SUITES LIMITED PARTNERSHIP
By: FelCor Suite Hotels, Inc.
its general partner
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Administrative Agent
By:
-----------------------------------
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Documentation Agent
By:
-----------------------------------
Name:
Title:
138
<PAGE> 147
Lenders
THE CHASE MANHATTAN BANK
By:
-----------------------------------
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
-----------------------------------
Name:
Title:
BANK ONE TEXAS
By:
-----------------------------------
Name:
Title:
BANK OF BOSTON
By:
-----------------------------------
Name:
Title:
PNC BANK, N.A.
By:
-----------------------------------
Name:
Title:
139
<PAGE> 148
NATIONSBANK
By:
-----------------------------------
Name:
Title:
FIRST NATIONAL BANK OF CHICAGO
By:
-----------------------------------
Name:
Title:
AMSOUTH BANK
By:
-----------------------------------
Name:
Title:
SOCIETE GENERALE
By:
-----------------------------------
Name:
Title:
CREDIT LYONNAIS
By:
-----------------------------------
Name:
Title:
140
<PAGE> 149
BANK OF MONTREAL
By:
-----------------------------------
Name:
Title:
CIBC WOOD GUNDY
SECURITIES, CORP.
By:
-----------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:
-----------------------------------
Name:
Title:
141
<PAGE> 150
SCHEDULE I
COMMITMENTS
<TABLE>
<CAPTION>
Lender Commitment
- ----- ----------
<S> <C>
Chase $ 26,000,000
Wells Fargo $ 26,000,000
Bank One Texas $ 21,000,000
Bank of Boston $ 21,000,000
PNC Bank, National $ 21,000,000
Association
NationsBank $ 21,000,000
The First National Bank $ 21,000,000
of Chicago
AmSouth Bank of Alabama $ 18,000,000
Societe Generale Southwest $ 15,000,000
Agency
Credit Lyonnais $ 15,000,000
Bank of Montreal $ 15,000,000
CIBC Inc. $ 15,000,000
The Sumitomo Bank,
Limited $ 15,000,000
TOTAL: $250,000,000
============
</TABLE>
I
<PAGE> 151
SCHEDULE II
APPLICABLE LENDING OFFICES AND
ADDRESSES FOR NOTICES
<TABLE>
<CAPTION>
Domestic Lending
Office and Address Eurodollar
Lender for Notices Lending Office
- ------ ------------------ --------------
<S> <C> <C>
Chase 380 Madison Avenue 380 Madison Avenue
10th Floor 10th Floor
New York, NY 10017 New York, NY 10017
Attention: Linda Rodriguez Attention: Linda Rodriguez
Telecopy: (212) 622-3395 Telecopy: (212) 622-3395
Wells Fargo 2120 East Park Place 2120 East Park Place
Suite 100 Suite 100
El Segundo, CA 90245 El Segundo, CA 90245
Attention: Disbursements Attention: Match Fundings
Administrator Administrator
Telecopy: (310) 335-1014 Telecopy: (310) 335-1014
Bank One Bank One, Texas Bank One, Texas
Texas 1717 Main 1717 Main
Dallas, TX 75201 Dallas, TX 75201
Attention: Dale Renner Attention: Dale Renner
Telecopy: (214) 290-2275 Telecopy: (214) 290-2275
Bank of 115 Perimeter Ctr Place 115 Perimeter Ctr Place
Boston Suite 500 Suite 500
Atlanta, GA 30346 Atlanta, GA 30346
Attention: Daniel J. Attention: Jeanette
Sullivan Streander
Telecopy: (770) 390-8434 Telecopy: (770) 390-8434
PNC Bank, One PNC Plaza, 19th Floor One PNC Plaza, 19th Floor
National 249 Fifth Avenue 249 Fifth Avenue
Association Pittsburgh, Pa 15222 Pittsburgh, Pa 15222
Attention: Jan Dotchin Attention: Jan Dotchin
Telecopy: (412) 762-6500 Telecopy: (412) 762-4464
NationsBank 901 Main 901 Main
51st Floor 51st Floor
Dallas, TX 75224 Dallas, TX 75224
Attn: John Lamb Attn: Michael Green
Telecopy: (214) 508-0085 Telecopy: (214) 508-1571
</TABLE>
I
<PAGE> 152
<TABLE>
<S> <C> <C>
The First One First National One First National Plaza
National Plaza
Bank of Suite 0151 Suite 0151
Chicago Chicago, IL 60607 Chicago, IL 60607
Attention: Rebecca Attention: Ernest M.
McCloskey Misioria
Telecopy: (312) 732-1117 Telecopy: (312) 732-1117
AmSouth Bank P.O. Box 11007 P.O. Box 11007
of Alabama Birmingham, Al 35288 Birmingham, Al 35288
Attention: Buddy Sharbel Attention: Buddy Sharbel
Telecopy: (205) 326-4075 Telecopy: (205) 326-4075
Societe 2001 Ross Avenue 2001 Ross Avenue
Generale Suite 4900 Suite 4900
Southwest Dallas, TX 75201 Dallas, TX 75201
Agency Attention: Thomas K. Day Attention: Becky Aduddell
Telecopy: (214) 979-2727 Telecopy: (214) 979-2727
Credit 1301 Avenue of the Americas 1301 Avenue of the Americas
Lyonnais New York, NY 10019 New York, NY 10019
Attention: Mischa Zabetin Attention: Hotel Finance/
18th Floor
Telecopy: (212) 261-7540 Telecopy: (212) 261-7890
Bank of 115 South La Salle St. 115 South La Salle St.
Montreal Chicago, IL 60603 Chicago, IL 60603
Attention: David Mazujian Attention: Debra Sandt
Telecopy: (312) 750-4352 Telecopy: (312) 750-4345
CIBC Inc. 350 S. Grand Avenue 350 S. Grand Avenue
Suite 2600 Suite 2600
Los Angeles, CA 90071 Los Angeles, CA 90071
Attention: Dean J. Decker Attention: Dean J. Decker
Telecopy: (213) 346-0157 Telecopy: (213) 346-0157
The Sumitomo Sears Tower Sears Tower
Bank Suite 4800 Suite 4800
Limited 233 South Wacker Drive 233 South Wacker Drive
Chicago, IL 60606 Chicago, IL 60606
Attention: Tom Batterham Attention: Tom Batterham
Telecopy: (312) 876-6436 Telecopy: (312) 876-6436
</TABLE>
II
<PAGE> 153
SCHEDULE 4.8
THE FOLLOWING IS A TRUE AND CORRECT LIST OF THE SUBSIDIARIES
AND UNCONSOLIDATED ENTITIES OF THE BORROWERS AS OF SEPTEMBER 30, 1996.
<TABLE>
<CAPTION>
STATE AND FORM OF
NAME ORGANIZATION OWNERSHIP INTEREST
---- ----------------- ------------------
<S> <C> <C>
FelCor Suites Limited Partnership Delaware; 89.4% GP interest owned by
Limited Partnership FelCor
FelCor/CSS Hotels, L.L.C. Delaware; Limited 1% owned by Felcor;
("FelCor/CSS Hotels") Liability Company 99% owned by FelCor LP
FelCor/LAX Hotels, L.L.C. Delaware; Limited 1% owned by Felcor;
("FelCor/LAX Hotels") Liability Company 99% owned by FelCor LP
FelCor/CSS Holdings, L.P. Delaware; 1% GP interest owned by
("FelCor/CSS Holdings") Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
FelCor/St. Paul Holdings, L.P. Delaware; 1% GP interest owned by
("FelCor/St. Paul Holdings") Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
FelCor/LAX Holdings, L.P. Delaware; 1% GP interest owned by
("FelCor/LAX Holdings") Limited Partnership FelCor/LAX Hotels; 99% LP
interest owned by FelCor LP
Los Angeles International Airport Texas; 50% GP interest and
Hotel Associates Limited Partnership 47.2% LP interest owned by
FelCor/LAX Holdings
Promus/FelCor Lombard Venture Illinois; 50% GP interest owned by
General Partnership FelCor LP
MHV Joint Venture Texas; 50% GP interest owned by
General Partnership FelCor LP
Promus/FelCor Parsippany New Jersey; 50% GP interest owned by
Joint Venture General Partnership FelCor LP
</TABLE>
<PAGE> 154
<TABLE>
<CAPTION>
STATE AND FORM OF
NAME ORGANIZATION OWNERSHIP INTEREST
---- ----------------- ------------------
<S> <C> <C>
Charlotte Limited Minnesota; 1% GP interest owned by
Partnership Limited Partnership FelCor/CSS Hotels; 49% LP
interest owned by FelCor LP
E.S. North, an Indiana Indiana; 1% GP interest owned by
Limited Limited Partnership FelCor/CSS Hotels; 49% LP
Partnership interest owned by FelCor LP
</TABLE>
# # # #
THE PERCENTAGE INTERESTS REFLECTED ABOVE REPRESENT THE PERCENTAGES OF AGGREGATE
EQUITY INTEREST IN THE RESPECTIVE ENTITIES. EACH OF THE GP INTERESTS REFLECTED
ABOVE REPRESENTS EITHER THE ENTIRE GENERAL PARTNER INTEREST IN SUCH ENTITY OR
AN INTEREST AS THE SOLE ADMINISTRATIVE GENERAL PARTNER OF SUCH ENTITY WITH
POWER TO CONTROL THE DAY-TO-DAY OPERATIONS THEREOF.
<PAGE> 155
FELCOR SUITE HOTELS, INC.
EXISTING INDEBTEDNESS
SCHEDULE 4.10
<TABLE>
<CAPTION>
BALANCE
9/30/96
-------
<S> <C>
EXISTING INDEBTEDNESS FOR FELCOR SUITE HOTELS, INC.
(i) All indebtedness of such Person for borrowed money (including,
without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured) or for the deferred
purchase price of property or services.
Irrevocable standby letter of credit Number S5454-Laurence Geller 30,000
(securing Laurence Geller promissory note with principal of $900,000)
(ii) All obligations of such Person evidenced by notes, bonds,
debentures or similar instruments.
Bank of Nova Scotia --
Canadian Imperial Bank of Commerce 25,000,000
Boatman's (Bank IV facility) 85,000,000
Laurence Geller (associated with Lombard JV interest) 900,000
Promus Hotel Corporation (associated with the land purchased at Boston) 650,000
-----------
Total 111,550,000
(iii) All indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect
to property acquired by such Person. 0
(iv) All Capitalized Lease Obligations of such Person
Capital land leases:
Port Authority of the City of Saint Paul (St. Paul lease) 9,757,057
Equipment capital leases:
Tampa
Telerent 28,919
LANMark 16,889
St. Paul
Telerent 64,504
Telerent 75,362
LANMark 15,131
South San Francisco
Telerent 92,228
LANMark 36,253
Vendor Capital 70,770
Phoenix
Telerent 71,668
LANMark 16,848
Squirrel 21,052
Vendor Capital 124,512
Napa
Telerent 64,460
</TABLE>
Page 1 of 3
<PAGE> 156
FELCOR SUITE HOTELS, INC.
EXISTING INDEBTEDNESS
SCHEDULE 4.10
<TABLE>
<CAPTION>
BALANCE
9/30/96
-------
<S> <C>
LANMark 15,418
Vendor Capital 57,550
Minn. Air
Telerent 90,456
Telerent 140,118
LANMark 15,676
Minn. Downtown
Telerent 84,218
Telerent 81,748
LANMark 15,749
Milpitas
Telerent 74,510
LANMark 15,153
Squirrel 19,816
Vendor Capital 135,332
Miami
Telerent 87,456
Telerent 121,719
LANMark 15,150
Mandalay Beach
Telerent 62,237
LANMark 16,421
Vendor Capital 58,027
Los Angeles International Airport
Telerent 93,066
Vendor Capital 195,992
LANMark 16,978
GE Capital 21,532
Ft. Lauderdale
Bell South 19,948
LANMark 13,214
Vendor Capital 79,497
Vendor Capital 176,661
Deerfield Beach
Telerent 111,038
Telerent 69,776
LANMark 17,567
Burlingame
Telerent 101,222
LANMark 10,991
Vendor Capital 81,467
Boca Raton - Doubletree
Telerent 54,183
Fairchild 64,823
LANMark 15,602
Birmingham
LANMark 17,127
Homisco 6,751
Vendor Capital 67,436
Vendor Capital 116,917
</TABLE>
Page 2 of 3
<PAGE> 157
FELCOR SUITE HOTELS, INC.
EXISTING INDEBTEDNESS
SCHEDULE 4.10
<TABLE>
<CAPTION>
BALANCE
9/30/96
-------
<S> <C>
Baton Rouge
Telerent 61,889
LANMark 18,376
Vendor Capital 102,335
Squirrel 18,324
Anaheim
Telerent 66,409
LANMark 16,421
Vendor Capital 141,070
-----------
Total capital equipment lease liability 3,581,969
-----------
Total capital lease liability 13,339,026
(v) All Contingent Obligations of such Person 0
(vi) All obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value (other than for other
equity securities) any Stock or Stock Equivalents of such Person,
valued, in the case of mandatory redeemable preferred stock, at
the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends. 0
(vii) All Indebtedness referred to in clause (i), (ii), (iii), (iv),
(v), (vi) or (vii) above secured by any Lien upon or in property
owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness. 0
-----------
TOTAL EXISTING INDEBTEDNESS FOR FELCOR SUITE HOTELS, INC. 124,919,026
===========
EXISTING INDEBTEDNESS FOR UNCONSOLIDATED ENTITIES OF FELCOR SUITE HOTELS, INC.
MHV Joint Venture (The Long-Term Credit Bank of Japan) 20,079,000
Charlotte Limited Partnership (P.N.C.) 17,400,000
E.S. North, an Indiana Limited Partnership (Coast Savings and Loan) 13,143,202
-----------
TOTAL EXISTING INDEBTEDNESS FOR UNCONSOLIDATED ENTITIES
OF FELCOR SUITE HOTELS, INC. 50,622,202
===========
</TABLE>
Page 3 of 3
<PAGE> 158
FELCOR SUITE HOTELS, INC.
EXISTING INVESTMENTS
SCHEDULE 4.13
<TABLE>
<CAPTION>
Balance Balance
8/31/96 9/30/96
-------- --------
<S> <C> <C>
EXISTING INVESTMENTS
(a) Any loan or advance to any other Person
Receivable from DJONT Operations, L.L.C. (balance
as of 8/31/96) 4,249,801 N/A
Receivable from FelCor Inc. (balance as of 8/31/96) 24,075 N/A
The balances for the receivables are scheduled
at 8/31/96 (the date of the last financial
statements)
(b) The ownership, purchase or other acquisition of, any 0 0
Stock, Stock Equivalents, other equity interest,
obligations or other securities of, (i) any other
Person, (ii) or all or substantially all of the
assets of any other Person, or (iii) all or
substantially all of the assets constituting the
business of a division, branch or other unit
operation of any other Person.
(c) Any joint venture or partnership with, or any capital
contribution to, or other investment in, any other
Person or any real property.
Promus/FelCor Lombard Venture (50% interest in the
Lombard Embassy Suites) 13,220,989 13,220,989
MHV Joint Venture (50% interest in the Marin
Embassy Suites) 4,063,491 4,063,491
Promus/FelCor Parsippany Joint Venture (50% interest
in Parsippany ES) 15,377,122 15,377,122
Charlotte Limited Partnership (50% interest in the
Charlotte Embassy Suites) -- 6,695,766
E.S. North, an Indiana Limited Partnership (50%
interest in the Indianapolis ES) -- 4,595,577
---------- ----------
32,661,602 43,952,945
---------- ----------
TOTAL EXISTING INVESTMENTS 36,935,477 N/M
========== ==========
</TABLE>
Page 1
<PAGE> 159
FELCOR SUITE HOTELS, INC.
SCHEDULE 4.19
ENVIRONMENTAL REPORTS
<TABLE>
<S> <C> <C> <C>
1 Embassy Suites Boston-Marlborough MA
2 Embassy Suites Corpus Christi TX
3 Embassy Suites Brunswick GA
4 Embassy Suites Chicago-Lombard IL
5 Embassy Suites Minneapolis (Airport) MN
6 Embassy Suites Cleveland OH
7 Embassy Suites Minneapolis (Downtown) MN
8 Doubletree Guest Suites Boca Raton FL
9 Doubletree Guest Suites Tampa (Busch Gardens) FL
10 Embassy Suites Fort Lauderdale FL
11 Embassy Suites Miami (Airport) FL
12 Embassy Suites San Francisco (Airport North) CA
13 Embassy Suites Milpitas CA
14 Embassy Suites Deerfield Beach FL
15 Embassy Suites Birmingham AL
16 Embassy Suites Phoenix (Biltmore) AZ
17 Embassy Suites Piscataway NJ
18 Embassy Suites Baton Rouge LA
19 Embassy Suites Anaheim CA
20 Hilton Suites Lexington KY
21 Embassy Suites Boca Raton FL
22 Embassy Suites Beaver Creek Lodge (Avon/Vail) CO
23 Embassy Suites Los Angeles (Airport) CA
24 Embassy Suites Mandalay Beach CA
25 Embassy Suites Napa CA
26 Embassy Suites Deerfield IL
</TABLE>
<PAGE> 160
Schedule 4.22(a)
Birmingham
2300 Woodcrest Place
Birmingham, Alabama 35209
Date Acquired: 1/3/96
No. of Suites: 242
Year Opened: 1987
Current Flag: Crown Sterling Suites
Flagstaff
706 S. Milton Road
Flagstaff, Arizona 86001
Date Acquired: 2/15/95
No. of Suites: 119
Year Opened: 1988
Current Flag: Embassy Suites
Anaheim
3100 E. Frontera St.
Anaheim, California 92806
Date Acquired: 1/3/96
No. of Suites: 222
Year Opened: 1987
Current Flag: Embassy Suites
Los Angeles (Airport)
1440 E. Imperial Avenue
El Segundo, California 90245
Date Acquired: 3/27/96
No. of Suites: 350
Year Opened: 1985
Current Flag: Crown Sterling Suites
Milpitas
901 Calaveras Blvd.
Milpitas, California 95035
Date Acquired: 1/3/96
No. of Suites: 267
Year Opened: 1987
Current Flag: Embassy Suites
<PAGE> 161
Napa
1075 California Blvd.
Napa, California 94559
Date Acquired: 5/8/96
No. of Suites: 205
Year Opened: 1985
Current Flag: Crown Sterling Suites
Mandalay Beach
2101 Mandalay Beach Road
Oxnard, California 93035
Date Acquired: 5/8/96
No. of Suites: 249
Year Opened: 1986
Current Flag: Crown Sterling Suites
(JV) Marin County
101 McInnis Parkway
San Rafael, California 94903
Date Acquired: 7/18/96
No. of Suites: 235
Year Opened: 1990
Current Flag: Embassy Suites
San Francisco (Airport North)
250 Gateway Blvd.
South San Francisco, California 94080
Date Acquired: 1/3/96
No. of Suites: 312
Year Opened: 1988
Current Flag: Embassy Suites
Beaver Creek Lodge
26 Avondale Lane
Avon, Colorado 81620
Date Acquired: 2/20/96
No. of Suites: 72
Year Opened: 1990
Current Flag: Embassy Suites
Orlando (North)
225 E. Altamone Drive
Altamone Springs, Florida 32701
Date Acquired: 7/28/94
No. of Suites: 210
Year Opened: 1985
Current Flag: Embassy Suites
2
<PAGE> 162
Boca Raton
701 N.W. 53rd Street
Boca Raton, Florida 33487
Date Acquired: 11/15/95
No. of Suites: 182
Year Opened: 1989
Current Flag: Doubletree Guest Suites
Boca Raton
661 N.W. 53rd Street
Boca Raton, Florida 33487
Date Acquired: 2/28/96
No. of Suites: 263
Year Opened: 1985
Current Flag: Embassy Suites
Deerfield Beach
950 Southeast 20th Ave.
Deerfield Beach, Florida 33441
Date Acquired: 1/3/96
No. of Suites: 244
Year Opened: 1987
Current Flag: Crown Sterling Suites
Ft. Lauderdale
1100 S.E. 17th Street
Ft. Lauderdale, Florida 33316
Date Acquired: 1/3/96
No. of Suites: 359
Year Opened: 1986
Current Flag: Embassy Suites
Jacksonville (Bay Meadows)
9300 Baymeadows Rd.
Jacksonville, Florida 32256
Date Acquired: 7/28/94
No. of Suites: 210
Year Opened: 1985
Current Flag: Embassy Suites
Miami (Airport)
3974 N.W. South River Rd.
Miami, Florida 33142
Date Acquired: 1/3/96
No. of Suites: 314
Year Opened: 1987
Current Flag: Crown Sterling Suites
3
<PAGE> 163
Orlando (South)
8978 International Drive
Orlando, Florida 32819
Date Acquired: 7/28/94
No. of Suites: 244
Year Opened: 1985
Current Flag: Embassy Suites
Tampa (Busch Gardens)
11310 N. 30th Street
Tampa, Florida 33612
Date Acquired: 11/15/95
No. of Suites: 129
Year Opened: 1985
Current Flag: Doubletree Guest Suites
Brunswick
500 Mall Boulevard
Brunswick, Georgia 31525
Date Acquired: 7/19/95
No. of Suites: 130
Year Opened: 1988
Current Flag: Embassy Suites
Deerfield
1445 Lake Cook Road
Deerfield, Illinois 60015
Date Acquired: 6/20/96
No. of Suites: 237
Year Opened: 1987
Current Flag: Embassy Suites
(JV) Chicago-Lombard
707 E. Butterfield
Lombard, Illinois 60148
Date Acquired: 8/1/95
No. of Suites: 262
Year Opened: 1990
Current Flag: Embassy Suites
(JV) Indianapolis (North)
3912 Vincennes Rd.
Indianapolis, Indiana 46268
Date Acquired: 9/12/96
No. of Suites: 222
Year Opened: 1985
Current Flag: Embassy Suites
4
<PAGE> 164
Lexington
3195 Nicholasville Road
Lexington, Kentucky 40503
Date Acquired: 1/10/96
No. of Suites: 174
Year Opened: 1987
Current Flag: Hilton Suites
Baton Rouge
4914 Constitution Avenue
Baton Rouge, Louisiana 70808
Date Acquired: 1/3/96
No. of Suites: 224
Year Opened: 1985
Current Flag: Embassy Suites
New Orleans
315 Julia Street
New Orleans, Louisiana 70130
Date Acquired: 12/1/94
No. of Suites: 251
Year Opened: 1984
Current Flag: Embassy Suites
Boston-Marlborough
123 Boston Post Road West
Marlborough, Massachusetts 01752
Date Acquired: 6/30/95
No. of Suites: 100
Year Opened: 1988
Current Flag: Embassy Suites
Minneapolis (Airport)
7901 34th Avenue South
Minneapolis, Minnesota 55425
Date Acquired: 11/6/95
No. of Suites: 311
Year Opened: 1986
Current Flag: Embassy Suites
Minneapolis (Downtown)
425 S. 7th Street
Minneapolis, Minnesota 55415
Date Acquired: 11/15/95
No. of Suites: 218
Year Opened: 1984
Current Flag: Embassy Suites
5
<PAGE> 165
(JV) Parsippany
909 Parsippany Blvd.
Parsippany, New Jersey 07054
Date Acquired: 7/31/96
No. of Suites: 274
Year Opened: 1989
Current Flag: Embassy Suites
Piscataway
121 Centennial Avenue
Piscataway, New Jersey 08854
Date Acquired: 1/10/96
No. of Suites: 225
Year Opened: 1988
Current Flag: Embassy Suites
(JV) Charlotte
4800 S. Tryon Street
Charlotte, North Carolina 28217
Date Acquired: 9/12/96
No. of Suites: 274
Year Opened: 1989
Current Flag: Embassy Suites
Cleveland
1701 E. 12th Street
Cleveland, Ohio 44114
Date Acquired: 11/17/95
No. of Suites: 268
Year Opened: 1990
Current Flag: Embassy Suites
Tulsa
3332 S. 79th East Avenue
Tulsa, Oklahoma 74145
Date Acquired: 7/28/94
No. of Suites: 240
Year Opened: 1985
Current Flag: Embassy Suites
Nashville (Airport/Opryland)
10 Century Blvd.
Nashville, Tennessee 37214
Date Acquired: 7/28/94
No. of Suites: 296
Year Opened: 1986
Current Flag: Embassy Suites
6
<PAGE> 166
Corpus Christi
4337 S. Padre Island
Corpus Christi, Texas 78411
Date Acquired: 7/19/95
No. of Suites: 150
Year Opened: 1984
Current Flag: Embassy Suites
Dallas (Love Field)
3880 W. Northwest Hwy.
Dallas, Texas 75220
Date Acquired: 3/29/95
No. of Suites: 248
Year Opened: 1986
Current Flag: Embassy Suites
Dallas (Park Central)
1313 N. Central Exwy.
Dallas, Texas 75243
Date Acquired: 7/28/94
No. of Suites: 279
Year Opened: 1985
Current Flag: Embassy Suites
7
<PAGE> 167
Schedule 4.22(b)
LSD Phoenix (Camelback)
2680 E. Camelback
Phoenix, Arizona 85016
Date Acquired: 1/3/96
No. of Suites: 233
Year Opened: 1985
Current Flag: Crown Sterling Suites
LSD San Francisco (Airport South)
150 Anza Boulevard
Burlingame, California 94010
Date Acquired: 11/6/95
No. of Suites: 339
Year Opened: 1986
Current Flag: Embassy Suites
LSD St. Paul
175 E. 10th Street
St. Paul, Minnesota 55101
Date Acquired: 11/15/95
No. of Suites: 210
Year Opened: 1983
Current Flag: Embassy Suites
<PAGE> 168
FELCOR SUITE HOTELS, INC.
ELIGIBLE HOTELS
SCHEDULE 6.23
AS OF SEPTEMBER 30, 1996
Embassy Suites Boston - Marlborough, MA
Embassy Suites Corpus Christi, TX
Embassy Suites Brunswick, GA
Embassy Suites Chicago - Lombard, IL
Embassy Suites Minneapolis Airport, MN
Embassy Suites Minneapolis Downtown, MN
Embassy Suites Anahiem, CA
Embassy Suites Baton Rouge, LA
Embassy Suites Birmingham, AL
Embassy Suites Deerfield Beach, FL
Embassy Suites Ft Lauderdale, FL
Embassy Suites Los Angeles Airport, CA
Embassy Suites Mandalay Beach, CA
Embassy Suites Miami, FL
Embassy Suites Milpitas, CA
Embassy Suites Napa, CA
Embassy Suites Phoenix (Camelback), AZ
Embassy Suites San Francisco (Airport North), CA
Embassy Suites Cleveland, OH
Embassy Suites Piscataway, NJ
Embassy Suites Boca Raton, CA
Embassy Suites Beaver Creek, CO
Embassy Suites Chicago - Deerfield, IL
Doubletree Guest Suites Hotel Tampa, FL
Doubletree Guest Suites Hotel Boca Raton, FL
Hilton Suites Hotel Lexington, KY
Embassy Suites Hotel Parsippany, NJ
<PAGE> 169
EXHIBIT A
[FORM OF]
NOTE
U.S. $ ____________ Dated: ____________, 1996
FOR VALUE RECEIVED, the undersigned, FelCor Suite Hotels,
Inc. ("FelCor"), a Maryland corporation, and FelCor Suites Limited Partnership
("FelCor LP"), a Delaware limited partnership (collectively, the "Borrower"),
HEREBY PROMISES TO PAY to the order of [NAME OF LENDER] (the "Lender") the
principal sum of ___________ United States Dollars ($_________), or, if less,
the aggregate unpaid principal amount of all Loans (as defined in the Credit
Agreement referred to below) of the Lender to the Borrower, payable at such
times, and in such amounts, as are specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal
amount of the Loans from the date made until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to The Chase Manhattan Bank ("Chase") as
administrative agent, at 380 Madison Avenue, New York, New York 10017, in
immediately available funds. The Loans made by the Lender to the Borrower, and
all payments made on account of the principal thereof, shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on this Note.
A-1
<PAGE> 170
This Note is one of the Notes referred to in, and is entitled
to the benefits of, the Revolving Credit Agreement, dated as of the date hereof
(said Agreement, as it may be amended or otherwise modified from time to time,
being the "Credit Agreement"), among the Borrower, the Lender, the other
financial institutions referred to therein, Chase, as administrative agent for
the Lender and such other financial institutions, and Wells Fargo Bank,
National Association, as documentation agent, and the other Loan Documents
referred to therein and entered into pursuant thereto. The Credit Agreement,
among other things, (i) provides for the making of Loans by the Lender to the
Borrower in an aggregate amount not to exceed at any time outstanding the
United States dollar amount first above mentioned, the indebtedness of the
Borrower resulting from such Loans being evidenced by this Note, and (ii)
contains provisions for acceleration of the maturity of the unpaid principal
amount of this Note upon the happening of certain stated events and also for
prepayments on account of the principal hereof prior to the maturity hereof
upon the terms and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by the Borrower.
This Note shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.
FELCOR SUITE HOTELS, INC.,
a Maryland Corporation
By:
-----------------------------------
Name:
Title:
A-2
<PAGE> 171
FELCOR SUITES LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: FelCor Suite Hotels, Inc.,
its general partner
By:
-------------------------------
Name:
Title:
A-3
<PAGE> 172
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of
Amount Principal Paid Notation
Date of Loan or Prepaid Made by
- ---- ------- -------------- --------
<S> <C> <C> <C>
</TABLE>
A-4
<PAGE> 173
EXHIBIT B
[FORM OF]
NOTICE OF BORROWING
The Chase Manhattan Bank,
as administrative agent for the financial
institutions party
to the Credit Agreement
referred to below
380 Madison Avenue
New York, New York 10017
_________, 1996
Attention: ______________________
Re: FelCor Suite Hotels, Inc. and FelCor Suites Limited
Partnership
Gentlemen:
The undersigned, FelCor Suite Hotels, Inc. and FelCor Suites
Limited Partnership, refer to the Revolving Credit Agreement, dated as
of______________, 1996, among the undersigned, the financial institutions party
thereto, The Chase Manhattan Bank, as administrative agent for said financial
institutions and Wells Fargo Bank, National Association, as documentation agent
(said Agreement, as it may be amended or otherwise modified from time to time,
being the "Credit Agreement" and capitalized terms not defined herein but
defined therein being used herein as therein defined), and hereby gives you
notice, irrevocably, pursuant to Section 2.3 [2.17] of the Credit Agreement
that the undersigned hereby requests a Borrowing under the Credit Agreement,
and in that connection sets forth below the
B-1
<PAGE> 174
information relating to such Borrowing (the "Proposed Borrowing") as required
by Section 2.3 [2.17] of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
_________________, 1996.
(ii) The aggregate amount of the Loans
constituting the Proposed Borrowing is $___________, [which
comprises a Swing Line Advance] [of which amount $___________
consists of Base Rate Loans] [and] [$___________ consists of
Eurodollar Rate Loans having an initial Interest Period of
_______ months.]
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, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the representations and warranties contained in
Article IV of the Credit Agreement and in each of the other
Loan Documents are true and correct as though made on and as
of the date hereof (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); and
(B) no Default or Event of Default has occurred and
is continuing or will result from the Proposed Borrowing.
B-2
<PAGE> 175
Very truly yours,
FELCOR SUITE HOTELS, INC.,
a Maryland Corporation
By:
-----------------------------------
Name:
Title:
FELCOR SUITES LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: FelCor Suite Hotels, Inc.,
its general partner
By:
-------------------------------
Name:
Title:
B-3
<PAGE> 176
EXHIBIT C
[FORM OF] NOTICE OF CONVERSION OR CONTINUATION
The Chase Manhattan Bank,
as agent for the financial institutions
party to the Credit Agreement
referred below
380 Madison Avenue
New York, New York 10017
___________, 1996
Attention: ______________________
Re: FelCor Suite Hotels Inc. and FelCor Suites Limited
Partnership
Gentlemen:
The undersigned, FelCor Suite Hotels Inc. and FelCor Suites
Limited Partnership (collectively, the "Borrower"), refer to the Revolving
Credit Agreement, dated as of _____________ ___, 1996, among the Borrower, the
financial institutions party thereto, The Chase Manhattan Bank, as
administrative agent for the financial institutions party thereto, and Wells
Fargo Bank, National Association, as documentation agent (said Agreement, as it
may be amended or otherwise modified from time to time, being the "Credit
Agreement" and capitalized terms not defined herein but defined therein being
used herein as defined therein), and hereby gives you notice pursuant to
Section 2.8 of the Credit Agreement that the undersigned hereby requests a
C-1
<PAGE> 177
[conversion] [continuation] on ______________ ___, 19__ of $____________ in
principal amount of presently outstanding Loans that are [Base Rate Loans]
[Eurodollar Rate Loans having an Interest Period ending on _____________ __,
19__] [to] [as] [Base Rate] [Eurodollar Rate] Loans. [The Interest Period for
such amount requested to be converted to or continued as Eurodollar Rate Loans
is [[1] [2] [3] [6] months].]
In connection herewith, the undersigned hereby certifies that
no Default or Event of Default is continuing.
Very truly yours,
FELCOR SUITE HOTELS, INC.,
a Maryland Corporation
By:
-----------------------------------
Name:
Title:
FELCOR SUITES LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: FelCor Suite Hotels, Inc.,
its general partner
By:
-------------------------------
Name:
Title:
C-2
<PAGE> 178
EXHIBIT D
[INTENTIONALLY OMITTED]
D-1
<PAGE> 179
EXHIBIT E
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
__________ ___, 19__
Reference is made to the Revolving Credit Agreement, dated as
of _____________, 19__, among FelCor Suite Hotels, Inc., a Maryland corporation
("FelCor") and FelCor Suites Limited Partnership, a Delaware limited
partnership ("FelCor LP" and collectively with FelCor, the "Borrower"), the
financial institutions party thereto, The Chase Manhattan Bank ("Chase"), as
administrative agent for the financial institutions party thereto and Wells
Fargo Bank, National Association, as documentation agent (said Agreement, as it
may be amended or otherwise modified from time to time, being the "Credit
Agreement", and capitalized terms not defined herein but defined therein being
used herein as therein defined).
___________________ (the "Assignor") and _________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, 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 on
Schedule I of all outstanding rights and obligations under the Credit Agreement
(including, without limitation,
E-1
<PAGE> 180
such interest in each of the Assignor's outstanding Commitments, if any, the
Obligations owing to it and the Notes held by it). After giving effect to such
sale and assignment, the Assignee's Commitments (and the Commitments retained
by the Assignor, if any) and the amount of the Loans owing to the Assignee (and
the Assignor, if any) will be as set forth in Section 2 of Schedule I and will
otherwise comply with the requirements of Section 10.7(a).
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 claim; (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 any other Loan Document or any other instrument or document
furnished pursuant thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other Loan Document or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under the
Credit Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Notes referred to above and
requests that the Agent exchange such Notes for new Notes as follows: [specify
date of Notes, amounts, Assignee].
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.5 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the
E-2
<PAGE> 181
Assignor or any other Lender 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 Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(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 Lender; (v) represents and warrants that it is an Eligible
Assignee; and (vi) specifies as its Domestic Lending Office (and address for
notices) and Eurodollar Lending Office the offices set forth beneath its name
on the signature pages hereof[; and* (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement and the Notes or such other documents as are necessary to indicate
that all such payments are subject to such rates at a rate reduced by an
applicable tax treaty].
4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Agent, together
with an assignment processing fee in the sum of $2,500 payable to and for the
benefit of the Agent, for acceptance and recording by the Agent. The effective
date of this Assignment and Acceptance shall be the date of acceptance thereof
by the Agent and, provided no Default or Event of Default exists, the Borrower,
unless otherwise specified on Schedule I hereto (the "Effective Date").
__________________________________
* If Assignee is organized under the laws of a jurisdiction outside of the
United States.
E-3
<PAGE> 182
5. Upon such acceptance by the Agent and, if applicable, the
Borrower and recording by the Agent, as of the Effective Date (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations under the Credit
Agreement of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and be
construed and interpreted in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule I hereto.
E-4
<PAGE> 183
SCHEDULE I
TO
ASSIGNMENT AND ACCEPTANCE
DATED ________________ __, 19__
Section 1.
- ---------
Percentage Interest: %
--------------
Section 2.
- ---------
Assignee's Commitment: $
--------------
Aggregate Outstanding Principal of
Loans Owing to Assignee: $
--------------
Section 3.
- ---------
Effective Date: ___________ __, 19__
[ASSIGNOR]
By:
-----------------------------------
Name:
Title:
[ASSIGNEE]
By:
-----------------------------------
Name:
Title:
E-5
<PAGE> 184
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of ____________, 19__
THE CHASE MANHATTAN BANK, as Agent
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
[ONLY REQUIRED IF NO DEFAULT OR EVENT OF DEFAULT]
Accepted this ____ day
of ____________, 19__
FELCOR SUITE HOTELS, INC.
By:
--------------------------------
Name:
Title:
Accepted this ____ day
of ____________, 19__
FELCOR SUITES LIMITED PARTNERSHIP
By: FelCor Suite Hotels, Inc.
By:
--------------------------------
Name:
Title:
E-6
<PAGE> 185
EXHIBIT F
FORM OF
BORROWING BASE CERTIFICATE
TO: Chase Manhattan Bank, as Administrative Agent
FROM: FelCor Suite Hotels, Inc. and
FelCor Suites Limited Partnership
DATE: ____________ __, 19__
Pursuant to the provisions of the Revolving Credit Agreement dated _________
___, 19__, among FelCor Suite Hotels, Inc. and FelCor Suites Limited
Partnership (collectively, the "Borrower"), the financial institutions party
thereto, The Chase Manhattan Bank as administrative agent for said financial
institutions and Wells Fargo Bank, National Association, as documentation agent
(said Agreement, as it may be amended or otherwise modified from time to time,
the "Credit Agreement"; and the terms defined therein being used herein as
therein defined), the undersigned hereby certifies that the following
information is true, complete and accurate as of the close of business on
_______________ ___, 19__:
1. Schedule 1 attached hereto accurately and completely
sets forth, as of the date hereof (i) all Hotels owned or leased by the
Borrower, its wholly owned Subsidiaries and Eligible Joint Ventures, (ii) with
respect to each Hotel owned by an Eligible Joint Venture, the Borrower's JV% in
such Hotel, (iii) for each Hotel owned for four (4) Fiscal Quarters or more,
the Adjusted NOI from such Hotel for the preceding four (4) Fiscal Quarters
divided by ten percent (10%) (iv) for each Hotel owned for less than four (4)
Fiscal Quarters, the Borrower's Investment in such Hotel, (v) those Hotels that
do not meet the requirements for Eligible Hotels (the remaining Hotels being
Eligible Hotels), (vi) the Aggregate Value of the Eligible Hotels, (vii) the
Borrowing Base, and (viii) the Available Credit.
F-1
<PAGE> 186
2. Each of the Eligible Hotels is Unencumbered and
otherwise meets the requirements for Eligible Hotels set forth in the Credit
Agreement. Submitted herewith, with respect to each such Eligible Hotel (to
the extent not previously delivered) are copies of the following:
(i) A description of such Hotel, including the age, location
and number of rooms or suites of such Hotel;
(ii) A copy of the most recent ALTA Owner's Policy of Title
Insurance (or commitment to issue such a policy to the Loan
Party owning or to own such Hotel) relating to such Hotel
showing the identity of the fee titleholder thereto and all
matters of record;
(iii) Copies of each of the Operating Lease, Management Agreement
and License relating to such Hotel;
(iv) Copies of all engineering, mechanical, structural and
maintenance studies performed with respect to such Hotel;
(v) A "Phase I" environmental assessment of such Hotel [not
more than 12 months old] prepared by an environmental
engineering firm acceptable to the Administrative Agent,
and any additional environmental studies or assessments
available to the Borrower performed with respect to such
Hotel;
(vi) If such Hotel is owned pursuant to a Qualified Lease, a
copy of such Lease together with all and any amendments
thereto or modifications thereof.
3. Not more than (i) 20% of the Aggregate Value is
attributable to Joint Venture Hotels, or (ii) 15% of the Aggregate Value is
attributable to Eligible Hotels leased pursuant to Qualified Leases.
F-2
<PAGE> 187
4. The representations and warranties contained in Article
IV of the Credit Agreement and in each of the other Loan Documents are true and
correct as though made on and as of the date hereof (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); and
5. No Default or Event of Default has occurred and is
continuing.
Authorized Signature:____________________________ Date: ___________
Title: Chief Financial Officer
F-3
<PAGE> 188
EXHIBIT G
[FORM OF] COMPLIANCE CERTIFICATE
This COMPLIANCE CERTIFICATE is delivered pursuant to that
certain Revolving Credit Agreement, dated as of______________, 1996 (the
"Credit Agreement") among FelCor Suite Hotels, Inc. ("FelCor"), FelCor Suites
Limited Partnership ("FelCor LP"; FelCor and FelCor LP are collectively
referred to as the "Borrower"), the financial institutions party thereto
(collectively, the "Lenders"), The Chase Manhattan Bank, as administrative
agent for said financial institutions (the "Administrative Agent") and Wells
Fargo Bank, National Association, as documentation agent (the "Documentation
Agent"). Capitalized terms not defined herein shall have the same meanings
ascribed thereto in the Credit Agreement.
1. FelCor is the sole general partner of FelCor LP.
2. The individual executing this Certificate is the duly
qualified Chief Financial Officer of FelCor and is executing this Certificate
on behalf of FelCor and FelCor LP.
3. The undersigned has reviewed the terms of the Credit
Agreement and has made a review of the transactions, financial condition and
other affairs of the Borrower and each of its Subsidiaries and Unconsolidated
Entities as of, and during the Fiscal Quarter ending _________, 199__, and the
undersigned has no knowledge of the existence, as of the date hereof, of any
condition or event which (i) renders untrue or incorrect, any of the
representations and warranties contained in Article IV of the Credit Agreement
(it being understood and agreed that any representation or
G-1
<PAGE> 189
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), or (ii) constitutes a
Default or Event of Default.
4. Schedule I attached hereto accurately and completely sets
forth the financial data, computations and other matters required to establish
compliance with the following Sections of the Credit Agreement:
a. Section 5.1 - Gross Interest Expense Coverage;
b. Section 5.2 - Debt Service Coverage Ratio;
c. Section 5.3 - Maintenance of Tangible Net Worth;
d. Section 5.4 - Limitations on Total Indebtedness;
e. Section 5.5 - Limitations on Total Secured Indebtedness;
f. Section 6.21 - Hotel Requirements;
g. Section 7.4 - Restricted Payments;
h. Section 7.14 - Management Continuity; and
i Section 8.1 - Minimum Ownership Interests.
5. The aggregate outstanding principal amount of the Loans as
of the date hereof is equal to or less than the Available Credit.
6. The representations and warranties contained in Article IV
of the Credit Agreement and in each of the
G-2
<PAGE> 190
other Loan Documents are true and correct as though made on and as of such date
(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. No Default or Event of Default has occurred and is
continuing.
The Lenders, the Administrative Agent and the Documentation Agent and
their respective successors and assigns may rely on the truth and accuracy of
the foregoing in connection with the extensions of credit to the Borrower
pursuant to the Credit Agreement.
G-3
<PAGE> 191
IN WITNESS WHEREOF, the Borrower has caused this Compliance
Certificate to be duly executed by its duly authorized Chief Financial Officer
this ____ day of _________, 1996.
FELCOR SUITE HOTELS, INC
By:
-----------------------------------
[Name], Chief Financial Officer
FELCOR SUITES LIMITED PARTNERSHIP
By: FELCOR SUITE HOTELS, INC
By:
-------------------------------
[Name], Chief Financial Officer
G-4
<PAGE> 192
EXHIBIT H
[INTENTIONALLY OMITTED]
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EXHIBIT I
[FORM OF] SUBSIDIARY GUARANTY
GUARANTY, dated _____________, 1996, made by __________, a
____________ [limited partnership][limited liability company](the "Guarantor"),
in favor of the Guarantied Parties referred to below.
W I T N E S S E T H:
WHEREAS, FelCor Suite Hotels, Inc., a Maryland corporation and FelCor
Suites Limited Partnership, a Delaware limited partnership (collectively, the
"Borrower"), have entered into a Revolving Credit Agreement, dated as of
__________, 1996, with the financial institutions party thereto, The Chase
Manhattan Bank, as administrative agent for said financial institutions (the
"Administrative Agent") and Wells Fargo Bank, National Association, as
documentation agent (the "Documentation Agent") (said Agreement, as it may be
amended or otherwise modified from time to time, being the "Credit Agreement",
and capitalized terms not defined herein but defined therein being used herein
as therein defined); and
WHEREAS, the Borrower either directly or indirectly owns beneficially
100% of the capital stock of the Guarantor; the Borrower is the principal
financing entity for capital requirements of its Subsidiaries, and from time to
time the Borrower has made and will continue to make capital contributions and
advances to its Subsidiaries, including the Guarantor; the Borrower and the
Guarantor are members of the same consolidated group of companies and are
engaged in related businesses; and the Guarantor will derive direct and
indirect economic benefit from the Loans; and
WHEREAS, it is a condition precedent under the Credit Agreement to the
making of Loans that the Guarantor shall have executed and delivered this
Guaranty; and
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WHEREAS, the Lenders, the Administrative Agent and the
Documentation Agent are herein referred to as the "Guarantied Parties";
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to make Loans, the Guarantor hereby agrees as follows:
SECTION 1. Guaranty. The Guarantor hereby unconditionally
and irrevocably guarantees the full and prompt payment when due, whether at
stated maturity, by acceleration or otherwise, of, and the performance of, the
Obligations, whether now or hereafter existing and whether for principal,
interest, fees, expenses or otherwise, and any and all expenses (including,
without limitation, counsel fees and expenses) incurred by any of the
Guarantied Parties in enforcing any rights under this Guaranty. This Guaranty
is an absolute guaranty of payment and performance and not a guaranty of
collection.
SECTION 2. Guaranty Absolute. The Guarantor guaranties that
the Obligations will be paid strictly in accordance with the terms of the
Credit Agreement, the Notes and the other Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Guarantied Parties with
respect thereto. The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any
provision of any other Loan Document or any other agreement or instrument
relating to any Loan Document, or avoidance or subordination of any of the
Obligations;
(ii) any change in the time, manner or place of payment
of, or in any other term of, or any increase in the amount of, all or any of
the Obligations, or any other amendment or waiver of any term of, or any
consent
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to departure from any requirement of, the Credit Agreement, the Notes
or any of the other Loan Documents;
(iii) any release or amendment or waiver of any term of any
other guaranty of, or any consent to departure from any requirement of any
other guaranty of, all or any of the Obligations;
(iv) the absence of any attempt to collect any of the
Obligations from the Borrower or for any other guarantor or any other action to
enforce the same or the election of any remedy by any of the Guarantied
Parties;
(v) any waiver, consent, extension, forbearance or
granting of any indulgence by any of the Guarantied Parties with respect to any
provision of any other Loan Document;
(vi) the election by any of the Guarantied Parties in any
proceeding under chapter 11 of title 11 of the United States Code, as amended,
or any successor statute (the "Bankruptcy Code"), of the application of section
1111(b)(2) of the Bankruptcy Code;
(vii) any borrowing or grant of a security interest by the
Borrower, as debtor-in-possession, under section 364 of the Bankruptcy Code;
(viii) the disallowance, under section 502 of the Bankruptcy
Code, of all or any portion of the claims of any of the Guarantied Parties for
payment of any of the Obligations; or
(ix) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a borrower or a
guarantor.
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SECTION 3. Waiver. (a) The Guarantor hereby (i) waives (A)
promptness, diligence, notice of acceptance and any and all other notices with
respect to any of the Obligations or this Guaranty, (B) the filing of any claim
with a court in the event of receivership or bankruptcy of the Borrower, (C)
protest or notice with respect to nonpayment of all or any of the Obligations,
(D) the benefit of any statute of limitation, (E) all demands whatsoever (and
any requirement that same be made on the Borrower as a condition precedent to
the Guarantor's obligations hereunder); and (ii) covenants and agrees that this
Guaranty will not be discharged except by complete performance of the
Obligations and any other obligations of the Guarantor contained herein.
(b) If, in the exercise of any of its rights and
remedies, any of the Guarantied Parties shall forfeit any of its rights or
remedies, including, without limitation, its right to enter a deficiency
judgment against the Borrower or any other Person, whether because of any
applicable law pertaining to "election of remedies" or the like, the Guarantor
hereby consents to such action by such Guarantied Party and waives any claim
based upon such action. Any election of remedies which results in the denial
or impairment of the right of such Guarantied Party to seek a deficiency
judgment against the Borrower shall not impair the obligation of the Guarantor
to pay the full amount of the Obligations or any other obligation of the
Guarantor contained herein.
(c) Intentionally Omitted
(d) The Guarantor agrees that notwithstanding the
foregoing and without limiting the generality of the foregoing if, after the
occurrence and during the continuance of an Event of Default, the Guarantied
Parties are prevented by applicable law from exercising their respective rights
to accelerate the maturity of the
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Obligations, to collect interest on the Obligations, or to enforce or exercise
any other right or remedy with respect to the Obligations, the Guarantor agrees
to pay to the Administrative Agent for the account of the Guarantied Parties,
upon demand therefor, the amount that would otherwise have been due and payable
had such rights and remedies been permitted to be exercised by the Guarantied
Parties.
(e) The Guarantor hereby assumes responsibility for
keeping itself informed of the financial condition of the Borrower and of each
other guarantor of all or any part of the Obligations, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations or any
part thereof, that diligent inquiry would reveal. The Guarantor hereby agrees
that the Guarantied Parties shall have no duty to advise the Guarantor of
information known to any of the Guarantied Parties regarding such condition or
any such circumstance. In the event that any of the Guarantied Parties in its
sole discretion undertakes at any time or from time to time to provide any such
information to the Guarantor, such Guarantied Party shall be under no
obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which, pursuant to accepted
or reasonable banking or commercial finance practices, such Guarantied Party
wishes to maintain confidential or (iii) to make any other or future
disclosures of such information or any other information to the Guarantor.
(f) The Guarantor consents and agrees that the Guarantied
Parties shall be under no obligation to marshall any assets in favor of the
Guarantor or otherwise in connection with obtaining payment of any or all of
the Obligations from any Person or source.
SECTION 4. No Subrogation Etc. Except as provided in Section
12 hereof, the Guarantor waives and
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relinquishes any and all rights which it may acquire by way of subrogation,
contribution or reimbursement by reason of this Guaranty or by any payment made
hereunder.
SECTION 5. Representations and Warranties. The Guarantor
hereby represents and warrants to the Guarantied Parties as follows:
(a) The Guarantor is a [limited liability
company][limited partnership] duly organized, validly existing and in good
standing under the laws of the State of ____________; (ii) is duly qualified as
a foreign [limited liability company][limited partnership] and in good standing
under the laws of each jurisdiction, except for failures which in the aggregate
would have no Material Adverse Effect; (iii) has all requisite [company]
[partnership] power and authority and the legal right to own, pledge, mortgage
and operate its properties, to lease the property it operates under lease and
to conduct its business as now or currently proposed to be conducted; (iv) is
in compliance with its [certificate of limited partnership and limited
partnership agreement][articles of organization and operating agreement]; (v)
is in compliance with all other applicable Requirements of Law except for such
noncompliances as in the aggregate would have no Material Adverse Effect; and
(vi) has all necessary licenses, permits, consents or approvals from or by, has
made all necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, operation and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to secure
the grant or transfer thereof or failures which in the aggregate would have no
Material Adverse Effect.
(b) The execution, delivery and performance by the
Guarantor of this Guaranty and the other Loan Documents to which it is a party:
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(i) are within its [company][partnership] powers;
(ii) have been duly authorized by all necessary
[company][partnership] action, including, without limitation,
the consent of [members][partners] where required; and
(iii) do not and will not (A) contravene its
[certificate of limited partnership or limited partnership
agreement][articles of organization or operating agreement] or
other comparable governing documents, (B) violate any other
applicable Requirement of Law (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System), or any order or decree of any
Governmental Authority or arbitrator, (C) conflict with or
result in the breach of, or constitute a default under, or
result in or permit the termination or acceleration of, any of
its Contractual Obligations, (D) result in the creation or
imposition of any Lien upon any of its property, or (E)
require the consent, authorization by, or approval of, or
notice to, or filing or registration with, any Governmental
Authority or any other Person, other than those which have
been obtained and copies of which have been delivered to the
Administrative Agent pursuant to Section 3.1 of the Credit
Agreement, each of which is in full force and effect.
(c) This Guaranty has been duly executed and delivered by the
Guarantor and is the legal, valid and binding obligation of the Guarantor
enforceable against it in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting the
enforcement of creditor's rights and remedies generally.
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(d) There are no pending or, to the knowledge of the
Guarantor, threatened actions, investigations or proceedings affecting the
Guarantor or any of its subsidiaries before any Governmental Authority or
arbitrator other than those that in the aggregate, if adversely determined,
would have no Material Adverse Effect. The performance by the Guarantor under
this Guaranty and under each of the other Loan Documents to which it is a party
is not restrained or enjoined (either temporarily, preliminarily or
permanently) and no conditions have been imposed by any Governmental Authority
or arbitrator that in the aggregate would have a Material Adverse Effect.
SECTION 6. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
herefrom shall in any event be effective unless the same shall be in writing,
approved by the Majority Lenders and signed by the Administrative Agent, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed by all the
Guarantied Parties, limit the liability of the Guarantor [(other than as
expressly provided herein)] or postpone any date fixed for payment hereunder.
SECTION 7. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand, if to the Guarantor,
addressed to it at the address of such Guarantor specified on the signature
pages hereof, if to any Guarantied Party, addressed to it at the address of
such Guarantied Party specified in the Credit Agreement, or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party complying as to delivery with the terms of this Section.
All such notices and other
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communications shall, when mailed, telegraphed, telexed, telecopied, cabled or
delivered, be effective when deposited in the mails, delivered to the telegraph
company, confirmed by telex answerback, telecopied with confirmation of
receipt, delivered to the cable company or delivered by hand to the addressee
or its agent, respectively.
SECTION 8. No Waiver; Remedies. (a) No failure on the part
of any Guarantied Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or any of the
other Loan Documents.
(b) Failure by any of the Guarantied Parties at any time
or times hereafter to require strict performance by the Borrower, the Guarantor
or any other Person of any of the provisions, warranties, terms or conditions
contained in any of the Loan Documents now or at any time or times hereafter
executed by the Borrower, the Guarantor or such other Person and delivered to
any of the Guarantied Parties shall not waive, affect or diminish any right of
any of the Guarantied Parties at any time or times hereafter to demand strict
performance thereof, and such right shall not be deemed to have been modified
or waived by any course of conduct or knowledge of any of the Guarantied
Parties or any agent, officer, employee of any of the Guarantied Parties.
(c) No waiver by the Guarantied Parties of any default
shall operate as a waiver of any other default or the same default on a future
occasion, and no action by any of the Guarantied Parties permitted hereunder
shall in any way affect or impair any of the rights of the Guarantied Parties
or the obligations of the Guarantor under this Guaranty or under any of the
other Loan Documents. Any determination by a court of competent jurisdiction
of the
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amount of any principal and/or interest or other amount constituting any of the
Obligations shall be conclusive and binding on the Guarantor irrespective of
whether the Guarantor was a party to the suit or action in which such
determination was made.
SECTION 9. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default, each of the Guarantied Parties is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Guarantied Party to or for the credit or
the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Guarantied Party shall have made any demand under this
Guaranty and although such obligations may be contingent and unmatured. Each
of the Guarantied Parties agrees promptly to notify the Guarantor after any
such set-off and application made by such Guarantied Party; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Guarantied Party under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Guarantied Party may have.
SECTION 10. Continuing Guaranty; Transfer of Notes. This
Guaranty is a continuing guaranty and shall (i) remain in full force and effect
until indefeasible payment in full of the Obligations and all other amounts
payable under this Guaranty, (ii) be binding upon the Guarantor, its successors
and assigns, and (iii) inure to the benefit of and be enforceable by the
Guarantied Parties and their respective successors, transferees, and assigns.
Without limiting the generality of the foregoing clause (iii), any of the
Guarantied Parties may assign or otherwise transfer
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any Note held by it or Obligation owing to it to any other Person, and such
other Person shall thereupon become vested with all the rights in respect
thereof granted to such Guarantied Party herein or otherwise with respect to
such of the Notes and Obligations so transferred or assigned, subject, however,
to compliance with the provisions of Section 10.7 of the Credit Agreement in
respect of assignments.
SECTION 11. Limitation of Guaranty. Any term or provision of
this Guaranty or any other Loan Document to the contrary notwithstanding, the
maximum aggregate amount of the Obligations for which the Guarantor shall be
liable shall not exceed the maximum amount for which such Guarantor can be
liable without rendering this Guaranty or any other Loan Document, as it
relates to such Guarantor, voidable under Section 548 of the United States
Bankruptcy Code or any comparable provision of any state law or any applicable
law relating to fraudulent conveyance or fraudulent transfer.
SECTION 12. Contribution. To the extent that any Guarantor
shall be required hereunder to pay a portion of the Obligation which shall
exceed the greater of (i) the amount of the economic benefit actually received
by such Guarantor from the Loans and (ii) the amount which such Guarantor would
otherwise have paid if such Guarantor had paid the aggregate amount of the
Obligations (excluding the amount thereof repaid by the Borrower and the other
Guarantors) in the same proportion as such Guarantor's net worth at the date
enforcement hereunder is sought bears to the aggregate net worth of all the
Guarantors at the date enforcement hereunder is sought, then such Guarantor
shall be reimbursed by the Borrower and the other Guarantors for the amount of
such excess, pro rata based on the respective net worths of the Borrower and
such other Guarantors at the date enforcement hereunder is sought.
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SECTION 13. Reinstatement. This Guaranty shall remain in
full force and effect and continue to be effective should any petition be filed
by or against any Loan Party for liquidation or reorganization, should any Loan
Party become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of
any Loan Party's assets, and shall, to the fullest extent permitted by law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations or such part thereof,
whether as a "voidable preference", "fraudulent transfer", or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
SECTION 14. Governing Law. This Guaranty shall be governed
by, and be construed and interpreted in accordance with, the law of the State
of New York. Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the remaining provisions of
this Guaranty.
SECTION 15. Submission to Jurisdiction; Jury Trial. (a) Any
legal action or proceeding with respect to this Guaranty or any document
related thereto may be brought in the courts of the State of New York or the
United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, the Guarantor hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Guarantor
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hereby irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions and consents to the
granting of such legal or equitable relief as is deemed appropriate by the
court.
(b) The Guarantor irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the guarantor at its address provided herein, such service to become effective
30 days after such mailing.
(c) Nothing contained in this Section 14 shall affect the
right of any Guarantied Party to serve process in any other manner permitted by
law or commence legal proceedings or otherwise proceed against the Guarantor or
any of the Guarantor's property in any other jurisdiction.
(d) The Guarantor waives any right it may have to trial
by jury in respect of any litigation based on, arising out of, under or in
connection with this Guaranty or any other Loan Document, or any course of
conduct, course of dealing, verbal or written statement or other action of any
Loan Party or any Guarantied Party.
SECTION 16. Section Titles. The Section titles contained in
this Guaranty are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of this Guaranty.
SECTION 17. Execution in Counterparts. This Guaranty may be
executed in any number of counterparts and by different parties hereto in
separate counterparts,
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each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same Guaranty.
SECTION 18. Miscellaneous. All references herein to the
Borrower or to the Guarantor shall include their respective successors and
assigns, including, without limitation, a receiver, trustee or
debtor-in-possession of or for the Borrower or the Guarantor. All references
to the singular shall be deemed to include the plural where the context so
requires.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed and delivered by its duly authorized officer on the date first
above written.
[GUARANTOR]
By:
-----------------------------------
Title:
Address:
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,083
<SECURITIES> 0
<RECEIVABLES> 3,755
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,454
<PP&E> 832,126
<DEPRECIATION> 28,029
<TOTAL-ASSETS> 866,913
<CURRENT-LIABILITIES> 4,101
<BONDS> 124,889
0
151,250
<COMMON> 235
<OTHER-SE> 508,218
<TOTAL-LIABILITY-AND-EQUITY> 866,913
<SALES> 0
<TOTAL-REVENUES> 74,997
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,273
<INCOME-PRETAX> 35,106
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,106
<DISCONTINUED> 0
<EXTRAORDINARY> 2,354
<CHANGES> 0
<NET-INCOME> 32,752
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
</TABLE>
