<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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 1-14236
FELCOR LODGING TRUST INCORPORATED
(Exact name of registrant as specified in its charter)
MARYLAND 72-2541756
(State or other jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization)
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
Lodging Trust Incorporated outstanding on May 11, 1999 was 68,064,892.
- --------------------------------------------------------------------------------
<PAGE> 2
FELCOR LODGING TRUST INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page
----
PART I. -- FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements....................................................................... 3
FELCOR LODGING TRUST INCORPORATED
Consolidated Balance Sheets - March 31, 1999 (Unaudited)
and December 31, 1998.................................................................... 3
Consolidated Statements of Operations -- For the Three Months
Ended March 31, 1999 and 1998 (Unaudited)................................................ 4
Consolidated Statements of Cash Flows -- For the Three Months
Ended March 31, 1999 and 1998 (Unaudited)................................................ 5
Notes to Consolidated Financial Statements................................................ 6
DJONT OPERATIONS, L.L.C.
Consolidated Balance Sheets - March 31, 1999 (Unaudited)
and December 31, 1998.................................................................... 14
Consolidated Statements of Operations -- For the Three Months
Ended March 31, 1999 and 1998 (Unaudited)................................................ 15
Consolidated Statements of Cash Flows -- For the Three Months
Ended March 31, 1999 and 1998 (Unaudited)................................................ 16
Notes to Consolidated Financial Statements................................................ 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 19
General/First Quarter Highlights.......................................................... 19
Results of Operations..................................................................... 20
Liquidity and Capital Resources........................................................... 24
PART II. -- OTHER INFORMATION
Item 2. Changes in Securities...................................................................... 29
Item 5. Other Information.......................................................................... 29
Item 6. Exhibits and Reports on Form 8-K........................................................... 29
SIGNATURE............................................................................................ 30
</TABLE>
2
<PAGE> 3
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Investment in hotels, net of accumulated depreciation of $214,333
in 1999 and $178,072 in 1998 .................................................. $ 4,010,960 $ 3,955,582
Investment in unconsolidated entities .......................................... 138,987 148,065
Cash and cash equivalents ...................................................... 26,644 34,692
Due from Lessees ............................................................... 31,513 18,968
Deferred expenses, net of accumulated amortization of $2,704
in 1999 and $2,096 in 1998 .................................................... 15,982 10,041
Other assets ................................................................... 7,685 8,035
----------- -----------
Total assets ........................................................ $ 4,231,771 $ 4,175,383
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt, net of discount of $1,571 in 1999 and $1,628 in 1998 ..................... $ 1,671,191 $ 1,594,734
Distributions payable .......................................................... 42,547 67,262
Accrued expenses and other liabilities ......................................... 68,318 57,312
Minority interest in Operating Partnership, 2,988 and 2,939 units issued and
outstanding at March 31, 1999 and December 31, 1998, respectively ............. 88,528 87,353
Minority interest in other partnerships ........................................ 51,911 51,105
----------- -----------
Total liabilities ................................................... 1,922,495 1,857,766
----------- -----------
Commitments and contingencies (Notes 3 and 5)
Shareholders' equity:
Preferred stock, $.01 par value, 20,000 shares authorized:
Series A Cumulative Preferred Stock, 6,050 shares issued and outstanding ...... 151,250 151,250
Series B Redeemable Preferred Stock, 58 shares issued and outstanding ......... 143,750 143,750
Common stock, $.01 par value, 200,000 shares authorized, 69,289 and 69,284
shares issued, including shares in treasury, at March 31, 1999
and December 31, 1998, respectively ........................................... 693 693
Additional paid-in capital ..................................................... 2,141,866 2,142,250
Distributions in excess of earnings ............................................ (86,796) (78,839)
Common stock in treasury, at cost, 1,213 shares ................................ (41,487) (41,487)
----------- -----------
Total shareholders' equity .......................................... 2,309,276 2,317,617
----------- -----------
Total liabilities and shareholders' equity .......................... $ 4,231,771 $ 4,175,383
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE> 4
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED, IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Percentage lease revenue ............................................. $ 124,991 $ 56,060
Equity in income from unconsolidated entities ........................ 1,246 1,293
Other revenue ........................................................ 680 175
----------- -----------
Total revenues ............................................. 126,917 57,528
----------- -----------
Expenses:
General and administrative ........................................... 2,244 1,199
Depreciation ......................................................... 36,425 15,887
Taxes, insurance, and other .......................................... 20,953 7,270
interest expense ..................................................... 28,422 9,731
Minority interest in Operating Partnership ........................... 1,320 1,751
Minority interest in other partnerships .............................. 806 190
----------- -----------
Total expenses ............................................. 90,170 36,028
----------- -----------
Income before extraordinary charge .................................... 36,747 21,500
Extraordinary charge from write off of deferred financing fees ........ 556
----------- -----------
Net income ............................................................ 36,747 20,944
Preferred dividends ................................................... 6,184 2,949
----------- -----------
Income applicable to common shareholders .............................. $ 30,563 $ 17,995
=========== ===========
Per common share data:
Basic:
Income applicable to common shareholders before extraordinary
charge ............................................................ $ 0.45 $ 0.51
Extraordinary charge ................................................. (0.02)
----------- -----------
Net income applicable to common shareholders ......................... $ 0.45 $ 0.49
=========== ===========
Weighted average common shares outstanding ........................... 68,009 36,539
Diluted:
Income applicable to common shareholders before extraordinary
charge ............................................................ $ 0.45 $ 0.51
Extraordinary charge ................................................. (0.02)
----------- -----------
Net income applicable to common shareholders ......................... $ 0.45 $ 0.49
=========== ===========
Weighted average common shares outstanding ........................... 68,344 36,905
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 5
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ......................................................... $ 36,747 $ 20,944
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation .................................................... 36,425 15,887
Amortization of deferred financing fees ......................... 608 628
Accretion of debt ............................................... (262)
Amortization of unearned officers' and directors' compensation .. 173 191
Equity in income from unconsolidated entities ................... (1,246) (1,293)
Extraordinary charge for write off of deferred financing fees ... 556
Minority interest in Operating Partnership ...................... 1,320 1,751
Minority interest in other partnerships ......................... 806 190
Changes in assets and liabilities:
Due from Lessees ................................................ (12,545) (14,907)
Deferred financing fees ......................................... (6,549) (84)
Other assets .................................................... 306 (2,898)
Accrued expenses and other liabilities .......................... 5,677 12,212
----------- -----------
Net cash flow provided by operating activities ................. 61,460 33,177
----------- -----------
Cash flows used in investing activities:
Acquisition of hotels .............................................. (10,802) (26,516)
Acquisition of unconsolidated entities ............................. (10)
Sale of hotels ..................................................... 9,916
Improvements and additions to hotels ............................... (81,781) (5,227)
Cash distributions from unconsolidated entities .................... 10,180 14,510
----------- -----------
Net cash flow used in investing activities ..................... (72,487) (17,243)
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings ........................................... 153,000 30,000
Repayment of borrowings ............................................ (79,041) (13,078)
Distributions paid to limited partners ............................. (2,630) (1,667)
Distributions paid to preferred shareholders ....................... (7,436) (2,949)
Distributions paid to common shareholders .......................... (60,914) (20,050)
----------- -----------
Net cash flow provided by (used in) financing activities ....... 2,979 (7,744)
----------- -----------
Net change in cash and cash equivalents ............................. (8,048) 8,190
Cash and cash equivalents at beginning of periods ................... 34,692 17,543
----------- -----------
Cash and cash equivalents at end of periods ......................... $ 26,644 $ 25,733
=========== ===========
Supplemental cash flow information --
Interest paid ...................................................... $ 22,347 $ 9,320
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 6
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND FIRST QUARTER HIGHLIGHTS
FelCor Lodging Trust Incorporated ("FelCor") is one of the nation's
largest hotel real estate investment trusts ("REIT") which, at March 31, 1999,
owned interests in 189 hotels with nearly 50,000 rooms and suites (collectively
the "Hotels") through its greater than 95% equity interest in FelCor Lodging
Limited Partnership (the "Operating Partnership"). FelCor, the Operating
Partnership, and their subsidiaries are herein referred to, collectively, as the
"Company". The Company owns 100% interests in 165 of the Hotels, a 90% or
greater interest in entities owning seven hotels, a 60% interest in an entity
owning two hotels and 50% interests in separate entities that own 15 hotels.
FelCor strives to be the premier full-service lodging REIT partnered
with leading brands and management companies to create shareholder value. The
Company is the owner of the largest number of Embassy Suites(R), Crowne
Plaza(R), Holiday Inn(R), and independently owned Doubletree(R) branded hotels
in the world. The following table presents the Hotels by brand operated by each
of the Company's Lessees at March 31, 1999:
<TABLE>
<CAPTION>
BRAND DJONT BRISTOL TOTAL
----- ----- ------- -----
<S> <C> <C> <C>
Embassy Suites 59 59
Holiday Inn 47 47
Doubletree and Doubletree Guest Suites(R) 16 16
Crowne Plaza and Crowne Plaza Suites(R) 14 14
Holiday Inn Select(R) 11 11
Sheraton(R)and Sheraton Suites(R) 9 9
Hampton Inn(R) 9 9
Holiday Inn Express(R) 6 6
Fairfield Inn(R) 5 5
Harvey Hotel(R) 4 4
Independents 3 3
Courtyard by Marriott(R) 2 2
Four Points by Sheraton(R) 1 1
Hilton Suites(R) 1 1
Homewood Suites(R) 1 1
Westin(R) 1 1
--- ---- ----
Total Hotels 86 103 189
=== ==== ====
</TABLE>
The Hotels are located in the United States (34 states) and Canada,
with 79 hotels in California, Florida and Texas. The following table provides
information regarding the net acquisition of hotels through March 31, 1999:
<TABLE>
<CAPTION>
NET HOTELS
ACQUIRED/(DISPOSED)
-------------------
<S> <C>
1994 7
1995 13
1996 23
1997 30
1998 120
FIRST QUARTER 1999 (4)
----
189
====
</TABLE>
6
<PAGE> 7
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND FIRST QUARTER HIGHLIGHTS -- (CONTINUED)
At March 31, 1999 the Company leased 86 of the Hotels to DJONT
Operations, L.L.C., a Delaware limited liability company, or a consolidated
subsidiary thereof (collectively "DJONT"), 102 of the Hotels to Bristol Hotels &
Resorts or a consolidated subsidiary thereof ("Bristol" and, together with
DJONT, the "Lessees"). One hotel, managed by Bristol, was not leased.
Thomas J. Corcoran, Jr., the President, Chief Executive Officer, and a
Director of FelCor, and Hervey A. Feldman, Chairman Emeritus of FelCor,
beneficially own a 50% voting common equity interest in DJONT. The remaining 50%
nonvoting common equity interest is beneficially owned by the children of
Charles N. Mathewson, a director of FelCor and major initial investor in the
Company. DJONT has entered into management agreements pursuant to which 73 of
the Hotels leased by it are managed by subsidiaries of Promus Hotel Corporation
("Promus"), ten are managed by subsidiaries of Starwood Hotels & Resorts
Worldwide, Inc. ("Starwood"), and three are managed by two independent
management companies.
Bristol leases and manages 102 Hotels and manages one hotel which
operated without a lease. Bristol is one of the largest independent hotel
operating companies in North America and operates the largest number of Bass
Hotels & Resorts-branded hotels in the world.
A brief discussion of the first quarter 1999 highlights follows:
o Completed renovations at six hotels at a total project cost of $23.8
million.
o Twenty-four additional hotels undergoing renovation.
o Capital expenditures to the Hotel portfolio per the Company's
renovation and redevelopment program totaled $73 million in addition to
$9 million of routine capital replacements and improvements.
o Four of the hotels acquired in the merger with Bristol Hotel Company in
1998 (the "Bristol Merger") were sold during the quarter - two in
Colorado Springs, Colorado, and one each in Columbia, South Carolina
and Flagstaff, Arizona - for an aggregate sales price of $10.5 million
($9.9 million net proceeds). One additional hotel was sold in April
1999 for $2.1 million and FelCor has a pending sales contract on one
hotel for $3.3 million which is expected to close within the next
couple of months. One additional hotel acquired in the Bristol Merger
is being actively offered for sale. No significant gain or loss has
occurred or is expected to occur with respect to the sale of these
hotels.
o Declared first quarter dividends of $0.55 per common share, $0.4875 per
$1.95 Series A Cumulative Convertible Preferred Share and $0.5625 per
depositary share evidencing the 9% Series B Cumulative Redeemable
Preferred Stock.
Certain reclassifications have been made to prior period financial
information to conform to the current period's presentation with no effect to
previously reported net income or shareholders' equity.
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 DJONT included in FelCor's Annual Report on Form 10-K for the
year ended December 31, 1998 (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. The financial statements
for the three months ended March 31, 1999 and 1998 are unaudited; however, in
the opinion of management, all adjustments (which include only normal recurring
accruals) have been made which are considered necessary to present fairly the
operating results and financial position of the Company for the unaudited
periods.
7
<PAGE> 8
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT IN UNCONSOLIDATED ENTITIES
At March 31, 1999, the Company owned 50% interests in separate entities
owning 15 hotels, a parcel of undeveloped land, and a condominium management
company. The Company also owned a 97% nonvoting interest in an entity that is
developing condominiums for sale and owns a recently completed hotel annex. The
Company is accounting for its investments in these unconsolidated entities under
the equity method.
Summarized combined financial information for 100% of these
unconsolidated entities is as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
Balance sheet information:
Investment in hotels, net of accumulated depreciation........ $267,734 $269,881
Non-recourse mortgage debt................................... $191,664 $176,755
Equity....................................................... $ 95,980 $105,347
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
----------- -----------
<S> <C> <C>
Statements of operations information:
Percentage lease revenue ........................... $ 12,571 $ 12,347
Other income ....................................... 1,589 160
----------- -----------
Total revenue ............................. 14,160 12,507
----------- -----------
Expenses:
Depreciation ....................................... 4,879 4,263
Taxes, insurance, and other ........................ 2,342 1,567
Interest expense ................................... 3,219 3,259
----------- -----------
Total expenses ............................ 10,440 9,089
----------- -----------
Net income ......................................... $ 3,720 $ 3,418
=========== ===========
Net income attributable to the Company ............. $ 1,781 $ 1,709
Amortization of cost in excess of book value ....... (535) (416)
----------- -----------
Equity in income from unconsolidated entities ...... $ 1,246 $ 1,293
=========== ===========
</TABLE>
3. DEBT
On March 4, 1999 the Company completed a $63 million first mortgage
term loan ("Mortgage Loan"). The Mortgage Loan is collateralized by three
hotels, bears interest at 200 basis points over LIBOR (30 day LIBOR at March 31,
1999, was 4.94%), matures in February 2003 and amortizes over 25 years. The
proceeds from this loan were used to pay off a $44 million mortgage loan due
December 2002 and to acquire ownership of land previously held under ground
lease.
8
<PAGE> 9
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. DEBT -- (CONTINUED)
Debt at March 31, 1999 and December 31, 1998 consists of the following
(in thousands): (see "Subsequent Events" Note 8)
<TABLE>
<CAPTION>
OUTSTANDING BALANCE
--------------------------------------
INTEREST RATE MATURITY DATE MARCH 31, 1999 DECEMBER 31, 1998
------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
FLOATING RATE DEBT:
Line of Credit LIBOR + 150bp June 2001 $ 480,000 $ 411,000
Term Loan LIBOR + 150bp December 1999 250,000 250,000
Mortgage debt LIBOR + 200bp February 2003 63,000
Other Up to LIBOR + 150bp Various 25,650 34,750
---------- ----------
Total floating rate debt 818,650 695,750
---------- ----------
FIXED RATE DEBT:
Line of credit - swapped 7.24% June 2001 325,000 325,000
Publicly-traded term notes 7.38% October 2004 174,279 174,249
Publicly-traded term notes 7.63% October 2007 124,150 124,122
Mortgage debt 7.24% November 2007 144,212 145,062
Mortgage debt 6.97% December 2002 43,836
Other 6.96% - 7.23% 2000 - 2005 84,900 86,715
---------- ----------
Total fixed rate debt 852,541 898,984
---------- ----------
Total debt $1,671,191 $1,594,734
========== ==========
</TABLE>
A portion of the Company's Line of Credit is matched with interest rate
swap agreements which effectively convert the variable rate on the Line of
Credit to a fixed rate.
The Line of Credit and the Term Loan contain various affirmative and
negative covenants including limitations on total indebtedness, total secured
indebtedness, and cash distributions, as well as the obligation to maintain
certain minimum tangible net worth and certain minimum interest and debt service
coverage ratios. At March 31, 1999, the Company was in compliance with all such
covenants.
The Company's other borrowings contain affirmative and negative
covenants that are generally equal to or less restrictive than the Line of
Credit and Term Loan. Most of the collateralized borrowings are nonrecourse to
the Company (with certain exceptions) and contain provisions allowing for the
substitution of collateral upon satisfaction of certain conditions. Most of the
collateralized borrowings are prepayable; however they are subject to various
prepayment penalties, yield maintenance, or defeasance obligations.
9
<PAGE> 10
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. TAXES, INSURANCE, AND OTHER
Taxes, insurance, and other is comprised of the following for the three
months ended March 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
----------- -----------
<S> <C> <C>
Real estate and personal property taxes ........ $ 14,636 $ 6,566
Property insurance ............................. 853 252
Land lease expense ............................. 4,006 227
State franchise taxes .......................... 1,074 225
Other .......................................... 384
----------- -----------
Total taxes, insurance, and other ..... $ 20,953 $ 7,270
=========== ===========
</TABLE>
5. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company is to receive rental income from the Lessees under the
Percentage Leases which expire in 2002 (six hotels), 2003 (four hotels), 2004
(12 hotels), 2005 (19 hotels), 2006 (26 hotels), 2007 (37 hotels), 2008 (54
hotels), and thereafter (16 hotels). The rental income under the Percentage
Leases between 14 of the unconsolidated entities, of which the Company owns 50%,
is payable by the Lessee to the respective entities and is not included in the
following schedule of future lease commitments to the Company. Minimum future
rental income (i.e., base rents) payable to the Company under these
noncancellable operating leases at March 31, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
DJONT BRISTOL TOTAL
---------- ---------- ----------
<S> <C> <C> <C>
Remainder of 1999.................................... $ 104,392 $ 117,108 $ 221,500
2000................................................. 140,749 180,626 321,375
2001................................................. 144,123 180,647 324,770
2002................................................. 144,480 180,620 325,100
2003................................................. 130,445 177,873 308,318
2004 and thereafter.................................. 519,383 822,832 1,342,215
---------- ---------- ----------
$1,183,572 $1,659,706 $2,843,278
========== ========== ==========
</TABLE>
Certain entities owning interests in DJONT and managers for certain
hotels have agreed to make loans to DJONT of up to an aggregate of approximately
$17.3 million to the extent necessary to enable DJONT to pay rent and other
obligations due under the respective Percentage Leases relating to a total of 34
of the Hotels. No loans were outstanding under such agreements at March 31,
1999.
DJONT engages third-party managers to operate the Hotels leased by it
and generally pays such managers a base management fee based on a percentage of
room and suite revenue and an incentive management fee based on DJONT's income
before overhead expenses for each hotel. In certain instances, the hotel
managers have subordinated fees and committed to make subordinated loans to
DJONT, if needed, to meet its rental and other obligations under the Percentage
Leases.
Bristol serves as both the lessee and manager of 102 Hotels leased to
it by the Company at March 31, 1999 and, as such, is compensated for both roles
through the profitability of the Hotels, after meeting their operating expenses
and rental obligations under the Percentage Leases.
10
<PAGE> 11
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS AND RELATED PARTY TRANSACTIONS -- (CONTINUED)
Bristol has entered into an absolute and unconditional guarantee of the
obligations of the Bristol Lessees under the Percentage Leases. As an additional
credit enhancement, the Bristol Lessees obtained a letter of credit (the "Letter
of Credit") issued by Bankers Trust Company for the benefit of the Company in
the original amount of $20 million that is required to be maintained until July
27, 1999. This Letter of Credit is subject to periodic reductions upon
satisfaction of certain conditions and at March 31, 1999, was in the amount of
$15.9 million. According to Bristol's financial statements filed with the SEC,
for the three months ended March 31, 1999, Bristol earned $1.1 million of net
income and at March 31, 1999, had stockholders' equity of $36.6 million.
The Company has a Renovation and Redevelopment Program for the Hotels
and presently expects approximately $160 million to be invested during 1999
under this program, which may be funded from cash on hand or borrowings under
its Line of Credit. Through the three months ending March 31, 1999 the Company
has spent approximately $73 million under the Renovation and Redevelopment
program.
Bristol is a public company whose common stock is listed on the New
York Stock Exchange under the symbol BH and that files its financial statements
with the SEC in accordance with the Securities and Exchange Act of 1934.
6. SUPPLEMENTAL CASH FLOW INFORMATION
During the first three months of 1999, the Company purchased the land
related to three hotels which were previously leased under long term land leases
for an aggregate purchase price of $19.8 million as follows (in thousands):
<TABLE>
<S> <C>
Assets acquired................................................. $ 19,776
Debt assumed.................................................... (7,800)
Operating Partnership units issued.............................. (1,174)
-------
Net cash paid by the Company............................... $10,802
========
</TABLE>
The debt assumed was paid off immediately after the purchase.
7. SEGMENT INFORMATION
The Company has determined that its reportable segments are those that
are consistent with the Company's method of internal reporting, which segments
its business by Lessee. The Company's Lessees at March 31, 1999 were DJONT and
Bristol. Prior to July 28, 1998 (the date of the Bristol Merger) the Company had
only one Lessee, DJONT. Accordingly, segment information is not disclosed for
the three months ended March 31, 1998.
11
<PAGE> 12
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SEGMENT INFORMATION -- (CONTINUED)
The following table presents information for the reportable segments
for the three months ended March 31, 1999 (in thousands):
<TABLE>
<CAPTION>
CORPORATE
SEGMENT NOT ALLOCABLE CONSOLIDATED
DJONT BRISTOL TOTAL TO SEGMENTS TOTAL
------- ------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Information:
Revenues:
Percentage lease revenue...................... $73,072 $51,919 $124,991 $124,991
Equity in income from unconsolidated
entities.................................... 960 286 1,246 1,246
Other revenue................................. 24 433 457 $ 223 680
------- ------- -------- -------- --------
Total revenues............................ 74,056 52,638 126,694 223 126,917
------- ------- -------- -------- --------
Expenses:
General and administrative.................... 2,244 2,244
Depreciation.................................. 20,090 16,335 36,425 36,425
Taxes, insurance, and other................... 9,212 11,741 20,953 20,953
Interest expense.............................. 28,422 28,422
Minority interest in Operating
Partnership................................... 1,320 1,320
Minority interest in other partnerships....... 806 806 806
------- ------- -------- -------- --------
Total expenses............................ 30,108 28,076 58,184 31,986 90,170
------- ------- -------- -------- --------
Net income .................................... $43,948 $24,562 $ 68,510 $(31,763) $ 36,747
======= ======= ======== ========= ========
Funds from operations:
Net income .................................... $43,948 $24,562 $ 68,510 $(31,763) $ 36,747
Series B preferred dividends................... (3,234) (3,234)
Depreciation................................... 20,090 16,335 36,425 36,425
Depreciation for unconsolidated entities....... 2,404 187 2,591 2,591
Minority interest in Operating Partnership..... 1,320 1,320
------- ------- -------- -------- --------
Funds from operations.......................... $66,442 $41,084 $107,526 $(33,677) $ 73,849
======= ======= ======== ========= ========
Weighted average common shares and
units outstanding (1)......................... 75,988
</TABLE>
(1) Weighted average common shares and units outstanding are computed including
dilutive options and unvested stock grants, and assuming conversion of
Series A Preferred Stock to Common Stock.
8. SUBSEQUENT EVENTS
On April 1, 1999, the Company closed a five-year, $375 million term
loan (the "Senior Term Loan"). The Senior Term Loan is collateralized by stock
and partnership interests in certain subsidiaries of the Company and bears
interest at 250 basis points over LIBOR (30-day LIBOR at March 31, 1999, was
4.94%). The financial covenants in the Senior Term Loan are consistent with
those in the Company's existing Line of Credit. In connection with this
transaction, the Company's $850 million Line of Credit and existing seven and
10-year publicly-traded term
12
<PAGE> 13
FELCOR LODGING TRUST INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. SUBSEQUENT EVENTS -- (CONTINUED)
notes were equally and ratably collateralized by the same collateral securing
the Senior Term Loan. Upon the Company achieving investment grade credit ratings
from the applicable rating agencies, the stock and partnership interest
collateral will be released. The proceeds of the Senior Term Loan were used to
immediately pay off the $250 million term loan which was to mature on December
31, 1999 and to reduce borrowings under the Company's Line of Credit.
On April 1, 1999, the Company also closed a 10-year, $100 million
mortgage loan (the "April 1999 First Mortgage Term Loan"). The April 1999 First
Mortgage Term Loan is non-recourse (with certain exceptions), is secured by
seven Embassy Suites hotels, carries a fixed rate coupon of 7.54%, matures in
April 2009 and amortizes over 25 years. The proceeds from this loan were used to
reduce outstanding borrowings under the Company's Line of Credit.
On May 13, 1999, the Company closed a 10-year, $75 million mortgage
loan (the "May 1999 First Mortgage Term Loan"). This loan is non-recourse (with
certain exceptions), is collateralized by six Embassy Suites hotels, carries a
fixed rate coupon of 7.55%, matures in May 2009 and amortizes over 25 years. The
proceeds from this loan were used to reduce outstanding borrowings under the
Company's Line of Credit.
The Company presently intends to issue approximately $200 million of
seven year senior notes during the second quarter of 1999, subject to market
conditions. The net proceeds from the sale of such notes, if completed, will be
used to reduce outstanding borrowings under the Company's Line of Credit.
13
<PAGE> 14
DJONT OPERATIONS, L.L.C.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents ................................................... $ 30,932 $ 28,538
Accounts receivable, net .................................................... 39,142 27,561
Inventories ................................................................. 4,172 4,381
Prepaid expenses ............................................................ 4,477 471
Other assets ................................................................ 2,908 3,021
Investment in real estate ................................................... 12,281
------------ ------------
Total assets ........................................................... $ 93,912 $ 63,972
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, trade ..................................................... $ 6,560 $ 6,514
Accounts payable, other ..................................................... 14,241 6,994
Due to FelCor Lodging Trust Incorporated .................................... 28,678 16,875
Accrued expenses and other liabilities ...................................... 43,301 41,820
Minority interest ........................................................... 4,364
Debt ........................................................................ 7,765
------------ ------------
Total liabilities ...................................................... 104,909 72,203
------------ ------------
Commitments and contingencies (Note 2)
Shareholders' equity (deficit):
Capital ..................................................................... 1 1
Accumulated deficit ......................................................... (10,998) (8,232)
------------ ------------
Total shareholders' deficit ............................................ (10,997) (8,231)
------------ ------------
Total liabilities and shareholders' equity ................................. $ 93,912 $ 63,972
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
14
<PAGE> 15
DJONT OPERATIONS, L.L.C.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenue:
Room and suite revenue ..................... $ 167,731 $ 143,284
Food and beverage revenue .................. 21,187 15,264
Food and beverage rent ..................... 1,265 1,173
Other revenue .............................. 14,012 11,368
----------- -----------
Total revenues .................... 204,195 171,089
----------- -----------
Expenses:
Property operating costs ................... 46,228 38,605
General and administrative ................. 14,946 12,308
Advertising and promotion .................. 13,907 11,839
Repair and maintenance ..................... 9,558 7,987
Utilities .................................. 7,153 6,097
Management and incentive fees .............. 6,393 5,548
Franchise fees ............................. 4,918 4,087
Food and beverage expenses ................. 15,525 13,513
Percentage lease expenses .................. 85,844 68,438
Lessee overhead expenses ................... 266 359
Liability insurance ........................ 565 266
Interest expense ........................... 216
Other ...................................... 1,442 1,267
----------- -----------
Total expenses .................... 206,961 170,314
----------- -----------
Net income (loss) ........................... $ (2,766) $ 775
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
15
<PAGE> 16
DJONT OPERATIONS, L.L.C.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ................................................... $ (2,766) $ 775
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Changes in assets and liabilities:
Accounts receivable ............................................... (11,581) (6,958)
Inventories ....................................................... 209 9
Prepaid expenses .................................................. (4,006) 333
Other assets ...................................................... 281 842
Due to FelCor Lodging Trust Incorporated .......................... 11,803 14,907
Accounts payable, accrued expenses and other liabilities .......... 8,454 4,661
----------- -----------
Net cash flow provided by operating activities .................... 2,394 14,569
----------- -----------
Net change in cash and cash equivalents .............................. 2,394 14,569
Cash and cash equivalents at beginning of periods .................... 28,538 25,684
----------- -----------
Cash and cash equivalents at end of periods .......................... $ 30,932 $ 40,253
=========== ===========
</TABLE>
The accompany notes are an integral part of these consolidated
financial statements.
16
<PAGE> 17
DJONT OPERATIONS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Thomas J. Corcoran, Jr, the President, Chief Executive Officer and a
Director of FelCor Lodging Trust Incorporated ("FelCor"), and Hervey A. Feldman,
Chairman Emeritus of FelCor, beneficially own a 50% voting common equity
interest in DJONT Operations, L.L.C., a Delaware limited liability company. The
remaining 50% nonvoting common equity interest is beneficially owned by the
children of Charles N. Mathewson, a Director of FelCor.
Eighty-six of the hotels in which FelCor Lodging Limited Partnership
(the "Operating Partnership") had an ownership interest at March 31, 1999 (the
"DJONT Hotels"), are leased to DJONT Operations L.L.C. or a consolidated
subsidiary thereof ("DJONT") pursuant to percentage leases ("Percentage
Leases"). Certain entities owning interests in DJONT and the managers of certain
DJONT Hotels have agreed to make loans to DJONT of up to an aggregate of
approximately $17.3 million to the extent necessary to enable DJONT to pay rent
and other obligations due under the respective Percentage Leases relating to a
total of 34 of the Hotels. No loans were outstanding under such agreements at
March 31, 1999.
Fifty-nine of the Hotels are operated as Embassy Suites(R) hotels, 16
are operated as Doubletree(R) or Doubletree Guest Suites(R) hotels, nine are
operated as Sheraton(R) or Sheraton Suites(R) hotels, one is operated as a
Westin(R) hotel, and one is operated as a Hilton Suites(R) hotel. Seventy-three
of the Hotels are managed by subsidiaries of Promus Hotel Corporation
("Promus"). Promus is the largest operator of all-suite, full-service hotels in
the United States. Of the remaining Hotels, 10 are managed by subsidiaries of
Starwood Hotels and Resorts Worldwide, Inc. ("Starwood") and three are managed
by two independent management companies.
2. COMMITMENTS AND RELATED PARTY TRANSACTIONS
DJONT has future lease commitments under the Percentage Leases which
expire in 2002 (six hotels), 2004 (seven hotels), 2005 (12 hotels), 2006 (18
hotels), 2007 (23 hotels), 2008 (12 hotels) and 2012 (eight hotels). Minimum
future rental payments (i.e., base rents) under these noncancellable operating
leases at March 31, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ----------
<S> <C>
Remainder of 1999................................................... $ 124,792
2000................................................................ 167,949
2001................................................................ 171,324
2002................................................................ 171,681
2003................................................................ 157,646
2004 and thereafter................................................. 599,173
----------
$1,392,565
==========
</TABLE>
3. INVESTMENT IN REAL ESTATE
DJONT acquired thirty shares of the Class A Voting Common Stock, $0.01
par value per share of Kingston Plantation Development Corporation ("KPDC")
which represents 3% of the equity and 100% of the voting interest in that
entity.
17
<PAGE> 18
DJONT OPERATIONS, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENT IN KINGSTON PLANTATION DEVELOPMENT CORPORATION -- (CONTINUED)
The investment is recorded on a consolidated basis in DJONT's financial
statements. A summary of the fair values of the assets and liabilities recorded
from the acquisition of DJONT's consolidated interest in KPDC at the date of the
acquisition is as follows (in thousands):
<TABLE>
<S> <C>
Investment in hotel................................. $12,450
=======
Debt................................................ $ 7,766
Minority interest................................... 4,677
Accrued expenses and other liabilities.............. 7
-------
$12,450
=======
</TABLE>
DJONT has reflected as a liability a mortgage note, dated November 24,
1998, from a wholly-owned subsidiary of KPDC, to FelCor Lodging Limited
Partnership. The note bears a fixed interest rate of 8.0% per annum with a 30
year amortization and matures on December 31, 2004.
The indebtedness is collateralized by a Mortgage and Assignment of
Leases and Rents with respect to the New Orleans Embassy Suites Hotel Annex.
Future scheduled principal payments on the debt are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR
- ----
<S> <C>
Remainder of 1999................................... $ 5
2000................................................ 65
2001................................................ 71
2002................................................ 77
2003................................................ 83
2004 and thereafter................................. 7,465
------
$7,766
======
</TABLE>
18
<PAGE> 19
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 Consolidated Financial Statements of FelCor Lodging Trust Incorporated
appearing elsewhere herein.
FIRST QUARTER HIGHLIGHTS:
o Revenues increased 121% for the quarter from $57.5 million to $126.9
million.
o Net income applicable to common shareholders increased 70% for the quarter
from $18.0 million to $30.6 million. Diluted net income per share
applicable to common shareholders decreased 8% from $0.49 to $0.45 per
share.
o Funds From Operations ("FFO") increased 77% from $41.7 million to $73.8
million. FFO per share and unit increased 3.2% from $0.94 to $0.97 per
share.
o Revenue per available room ("RevPAR") for the Company's comparable hotel
portfolio (128 hotels) increased 2.2% for the quarter. Comparable hotel
RevPAR increases for the quarter by brand are as follows:
<TABLE>
<S> <C>
Doubletree (12 hotels) 6.8%
Embassy Suites (48 hotels) 1.9%
Holiday branded hotels (36 hotels) 3.5%
Sheraton (4 hotels) 3.9%
</TABLE>
However, the nine recently renovated and rebranded Crowne Plaza hotels
(which are not included in the comparable hotel portfolio) produced a 23.3%
average RevPAR increase for the current quarter, over the prior year
quarter. The average daily rate (ADR) at these hotels increased 15.4% for
the current quarter, over the prior year quarter. ADR at the Bristol
non-comparable hotels (34 hotels including the nine Crowne Plaza hotels)
increased 12.6% in the quarter.
o Thirty hotels (19 of which are Bristol operated hotels) were undergoing
renovation, redevelopment, or rebranding during the quarter, resulting in
approximately 157,000 room nights out-of-service, or approximately 3.5% of
available room nights. Included in this number were 18 Holiday Inn or
Holiday Inn Select hotels, six Embassy Suites, three Doubletree, two
Sheraton, and one independent hotel. Two of these hotels were closed during
the quarter for redevelopment; the Allerton Hotel-Chicago, that is expected
to re- open in May 1999 (to be rebranded as a Crowne Plaza), and the
Holiday Inn-Tampa Busch Gardens, re- opened in late February, 1999. On
April 1, 1999, two hotels were rebranded, the Dallas (DFW Airport South)
hotel to an Embassy Suites and the Wilmington, Delaware hotel to a
Doubletree hotel.
o FelCor spent $73 million (out of a planned $160 million during 1999) on
renovations, redevelopment, and rebranding at 30 hotels and $9 million of
additional capital expenditures to maintain the remaining hotels in a
competitive condition. Approximately $20 million of the first quarter 1999
renovation expenditures related to the Allerton Hotel-Chicago.
o Four of the hotels acquired in the merger with Bristol Hotel Company in
1998 were sold during the quarter - two in Colorado Springs, Colorado, and
one each in Columbia, South Carolina and Flagstaff, Arizona - for an
aggregate sales price of $10.5 million. One additional hotel was sold in
April 1999 for $2.1 million and FelCor has a pending sales contract on one
hotel for $3.3 million which is expected to close within the next couple of
months. One additional hotel acquired in the Bristol Merger is being
actively offered for sale. No significant gain a loss has occurred or is
expected to occur with respect to the sale of these hotels.
19
<PAGE> 20
o Declared first quarter dividends of $0.55 per common share, $0.4875 per
$1.95 Series A Cumulative Convertible Preferred share and $0.5625 per
depositary share relating to the 9% Series B Cumulative Redeemable
Preferred Stock. The current annual dividend on Common Stock of $2.20
results in a current FFO payout ratio of approximately 54% and a dividend
yield of approximately 8.9%, based on the May 11, 1999, closing price for
FelCor Common Stock on the NYSE.
o Following the end of the first quarter, FelCor has completed a five-year,
$375 million Senior Term Loan, a 10-year, $100 million first mortgage term
loan and a 10-year, $75 million first mortgage term loan. The proceeds from
these loans were used to immediately pay off FelCor's $250 million
unsecured term loan, which was to mature on December 31, 1999, and to
reduce outstanding borrowings under its existing $850 million Line of
Credit.
RESULTS OF OPERATIONS
The Company
Three Months Ended March 31, 1999 and 1998
For the three months ended March 31, 1999 and 1998, the Company had
revenues of $126.9 million and $57.5 million, respectively, consisting primarily
of Percentage Lease revenues of $125.0 million and $56.1 million, respectively.
The increase in total revenue is primarily attributable to the Company's
acquisition and subsequent leasing, pursuant to Percentage Leases, of interests
in 114 additional hotels since March 31, 1998, including 103 hotels (net of
hotels subsequently sold) that were acquired through the Bristol Merger on July
28, 1998. Additionally, those hotels owned at both March 31, 1999 and 1998
recorded an increase in Percentage Lease revenues of $7.4 million or 13.2%.
The Company generally seeks to acquire hotels that management believes
can achieve increases in room and suite revenue and RevPAR as a result of
renovation, redevelopment and rebranding, or a change in management. However,
during the course of such improvements hotel revenue performance is often
adversely affected by such temporary factors as rooms and suites out of service
and disruptions of hotel operations. (A more detailed discussion of hotel room
and suite revenue is contained in "The Hotels" section of this Management's
Discussion and Analysis of Financial Condition and Results of Operations.)
Total expenses increased $54.2 million in the three months ended March
31, 1999, from $36.0 million to $90.2 million, compared to the same period in
1998. This increase resulted primarily from the additional hotels acquired in
1998. Total expenses as a percentage of total revenue increased to 71% for the
three months ended March 31, 1999, from 63% in the same period of 1998.
The major components of the increase in expenses, as a percentage of
total revenue, are: taxes, insurance, and other; and interest expense.
Taxes, insurance, and other increased $13.7 million primarily as a
result of the increased number of hotels owned. As a percentage of total
revenue, taxes, insurance, and other increased from 12.6% to 16.5%. The majority
of the increase, as a percentage of total revenue, is attributed to land leases,
which represent 3.2% of total revenue in 1999 but only 0.4% in 1998. Land leases
as a percentage of total revenue increased because of the greater number of
hotels subject to land leases acquired through the Bristol Merger.
Interest expense increased as a percentage of total revenue to 22.4% in
the three months ended March 31, 1999, from 16.9% in the three months ended
March 31, 1998. This increase in interest expense is attributed to the increased
use of debt to finance acquisitions and renovations and the assumption of debt
related to the more highly leveraged Bristol assets. Debt, as a percentage of
investment in hotels at cost, increased from 28% at March 31, 1998 to 38% at
March 31, 1999.
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.
20
<PAGE> 21
The White Paper on Funds From Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT") defines Funds From Operations as net income or loss (computed in
accordance with GAAP), excluding gains or losses from debt restructuring and
sales of properties, plus; real estate related depreciation and amortization and
after comparable adjustments for the Company's portion of these items related to
unconsolidated entities and joint ventures. The Company believes that Funds From
Operations is helpful to investors as a measure of the performance of an equity
REIT because, along with cash flow from operating activities, financing
activities and investing activities, it provides investors with an indication of
the ability of the Company to incur and service debt, to make capital
expenditures and to fund other cash needs. The Company computes Funds From
Operations in accordance with standards established by NAREIT which may not be
comparable to Funds From Operations reported by other REITs that do not define
the term in accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently than the Company. Funds From Operations
does not represent cash generated from operating activities determined by GAAP
and should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of the Company's financial performance or
to cash flow from operating activities (determined in accordance with GAAP) as a
measure of the Company 's liquidity, nor is it indicative of funds available to
fund the Company's cash needs, including its ability to make cash distributions.
Funds From Operations may include funds that may not be available for
management's discretionary use due to functional requirements to conserve funds
for capital expenditures and property acquisitions, and other commitments and
uncertainties.
The following table details the computation of Funds From Operations
(in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Funds From Operations (FFO):
Net income ......................................................... $ 36,747 $ 20,944
Series B redeemable preferred dividends ......................... (3,234)
Extraordinary charge from write off of deferred financing fees .. 556
Depreciation .................................................... 36,425 15,887
Depreciation for unconsolidated entities ........................ 2,591 2,547
Minority interest in Operating Partnership ...................... 1,320 1,751
--------- ---------
FFO ................................................................ $ 73,849 $ 41,685
========= =========
Weighted average common shares and units outstanding ............... 75,988 44,575
========= =========
</TABLE>
Included in the FFO previously described is the Company's share of FFO
from its interest in separate entities owning 15 hotels, a condominium
management company and an entity that develops condominiums for sale and owns a
recently completed hotel annex. The FFO contribution from these unconsolidated
entities was derived as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Statements of operations information:
Percentage Lease revenue ............................. $ 12,571 $ 12,347
Depreciation ......................................... $ 4,879 $ 4,263
Taxes, insurance and other ........................... $ 2,342 $ 1,567
Interest expense ..................................... $ 3,219 $ 3,259
Net income ........................................... $ 3,720 $ 3,418
Percentage of net income attributable to the Company . $ 1,781 $ 1,709
Amortization of cost in excess of book value ......... (535) (416)
-------- --------
Equity in income from unconsolidated entities ........ 1,246 1,293
Depreciation ......................................... 2,056 2,132
Amortization of cost in excess of book value ......... 535 416
-------- --------
FFO from unconsolidated entities ..................... $ 3,837 $ 3,841
======== ========
</TABLE>
21
<PAGE> 22
The Hotels
Upscale and full service hotels like Embassy Suites, Crowne Plaza,
Holiday Inn, and Holiday Inn Select, Doubletree and Doubletree Guest Suites, and
Sheraton, Sheraton Suites and Westin are expected to account for approximately
97% of Percentage Lease revenue in 1999. The following tables set forth
historical occupancy, ADR and RevPAR at March 31, 1999 and 1998, and the
percentage changes therein between the years presented for the Hotels in which
the Company had an ownership interest at March 31, 1999. This information is
presented regardless of the date of acquisition.
COMPARABLE HOTELS (A)
<TABLE>
<CAPTION>
FIRST QUARTER 1999
-------------------------------------
OCCUPANCY ADR REVPAR
-------- -------- --------
<S> <C> <C> <C>
DJONT Comparable Hotels:
Original Hotels (11 hotels) ..................... 71.2% $ 119.10 $ 84.79
CSS Hotels (18 hotels) .......................... 76.0 135.96 103.27
1996 Acquisitions (12 hotels) ................... 72.0 131.38 94.62
1997 Acquisitions (22 hotels) ................... 72.1 120.78 87.02
1998 Acquisitions (2 hotels) .................... 80.7 111.30 89.86
Total DJONT Comparable Hotels (65 hotels) ....... 73.3 126.75 92.92
Total Bristol Comparable Hotels (63 hotels) ...... 65.1 81.90 53.36
Total Comparable Hotels (128 hotels) .... 69.2% $ 105.76 $ 73.24
</TABLE>
<TABLE>
<CAPTION>
FIRST QUARTER 1998
-------------------------------------
OCCUPANCY ADR REVPAR
-------- -------- --------
<S> <C> <C> <C>
Original Hotels ................................. 72.9% $ 116.79 $ 85.12
CSS Hotels ...................................... 74.8 132.94 99.48
1996 Acquisitions ............................... 72.1 128.56 92.66
1997 Acquisitions ............................... 71.2 118.86 84.59
1998 Acquisitions ............................... 77.5 107.12 82.99
Total DJONT Comparable Hotels ................... 72.9 124.22 90.53
Total Bristol Comparable Hotels .................. 67.0 78.72 52.76
Total Comparable Hotels ................. 70.0% $ 102.48 $ 71.69
</TABLE>
<TABLE>
<CAPTION>
CHANGE FROM PRIOR PERIOD
1ST QTR. 1999 VS. 1ST QTR. 1998
-------------------------------------
OCCUPANCY ADR REVPAR
-------- -------- --------
<S> <C> <C> <C>
DJONT Comparable Hotels:
Original Hotels ................................. (1.7)pts. 2.0% (0.4)%
CSS Hotels ...................................... 1.1 2.3 3.8
1996 Acquisitions ............................... (0.1) 2.2 2.1
1997 Acquisitions ............................... 0.9 1.6 2.9
1998 Acquisitions ............................... 3.3 3.9 8.3
Total DJONT Comparable Hotels ................... 0.4 2.0 2.6
Total Bristol Comparable Hotels .................. (1.9) 4.0 1.1
Total Comparable Hotels ................. (0.7)pts. 3.2% 2.2%
</TABLE>
(A) DJONT Comparable Hotels excludes 21 hotels undergoing redevelopment in
either the first quarter of 1999 or 1998. Bristol Comparable Hotels
excludes 34 hotels undergoing redevelopment in either the first
quarter of 1999 or 1998, three individual hotel acquisitions and three
hotels targeted for sale.
22
<PAGE> 23
NON-COMPARABLE HOTELS
<TABLE>
<CAPTION>
FIRST QUARTER 1999
----------------------------------------
OCCUPANCY ADR REVPAR
--------- ------- ------
<S> <C> <C> <C>
DJONT Non-comparable Hotels 64.3% $111.77 $71.91
Bristol Non-comparable Hotels (B) 61.8 94.45 58.32
</TABLE>
<TABLE>
<CAPTION>
FIRST QUARTER 1998
----------------------------------------
OCCUPANCY ADR REVPAR
--------- ------- ------
<S> <C> <C> <C>
DJONT Non-comparable Hotels 71.3% $107.64 $76.72
Bristol Non-comparable Hotels (B) 65.9 83.90 55.26
</TABLE>
<TABLE>
<CAPTION>
CHANGE FROM PRIOR PERIOD
1ST QTR. 1999 VS. 1ST QTR. 1998
-------------------------------------
OCCUPANCY ADR REVPAR
--------- ------- -------
<S> <C> <C> <C>
DJONT Non-comparable Hotels (7.0)pts. 3.8% (6.3)%
Bristol Non-comparable Hotels (B) (4.1) 12.6 5.5
</TABLE>
(B) Excludes three closed hotels under renovation and three hotels
targeted for sale. In aggregate, the three hotels targeted for sale had
a 17.9% decline in RevPAR for the first quarter 1999.
Comparison of The Hotels' Operating Statistics for the Three Months
Ended March 31, 1999 and 1998
Revenue per available room ("RevPAR") for total Comparable hotels
increased 2.2% for the three months ended March 31, 1999 compared to the same
period in 1998. This increase was due to increases in RevPAR by state for hotels
in Florida (increases of 5.5% in RevPAR which represents 16% of comparable room
and suite revenue), and California (increases of 3.8% representing 14% of
comparable room and suite revenue). These increases were offset by RevPAR
decreases in Texas of 2.5% (representing 18% of comparable room and suite
revenue) and Georgia of 0.4% (representing 9% of comparable room and suite
revenue). These decreases were principally due to the absorption of new supply.
Bristol non-comparable hotels (34) average daily room rates ("ADR")
increased 12.6% and RevPAR increased 5.5%.
Contributing to these increases were the nine recently renovated and
rebranded Crowne Plaza hotels whose RevPAR increased 23.3% derived from a 15.4%
increase in ADR. These nine hotels are in Philadelphia; Pleasanton, California;
San Francisco Union Square, three in and around Dallas, Houston, Powers Ferry
(Atlanta) and Meadowlands.
DJONT
The Three Months Ended March 31, 1999 and 1998
Total revenues increased to $204.2 million in the first quarter of 1999
from $171.1 million in the first quarter of 1998, an increase of 19.3%. Total
revenues consisted primarily of room and suite revenue of $167.7 million and
$143.3 million in the first quarter of 1999 and 1998, respectively.
The increase in total revenues is primarily a result of the increase in
the number of hotels leased to 86 hotels at March 31, 1999 from 75 hotels at
March 31, 1998. Room and suite revenues from the 65 comparable hotels for the
three months ended March 31, 1999 and 1998 increased 3.2% or $4.1 million. The
increase in revenues at these hotels is due primarily to improvements in the
percentage of occupied rooms ("Occupancy") and in average daily room rates
("ADR") of 73.3% and $126.75, respectively, for the three months ended March 31,
1999, as compared to the 72.9% and $124.22 for the three months ended March 31,
1998. Twenty-one hotels were
23
<PAGE> 24
undergoing renovation or rebranding during the quarter which resulted in a
decrease in their combined occupancy and revenue per available room ("RevPAR")
to 64.3% and $71.91, respectively for the three months ended March 31, 1999, as
compared to the 71.3% and $76.72 for the three months ended March 31, 1998.
DJONT's income before Percentage Lease expense decreased as a
percentage of total revenues from 40.8% in the first quarter of 1998 to 40.7% in
the first quarter of 1999 primarily as a result of increased food and beverage
revenues as a percentage of total revenues of 10.4% in the first quarter of 1999
compared to 8.9% in the first quarter of 1998.
Bristol
Bristol is a public company whose common stock is listed on the New
York Stock Exchange under the symbol BH. Bristol files financial statements in
accordance with the Securities and Exchange Act of 1934.
RENOVATION, REDEVELOPMENT, AND REBRANDING
The Company spent $73 million on thirty hotels (19 of which are Bristol
operated hotels) undergoing renovation, redevelopment, or rebranding during the
quarter, resulting in approximately 157,000 room nights out- of-service, or
approximately 3.5% of available room nights. This included 18 Holiday Inn or
Holiday Inn Select hotels, six Embassy Suites, three Doubletree, two Sheraton,
and one independent hotel. Included are two hotels, which were closed during the
quarter for redevelopment, the Allerton Hotel-Chicago, expected to re-open in
May 1999 (to be rebranded as a Crowne Plaza) and the Holiday Inn-Tampa Busch
Gardens, re-opened in late February, 1999. In addition, $9 million was spent on
normal capital expenditures to hotels.
Included in the thirty hotels undergoing renovation are six hotels
where renovations, totaling $23.8 million were completed and containing
approximately 1,900 rooms, during the quarter as follows:
<TABLE>
<S> <C>
266-room Embassy Suites ($1.8 million) Kansas City, Missouri
140-room Hampton Inn(R)($1.9 million) Marietta, Georgia
167-room Holiday Inn ($2.4 million) Kansas City, Missouri
565-room Holiday Inn ($2.5 million) San Francisco, California
408-room Holiday Inn ($12.0 million) Tampa (Busch Gardens), Florida
395-room Sheraton Gateway ($3.2 million) Atlanta (Airport), Georgia
</TABLE>
The Company expects to spend approximately $160 million for capital
expenditures in which may be funded from cash on hand or borrowings under its
Line of Credit. Through the three months ending March 31, 1999, the Company has
spent approximately $73 million (of the $160 million) under the Renovation and
Redevelopment program.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash to meet its cash requirements,
including distributions to shareholders and repayments of indebtedness, is its
share of the Operating Partnership's cash flow from the Percentage Leases. For
the three months ended March 31, 1999, cash flow provided by operating
activities, consisting primarily of Percentage Lease revenue, was $61.5 million
and Funds From Operations was $73.8 million.
The Lessees' obligations under the Percentage Leases are largely
unsecured. The Lessees have limited capital resources, and, accordingly, their
ability to make lease payments under the Percentage Leases is substantially
dependent on the ability of the Lessees to generate sufficient cash flow from
the operation of the Hotels.
24
<PAGE> 25
During the three months ended March 31, 1999, DJONT realized a net loss
of $2.8 million and at March 31, 1999, had a cumulative shareholders' deficit of
$11.0 million. The shareholders' deficit results primarily from losses incurred
during 1997 and 1996, as a consequence of the one-time costs of converting the
CSS Hotels to the Embassy Suites and Doubletree Guest Suites brands and the
substantial number of room and suite nights lost during those years due to
renovation. It is anticipated that a substantial portion of any future profits
of DJONT will be retained until a positive shareholders' equity is restored. It
is anticipated that DJONT's future earnings will be sufficient to enable it to
continue to make its lease payments under the Percentage Leases.
Certain entities owning interests in DJONT and the managers of certain
hotels have agreed to make loans to DJONT of up to an aggregate of approximately
$17.3 million to the extent necessary to enable DJONT to pay rent and other
obligations when due under the respective Percentage Leases relating to a total
of 34 of the Hotels. No such loans were outstanding under such agreements at
March 31, 1999.
Bristol has entered into an absolute and unconditional guarantee of the
obligations of the Bristol Lessees under the Percentage Leases. As an additional
credit enhancement, the Bristol Lessees obtained a letter of credit (the "Letter
of Credit") issued by Bankers Trust Company for the benefit of the Company in
the original amount of $20 million that is required to be maintained until July
27, 1999. This Letter of Credit is subject to periodic reductions upon
satisfaction of certain conditions and at March 31, 1999, was in the amount of
$15.9 million. According to Bristol's financial statements filed with the SEC,
for the three months ended March 31, 1999, Bristol earned $1.1 million of net
income and at March 31, 1999, had stockholders' equity of $36.6 million.
The Company may 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.
On April 1, 1999, the Company closed a five-year, $375 million term
loan (the "Senior Term Loan"). The Senior Term Loan is collateralized by stock
and partnership interests in certain subsidiaries of the Company and bears
interest at 250 basis points over LIBOR (30-day LIBOR at March 31, 1999, was
4.94%). The financial covenants in the Senior Term Loan are consistent with
those in the Company's existing Line of Credit. In connection with this
transaction, the Company's $850 million Line of Credit and existing seven and
10-year publicly-traded term notes were equally and ratably secured by the same
collateral securing the Senior Term Loan. Upon the Company achieving investment
grade credit ratings from the applicable rating agencies, the stock and
partnership interest collateral will be released. The proceeds of the Senior
Term Loan were used to immediately pay off the $250 million term loan which was
to mature on December 31, 1999 and to reduce borrowings under the Company's Line
of Credit.
On April 1, 1999, the Company also closed a 10-year, $100 million
mortgage loan (the "April 1999 First Mortgage Term Loan"). The April 1999 First
Mortgage Term Loan is non-recourse (with certain exceptions), is collateralized
by seven Embassy Suites hotels, carries a fixed rate coupon of 7.54%, matures in
April 2009 and amortizes over 25 years. The proceeds from this loan were used to
reduce outstanding borrowings under Company's Line of Credit.
On May 13, 1999, the Company closed a 10-year, $75 million mortgage
loan (the "May 1999 First Mortgage Term Loan"). This loan is non-recourse (with
certain exceptions), is collateralized by six Embassy Suites hotels, carries a
fixed rate coupon of 7.55%, matures in May 2009 and amortizes over 25 years. The
proceeds from this loan were used to reduce outstanding borrowings under the
Company's Line of Credit.
25
<PAGE> 26
FelCor's debt outstanding as of March 31, 1999, both on a historical
and pro forma basis for the previously described transactions, consists of the
following (in thousands):
<TABLE>
<CAPTION>
HISTORICAL Pro Forma
OUTSTANDING Outstanding
INTEREST RATE BALANCE Balance MATURITY DATE
------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
FLOATING RATE DEBT:
Line of Credit LIBOR + 150bp $480,000 $305,000 June 2001
Term Loan LIBOR + 150bp 250,000 - December 1999
Senior Term Loan LIBOR + 250bp - 250,000 March 2004
Mortgage debt LIBOR + 200bp 63,000 63,000 February 2003
Other Up to LIBOR + 150bp 25,650 25,650 Various
---------- ----------
Total Floating Rate Debt 818,650 643,650
---------- ----------
FIXED RATE DEBT:
Line of Credit-swapped 7.24% 325,000 200,000 June 2001
Publicly-traded term notes 7.38% 174,279 174,279 October 2004
Publicly-traded term notes 7.63% 124,150 124,150 October 2007
Mortgage debt 7.24% 144,212 144,212 November 2007
Senior Term Loan-swapped 8.30% - 125,000 March 2004
Mortgage debt 7.54% - 100,000 April 2009
Mortgage debt 7.55% - 75,000 April 2009
Other 6.96%-7.23% 84,900 84,900 2000-2005
---------- ----------
Total Fixed Rate Debt 852,541 1,027,541
---------- ----------
Total Debt $1,671,191 $1,671,191
========== ==========
</TABLE>
FelCor's future scheduled debt principal payments at March 31, 1999,
pro forma for the previously described transactions, are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR
----
<S> <C>
Remainder of 1999 $ 10,585
2000 31,240
2001 524,330
2002 9,520
2003 91,211
2004 and thereafter 1,005,877
-----------
1,672,763
Discount accretion over term (1,572)
-----------
$ 1,671,191
===========
</TABLE>
The Company presently intends to issue approximately $200 million of
seven year senior notes during the second quarter of 1999, subject to market
conditions. The net proceeds from the sale of such notes, if completed, will be
used to reduce outstanding borrowings under the Company's Line of Credit.
The Line of Credit and the Term Loan contain various affirmative and
negative covenants including limitations on total indebtedness, total secured
indebtedness, and cash distributions, as well as the obligation to maintain
certain minimum tangible net worth and certain minimum interest and debt service
coverage ratios. At March 31, 1999, the Company was in compliance with all such
covenants.
The Company's other borrowings contain affirmative and negative
covenants that are generally equal to or less restrictive than the Line of
Credit and Term Loan. Most of the collateralized borrowings are nonrecourse to
the Company (with certain exceptions) and contain provisions allowing for the
substitution of collateral upon
26
<PAGE> 27
satisfaction of certain conditions. Most of the collateralized borrowings are
prepayable; however they are subject to various prepayment penalties, yield
maintenance, or defeasance obligations.
At March 31, 1999, the Company had $26.6 million of cash and cash
equivalents and had utilized $805 million of the amount available under the Line
of Credit. Significant debt statistics at March 31, 1999, after applying the
previously described financing transactions are as follows:
o Interest coverage ratio of 3.5x
o Total debt to annualized EBITDA of 4.2x
o Borrowing capacity of $345 million under the Line of Credit o
Consolidated debt equal to 38% of investment in hotels at cost
o Fixed interest rate debt comprising 62% of total debt
o Weighted average maturity of fixed interest rate debt of
approximately 6 years
o Mortgage debt to total assets of 11%
o Debt of less than $11 million and $32 million maturing in the
remainder of 1999 and 2000, respectively.
To manage the relative mix of its debt between fixed and variable rate
instruments, the Company has entered into interest rate swap agreements with six
financial institutions. These interest rate swap agreements modify a portion of
the interest characteristics of the Company's outstanding debt under its Line of
Credit 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 variable rate to be received by the Company at
March 31, 1999, are summarized in the following table:
<TABLE>
<CAPTION>
SWAP RATE
RECEIVED
SWAP RATE EFFECTIVE (VARIABLE) AT SWAP
NOTIONAL AMOUNT PAID (FIXED) FIXED RATE 3/31/99 MATURITY
--------------- ------------ ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
$ 50 million 6.11125% 7.61125% 4.97000% October 1999
$ 25 million 5.95500% 7.45500% 4.97094% November 1999
$ 25 million 5.55800% 7.05800% 4.96344% July 2001
$ 25 million 5.54800% 7.04800% 4.96344% July 2001
$ 75 million 5.55500% 7.05500% 4.96344% July 2001
$100 million 5.79600% 7.29600% 4.96344% July 2003
$ 25 million 5.82600% 7.32600% 4.96344% July 2003
------------
$325 million
============
</TABLE>
The differences to be paid or received by the Company under the terms
of the interest rate swap agreements are accrued as interest rates change and
recognized as an adjustment to interest expense 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 are limited to major banks and financial institutions, and it does not
anticipate nonperformance by the counterparties.
To provide for additional financing flexibility, the Company has
approximately $946 million of common stock, preferred stock, debt securities,
and/or common stock warrants available for offerings under shelf registration
statements previously declared effective.
INFLATION
Operators of hotels, in general, possess the ability to adjust room
rates daily to reflect the effects of inflation. Competitive pressures may,
however, limit the Lessees' ability to raise room rates.
27
<PAGE> 28
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, particularly during the fourth quarter, to
the extent that it receives Percentage Rent. To the extent the cash flow from
operations is insufficient during any quarter, due to temporary or seasonal
fluctuations in lease revenue, the Company expects to utilize cash on hand or
borrowings under the Line of Credit to make distributions to its equity holders.
YEAR 2000
The Year 2000 issue relates to computer programs that were written
using two digit rather than four to define the applicable year. In those
programs the year 2000 may be incorrectly identified as the year 1900, which
could result in a system failure or miscalculations causing a disruption of
operations, including a temporary inability to process transactions, prepare
financial statements, or engage in other normal business activities.
The Company believes that its efforts to identify and resolve the Year
2000 issues will avoid a major disruption of its business. The Company has
assessed its internal computer systems and believe that they will properly
utilize dates beyond December 31, 1999.
The Company and its managers have completed the assessment of both
computer and noninformation technology systems to determine if the Hotels are
Year 2000 compliant. This assessment included embedded systems that operate
elevators, phone systems, energy maintenance systems, security systems, and
other systems. Most of the upgrades to make a hotel Year 2000 compliant had been
anticipated as part of the renovation, redevelopment, and rebranding program
that we generally undertake upon acquisition of a hotel.
The Company has spent approximately $3 million through the first
quarter of 1999 to remediate Year 2000 issues and anticipates spending an
additional $7 million to remediate all Year 2000 issues, which amount is
included in the Company's 1999 capital plans. The majority of the unspent funds
relate to the acquisition and systematic implementation of Year 2000 compliant
computer hardware and software for the hotels.
The Company has requested and received assurances from the managers of
the hotels, the franchisors of the hotels and the lessees, that they have
implemented appropriate steps to insure that they will avoid a major disruption
of business due to Year 2000 issues. However, the Company cannot assure that
such third parties will successfully avoid a disruption due to Year 2000 issues,
and such disruptions could have an adverse effect upon the Company's business,
financial condition or results of operations.
Concurrent with the assessment of the year 2000 issue, the Company and
its hotel managers and Lessees are developing contingency plans intended to
mitigate the possible disruption in business operations that may result from
year 2000 issues, and are developing cost estimates for such plans. Once
developed, contingency plans and related cost estimates will be continually
refined as additional information becomes available.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Portions of this Quarterly Report on Form 10-Q include forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. Important factors that could
cause actual results to differ materially from the Company's current
expectations are disclosed herein and in the Company's other filings under the
1933 Act and 1934 Act (collectively, "Cautionary Disclosures"). The forward
looking statements included herein, and all subsequent written and oral forward
looking statements attributable to the Company or persons acting on its behalf,
are expressly qualified in their entirety by the Cautionary Statements.
28
<PAGE> 29
PART II. -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
During the first quarter of 1999, the Company issued 1,245 shares of
its common stock in redemption of a like number of outstanding units of limited
partner interest in the Operating Partnership. Neither the units, nor the common
stock issued in redemption thereof, were registered under the 1933 Act in
reliance upon certain exemptions from the registration requirements thereof,
including the exemption provided by Section 4(2) of that act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION.
For information relating to asset acquisitions and certain other
transactions by the Company through March 31, 1999, see Note 1 of Notes to
Consolidated Financial Statements of FelCor Lodging Trust Incorporated 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:
Exhibit
Number Description
------ -----------
4.7.3 Third Amendment to Indenture dated as of March 30,
1999 by and among FelCor Lodging Limited Partnership,
FelCor Lodging Trust Incorporated, the Subsidiary
Guarantors named therein, who are signatories thereto
and SunTrust Bank, Atlanta.
10.21 Deed of Trust, Security Agreement, Assignment of
Leases and Rents, Fixture Filing and Financing
Statement, dated March 1, 1999, by FelCor Hotel
Company II, Ltd., as Grantor, to Howard E. Schreiber,
Trustee, in trust for the benefit of Bankers Trust
Company, as Beneficiary.
10.22.1 Loan Agreement, dated April 1, 1999, among FelCor
Lodging Trust Incorporated and FelCor Lodging Limited
Partnership as Borrower, and The Lenders Party
Thereto and The Chase Manhattan Bank as
Administrative Agent and Collateral Agent.
10.22.2 Guaranty, dated April 1, 1999, made by each of the
named Guarantors therein, who are signatories
thereto.
10.22.3 Pledge and Security Agreement, dated April 1, 1999,
made by each of the named Pledgors therein, who are
signatories thereto, in favor of The Chase Manhattan
Bank, as Collateral Agent.
10.23 Form of Mortgage, Security Agreement and Fixture
Filing by and between FelCor/CSS Holdings, L.P. as
Mortgagor and The Prudential Insurance Company of
America as Mortgagee.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
Registrant did not file any reports on Form 8-K during the first
quarter of 1999.
29
<PAGE> 30
SIGNATURE
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: May 17, 1999
FELCOR LODGING TRUST INCORPORATED
By: /s/ Randall L. Churchey
-------------------------------------------------
Randall L. Churchey
Senior Vice President and Chief Financial Officer
(Chief Financial Officer)
30
<PAGE> 31
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
4.7.3 Third Amendment to Indenture dated as of March 30,
1999 by and among FelCor Lodging Limited Partnership,
FelCor Lodging Trust Incorporated, the Subsidiary
Guarantors named therein, who are signatories thereto
and SunTrust Bank, Atlanta.
10.21 Deed of Trust, Security Agreement, Assignment of
Leases and Rents, Fixture Filing and Financing
Statement, dated March 1, 1999, by FelCor Hotel
Company II, Ltd., as Grantor, to Howard E. Schreiber,
Trustee, in trust for the benefit of Bankers Trust
Company, as Beneficiary.
10.22.1 Loan Agreement, dated April 1, 1999, among FelCor
Lodging Trust Incorporated and FelCor Lodging Limited
Partnership as Borrower, and The Lenders Party
Thereto and The Chase Manhattan Bank as
Administrative Agent and Collateral Agent.
10.22.2 Guaranty, dated April 1, 1999, made by each of the
named Guarantors therein, who are signatories
thereto.
10.22.3 Pledge and Security Agreement, dated April 1, 1999,
made by each of the named Pledgors therein, who are
signatories thereto, in favor of The Chase Manhattan
Bank, as Collateral Agent.
10.23 Form of Mortgage, Security Agreement and Fixture
Filing by and between FelCor/CSS Holdings, L.P. as
Mortgagor and The Prudential Insurance Company of
America as Mortgagee.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 4.7.3
THIRD AMENDMENT TO INDENTURE
This Third Amendment to Indenture (this "Agreement") is entered into as
of this 30th day of March, 1999, by and among (i) FelCor Lodging Limited
Partnership, formerly FelCor Suites Limited Partnership, a Delaware limited
partnership ("FelCor LP"), (ii) FelCor Lodging Trust Incorporated, formerly
FelCor Suite Hotels, Inc., a Maryland corporation ("FelCor"), (iii) FelCor/CSS
Hotels, L.L.C., a Delaware limited liability company, FelCor/LAX Hotels, L.L.C.,
a Delaware limited liability company, FelCor/CSS Holdings, L.P., a Delaware
limited partnership, FelCor/St. Paul Holdings, L.P., a Delaware limited
partnership, FelCor/LAX Holdings, L.P., a Delaware limited partnership, FelCor
Eight Hotels, L.L.C., a Delaware limited liability company, FelCor Hotel Asset
Company, L.L.C., a Delaware limited liability company, FelCor Nevada Holdings,
L.L.C., a Nevada limited liability company, FHAC Nevada Holdings, L.L.C., a
Nevada limited liability company, and FHAC Texas Holdings, L.P., a Texas limited
partnership (collectively, "Subsidiary Guarantors"), and (iv) SunTrust Bank,
Atlanta, as Trustee ("Trustee").
WHEREAS, FelCor LP, as Issuer, FelCor and certain of the Subsidiary
Guarantors, as Guarantors, and Trustee, as Trustee, entered into that certain
Indenture dated as of October 1, 1997, as previously amended by that certain
First Amendment to Indenture dated as of February 5, 1998 and that certain
Second Amendment to Indenture and First Supplemental Indenture dated as of
December 30, 1998 (collectively, the "Indenture"); and
WHEREAS, accordingly, the parties to the Indenture desire to amend the
Indenture as provided herein in accordance with Section 9.01(5) of the
Indenture; and
WHEREAS, the Board of Directors of FelCor has determined in its good
faith opinion that this Amendment will not materially and adversely affect the
rights of any holder of the Notes;
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. The definition of "Secured Indebtedness" in Section 1.01 of the
Indenture is hereby amended to read in its entirety as follows:
"Secured Indebtedness" means any Indebtedness secured by a
Lien upon the property of FelCor LP or FelCor or any of their
respective Restricted Subsidiaries, other than Indebtedness secured
solely by Liens shared equally and ratably with the Holders pursuant to
the equal and ratable provisions referred to in Section 4.09.
2. The parties hereto hereby confirm and acknowledge that the Indenture
shall continue in full force and effect according to its original terms, except
as expressly as amended and supplemented hereby.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FELCOR LODGING LIMITED PARTNERSHIP
(formerly FelCor Suites Limited
Partnership), a Delaware limited
partnership
By: FelCor Lodging Trust Incorporated, a Maryland
corporation, its general partner
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson,
Senior Vice President
FELCOR LODGING TRUST INCORPORATED
(formerly FelCor Suite Hotels, Inc.),
a Maryland corporation
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
FELCOR/CSS HOTELS, L.L.C.,
a Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
FELCOR/LAX HOTELS, L.L.C.,
a Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
<PAGE> 3
FELCOR/CSS HOLDINGS, L.P.,
a Delaware limited partnership
By: FelCor/CSS Hotels, L.L.C., a Delaware limited
liability company, its general partner
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson,
Senior Vice President
FELCOR/ST. PAUL HOLDINGS, L.P.,
a Delaware limited partnership
By: FelCor/CSS Hotels, L.L.C., a Delaware limited
liability company, its general partner
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson,
Senior Vice President
FELCOR/LAX HOLDINGS, L.P.,
a Delaware limited partnership
By: FelCor/LAX Hotels, L.L.C., a Delaware limited
liability company, its general partner
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson,
Senior Vice President
FELCOR EIGHT HOTELS, L.L.C.,
a Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
<PAGE> 4
FELCOR HOTEL ASSET COMPANY, L.L.C.,
a Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
FELCOR NEVADA HOLDINGS, L.L.C.,
a Nevada limited liability company
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
FHAC NEVADA HOLDINGS, L.L.C.,
a Nevada limited liability company
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson, Senior Vice President
FHAC TEXAS HOLDINGS, L.P.,
a Texas limited partnership
By: FelCor Hotel Asset Company, L.L.C.,
a Delaware limited liability company,
its general partner
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------------
Lawrence D. Robinson,
Senior Vice President
SUNTRUST BANK, ATLANTA,
as Trustee
By: /s/ RONALD C. PAINTER
---------------------------------------------------
Name: Ronald C. Painter
--------------------------------------------------
Title: Group Vice President
-------------------------------------------------
By: /s/ OLGA G. WARREN
---------------------------------------------------
Name: Olga G. Warren
--------------------------------------------------
Title: Vice President
-------------------------------------------------
<PAGE> 1
EXHIBIT 10.21
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Howard E. Schreiber, Esq.
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Instructions to County Recorder: Index this document as a Deed of Trust, as an
Assignment of Leases and Rents, as a Fixture Filing and as a Financing Statement
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING
AND FINANCING STATEMENT
This Deed of Trust, Security Agreement, Assignment of Leases and Rents,
Fixture Filing and Financing Statement ("Deed of Trust") is executed effective
as of the 1st day of March, 1999, by FELCOR HOTEL COMPANY II, LTD., a Texas
limited partnership ("Grantor"), whose address is set forth below, as Grantor,
to Howard E. Schreiber, Trustee, whose address is set forth below, in trust for
the benefit of BANKERS TRUST COMPANY, a New York banking corporation ("BTCo"),
whose address is set forth below, as Beneficiary.
Article 1
DEFINITIONS
1. Definitions
As used herein, the following terms shall have the following meanings:
1.1 Assignment: The assignment, contained in Article 4 of this Deed of
Trust, from Grantor to Beneficiary, of all of Grantor's right, title and
interest in and to the Leases and the Rents.
1.2 Awards: All awards and payments with respect to the Mortgaged
Property made or hereafter to be made by any municipal, township, county, state,
Federal or other governmental agencies, authorities or boards or any other
entity having the power of eminent domain to Grantor, including any awards and
payments for any taking of all or a portion of the Mortgaged Property, as a
result of, or by agreement in anticipation of, the exercise of the right of
condemnation or eminent domain, or for any change or changes of grade of streets
affecting the Mortgaged Property.
1.3 Beneficiary: BTCo and its successors and assigns and the holders,
from time to time, of the Note.
<PAGE> 2
1.4 Beneficiary's Address: 130 Liberty Street, 25th Floor, MS 2257,
York, New York 10006, Attention: Steven Sauer.
1.5 Buildings: All buildings, improvements, alterations or
appurtenances now, or at any time hereafter, located upon the Land or any part
thereof.
1.6 Default Interest Rate: The lesser of (i) the interest rate of five
percent (5%) per annum plus the Applicable Interest Rate (as defined in the
Note), or (ii) the Maximum Rate (as defined in Section 9.10 below).
1.7 Event(s) of Default: The happenings and occurrences described in
Article 6 of this Deed of Trust.
1.8 Exit Fee: None.
1.9 Fixtures: All fixtures now or hereafter affixed or attached to, or
installed in, or used in connection with, the Land or Buildings, whether or not
permanently affixed thereto, together with all accessions, replacements and
substitutions thereto or therefor and the proceeds thereof.
1.10 Grantor: The entity named as such in the preamble of this Deed of
Trust, and its heirs, administrators, executors, successors and assigns and its
successors in interest in and to the Mortgaged Property.
1.11 Grantor's Address: 545 E. John Carpenter Freeway, Suite 1300,
Irving, Texas 75062, Attn: Joel M. Eastman.
1.12 Guarantor and Guarantor's Address: FelCor Lodging Limited
Partnership, whose address for notice hereunder is 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas 75062, Attn: Joel M. Eastman (the
"Guarantor").
1.13 Guaranty: That certain Unconditional Guaranty (Carve-Outs) of even
date herewith (the "Guaranty") executed by Guarantor and guaranteeing certain
obligations of Grantor under this Deed of Trust, the Note, the Security
Documents and the Indemnity Agreement.
1.14 Hazardous Materials: Any flammable explosives, radioactive
materials, oil or petroleum, chemical liquids or solids, polychlorinated
biphenyls, asbestos, liquid or gaseous products or hazardous wastes, pollutants,
toxic pollutants, toxic substances and similar substances and materials defined
as hazardous or toxic wastes, substances or materials under any applicable law
(excluding cleaning and office supplies customarily found in hotels similar in
size and quality to the Mortgaged Property).
1.15 Impositions: All (i) real estate and personal property taxes and
other taxes (excluding federal income taxes) and assessments, water and sewer
rates and charges, and all other governmental charges and any interest or costs
or penalties with respect thereto, and charges for
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an easement or agreement maintained for the benefit of the Mortgaged Property
which at any time prior to or after the execution of the Security Documents may
be assessed, levied, or imposed upon the Mortgaged Property or the rent or
income received therefrom or any use or occupancy thereof, and (ii) other taxes
(excluding federal income taxes), assessments, fees and governmental charges
levied, imposed or assessed upon or against Grantor or the Mortgaged Property.
1.16 Indebtedness: The principal of and accrued interest on and all
other amounts, payments and premiums due under the Note (including any future
advances), and all other amounts now existing or hereafter arising of Grantor
owing to Beneficiary under and/or secured by the Security Documents, or any
amendments, modifications, renewals and extensions of any of the foregoing.
1.17 Indemnity Agreement: The Environmental Indemnity Agreement, dated
as of even date herewith, executed by Grantor in favor of Beneficiary.
1.18 Land: The real estate described in Schedule A attached hereto.
1.19 Leases: Any and all leases, subleases, licenses, concessions or
grants of other possessory interests now or hereafter in force, oral or written,
covering or affecting the Mortgaged Property, or any part thereof, together with
all rights, powers, privileges, options and other benefits of Grantor
thereunder.
1.20 Loan Documents: The Note, the Indemnity Agreement, this Deed of
Trust, the Guaranty and any and all other documents executed in connection
herewith.
1.21 Mortgaged Property: The Land, the Buildings, the Fixtures, the
Leases, the Rents and the Personalty and all substitutions therefor,
replacements and accessions thereto, and proceeds derived therefrom together
with:
(i) all of the rights, privileges, permits, licenses,
tenements, hereditaments, rights-of-way, easements, appendages and
appurtenances of the Land and/or the Buildings belonging or in anyway
appertaining thereto and all right, title and interest of Grantor in
and to any streets, ways, alleys, strips or gores of land adjoining the
Land or any part thereof;
(ii) all the estate, right, title, interest, claim or demand
whatsoever of Grantor, either at law or in equity, in and to the Land
(including, without limitation, water, mineral and sewer rights), the
Buildings, the Fixtures, the Leases, the Rents and the Personalty;
(iii) all the estate, right, title, interest, claim or demand
whatsoever of Grantor, either at law or in equity, in and to the
Awards, or payments with respect to casualties; and
(iv) all other interest of every kind and character which
Grantor now has or at any time hereafter acquires in and to the above
described real and personal property and all proceeds derived from all
of the foregoing.
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1.22 Note: That certain Promissory Note, dated of even date with this
Deed of Trust, made by Grantor to the order of Beneficiary, in the original
principal amount of $63,000,000.00, due and payable on February 28, 2003, unless
earlier accelerated or extended as provided in the Note, secured by this Deed of
Trust, together with all future advances, extensions, renewals, modifications
and amendments thereof.
1.23 Obligations: Any and all of the covenants, promises and other
obligations (other than the Indebtedness) made or owing by Grantor or Guarantor
to or due to Beneficiary under and/or as set forth in the Note and/or the
Security Documents, and any and all extensions, renewals, modifications and
amendments of any of the foregoing.
1.24 Permitted Encumbrances: The encumbrances described with
particularity, in Schedule B attached hereto and liens contested in accordance
with the terms of this Deed of Trust.
1.25 Personalty:
(i) All tangible and intangible personal property related to
the Mortgaged Property of Grantor (whether now owned or hereafter
acquired), including all equipment, inventory, goods, consumer goods,
accounts, accounts receivable (including, without limitation, credit
card receipts), hotel guest room fees and receipts, hotel facilities
fees and receipts (including, without limitation, fees and receipts
generated from restaurants, bars, catering, room service, mini-bars,
health clubs and gift shops), hotel service fees for the use or
occupancy of rooms and other public or commercial facilities, income,
issues, profits, chattel paper, instruments, working capital reserves,
FF&E/capital improvement reserves (including, without limitation,
Account No. 08-80-6238455 at Chase Bank, N.A.), project escrows, money
(which are rental, tax or insurance deposits), general intangibles,
documents, minerals, crops and timber (as those terms are defined in
the Texas Uniform Commercial Code) and all other personal property of
Grantor which is attached to, installed on or placed or used on, in
connection with or is acquired for such attachment, installation,
placement or use, or which arises out of the development, improvement,
financing, leasing, operation or use of (1) the Land together with all
rights, titles and interests appurtenant thereof, (2) any and all
Buildings, structures, open parking areas and other improvements, now
or any time hereafter situated, placed or constructed upon the Land or
any part thereof, (3) the Fixtures, or (4) other goods located on the
Land or Buildings, together with all additions, accessions,
accessories, amendments and modifications thereto, extensions,
renewals, replacements, enlargements and proceeds thereof,
substitutions therefor, and income and profits therefrom. The following
are included, without limitation, in the definition of Personalty:
accounts receivable, hotel guest room fees and receipts, hotel
facilities fees and receipts (including, without limitation, fees and
receipts generated from restaurants, bars, catering, room service,
mini-bars, health clubs and gift shops), hotel service fees for the use
or occupancy of rooms and other public facilities, income, issues,
profits, furniture and furnishings (including, without limitation,
beds, bureaus, chiffoniers, chests, chairs, desks, lamps, mirrors,
bookcases, tables, rugs, paintings, couches, televisions and clock
radios), building materials, supplies,
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machines, engines, boilers, stokers, pumps, fans, vents, blowers,
dynamos, furnaces, elevators, ducts, shafts, pipes, furniture,
cabinets, shades, blinds, screens, plumbing, heating, air conditioning,
lighting, lifting, ventilating, refrigerating, cooking, medical,
laundry and incinerating equipment, partitions, drapes, carpets, rugs
and other floor coverings, awnings, call and sprinkler systems, fire
prevention and extinguishing apparatus and equipment, water tanks,
swimming pools, compressors, vacuum cleaning systems, disposals,
dishwashers, washers, dryers, ranges, ovens, kitchen equipment,
cafeteria equipment, recreational equipment, loan commitments,
financing arrangements, bonds, construction contracts, leases,
licenses, permits, sales contracts, insurance policies and the proceeds
therefrom, plans and specifications, surveys, rent rolls, books and
records, rental, tax and insurance deposits, and all other intangible
personal property; and
(ii) All materials, supplies, equipment, apparatus and other
items of Grantor now or hereafter attached to, installed on or in the
Land or the Buildings, or which in some fashion are deemed to be
fixtures to the Land or Buildings under the laws of the State of Texas,
including the Texas Uniform Commercial Code; and
(iii) Any and all leases, subleases, licenses, concessions or
other agreements (written or verbal, now or hereafter in effect) which
grant a possessory interest in and to, or the right to extract, mine,
reside in, sell or use the Mortgaged Property or any portion thereof,
and all other agreements, including, but not limited to, utility
contracts, management agreements, maintenance agreements and service
contracts, which in any way relate to the use, occupancy, operation,
maintenance, enjoyment or ownership of the Mortgaged Property, all
contracts or agreements relating to the sale of all or any part of the
Mortgaged Property, save and except any and all leases, subleases or
other agreements pursuant to which Grantor is granted a possessory
interest in the Mortgaged Property.
1.26 Rents: All of the rents, revenues, income, profits, deposits,
tenders and other benefits payable under the Leases and Grantor's rights, title
and interest in and to the rents, revenues, income, profits, deposits, tenders
and other benefits payable and/or arising from the use or enjoyment of all or
any portion of the Mortgaged Property.
1.27 Security Agreement: Individually and collectively means (i) the
Security Agreement contained in this Deed of Trust, wherein and whereby Grantor
grants a security interest in the Personalty and the Fixtures to Beneficiary,
and (ii) the Security Agreement of even date herewith between Grantor, as
debtor, and Beneficiary, as secured party, whereby Grantor grants a security
interest in all hotel revenues, fees, accounts and furniture, fixtures and
equipment.
1.28 Security Documents: This Deed of Trust, the Assignment, the
Security Agreement, the Guaranty, and any and all other documents executed by
Grantor now or hereafter securing the payment of the Indebtedness or the
observance or performance of the Obligations (but specifically excluding the
Indemnity Agreement).
1.29 Trustee: The person, persons or entity named as such in the
preamble of this Deed of Trust and, as the case may be, his, their or its
successors and assigns.
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1.30 Trustee's Address: 1445 Ross Avenue, Suite 3200, Dallas, Texas
75202.
Article 2
GRANT
2.1 Grant. To secure the payment of the Indebtedness and the
performance and discharge of the Obligations, Grantor by these presents hereby
grants, bargains, sells, assigns, mortgages, transfers, conveys and warrants
unto Trustee, in trust for the use and benefit of Beneficiary, with power of
sale and right of entry and possession, the Mortgaged Property, to have and to
hold the Mortgaged Property unto Trustee, its successors, substitutes and,
assigns forever. Grantor hereby binds itself, and Grantor's successors,
substitutes and assigns, to warrant and forever defend unto Beneficiary, its
successors and assigns, the title to the Mortgaged Property subject to the
Permitted Encumbrances.
2.2 Condition of Grant. Provided always, that if Grantor shall pay or
cause to be paid the entire Indebtedness as and when the same shall become due
and payable and shall observe, perform and discharge the Obligations, then the
Security Documents and the estate and rights granted by Grantor shall cease,
terminate and become void, and shall be promptly released or reconveyed by
Beneficiary, at the cost and expense of Grantor.
Article 3
SECURITY AGREEMENT AND FIXTURE FILING
With respect to all Personalty and/or Fixtures and/or other collateral
constituting a part of the Mortgaged Property, this Deed of Trust shall likewise
be a security agreement, and for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and for the purpose of further
securing payment and performance of the Indebtedness and the Obligations,
Grantor hereby grants to Beneficiary a security interest and lien in all rights,
titles, and interests now owned or hereafter acquired by Grantor in all
Personalty and/or Fixtures. As to the Personalty and Fixtures, the grant,
transfer, and assignment provisions of this Article 3 shall control over the
grant in trust provision of Section 2.1 of this Deed of Trust. Grantor
represents and warrants that, except for any financing statement filed by
Beneficiary or otherwise described on Schedule "B" hereto, no presently
effective financing statement covering the Personalty and/or Fixtures or any
part thereof (except notice filings for permitted equipment leases), has been
filed with any filing officer, and no other security interest has attached or
has been perfected in the Personalty and/or Fixtures or any part thereof. This
Deed of Trust shall be effective as a financing statement filed as a fixture
filing with respect to all Fixtures included within the definitions of Mortgaged
Property and Personalty and/or Fixtures. Beneficiary shall have all the rights
with respect to the Fixtures and Personalty afforded to it by the Uniform
Commercial Code as adopted by the State of Texas, in addition to, but not in
limitation of, the other rights afforded Beneficiary by the Loan Documents. This
Deed of Trust shall also be effective as a financing statement covering minerals
or the like (including oil and gas) and accounts subject to Subsection (e) of
Section 9.103 of the Uniform Commercial Code. A carbon, photographic or other
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reproduction of this Deed of Trust shall be sufficient as a financing statement.
Beneficiary shall have the right at any time to file a manually executed
counterpart or a carbon, photographic or other reproduction of this Deed of
Trust as a financing statement in either the central or local UCC records of any
jurisdiction wherein the Mortgaged Property is located, but the failure of
Beneficiary to do so shall not impair (i) the effectiveness of this Deed of
Trust as both a financing statement covering oil, gas and accounts and as a
fixture filing as permitted by Section 9-402 of the Uniform Commercial Code, or
(ii) the validity and enforceability of this Deed of Trust in any respect
whatsoever. The following information is included for purposes of meeting the
requirements of a financing statement:
(a) The name of the debtor is FelCor Hotel Company II, Ltd.
(b) The name of the secured party is Bankers Trust Company.
(c) The address of the secured party is 130 Liberty Street,
25th Floor, MS 2257, New York, New York 10006, Attention: Steven Sauer.
(d) The mailing address of the debtor is 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas 75062, Attn: Joel M. Eastman.
(e) This financing statement covers all of the debtor's
Personalty and/or Fixtures (whether now owned or hereafter acquired).
The Personalty and/or Fixtures includes (i) goods which are or are to
become fixtures on the Land described in Schedule A, and (ii) minerals
or the like (including oil and gas) located on the Land described in
Schedule A, and (iii) the Personalty. This financing statement is to be
filed for record in the real estate records. Debtor has an interest of
record in the Land described in Schedule A, and the names of the
additional record owners of the Land described in Schedule A, if any,
are listed thereon.
(f) Proceeds and products of Personalty and/or Fixtures are
also covered.
Article 4
ASSIGNMENT OF RENTS AND LEASES
4.1 Assignment of Rents. All of Grantor's right, title and interest in
and to the Rents are hereby absolutely and irrevocably assigned to Beneficiary
to be applied against the Indebtedness and the Obligations. Grantor hereby
appoints Beneficiary its true and lawful attorney-in-fact, with the right, at
Beneficiary's option at any time to demand, receive and enforce payment, to give
receipts, releases and, satisfactions, and to sue, either in Grantor's or
Beneficiary's name, for all Rents. Notwithstanding the foregoing Assignment of
Rents, so long as no Event of Default has occurred which remains uncured, (i)
Grantor may collect, receive, take, use and enjoy such Rents, as they become due
and payable, but not more than one month in advance thereof and (ii) Beneficiary
shall not send a demand notice to any tenants. The foregoing assignment shall be
fully operative without any further action on the part of either party, and
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specifically Beneficiary shall be entitled at its option, upon the occurrence of
an Event of Default hereunder and for so long as such Event of Default is
continuing, to collect all Rents from the Mortgaged Property whether or not
Beneficiary takes possession of the Mortgaged Property. Upon the occurrence of
an Event of Default hereunder, the permission hereby given to Grantor to collect
the Rents from the Mortgaged Property shall terminate. The permission given by
Beneficiary to Grantor shall be reinstated upon a cure of such Event of Default
with Beneficiary's specific consent which shall not be unreasonably withheld.
This Assignment shall not be deemed or construed to constitute Beneficiary or
Trustee as a mortgagee in possession nor obligate Beneficiary or Trustee to take
any action or to incur expenses or perform or discharge any obligation, duty or
liability. Exercise of any rights under this Section and the application of the
Rents to the Indebtedness or the Obligations shall not cure or waive any Event
of Default but shall be cumulative of all other rights and remedies.
4.2 Assignment of Leases. Grantor hereby assigns to Beneficiary all
right, title and interest of Grantor in and to all Leases, together with all
security therefor and all monies payable thereunder, subject, however, to the
conditional permission given to Grantor above to collect the rentals under any
such Lease. The foregoing assignment of any Lease shall not be deemed to impose
upon Beneficiary any of the obligations or duties of Grantor provided in any
such Lease; and Grantor agrees to fully perform all obligations of the lessor
under all such Leases. Upon Beneficiary's request, Grantor shall deliver to any
new lessee a notice of this assignment in form satisfactory to Beneficiary in
its sole discretion. Beneficiary may deliver such a notice to new lessees if
Grantor fails to do so within a reasonable time after Beneficiary's request.
From time to time, upon request of Beneficiary, Grantor shall specifically
assign to Beneficiary, by an assignment in writing in form approved by
Beneficiary, all right, title and interest of Grantor in and to any and all
Leases, together with all security therefor and all monies payable thereunder,
subject to the conditional permission given to Grantor above to collect and use
the rentals under any such lease. Grantor shall also execute and deliver to
Beneficiary any notification, financing statement, or other document reasonably
required by Beneficiary to perfect the foregoing assignment as to any such
Lease.
4.3 Effect of Assignments. This instrument constitutes an absolute and
present assignment of the rents, royalties, issues, profits, revenue, income and
other benefits from the Mortgaged Property; subject, however, to the conditional
permission given to Grantor to collect, receive, take, use and enjoy the same as
provided above; provided, further, that the existence or exercise of such right
of Grantor shall not operate to subordinate this assignment to any subsequent
assignment by Grantor, in whole or in part, and any such subsequent assignment
by Grantor shall be subject to the rights of Trustee and Beneficiary hereunder.
4.4 No Merger of Leasehold Estates. If both the lessor's and lessee's
estate under any Lease, or any portion thereof, becomes vested at any time in
one owner, this Deed of Trust and the lien created hereby shall not be adversely
affected by the application of the doctrine of merger unless Beneficiary so
elects in writing by recording a written declaration so stating. Unless and
until Beneficiary so elects, Beneficiary and any lessor and lessee shall
continue to have and enjoy all of the rights and privileges to the separate
estates. In addition, upon the foreclosure of the lien created by this Deed of
Trust on the Mortgaged Property, any Leases then existing and affecting
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all or any portion of the Mortgaged Property shall not be destroyed or
terminated by merger or by the foreclosure unless Beneficiary or any purchaser
at the sale so elects. No act by or on behalf of Beneficiary or such purchaser
shall constitute a termination of any Lease unless Beneficiary gives written
notice thereof to the tenant or subtenant affected.
4.5 Assignment to Beneficiary Controlling. The rights of Trustee in the
Leases and Rents created under Article 2 shall be subject to the rights of
Beneficiary in the Leases and Rents created under this Article 4.
Article 5
COVENANTS AND REPRESENTATIONS AND WARRANTIES
5.1 Covenants. Until the entire Indebtedness shall have been paid in
full, Grantor hereby covenants and agrees as follows:
5.1.1 Payment of Indebtedness. Grantor will promptly pay or cause to be
paid the Indebtedness as and when same shall be due and payable under the Note,
the Deed of Trust and the Security Documents.
5.1.2 Compliance with Laws. Grantor will promptly and faithfully comply
in all material respects with, conform to and obey all present and future laws,
ordinances, rules, regulations and requirements of every duly constituted
governmental authority or agency and of every Board of Fire Underwriters having
jurisdiction, or similar body exercising similar functions, which may be binding
upon Grantor or the Mortgaged Property or any part thereof, or to the use or
manner of use, occupancy, possession, operation, maintenance, alteration, repair
or reconstruction of the Mortgaged Property, or any part thereof, whether or not
such law, ordinance, rule, order, regulation or requirement shall necessitate
structural changes or improvements or interfere with the use or enjoyment of the
Mortgaged Property. Grantor shall have the right to contest such law, ordinance,
rule, order, regulation or requirement to the extent contesting same results in
a suspension of the enforcement action and any applicable penalties or fines for
such non-compliance.
5.1.3 Payment of Impositions. Grantor will duly pay and discharge, or
cause to be paid and discharged, the Impositions, such Impositions or
installments thereof to be paid prior to the day before any fine, penalty,
interest or cost may be added thereto or imposed by law for the non-payment
thereof; provided, however, that if, by law, any Imposition may be paid in
installments, Grantor may pay the same in such installments; provided, further,
Grantor shall have the right to contest any such imposition prior to payment so
long as (i) Grantor contests such Imposition in good faith, (ii) Grantor sends
advance written notice to Beneficiary that Grantor is contesting such
Imposition, (iii) Grantor posts a bond with a party acceptable to Beneficiary
which is sufficient to pay the Imposition (or a lower amount acceptable to
Beneficiary), and (iv) such contest does not impair the Mortgaged Property in
any manner.
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5.1.4 Repair and Alterations.
(a) Grantor will keep the Mortgaged Property in good order and
condition and make all necessary or appropriate repairs, replacements
and renewals thereof and will prevent any act or thing which might
impair the value or usefulness of the Mortgaged Property (ordinary wear
and tear excepted).
(b) Grantor will not commit or knowingly permit any waste of
the Mortgaged Property or any part thereof, or make or knowingly permit
to be made any alterations or additions to the Mortgaged Property which
would have the effect of materially diminishing the value thereof, or
make or knowingly permit to be made any other alterations or additions
to the Mortgaged Property of a material nature, without the prior
written consent of Beneficiary.
(c) Grantor will not permit any of the Fixtures or Personalty
to be removed at any time from the Land and/or Buildings, without the
prior written consent of Beneficiary, unless actually replaced by an
article of equal suitability and value and owned by Grantor free and
clear of any lien or security interest except such as may be approved
in writing by Beneficiary.
5.1.5 Insurance. Grantor will purchase and maintain property insurance
on the Mortgaged Property protecting against such hazards, casualties and
contingencies as are usually covered by all risk property policies including,
but not limited to, fire, windstorms, flood (if the Mortgaged Property is
located in a flood plain) and such other risks as specified by Beneficiary. The
policies shall be in effect in the locality where the Mortgaged Property is
situated, in amounts and with insurers acceptable to Beneficiary having a Best's
Insurance Rating of A-/XI or better (or other Standard & Poor's equivalent
rating), but in any event not less than the full insurable value of the
Buildings, Fixtures, Personalty and all other contents on a replacement cost
basis, and which includes riders for increased replacement cost due to inflation
and changes in building codes and ordinances and business interruption insurance
covering the loss of rents for one year. All property insurance policies shall
include a mortgagee clause or loss payee endorsement for the benefit of
Beneficiary. No primary deductible or retention greater than $10,000 per Hotel
Project (as herein defined) and no coinsurance clauses shall be called for in
any such policies, unless agreed to in writing by Beneficiary. Policies shall
contain endorsements providing for breach of warranty, adjustment of value for
inflation, increased costs of demolition, and such other conditions as may be
required by Beneficiary. Policies shall be endorsed with form 438BFUNS, or a
similar endorsement acceptable to Beneficiary, showing Beneficiary as an
additional insured and loss payee as its interests may appear, such loss
payments to be applied to the restoration, repair or replacement of the
Mortgaged Property to the extent provided herein under terms and conditions
acceptable to Beneficiary; provided, however, that if Beneficiary's security
under this Deed of Trust is impaired (i.e., damage in excess of that
contemplated in Section 5.1.6 (a) below) or an Event of Default has occurred and
is continuing, then such payments shall, at the sole option of Beneficiary, be
applied to the payment of the Indebtedness.
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Grantor shall also maintain Commercial General Liability Insurance and
Excess/Umbrella Liability Insurance which shall respond to third-party claims
involving bodily injury, property damage and personal injury arising out of
Grantor's alleged actions or inactions; such policies shall contain endorsements
naming Beneficiary as additional insured under the policies as respects its
interest as mortgagee/secured party and as a loss payee. Such policies shall
provide such combined limits of coverage as Beneficiary shall specify, but in
any event for all of the Hotel Projects not less than Five Million Dollars
($5,000,000.00) per occurrence and in the aggregate Five Million Dollars
($5,000,000.00) as to liability for bodily injury, property damage and personal
injury. No primary deductible or retention shall be called for in the Commercial
General Liability policy. All such insurance policies purchased by Grantor shall
be endorsed to be primary and non-contributory to any insurance carried by the
Beneficiary. In addition, Grantor shall cause the Beneficiary to be named as an
additional insured on any excess or umbrella policy purchased by Grantor.
Grantor shall cause the policy or policies evidencing all insurance referred to
in this paragraph (and the insurer issuing such policy) to certify to
Beneficiary that: (a) the interest of Beneficiary shall be insured regardless of
any breach or violation by Grantor of any warranties, declarations or conditions
in such policy; (b) if any such insurance policy be subject to cancellation,
termination or be endorsed or sought to be endorsed to effect a change in
coverage for any reason whatsoever, such insurer will promptly notify
Beneficiary and such cancellation, termination or change shall not be effective
as to Beneficiary until fifteen (15) days after receipt by Beneficiary of such
notice; and (c) Beneficiary may, but shall not be obligated to, make premium
payments to prevent such cancellation, and that such payments shall be accepted
by such insurer. In addition, Grantor shall furnish to Beneficiary duplicate
executed copies of each such policy at the time of execution hereof and copies
of each renewal policy not less than fifteen (15) days prior to the expiration
of the original policy or the preceding renewal policy (as the case may be),
together with receipts or other evidence that the premiums have been paid and
furnish to Beneficiary certificates of insurance prepared by Grantor's insurance
agent or broker which show evidence of the required coverages and endorsements,
and payment of premiums thereon; and furnish to Beneficiary upon Beneficiary's
request, on or before sixty (60) days after the close of each fiscal year of
Grantor a statement of Grantor of the amounts of insurance maintained in
compliance with this Section 5.1.5, of the risks covered by such insurance and
of the insurance company or companies which carry such insurance, accompanied by
copies of all certificates of insurance evidencing the required coverages and
endorsements.
5.1.6 Restoration Following Casualty. After the happening of any
casualty to the Mortgaged Property or any part thereof, Grantor shall give
prompt written notice thereof to Beneficiary.
(a) In the event of any damage to or destruction of the
Buildings, Beneficiary shall have the option in its sole discretion of
applying or paying all or part of the insurance proceeds (i) to any
Indebtedness and in such order as Beneficiary may determine or (ii) to
the restoration of the Buildings or (iii) to Grantor; provided,
however, Beneficiary agrees that if no Event of Default or event or
condition which with the giving of notice, the passage of time, or
both, could mature into an Event of Default then exists hereunder and
if such proceeds do not exceed $500,000 for the Hotel Project so
damaged, the same shall be applied to the restoration of the Buildings.
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(b) In the event of such loss or damage, all proceeds of
insurance shall be payable to Beneficiary, and Grantor hereby
authorizes and directs any affected insurance company to make payment
of such proceeds directly to Beneficiary. Beneficiary is hereby
authorized and empowered by Grantor to settle, adjust, or compromise
any claims for loss, damage, or destruction under any policy or
policies of insurance, and provided there is no Event of Default
hereunder, Grantor shall be permitted to participate in such
negotiations.
(c) Except to the extent that insurance proceeds are received
by Beneficiary and applied to the Indebtedness, nothing herein
contained shall be deemed to excuse Grantor from repairing or
maintaining the Mortgaged Property as provided in this Deed of Trust or
restoring all damage or destruction to the Mortgaged Property,
regardless of whether or not there are insurance proceeds available or
whether any such proceeds are sufficient in amount, and the application
or release by Beneficiary of any insurance proceeds shall not cure or
waive any default or notice of default under this Deed of Trust or
invalidate any act done pursuant to such notice.
(d) No prepayment penalty shall be applicable to any insurance
proceeds received by Beneficiary under this Section 5.1.6.
5.1.7 Performance of Leases and Other Agreements. All Leases entered
into by Grantor after the date hereof shall be on Grantor's standard form lease
which form has been approved in advance and in writing by Beneficiary. All new
Leases or renewals of existing Leases shall be consistent in form and substance
with existing Leases and shall be subject to the prior written approval of
Beneficiary. Grantor will not, without the prior written consent of Beneficiary,
terminate any Leases or modify or amend any Lease (unless such modification or
amendment does not materially affect the economics or business terms of the
Lease). Grantor will duly and punctually perform all covenants and agreements
expressed as binding upon it under the Leases and other agreements to which it
is a party with respect to the Mortgaged Property or any part thereof, and will
use its diligent good faith efforts to enforce or secure the performance of each
and every obligation and undertaking of the respective lessees under the Leases,
and Grantor will appear and defend, at its cost and expense, any action or
proceeding arising under or in any manner connected with the Leases or the
obligations and undertakings of any lessee or other party thereunder.
Notwithstanding the foregoing, Beneficiary agrees that the terms of this Section
5.1.7 shall only be applicable to the Master Leases (as defined in Section 6.8)
and any third-party restaurant leases at the Mortgaged Property.
5.1.8 Payment of Rents. Grantor hereby agrees that the respective
lessees under the Leases, upon notice from Beneficiary of the occurrence of an
Event of Default, shall thereafter pay to Beneficiary the Rents due and to
become due under the Leases without any obligation to determine whether an Event
of Default in fact exists.
5.1.9 Inspection. Grantor will permit Beneficiary, at all reasonable
times and with reasonable notice, to inspect the Mortgaged Property. Beneficiary
shall have the right, but not the obligation, to enter onto the Mortgaged
Property, at all reasonable times and upon reasonable notice (except in the case
of an emergency or following an Event of Default for which no notice
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shall be required), to inspect the Mortgaged Property for the existence of
Hazardous Materials on the Mortgaged Property and to determine the compliance of
the Mortgaged Property and its use with any law, rule or regulation relating to
industrial hygiene or environmental conditions, including soil and ground water
conditions and the compliance of the Grantor and the Mortgaged Property with the
conditions and covenants set forth herein with respect to Hazardous Materials.
5.1.10 Hold Harmless. Grantor will defend and hold Beneficiary harmless
from any action, proceeding or claim affecting the Mortgaged Property, the
Security Documents or the Guaranty to the extent such action, proceeding or
claim arose prior to Beneficiary's possession of the Mortgaged Property and to
the extent such action, proceeding or claim did not result primarily from
Beneficiary's gross negligence or willful wrongdoing. Grantor shall appear in
and defend (or pay the reasonable expenses of Beneficiary to defend, if
Beneficiary gives Grantor notice of its election to handle such defense) any
action or proceeding purporting to affect the security of this Deed of Trust
and/or the rights and/or powers of Beneficiary hereunder, and Grantor shall pay
all costs and expenses (including costs of evidence of title and reasonable
attorneys' fees) in any action or proceeding in which Beneficiary may so appear
and/or any suit by Beneficiary to foreclose this Deed of Trust, to enforce any
obligations secured by this Deed of Trust, and/or to prevent the breach hereof.
Grantor's obligations under this Section 5.1.10 shall survive payment of the
Indebtedness and the release of the lien granted herein, but are subject to the
terms of Section 9.24 below.
5.1.11 Books and Records. Grantor will maintain full and complete books
of account and other records reflecting the results of its operation of the
Mortgaged Property. Grantor will furnish or cause to be furnished to Beneficiary
(a) within 30 days after the end of each calendar quarter, detailed statements
of income and expenses, balance sheet and statement of cash flow relating to the
Mortgaged Property for such period (including a certified rent roll for the
Mortgaged Property); (b) within 90 days after the end of each calendar year,
detailed statements of income and expenses relating to the Mortgaged Property
for such year; (c) within 90 days after the end of each calendar year, separate
financial statements for such year of Grantor and Guarantor; (d) within 30 days
after the end of each calendar quarter, a report outlining monthly occupancy and
average daily rates for the Mortgaged Property; (e) within 30 days after the end
of each calendar quarter, a delinquency report and accounts receivable aging for
the Mortgaged Property for such months; (f) within 30 days after the end of each
calendar quarter a statement of the balance of the working capital reserve
described in Section 5.1.21 hereof; (g) no less than 10 days prior to each
fiscal year, a budget for the upcoming fiscal year; and (h) at least 10 days
prior to the end of each calendar year, a detailed capital improvement budget
for the replacement reserve described in Section 5.1.21 below), all in
reasonable detail and certified by Grantor (except Guarantor's statements which
shall be certified by Guarantor). All such financial statements and reports
shall be certified by Grantor as accurate and complete in all material respects.
At any time and from time to time, Grantor shall deliver to Beneficiary such
other financial data and other information, including, without limitation,
copies of all Leases, as Beneficiary shall, from time to time, reasonably
request with respect to Grantor and the ownership and operation of the Mortgaged
Property, and Beneficiary (or its designee) shall have the right, at reasonable
times and upon reasonable notice, to audit Grantor's books of account and
records at Grantor's sole cost and expense.
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5.1.12 Awards. Grantor will file and prosecute its claim or claims for
any Awards in good faith and with due diligence and cause the same to be
collected and paid over to Beneficiary, and hereby irrevocably authorizes and
empowers Beneficiary, if it so desires, to file such claim and collect any
Awards and agrees that the proceeds of any Awards will be applied by Beneficiary
in reduction (without a prepayment premium) of any portion of the Indebtedness
as Beneficiary may determine in accordance with Article 8 hereof.
5.1.13 Licenses. Grantor shall keep in full force and effect all
licenses, permits and other governmental approvals which are necessary for the
operation of the Mortgaged Property and related facilities, and furnish evidence
satisfactory to Beneficiary that the Mortgaged Property and the use thereof
comply in all material respects with all applicable zoning and building laws,
regulations, ordinances and other applicable laws.
5.1.14 Junior Financing. Grantor shall not, without the prior written
consent of Beneficiary, such consent to be made in Beneficiary's sole
determination, incur any additional indebtedness or create or permit to be
created or to remain, any mortgage, pledge, lien, encumbrance or charge on, or
conditional sale or other title retention agreement with respect to, the
Mortgaged Property or any part thereof or income therefrom, other than the
Security Documents and the Permitted Encumbrances. Notwithstanding the
foregoing, Mortgagor shall be permitted to incur up to $300,000 (in the
aggregate per Hotel Project) of unsecured debt for the financing of equipment
and other personal property, which debt may be evidenced by either notes or
equipment leases and may be secured by a purchase money security interest(s).
5.1.15 Mechanic's Lien. Grantor shall not permit or suffer any
mechanic's, materialmen's or other lien to be created or to remain a lien upon
any of the Mortgaged Property; provided however, Grantor shall have the right to
contest any such lien prior to payment so long as (i) Grantor contests such lien
in good faith, (ii) Grantor sends advance written notice to Beneficiary that
Grantor is contesting such lien, (iii) either Grantor posts a bond with a party
acceptable to Beneficiary which is sufficient to pay the indebtedness secured by
such lien or Grantor delivers other security reasonably satisfactory to
Beneficiary, and (iv) such contest does not materially impair the Mortgaged
Property.
5.1.16 Hazardous Materials.
(a) Without limiting the generality of Section 5.1.2 hereof,
Grantor shall not cause or permit the violation of any law relating to
industrial hygiene or environmental conditions in connection with the
Mortgaged Property, including soil and ground water conditions and
underground storage tanks ("USTs"); or use, cause or permit a release
(a "Release") of a Hazardous Material, generate, or store any Hazardous
Materials in, on, under, over, from or affecting the Mortgaged
Property, except in accordance with all applicable laws; manufacture or
dispose of any Hazardous Materials in, on, under, over, from or
affecting the Mortgaged Property; or transport any Hazardous Materials
to or from the Mortgaged Property. Without Beneficiary's prior written
consent, which shall not be unreasonably withheld, Grantor shall take
no remedial action with respect to any Hazardous Materials in, on,
under, over, from or affecting the Mortgaged Property, and
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shall not enter into any settlement agreement, consent decree or other
compromise or agreement relating to any such Hazardous Materials.
Beneficiary's consent to such action shall not be construed to mean
that Beneficiary has the capacity to cause or determine the
appropriated Hazardous Materials management practices of Grantor but
only is intended for Beneficiary to assure that its collateral
hereunder is not being impaired.
(b) Grantor shall indemnify and hold Trustee and Beneficiary
harmless from any loss, liability, cost, expense and/or claim
(including without limitation the cost of any fines, remedial action,
damage to the environment and cleanup and the fees of experts and
reasonable attorneys fees) of or against Trustee and/or Beneficiary
arising from (i) the use, generation, storage, Release or disposal of
any Hazardous Materials in, on, under, over, from or affecting the
Mortgaged Property or the transport of any Hazardous Materials to or
from the Mortgaged Property; and (ii) the violation of any law relating
to industrial hygiene or environmental conditions in connection with
the Mortgaged Property, including soil and ground water conditions and
USTs; and (iii) the breach of any of the representations, warranties
and covenants of Grantor with respect to Hazardous Materials set forth
in this Section 5.1.16 and in Section 5.2 hereof. This indemnity shall
only apply to the extent any loss, liability, cost, expense and/or
claim which arose prior to Beneficiary's actual possession of the
Mortgaged Property and did not result primarily from Beneficiary's
gross negligence or willful wrong doing. Beneficiary shall have the
right to approve any counsel selected by Grantor to defend Beneficiary
hereunder. Beneficiary shall have the right, but not the obligation, to
enter into the Mortgaged Property during the term of the Loan following
24 hours prior notice to Grantor, to inspect the Mortgaged Property and
to perform any reasonable testing of the Mortgaged Property for the
existence of any Hazardous Materials thereon and to determine the
compliance of the Mortgaged Property and its uses with any
environmental law. Beneficiary may hire engineers and other consultants
of its choice to perform the inspections, and testing required in the
foregoing paragraph at Grantor's sole expense. The inspection of the
Mortgaged Property by Beneficiary or its agents will not relieve
Grantor of its obligation to comply with any environmental laws.
Grantor's obligations under this Section 5.1.16 shall survive payment
of the Indebtedness and the release of the lien granted herein.
Notwithstanding the foregoing, prior to an Event of Default any such
testing shall be at Beneficiary's cost as opposed to Grantor's cost.
5.1.17 Management. The Mortgaged Property shall at all times be
operated by Grantor or such other management company approved in advance and in
writing by Beneficiary under a management contract satisfactory in form and
substance to Beneficiary. In the event the Mortgaged Property is managed by an
affiliate of Grantor or Guarantor, then the interests of the Grantor and the
management company under such contract shall be subordinate to the rights of
Beneficiary hereunder, and the management agreement shall provide that
Beneficiary may, at its option, terminate such contract upon the occurrence of
an Event of Default which remains uncured following the expiration of any
applicable cure periods. In addition, any economic or material changes in the
franchise agreements/license agreements for the operation of the Mortgaged
Property must receive the prior written consent of Beneficiary. In addition,
Grantor agrees to immediately forward to Beneficiary copies of any
correspondence Grantor receives from any franchisor with regard to a default or
potential default by the tenant under the Master Leases.
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5.1.18 Use of Mortgaged Property. Grantor shall not use the Mortgaged
Property or any part thereof, or allow the same to be used or occupied, for any
purpose other than for the purposes of a hotel or for any unlawful purpose, or
in violation of any certificate of occupancy or other permit or certificate, or
any law, ordinance or regulation, covering or affecting the use or occupancy
thereof. Grantor will not suffer any act to be done or any condition to exist on
the Mortgaged Property or any part thereof or any article to be brought thereon,
which may be dangerous (unless safeguarded as required by law) or which may
constitute a nuisance public or private or which may void or make voidable any
insurance then in force with respect thereto.
5.1.19 Use of Beneficiary's Name. Grantor shall not use the names of
either Beneficiary or any of Beneficiary's subsidiaries or affiliates in
connection with the development and operation of the Mortgaged Property.
5.1.20 No Other Real Estate. At all times during the term of the Note,
Grantor shall not own any real estate other than the Mortgaged Property.
5.1.21 Maintenance of Reserves. At all times during the term of the
Note and for the exclusive benefit of the Mortgaged Property, Grantor shall
maintain a cash working capital replacement reserve with a financial institution
acceptable to Beneficiary, in Beneficiary's sole discretion. Grantor shall
deposit, on a monthly basis, into such reserve an amount equal to four percent
(4%) of the Mortgaged Property's gross revenues. Grantor shall, on a quarterly
basis, send to Beneficiary copies of monthly bank statements for the preceding
quarter, so that Beneficiary can verify the existence and maintenance of such
working capital reserves. Such reserve shall be pledged to Beneficiary as
additional security for the Loan (and will not be applied by Beneficiary unless
there is an Event of Default). The working capital reserve shall be restricted
for the exclusive purpose of funding Beneficiary-approved capital improvements
and replacement of furniture, fixtures and equipment for the Mortgaged Property.
Beneficiary's approval for disbursements from the reserve may be obtained on an
annual basis at the time of the submission of the annual hotel budget to
Beneficiary, with such disbursements available on a monthly basis (Beneficiary
will permit withdrawals from such reserve up to 10% in excess of a specified
line item in such approved budget). Beneficiary agrees that its consent shall
not be unreasonably withheld in connection with such budget approval. All other
disbursements shall require Beneficiary's specific written approval before such
funds are released.
5.2 Representations and Warranties of Grantor. Grantor hereby
represents and warrants to Beneficiary as of the date hereof as follows, and
agrees to give written notice to Beneficiary of any breach of such
representations and warranties:
5.2.1 Good Standing/Licensing. Grantor (and its general partner) is
duly organized and validly existing under the laws of its state of organization,
is duly licensed or qualified to do business and is in good standing and is
authorized to do business in every jurisdiction in which the nature of its
businesses or properties makes such licensing or qualification necessary and
where a failure to so qualify or be licensed would have a materially adverse
effect on the business or operations of the Grantor (and its general partner and
Guarantor), and to its knowledge is in compliance with all laws, regulations,
ordinances and orders of public authorities applicable to
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Grantor (and its general partner). The execution of the Note, the Security
Documents, and the Indemnity Agreement are within Grantor's partnership powers.
5.2.2 No Conflict. The execution, delivery and performance by Grantor
of the Note, the Security Documents, the Indemnity Agreement and by Guarantor of
the Guaranty will not, to Grantor's knowledge, violate any provision of law
(including, but not limited to, any law relating to usury), any order of any
court or other agency or government, or any indenture, agreement or other
instrument to which Grantor or Guarantor is a party or by which Grantor,
Guarantor or any of their property is bound, or be in conflict with, result in a
breach of or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or other instrument, or violate the partnership
agreement of the Grantor or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of Grantor or Guarantor, except as contemplated by the Note and the
Security Documents, and no action with respect thereto by Grantor or Guarantor
is required.
5.2.3 Consents. No consent or approval of any regulatory body to the
execution, delivery and performance of the Note, the Security Documents, the
Indemnity Agreement or the Guaranty or the transactions contemplated thereby is
required by law.
5.2.4 Suits. There are no suits, proceedings or investigations pending
or, to the best of Grantor's knowledge, threatened against or affecting Grantor
or Guarantor, at law or in equity, or before or by any governmental or
administrative agency or instrumentality which, if adversely determined, would
have a material adverse effect on the business or condition of Grantor or
Guarantor.
5.2.5 Judgments. No judgment, decree or order of any court or
governmental or administrative agency or instrumentality has been issued against
Guarantor or Grantor which has or may have any material adverse effect on the
business or condition of Grantor or Guarantor.
5.2.6 Information. To the best of Grantor's knowledge, all information,
reports, papers and data given to Beneficiary with respect to Grantor, Guarantor
or others obligated under the terms of the Security Documents, and the Guaranty
are accurate and correct in all material respects.
5.2.7 Title to Mortgaged Property/Right to Assign Leases. Grantor has
good and indefeasible title in fee simple to the Land and good and marketable
title to the Buildings, Fixtures and Personalty, and the right to assign the
Leases and Rents to Beneficiary free and clear of any prior assignment, liens,
charges, encumbrances, security interests and adverse claims whatsoever except
the Permitted Encumbrances.
5.2.8 Leases. Grantor has not executed any presently effective prior
assignment of the Leases or of its right, title and interest therein or in the
Rents to accrue thereunder.
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5.2.9 Permitted Encumbrances. The Permitted Encumbrances have not
materially interfered with the operation of the Mortgaged Property, nor does
Grantor reasonably foresee any material interference arising from the Permitted
Encumbrances during the term of the Note.
5.2.10 Taxes. Grantor, its general partner and Guarantor have filed all
Federal, state, county, and municipal income tax returns required to have been
filed by them and have paid all taxes which have become due pursuant to any
assessments received by them, and Grantor and Guarantor do not know of any basis
for additional assessment in respect to such taxes.
5.2.11 Use of Mortgaged Property. The Mortgaged Property is being, and
will continue to be, used for the purpose of a Hotel Project and is not now
homestead property (business or personal).
5.2.12 Hazardous Materials. To the best of Grantor's knowledge after
due inquiry and investigation, no Release of a Hazardous Material has occurred
in, on, under, over, from or affecting the Mortgaged Property except to the
extent disclosed in the environmental assessments delivered to Beneficiary by
Grantor in connection with the closing of the Loan. Grantor has not received any
notice from any governmental agency or from any tenant under a Lease or from any
other party with respect to such Release. To the best of Grantor's knowledge
after due inquiry and investigation, the Mortgaged Property is not in violation
of any applicable environmental or industrial hygiene laws, rules or
regulations. Grantor has not generated, stored, used, released or disposed of
any Hazardous Material in, on, under, over, from or affecting the Mortgaged
Property or in, on, under, over, from or affecting any adjoining property.
5.2.13 Plans and Specifications. To the best of Grantor's knowledge
after due inquiry and investigation, Grantor warrants that the Buildings and
Improvements comply with all applicable laws, codes and other governmental
requirements, except to the extent disclosed in the engineering assessments
delivered to Beneficiary by Grantor in connection with the closing of the Loan.
5.2.14 Single Purpose Entity/Separateness. Grantor represents, warrants
and covenants as follows:
(a) Grantor does not own and will not own any asset or
property other than (i) the Mortgaged Property and (ii) incidental
personal property necessary for the ownership or operation of the
Mortgaged Property and Grantor's permitted business operations.
(b) Grantor will not engage in any business other than the
ownership, management and operation of the Mortgaged Property and
Grantor will conduct and operate its business as presently conducted
and operated.
(c) Grantor will not enter into any contract or agreement with
any affiliate of the Grantor, any constituent party of Grantor, any
Guarantor of the Indebtedness and/or Obligations or any part thereof or
any affiliate of any constituent party or Guarantor, except upon terms
and conditions that are intrinsically fair and substantially similar to
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those that would be available on an arms-length basis with third
parties other than any such party.
(d) Grantor has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect, absolute or
contingent (including guaranteeing any obligation), other than (i) the
Indebtedness, (ii) trade and operational debt incurred in the ordinary
course of business with trade creditors and in amounts as are normal
and reasonable under the circumstances (and expressly consented to by
Beneficiary in writing or otherwise permitted hereunder without
Beneficiary's further consent), and (iii) debt incurred in the
financing of equipment and other personal property used on the premises
(and expressly consented to by Beneficiary hereunder). No indebtedness
other than the Indebtedness may be secured (subordinate or pari passu)
by a lien on the Mortgaged Property.
(e) Grantor has not made and will not make any loans or
advances (other than distributions of any net profits to Grantor's
partners and the repayment of permitted intercompany loans) to any
third party (including any affiliate or constituent party, any
Guarantor or any affiliate of any constituent party or Guarantor), and
shall not acquire obligations or securities of its affiliates.
(f) Grantor is and will remain solvent and Grantor will pay
its debts and liabilities (including, as applicable, shared personnel
and overhead expenses) from its assets as the same shall become due.
(g) Grantor has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve its
existence, and Grantor will not, nor will Grantor permit any
constituent party to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and
bylaws, trust or other organizational documents of Grantor or such
constituent party without the prior written consent of Beneficiary.
(h) Grantor will maintain all of its books, records, financial
statements and bank accounts separate from those of its affiliates and
any constituent party and Grantor will file its own tax returns unless
required otherwise by applicable law. Grantor shall maintain its books,
records, resolutions and agreements as official records.
(i) Grantor will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other
entity (including any affiliate of Grantor, any constituent party of
Grantor, any Guarantor or any affiliate of any constituent party or
Guarantor), shall correct any known misunderstanding regarding its
status as a separate entity, shall conduct business in its own name,
shall not identify itself or any of its affiliates as a division or
part of the other and shall maintain and utilize separate stationery,
invoices and checks.
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(j) Grantor will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.
(k) Neither Grantor nor any constituent party will seek the
dissolution, winding up, liquidation, consolidation or merger in whole
or in part, of the Grantor.
(l) Grantor will not commingle the funds and other assets of
Grantor with those of any affiliate or constituent party, any
Guarantor, or any affiliate of any constituent party of Guarantor, or
any other person.
(m) Grantor has and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or
constituent party, any Guarantor, or any affiliate of any constituent
party or Guarantor, or any other person.
(n) Grantor does not and will not hold itself out to be
responsible for the debts or obligations of any other person.
(o) If Grantor is a limited partnership or a limited liability
company, the general partner or managing member or Guarantor shall be a
limited liability company whose sole asset is its interest in Grantor
and the general partner or managing member will at all times comply,
and will cause Grantor to comply, with each of the representations,
warranties, and covenants contained in this Section 5.2.14 as if such
representation, warranty or covenant was made directly by such general
partner or managing member.
(p) The general partner of Grantor shall at all times maintain
an independent director/member who has been approved in writing by
Beneficiary.
Article 6
EVENTS OF DEFAULT
6. Events of Default
The term "Event(s) of Default," as used in the Security Documents, the
Guaranty and the Note, shall mean the occurrence or happening, from time to
time, of any one or more of the following:
6.1 Payment of Indebtedness. If Grantor shall default in the due and
punctual payment of all or any portion of any installment of the Indebtedness as
and when the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment or by acceleration or otherwise and such
default shall continue for a period of ten (10) days; provided that failure to
pay the final installment due at maturity shall immediately constitute an Event
of Default hereunder.
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6.2 Performance of Obligations. If Grantor or Guarantor shall default
in the due observance or performance of any of the Obligations other than
payment of money and such default shall not be curable, or if curable shall
continue for a period of thirty (30) days after written notice thereof from
Beneficiary to Grantor (unless such default, if curable, requires work to be
performed, acts to be done or conditions to be remedied which by their nature
cannot be performed, done or remedied, as the case may be, within such thirty
day period and Grantor shall commence to cure such default within such thirty
(30) day period and shall thereafter diligently and continuously process the
same to completion, but in no event shall the period for cure exceed ninety (90)
days unless otherwise agreed in writing by Beneficiary, and in no event shall
the period for such cure extend beyond the maturity of the Note).
6.3 Bankruptcy Receivership, Insolvency, Etc. If voluntary or
involuntary proceedings under the Federal Bankruptcy Code, as amended, shall be
commenced by or against Grantor, any general partner of Grantor, or Guarantor,
or bankruptcy, receivership, insolvency, reorganization, dissolution,
liquidation or other similar proceedings shall be instituted by or against
Grantor, any general partner of Grantor, or Guarantor, with respect to all or
any part of Grantor's, or Guarantor's property or the property of any general
partner of Grantor under the Federal Bankruptcy Code, as amended, or other law
of the United States or of any state or other competent jurisdiction, and if
such proceedings are instituted against Grantor, any general partner of Grantor
or Guarantor and it shall consent thereto or shall fail to cause the same to be
discharged within sixty (60) days.
6.4 Laws Affecting Obligations and Indebtedness. If subsequent to the
date of this Deed of Trust, any governmental entity having jurisdiction in which
the Mortgaged Property is located passes any law (a) which renders payment of
the Indebtedness and/or performance of the material Obligations by Grantor or by
Guarantor unlawful, or (b) which prohibits Beneficiary from exercising any of
its essential rights and remedies under the Note, the Security Documents, the
Indemnity Agreement or the Guaranty.
6.5 False Representation. If any representation or warranty made by
Grantor, Guarantor or others in, under or pursuant to the Note, the Guaranty or
the Security Documents (including, but not limited to, any representation or
warranty made in Section 5.2 hereof) shall prove to have been false or
misleading in any material respect as of the date on which such representation
or warranty was made.
6.6 Destruction of Improvements. If any of the Buildings is demolished
or removed or demolition or removal thereof is imminent, eminent domain
proceedings excepted, unless Grantor is diligently repairing or replacing the
Mortgaged Property to Beneficiary's satisfaction in accordance with Section
5.1.6 hereof.
6.7 Default Under Other Deed of Trust. If the holder of any junior deed
of trust or any other lien on the Mortgaged Property (without hereby implying
Beneficiary's consent to any such junior deed of trust or lien) institutes
foreclosure or other proceedings for the enforcement of its remedies thereunder,
or if a default exists and is continuing beyond any applicable grace or cure
period under any other deed of trust or lien (excluding mechanics' and
materialmen's liens
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adequately bonded to the sole satisfaction of Beneficiary) on the Mortgaged
Property. Notwith standing anything herein to the contrary, the filing of a
foreclosure proceeding or suit to collect the debt secured by any such deed of
trust or lien shall immediately constitute an Event of Default hereunder.
6.8 Security Documents and Loan Documents. If a default shall occur and
be continuing after the expiration of any applicable grace or cure period under
any of the Security Documents, the Guaranty, or under any of the other Loan
Documents, including, without limitation, the failure of Grantor in connection
with the purchase of a renewal Cap (as defined and described in Section 23 of
the Note).
6.9 Due on Sale. If, without the prior written consent of Beneficiary,
there is directly or indirectly (a) any master lease of an entire Hotel Project
comprising the Mortgaged Property [other than the existing master lease
agreements (the "Master Leases") between Grantor and Bristol Hotel Tenant
Company] or any sale, transfer, assignment, agreement for deed, conveyance,
hypothecation or encumbrance, whether voluntary or involuntary, of all or part
of the Mortgaged Property or any interest therein, or (b) any sale, assignment,
or transfer of the partnership interests, membership interests or of the
corporate voting stock in Grantor or its general partner (or the general partner
or managing member of such general partner), or (c) a seizure of the Mortgaged
Property, or attachment of any lien on the Mortgaged Property, whether voluntary
or involuntary, which has not been removed or bonded off to Beneficiary's sole
satisfaction within thirty (30) days of such attachment. Promptly following any
such transfer, Grantor shall advise Beneficiary in writing of such occurrence.
6.10 Judgment. If a final judgment (i.e., non-appealable and not
covered by insurance) for the payment of money in excess of One Hundred Thousand
Dollars ($100,000.00) shall be rendered against Grantor or Guarantor and the
same shall remain unpaid for a period of sixty (60) consecutive days during
which period execution shall not be effectively stayed.
6.11 Other Real Estate. If Grantor owns real estate other than the
Mortgaged Property.
6.12 Dissolution and Termination. The dissolution or termination, as
may be applicable, of any one or more of Grantor, Grantor's general partner(s)
or Guarantor.
6.13 Hotel Franchise Agreements and License Agreement. If there is an
uncured event of default by Grantor (or its master tenant or management agent)
under any of the franchise agreements and/or license agreements used in
connection with the operation of the Mortgaged Property.
6.14 Master Leases. If there is an uncured event of default by Grantor
under any of the Master Leases.
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Article 7
DEFAULT AND FORECLOSURE
7.1 Remedies. If an Event of Default shall occur, Beneficiary may, at
its option, by or through Trustee or otherwise, exercise one or more or all of
the following remedies:
7.1.1 Acceleration. Declare the unpaid portion of the Indebtedness to
be immediately due and payable, without further notice or demand (each of which
hereby is expressly waived by Grantor), whereupon the same shall become
immediately due and payable.
7.1.2 Operation of Mortgaged Property. Hold, lease, operate or
otherwise use or permit the use of the Mortgaged Property, or any portion
thereof, in such manner, for such time and upon such terms as Beneficiary may
deem to be in its best interest (making such repairs, alterations, additions and
improvements thereto, from time to time, as Beneficiary shall deem necessary or
desirable) and collect and retain all earnings, rents, profits or other amounts
payable in connection therewith.
7.1.3 Judicial Proceedings. Institute proceedings for the complete or
partial foreclosure of this Deed of Trust or take such steps to protect and
enforce its rights whether by action, suit or proceeding in equity or at law for
the specific performance of any covenant, condition or agreement in the Note or
in this Deed of Trust (without being required to foreclose this Deed of Trust),
or in aid of the execution of any power herein granted, or for any foreclosure
hereunder, or for the enforcement of any other appropriate legal or equitable
remedy or otherwise as Beneficiary shall elect.
7.1.4 Sale of Mortgaged Property. Cause the Mortgaged Property and all
estate, right, title and interest, claim and demand therein, or any part thereof
to be sold as follows:
Upon the occurrence of an Event of Default the Trustee, or his
successor or substitute, is authorized and empowered and it shall be his special
duty at the request of Beneficiary to sell the Mortgaged Property or any part
thereof situated within the State of Texas at the courthouse door of any county
in the State of Texas in which any part of the Mortgaged Property is situated,
at public vendue to the highest, bidder for cash between the hours of ten
o'clock a.m. and four o'clock p.m., but not later than three hours after the
earliest time at which sale will begin as set forth in the notice, on the first
Tuesday in any month after having given notice of such sale in accordance with
the statutes of the State of Texas then in force governing sales of real estate
under powers conferred by deed of trust. Any sale made by the Trustee hereunder
may be as an entirety or in such parcels as Beneficiary may request, and any
sale may be adjourned by announcement at the time and place appointed for such
sale without further notice except as may be required by law. The sale by the
Trustee of less than the whole of the Mortgaged Property shall not exhaust the
power of sale herein granted, and the Trustee is specifically empowered to make
successive sale or sales under such power until the whole of the Mortgaged
Property shall be sold; and if the proceeds of such sale of less than the whole
of the Mortgaged Property shall be less than the aggregate of the Indebtedness
secured hereby and the expense of executing this trust as provided
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herein, this Deed of Trust and the lien hereof shall remain in full force and
effect as to the unsold portion of the Mortgaged Property just as though no sale
had been made; provided, however, that Grantor shall never have any right to
require the sale of less than the whole of the Mortgaged Property but
Beneficiary shall have the right, at its sole election, to request the Trustee
to sell less than the whole of the Mortgaged Property. After each sale, the
Trustee shall make to the purchaser or purchasers at such sale good and
sufficient conveyances in the name of Grantor, conveying the property so sold to
the purchaser or purchasers in fee simple with general warranty of title binding
upon the Grantor but not upon the Trustee or Beneficiary, and shall receive the
proceeds of said sale or sales and apply the same as herein provided. The power
of sale granted herein shall not be exhausted by any sale held hereunder by the
Trustee or his substitute or successor, and such power of sale may be exercised
from time to time and as many times as Beneficiary may deem necessary until all
of the Mortgaged Property has been duly sold and all Indebtedness has been fully
paid. In the event any sale hereunder is not completed or is defective in the
opinion of Beneficiary, such sale shall not exhaust the power of sale hereunder
and Beneficiary shall have the right to cause a subsequent sale or sales to be
made hereunder. Any and all statements of fact or other recitals made in any
deed or deeds given by the Trustee or any successor or substitute appointed
hereunder as to the occurrence of an Event of Default or the nonpayment of the
Indebtedness or as to Beneficiary having declared all of said Indebtedness to be
due and payable, or as to the request to sell, or as to notice of time, place
and terms of sale and the property to be sold having been duly given, or as to
the refusal, failure or inability to act of the Trustee, substitute or
successor, or of the appointment of a substitute Trustee, shall be taken as
prima facie evidence of the truth of the facts so stated and recited. The
Trustee or his successor or substitute may appoint or delegate to the extent
permitted by law any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee, including the posting of
notices and the conduct of sale, but in the name and on behalf of the Trustee,
his successor or substitute. If the Trustee or his successor or substitute shall
have given notice of sale hereunder, any successor or substitute Trustee
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or substitute
Trustee conducting the sale.
7.1.5 Receiver. Beneficiary shall be entitled, as a matter of strict
right, without notice and ex parte, and without regard to the value or occupancy
of the security, or the solvency of the Grantor or of Guarantor, or the adequacy
of the Mortgaged Property as security for the Note, to have a receiver appointed
to enter upon and take possession of the Mortgaged Property, collect the Rents
and profits therefrom and apply the same as the court may direct, such receiver
to have all the rights and powers permitted under the laws of the jurisdiction
in which the Mortgaged Property is located. Grantor hereby waives any
requirements on the receiver or Beneficiary to post any surety or other bond.
Beneficiary or the receiver may also take possession of, and for these purposes
use, any and all Personalty which is a part of the Mortgaged Property and used
by Grantor in the rental or leasing thereof, or any part thereof. The expense,
(including the receiver's fees, counsel fees, costs and agent's compensation)
incurred pursuant to the powers herein contained shall be secured by this Deed
of Trust. Beneficiary shall (after payment of all costs and expenses incurred)
apply such Rents, issues and profits received by it on the Indebtedness in the
order set forth in Section 7.7 hereof. The right to enter and take possession of
the Mortgaged Property, to manage and operate the same, and to collect the
Rents, issues and
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profits thereof, whether by receiver or otherwise, shall be cumulative to any
other right or remedy hereunder or afforded by law, and may be exercised
concurrently therewith or independently thereof. Beneficiary shall be liable to
account only for such Rents, issues and profits actually received by
Beneficiary.
7.1.6 Additional Rights and Remedies. With or without notice, and
without releasing Grantor from the Indebtedness or Obligations, and without
becoming a mortgagee in possession, Beneficiary shall have the right to cure any
breach or default of Grantor and, in connection therewith, to enter upon the
Mortgaged Property and to do such acts and things as Beneficiary or Trustee deem
necessary or desirable to protect the security hereof including, but without
limitation, to appear in and defend any action or proceedings purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee
hereunder; to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the judgment of either Beneficiary or Trustee, is
prior or superior hereto, the judgment of Beneficiary or Trustee being
conclusive as between the parties hereto; to obtain insurance; to pay any
premiums or charges with respect to insurance required to be carried hereunder;
and to employ counsel, accountants, contractors and other appropriate persons to
assist them.
7.1.7 Beneficiary as Purchaser. Beneficiary shall have the right to
become the purchaser at any sale held by the Trustee or by any court, receiver
or public officer, and Beneficiary shall have the right to credit upon the
amount of the bid made therefor, the amount of Indebtedness payable to it out of
the net proceeds of such sale. Beneficiary upon any such purchase, shall acquire
good title to the Mortgaged Property so purchased, free from the lien of this
Deed of Trust and free of all rights of redemption, if any, in Grantor. Recitals
contained in any conveyance made to any purchaser at any sale made hereunder
shall presumptively establish the truth and accuracy of the matters therein
stated, including, without limiting the generality of the foregoing, nonpayment
of the unpaid principal sum of, and the interest accrued on, the Note after the
same have become due and payable, advertisement and conduct of such sale in the
manner provided herein or appointment of any successor Trustee hereunder; and
Grantor does hereby ratify and confirm any and all acts that said Beneficiary or
its successors may lawfully do in the premises by virtue of the terms and
conditions of this instrument.
7.1.8 Receipt to Purchaser. Upon any sale, whether made under the power
of sale herein granted and conferred or by virtue of judicial proceedings, the
receipt of the Trustee, or of the officer making sale under judicial
proceedings, shall be sufficient discharge to the purchaser or purchasers at any
sale for his or their purchase money, and such purchaser or purchasers, his or
their assigns or personal representatives, shall not, after paying such purchase
money and receiving such receipt of the Trustee or of such officer therefor, be
obliged to see to the application of such purchase money, or be in anywise
answerable for any loss, misapplication or nonapplication thereof.
7.1.9 Effect of Sale. Any sale or sales of the Mortgaged Property,
whether under the power of sale herein granted and conferred or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim,
and demand whatsoever either at law or in equity, of Grantor of, in, and to the
premises and the property sold, and shall be a perpetual bar, both at law and in
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equity, against Grantor, Grantor's successors, and against any and all persons
claiming or who shall thereafter claim all or any of the property sold from,
through or under Grantor, or Grantor's successors or assigns; nevertheless,
Grantor, if requested by the Trustee so to do, shall join in the execution and
delivery of all proper conveyances, assignments and transfers of the properties
so sold.
7.1.10 Remedies Under UCC. Upon the occurrence of an Event of Default,
Beneficiary may exercise its rights of enforcement, if they can be exercised
without a breach of the peace, with respect to the Personalty and/or the
Fixtures under the applicable provisions of the Uniform Commercial Code as
enacted in the State of Texas, and/or under other applicable Texas law, and in
conjunction with, in addition to or in substitution for those rights and
remedies:
(a) Beneficiary may enter upon Grantor's premises to take
possession of, assemble and collect the Personalty and/or Fixtures and
any and all books related to the Mortgaged Property; and
(b) Beneficiary may require Grantor to assemble the Personalty
and/or Fixtures and make same available at a place Beneficiary
designates which is mutually convenient to allow Beneficiary to take
possession or dispose of the Personalty and/or Fixtures; and
(c) Written notice mailed to Grantor as provided herein at
least ten (10) days prior to the date of public sale of the Personalty
and/or Fixtures or prior to the date after which private sale of the
Personalty and/or Fixtures will be made shall constitute reasonable
notice; and
(d) Any sale made pursuant to the provisions of this
Subsection shall be deemed to have been a public sale conducted in a
commercially reasonable manner if held contemporaneously with and upon
the same notice as required for the sale of the Mortgaged Property
under power of sale as provided in Subsection 7.1.4 of this Deed of
Trust; and
(e) In the event of a foreclosure sale, whether made by the
Trustee under the terms hereof, or under judgment of a court, the
Mortgaged Property may, at the option of Beneficiary, be sold as a
whole; and
(f) It shall not be necessary that Beneficiary take possession
of the Personalty and/or Fixtures or any part thereof prior to the time
that any sale pursuant to the provisions of this section is conducted
and it shall not be necessary that the Personalty and/or Fixtures or
any part thereof be present at the location of such sale; and
(g) Prior to application of proceeds of disposition of the
Personalty and/or Fixtures to the Indebtedness, such proceeds shall be
applied to the reasonable expenses of retaking, holding, preparing for
sale or lease, selling, leasing and the like and the reasonable
attorneys' fees and legal expenses incurred by Beneficiary; and
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(h) Any and all statements of fact or other recitals made in
any bill of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Indebtedness or as
to the occurrence of any Event of Default, or to Beneficiary having
declared all of such Indebtedness to be due and payable, or as to
notice of time, place and terms of sale and of the Mortgaged Property
to be sold having been duly done by Beneficiary, shall be taken as
prima facie evidence of the truth of the facts so stated and recited;
and
(i) Beneficiary may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to
any sale held by Beneficiary, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Beneficiary.
7.1.11 Entry on and Operation of Property by the Trustee. Upon the
occurrence of an Event of Default and in addition to all other rights herein
conferred on the Trustee, the Trustee (or any person, firm or corporation
designated by the Trustee) shall have the right and power, but shall not be
obligated, to enter upon and take possession of any of the Mortgaged Property,
and of all books, records, and accounts relating thereto and to exclude Grantor,
and Grantor's agents or servants, wholly therefrom, and to hold, lease, operate,
use, administer, manage, and operate the same to the extent that Grantor shall
be at the time entitled and in his place and stead for such time, and upon such
terms as Beneficiary may deem to be in its best interest (making such repairs,
alterations, additions, and improvements thereto, from time to time, as
Beneficiary shall deem necessary or desirable) and collect and retain all
earnings, rents, profits, or other amounts payable in connection therewith. The
Trustee, or any person, firm or corporation designated by the Trustee, may
operate the same without any liability to Grantor in connection with such
operations, except to use ordinary care in the operation of said properties, and
the Trustee or any person, firm or corporation designated by them, shall have
the right to collect, receive and receipt for all Rents from the Mortgaged
Property, to make repairs, purchase machinery and equipment, and to exercise
every power, right and privilege of Grantor with respect to the Mortgaged
Property. All costs, expenses and liabilities of every character incurred by the
Trustee or Beneficiary in managing, operating, maintaining, protecting or
preserving the Mortgaged Property, respectively, shall constitute a demand
obligation owing by Grantor to Beneficiary and shall bear interest from date of
expenditure until paid at the same rate as is provided in the Note for interest
on past due principal, all of which shall constitute a portion of the
Indebtedness and shall be secured by this Deed of Trust and by any other
instrument securing the Indebtedness. If necessary to obtain the possession
provided for above, the Trustee or Beneficiary, as the case may be, may invoke
any and all remedies to dispossess Grantor including specifically one or more
actions for forcible entry and detainer, trespass to try title and restitution.
When and if the expenses of such operation have been paid and the Indebtedness
paid, the Mortgaged Property shall, if there has been no sale or foreclosure, be
returned to Grantor.
7.1.12 Change in Laws. If any statute now applicable in any state in
which any of the Mortgaged Property is now located provides, or shall hereafter
be amended to provide, a different procedure for the sale of real property under
a power of sale in a deed of trust or mortgage,
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Beneficiary may, in its sole discretion, if same be permitted by applicable law,
follow the sale procedure set forth in this Article VII or that prescribed in
such statute, as amended.
7.1.13 Other. Exercise any other remedy specifically granted under the
Security Documents or the Guaranty, or now or hereafter existing in equity, at
law, by virtue of statute or otherwise, including the rights described below.
7.2 Separate Sales. Any real estate or any interest or estate therein
sold pursuant to any writ of execution issued on a judgment obtained by virtue
of the Note, this Deed of Trust or the other Security Documents, or pursuant to
any other judicial proceedings under this Deed of Trust, or pursuant to the
power of sale granted herein, may be sold in one parcel, as an entirety or in
such parcels, and in such manner or order as Beneficiary, in its sole
discretion, may elect.
7.3 Remedies Cumulative and Concurrent. The rights and remedies of
Beneficiary as provided in the Note, this Deed of Trust, the Guaranty and in the
Security Documents shall be cumulative and concurrent and may be pursued
separately, successively or together against Grantor or Guarantor or against
other obligors or against the Mortgaged Property, or any one or more of them, at
the sole discretion of Beneficiary, and may be exercised as often as occasion
therefor shall arise. The failure to exercise any such right or remedy shall in
no event be construed as a waiver or release thereof, nor shall the choice of
one remedy be deemed an election of remedies to the exclusion of other remedies.
7.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
receiver's entry upon and taking possession of all or any part of the Mortgaged
Property nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Indebtedness and
Obligations, nor the exercise of any other right or remedy by Beneficiary or
Trustee or any receiver shall impair the status of the security, or cure or
waive any default or notice of default under this Deed of Trust, or nullify the
effect of any notice of default or sale (unless all Indebtedness and Obligations
which are then due have been paid and performed and Grantor has cured all other
defaults), or prejudice Beneficiary or Trustee in the exercise of any right or
remedy, or be construed as an affirmation by Beneficiary of any tenancy, lease
or option or a subordination of the lien of this Deed of Trust.
7.5 Payment of Costs, Expenses and Attorneys' Fees. Grantor agrees to
pay to Beneficiary immediately and without demand all costs and expenses
incurred by Trustee and Beneficiary in exercising the remedies under the Note,
the Guaranty and the Security Documents (including, but without limitation,
court costs and reasonable attorneys' fees, whether incurred in litigation or
not) with interest at the Default Interest Rate from the date of expenditure
until said sums have been paid. Beneficiary shall be entitled to bid, at the
sale of the Mortgaged Property held pursuant to the power of sale granted herein
or pursuant to any judicial foreclosure of this instrument, the amount of said
costs, expenses and interest in addition to the amount of the other Indebtedness
and Obligations as a credit bid, the equivalent of cash.
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7.6 Grantor's Waiver of Appraisement, Marshalling, Other Rights.
Grantor agrees, to the full extent that Grantor may lawfully so agree, that
Grantor will not at any time insist upon or plead or in any manner whatever
claim the benefit of any appraisement, valuation, stay, extension or redemption
law now or hereafter in force, in order to prevent or hinder the enforcement or
foreclosure of this instrument or the absolute sale of the Mortgaged Property or
the possession thereof by any purchaser at any sale made pursuant to any
provision hereof, or pursuant to the decree of any court of competent
jurisdiction; but Grantor, for Grantor and all who may claim through or under
Grantor, so far as Grantor or those claiming through or under Grantor now or
hereafter lawfully may, hereby waives the benefit of all such laws. Grantor, for
Grantor and all who may claim through or under Grantor, waives to the extent
that Grantor may lawfully do so, any and all right to have the Mortgaged
Property marshalled upon any foreclosure of the lien hereof, or sold in inverse
order of alienation, and agrees that the Trustee or any court having
jurisdiction to foreclose such lien may sell the Mortgaged Property as an
entirety. If any law in this section referred, to and now or hereafter in force,
of which Grantor or Grantor's successor or successors might take advantage
despite the provisions hereof, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to constitute any part of the
contract herein contained or to preclude the operation or application of the
provisions of this section.
7.7 Application of Proceeds. The proceeds of any sale of all or any
portion of the Mortgaged Property and the amounts generated by any holding,
leasing, operation or other use of the Mortgaged Property shall be applied by
Beneficiary in the following order:
(a) first, to the payment of prepayment premiums, if any,
owing under the Note or the Security Documents;
(b) second, to the payment of late charges, if any, owing
under the Note or the Security Documents;
(c) third, to the payment of the costs and expenses of taking
possession of the Mortgaged Property and of holding, using, leasing,
repairing, improving and selling the same (including without limitation
payment of any Impositions or other taxes);
(d) fourth, to the extent allowed by law, to the payment of
attorneys' fees and other legal expenses, including expenses and fees
incurred on appeals, and legal expenses and fees of a receiver;
(e) fifth, to the payment of accrued and unpaid interest on
the Indebtedness; and
(f) sixth, to the payment of the balance of the Indebtedness.
The balance, if any, shall be paid to the parties entitled to receive
it under applicable law.
7.8 Strict Performance. Any failure by Beneficiary to insist upon
strict performance by Grantor or Guarantor of any of the terms and provisions of
the Security Documents, the Guaranty or of the Note shall not be deemed to be a
waiver of any of the terms or provisions of
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the Security Documents, the Guaranty or the Note and Beneficiary shall have the
right thereafter to insist upon strict performance by Grantor or Guarantor of
any and all of them.
7.9 No Conditions Precedent to Exercise of Remedies. Neither Grantor
nor any other person now or hereafter obligated for payment of all or any part
of the Indebtedness (including Guarantor) shall be relieved of such obligation
by reason of the failure of Beneficiary to comply with any request of Grantor or
Guarantor or of any other person so obligated to take action to foreclose on
this Deed of Trust or otherwise enforce any provisions of the Security
Documents, the Guaranty or the Note, or by reason of the release, regardless of
consideration, of all or any part of the security held for the Indebtedness, or
by reason of any agreement or stipulation between any subsequent owner of the
Mortgaged Property and Beneficiary extending the time of payment or modifying
the terms of the Security Documents or Note without first having obtained the
consent of Grantor, Guarantor or such other person; and in the latter event
Grantor, Guarantor and all such other persons shall continue to be liable to
make payment according to the terms of any such extension or modification
agreement, unless expressly released and discharged in writing by Beneficiary.
7.10 Release of Collateral. Beneficiary may release, regardless of
consideration, any part of the security held for the Indebtedness or Obligations
without, as to the remainder of the security, in any way impairing or affecting
the liens of the Security Documents or their priority over any subordinate lien.
Without affecting the liability of Grantor, Guarantor or any other person
(except any person expressly released in writing), for payment of any
Indebtedness secured hereby or for performance of any Obligations contained
herein, and without affecting the rights of Beneficiary with respect to any
security not expressly released in writing, Beneficiary may, at any time and
from time to time, either before or after maturity of said Note, and without
notice or consent: (a) release any person liable for payment of all or any part
of the Indebtedness or for performance of any Obligations; (b) make any
agreement extending the time or otherwise altering terms of payment of all or
any part of the Indebtedness, or modifying or waiving any Obligation, or
subordinating, modifying or otherwise dealing with the lien or charge hereof;
(c) exercise or refrain from exercising or waive any right Beneficiary may have;
(d) accept additional security of any kind; (e) release or otherwise deal with
any property, real or personal, securing the Indebtedness, including all or any
part of the Mortgaged Property.
7.11 Other Collateral. For payment of the Indebtedness, Beneficiary may
resort to any other security therefor held by Beneficiary in such order and
manner as Beneficiary may elect.
7.12 Discontinuance of Proceedings. In the event Beneficiary shall have
proceeded to enforce any right under the Note, the Guaranty or the Security
Documents and such proceedings shall have been discontinued or abandoned for any
reason, then in every such case Grantor, Guarantor and Beneficiary shall be
restored to their former positions and the rights, remedies and powers of
Beneficiary shall continue as if no such proceedings had been taken.
7.13 Release of Liability or Personalty. Without affecting the
liability of any person (other than any person released pursuant to the
provisions of this section) for payment of any Indebtedness secured hereby, and
without affecting or impairing in any way the priority or extent
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of the liens of the Loan Documents upon any property not specifically released
pursuant hereto, Beneficiary may at any time and from time to time (a) release
any person liable for payment of any Indebtedness secured hereby; (b) extend the
time or agree to alter the terms of payment of any of the Indebtedness; (c)
accept additional security of any kind; (d) release any property securing the
Indebtedness; or (e) consent to the creation of any easement on or over the
Mortgaged Property or any covenants restricting the use or occupancy thereof.
7.14 Prepayment Premium. Grantor shall have no right to voluntarily
prepay the principal amount of the Note, in whole or in part, except as set
forth in the Note and Section 9.26 below.
Article 8
CONDEMNATION
8.1 Condemnation. Grantor hereby assigns, transfers and sets over to
Beneficiary all rights of Grantor to any Awards or payment in respect of (a) any
taking of all or a portion of the Mortgaged Property as a result of, or by
agreement in anticipation of, the exercise of the right of condemnation or
eminent domain; (b) any such taking of any appurtenances to the Mortgaged
Property or of vaults, areas or projections outside the boundaries of the
Mortgaged Property, or rights in, under or above the alleys, streets or avenues
adjoining the Mortgaged Property, or rights and benefits of light, air, view or
access to said alleys, streets, or avenues or for the taking of space or rights
therein, below the level of, or above the Mortgaged Property; and (c) any damage
to the Mortgaged Property or any part thereof due to governmental action, but
not resulting in, a taking of any portion of the Mortgaged Property, such as,
without limitation, the changing of the grade of any street adjacent to the
Mortgaged Property. Grantor hereby agrees to file and prosecute its claim or
claims for any such award or payment in good faith and with due diligence and
cause the same to be collected and paid over to Beneficiary, and hereby
irrevocably authorizes and empowers Beneficiary, in the name of Grantor or
otherwise, to collect and receipt for any such award or payment and, in the
event Grantor fails to act, or in the event that an Event of Default has
occurred and is continuing, to file and prosecute such claim or claims.
Notwithstanding the foregoing, Grantor shall be permitted to collect and receive
any Award less than $10,000 per Hotel Project comprising the Mortgaged Property.
8.2 Application of Proceeds. All proceeds received by Beneficiary with
respect to a taking of all or any part of the Mortgaged Property or with respect
to damage to all or any part of the Mortgaged Property from governmental action
not resulting in a taking of the Mortgaged Property, shall be applied as
follows, in the order of priority indicated:
(a) first, to the payment of late charges, if any, owing under
the Note or the Security Documents;
(b) second, to the payment of the costs and expenses including
reasonable attorneys' fees incurred in connection with collecting the
sale proceeds;
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(c) third, to the extent allowed by law, to the payment of
attorneys fees and other legal expenses, including expenses and fees
incurred on appeals, and legal expenses and fees of a receiver;
(d) fourth, to the payment of accrued and unpaid interest on
the Indebtedness; and
(e) fifth, to the payment of the balance of the Indebtedness.
The balance, if any, shall be paid to the parties entitled to receive
it under applicable law.
Article 9
MISCELLANEOUS
9.1 Further Assurances. Grantor, upon the reasonable written request of
Beneficiary, will execute, acknowledge and deliver, or arrange for the
execution, acknowledgment and delivery of, such further reasonable instruments
(including, without limitation, financing statements, estoppel certificates and
declarations of no set-off, attornment agreements and acknowledgments of the
Assignment) and do such further acts as may be reasonably necessary, desirable
or proper to carry out more effectively the purpose of the Security Documents,
to facilitate the assignment or transfer of the Note, the Security Documents,
the Indemnity Agreement and the Guaranty and to subject to the liens of the
Security Documents any property intended by the terms thereof to be covered
thereby, and any renewals, additions, substitutions, replacements or betterments
thereto. Upon any failure of Grantor to execute and deliver such instruments,
certificates and other documents on or before fifteen (15) days after receipt of
written request therefor, Beneficiary may make, execute and record any and all
such instruments, and certificates and Grantor irrevocably appoints Beneficiary
the agent and attorney-in-fact of Grantor to do so.
9.2 Recording and Filing. Grantor, at its expense, will cause the
Security Documents, all supplements thereto and any financing statements at all
times to be recorded and filed and re-recorded and re-filed in such manner and
in such places as Beneficiary shall reasonably request, and will pay all such
recording, filing, re-recording and re-filing taxes, fees and other charges.
9.3 Notice. All notices, demands, requests and other communications
required under the Security Documents and the Note shall be in writing and shall
be deemed effective three (3) business days following the mailing of such notice
by U.S. certified or registered mail, postage prepaid, addressed to the party,
for whom it is intended at the Grantor's Address or the Trustee's Address, as
the case may be, or in the case of notices to Beneficiary, to Beneficiary at the
Beneficiary's Address. Any party may designate a change of address by written
notice to the other, given at least ten (10) business days before such change of
address is to become effective and provided that such address is located within
the continental United States. Grantor may, from time to time, change the
address to which notice of default and notice of sale hereunder shall be sent by
both recording a request therefor and sending a copy of such request to
Beneficiary.
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9.4 Beneficiary's Right to Perform the Obligations. If Grantor shall
fail to make any payment or perform any act required by the Note or the Security
Documents following the expiration of any applicable cure periods, then, at any
time thereafter, without notice to or demand upon Grantor and without waiving or
releasing any obligation or default, Beneficiary may make such payment or
perform such act for the account of and at the expense of Grantor, and shall
have the right to enter the Mortgaged Property for such purpose and to take all
such action thereon and with respect to the Mortgaged Property as may be
necessary or appropriate for such purpose. All sums so paid by Beneficiary, and
all costs, and expenses, including, without limitation, reasonable attorneys'
fees and expenses so incurred together with interest thereon at the Default
Interest Rate, from the date of payment or incurring, shall constitute additions
to the Indebtedness secured by the Security Documents, and shall be paid by
Grantor to Beneficiary, on demand. If Beneficiary shall elect to pay any
Imposition, Beneficiary may do so in reliance on any bill, statement or
assessment procured from the appropriate public office, without inquiring into
the accuracy thereof or into the validity of such Imposition. Grantor shall
indemnify Beneficiary for all losses and expenses, including reasonable
attorneys' fees, incurred by reason of any acts performed by Beneficiary
pursuant to the provisions of this Section 9.4 or by reason of the Security
Documents or the Guaranty, and any funds expended by Beneficiary to which it
shall be entitled to be indemnified, together with interest thereon at the
Default Interest Rate from the date of such expenditures, shall constitute
additions to the Indebtedness and shall be secured by the Security Documents and
shall be paid by Grantor to Beneficiary upon demand.
9.5 Covenants Running with the Land. All covenants contained in the
Security Documents shall run with the Mortgaged Property until the liens and
security interest created hereby are released by Beneficiary.
9.6 Severability. In case any one or more of the Obligations shall be
invalid, illegal or unenforceable in any respect, the validity of the Note, this
Deed of Trust, the Security Documents, the Indemnity Agreement and remaining
Obligations shall be in no way affected, prejudiced or disturbed thereby.
9.7 Modification. The Security Documents and the terms of each of them
may not be changed, waived, discharged or terminated orally, but only by an
instrument or instruments in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is asserted.
9.8 Non-Assumable. The loan evidenced by the Note and secured by this
Deed of Trust is personal to Grantor, and Beneficiary made such loan to Grantor,
based upon the credit of Grantor and Guarantor, and Beneficiary's judgment of
the ability of Grantor to repay the entire Indebtedness and therefore this Deed
of Trust may not be assumed by any subsequent holder of an interest in the
Mortgaged Property without Beneficiary's prior written consent. This Section 9.8
is subject to the terms of Section 6.9 hereof. Beneficiary shall notify Grantor
promptly in writing of any transaction or event described in Section 6.9 hereof.
9.9 Tax on Indebtedness or Deed of Trust. In the event of the passage,
after the date of this Deed of Trust, of any law deducting from the value of
land for the purposes of taxation,
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<PAGE> 34
any lien thereon, or imposing upon Beneficiary the obligation to pay the whole,
or any part, of the taxes or assessments or charges or liens herein required to
be paid by Grantor, or changing in any way the laws relating to the taxation of
deeds of trust, mortgages or debts as to affect this Deed of Trust or the
Indebtedness, the entire unpaid balance of the Indebtedness shall, at the option
of Beneficiary, after thirty (30) days written notice to Grantor, become due and
payable; provided, however, that if, in the opinion of Beneficiary's counsel, it
shall be lawful for Grantor to pay such taxes, assessments, or charges, or to
reimburse Beneficiary therefor, then there shall be no such acceleration of the
time for payment of the unpaid balance of the Indebtedness if a mutually
satisfactory agreement for reimbursement, in writing, is executed by Grantor and
delivered to Beneficiary within the aforesaid period.
9.10 Maximum Rate of Interest. All agreements between Grantor and
Beneficiary, whether now existing or hereafter arising and whether written or
oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of the maturity of the Note or
otherwise, shall the amount paid, or agreed to be paid to Beneficiary for the
use, forbearance, or detention of the money to be loaned under the Note or
otherwise or for the payment or performance of any covenant or obligation
contained herein or in the Note, exceed the Maximum Rate. The term "Maximum
Rate" as used herein shall mean the higher of the maximum interest rate allowed
by applicable United States or Texas law as amended from time to time, in effect
on the date for which a determination of interest accrued hereunder is made. If
from any circumstances whatsoever fulfillment of any provision hereof or of any
such other documents, at the time performance of such provisions shall be due,
shall involve transcending the limit of validity prescribed by applicable usury
law, ipso facto, the obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstance, Beneficiary shall have ever
received interest or anything which might be deemed interest under applicable
law which would exceed the Maximum Rate, such amount which would be excessive
interest shall be applied to the reduction of the principal amount owing on
account of the Note or the amounts owing on other obligations of Grantor to
Beneficiary hereunder and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of the principal of the Note and the amounts
owing on other obligations of Grantor to Beneficiary hereunder as the case may
be, such excess shall be refunded to Grantor. All sums paid or agreed to be paid
to Beneficiary for the use, forbearance or detention of the Indebtedness of
Grantor to Beneficiary shall, to the extent permitted by applicable law, (i) be
amortized, prorated, allocated and spread throughout the full term of such
Indebtedness until payment in full so that the actual rate of interest on
account of such Indebtedness does not exceed the Maximum Rate throughout the
term thereof, (ii) be characterized as a fee, expense or other charge other than
interest, and/or (iii) exclude any voluntary prepayments and the effects
thereof.
9.11 Survival of Warranties and Covenants. The warranties,
representations, covenants and agreements set forth in the Security Documents
shall survive the making of the loan and the execution and delivery of the Note,
and shall continue in full force and effect until the Indebtedness shall have
been paid in full, except such obligations as specified in Section 5.1.10 and
5.1.16 hereof which shall survive.
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9.12 APPLICABLE LAW. THE LOAN DOCUMENTS AND THE SECURITY
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THIS DEED OF TRUST, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
9.13 Tax and Insurance Escrow. Grantor shall pay to Beneficiary, on
each of the monthly due dates of interest payments set forth in the Note, an
amount equal to one-twelfth of the annual (i) Impositions and (ii) insurance
premiums for such insurance as is required hereunder. Grantor shall also pay
into such account such additional amounts, to be determined by Beneficiary from
time to time, as will provide a sufficient fund, at least thirty days prior to
the due dates of the next installment of such Impositions and premiums, for
payment of such Impositions and premiums so as to realize the maximum discounts
permitted by law. Amounts held hereunder by Beneficiary shall be interest
bearing but may be commingled with Beneficiary's other funds. Upon assignment of
this Deed of Trust, Beneficiary shall have the right to pay over the balance of
such amounts then in its possession to the assignee and Beneficiary shall
thereupon be completely released from all liability with respect to such
amounts. Upon full payment of the Indebtedness, or, at the election of
Beneficiary at any prior time, the balance of such amounts shall be paid over to
Grantor and no other party shall have any right or claim thereto. Amounts held
by Beneficiary pursuant to this Section 9.13 shall be made available to Grantor
in sufficient time to allow Grantor to satisfy Grantor's obligations under the
Security Documents to pay Impositions and required insurance premiums, within
the maximum discount period, where applicable.
9.14 Loan Expenses. Grantor shall pay all costs and expenses in
connection with the preparation, execution, delivery and performance of the
Note, the Guaranty, the Indemnity Agreement and the Security Documents and the
transactions contemplated thereby, including (but not limited to) costs and fees
incurred by Beneficiary's independent inspector, reasonable fees and
disbursements of its and Beneficiary's counsel, broker's fees, costs and
expenses of procuring any environmental audits required to be procured by
Grantor, recording costs and expenses, conveyance fees, documentary stamp,
intangible and other taxes, and costs and expenses of surveys, appraisals and
policies of title insurance, physical damage insurance, and liability insurance.
Grantor shall also pay any and all expenses associated with any future amendment
and modifications to the Loan.
9.15 Substitution of Trustee. Beneficiary may appoint a substitute or
successor trustee or trustees in place of the Trustee or Trustees, with or
without any reason, and without other formality than a designation in writing of
a substitute or successor. Beneficiary may exercise this irrevocable appointment
power at any time without specifying any reason therefor. The power of
appointment of a successor Trustee or Trustees may be exercised as often as and
whenever the Beneficiary may choose, and the exercise of the power of
appointment, no matter how often, shall not be an exhaustion thereof. Whenever
in this Deed of Trust reference is made to the Trustee or Trustees, it shall be
construed to mean the Trustee or Trustees for the time being, whether original
or successors or successor in trust; and all title, estate, rights, powers,
trusts, and duties hereunder given or appertaining to or devolving upon the
Trustee or Trustees shall be in each of the Trustees so that any action
hereunder or purporting to be hereunder of any one of the original
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<PAGE> 36
or any successor Trustees shall for all purposes be considered to be, and as
effective as, the action of all the Trustees.
9.16 No Representations by Beneficiary. By accepting or approving
anything required to be observed, performed or fulfilled or to be given to
Beneficiary, pursuant to the Security Documents, including (but not limited to)
any officer's certificate, survey, appraisal or insurance policy, Beneficiary
shall not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation with respect thereto by Beneficiary.
9.17 Acceptance of Trust. Trustee accepts the Trust created by this
Deed of Trust when this Deed of Trust, duly executed and acknowledged, is made a
public record as provided by law.
9.18 Release. Upon the payment of all sums secured hereby, Beneficiary
shall execute and deliver to Grantor a release of the lien created hereunder;
provided, however, that Beneficiary shall not be responsible for recording same
in the real property records and Grantor shall be solely responsible for the
payment of any recordation fees. The recitals in any such release of any matters
or facts contained in such release shall be conclusive proof thereof.
9.19 Compensation of Trustee. Trustee shall be entitled to reasonable
compensation for all services rendered or expenses incurred in the
administration or execution of the trusts hereby created and Grantor hereby
agrees to pay same (so long as such services are not a duplication of attorney
fees). Trustee and Beneficiary shall be indemnified, held harmless and
reimbursed by Grantor for any liability, damage or expense, including reasonable
attorneys' fees and amounts paid in settlement, which they or either of them may
incur or sustain in the execution of this trust or in the doing of any act which
they, or either of them, are required or permitted to do by the terms hereof or
by law.
9.20 Brokerage Commission. Any brokerage commission or finder's fee
payable in connection with the loan evidenced by the Note shall be payable by
Grantor and not by Beneficiary, and Grantor shall indemnify Beneficiary and hold
Beneficiary harmless against any claim of any broker or finder arising out of
such loan.
9.21 Headings. The article headings and the section and subsection
captions are inserted for convenience of reference only and shall in no way
alter or modify the text of such articles, sections and subsections.
9.22 No Further Agreements. Grantor hereby acknowledges, with respect
to the Loan Documents, that:
1. THE RIGHTS AND OBLIGATIONS OF GRANTOR AND
BENEFICIARY SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN
DOCUMENTS AND ANY PRIOR ORAL AGREEMENTS BETWEEN BENEFICIARY
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AND GRANTOR ARE SUPERSEDED BY AND MERGED INTO THE LOAN
DOCUMENTS.
2. THE LOAN DOCUMENTS MAY NOT BE VARIED BY ANY ORAL AGREEMENTS
OR DISCUSSIONS THAT OCCUR BEFORE, CONTEMPORANEOUSLY WITH, OR
SUBSEQUENT TO THE EXECUTION OF SUCH LOAN DOCUMENTS.
3. THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENTS
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9.23 Extension of Prior Liens. If any or all of the proceeds of the
Note have been used to pay any indebtedness heretofore existing against the
Mortgaged Property, then, to the extent of such funds so used, Beneficiary shall
be subrogated to all of the rights, claims, liens, titles and interests
heretofore existing against the Mortgaged Property to secure the indebtedness so
paid and the former rights, claims, liens, titles and interests, if any, are not
waived but rather shall continue in full force and effect in favor of
Beneficiary as cumulative security for the repayment of the Indebtedness and the
satisfactions of the Obligations regardless of whether said liens or debts are
acquired by Beneficiary by assignment or are released by the holder thereof upon
payment.
9.24 Limitation of Liability. Without impairing Beneficiary's rights,
powers, privileges, liens or security interest of this Deed of Trust or any
other document existing as security for the payment of the Indebtedness,
Beneficiary agrees that, for enforcement of payment of the Note, it will look
solely to the Mortgaged Property and such other collateral, as may now or
hereafter be given to secure the payment of the Note, and no other property or
assets of Grantor or its partner(s), except as described in this Deed of Trust,
or the Security Documents, shall be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Beneficiary, or
for any payment required to be made under the Note or under this Deed of Trust
or for the performance of any of the covenants or warranties contained therein
or herein; provided, however, Beneficiary may pursue all of its rights and
remedies against the property of Grantor or its general partner or any
guarantors of the Note described in this Deed of Trust or the other Security
Documents, including, without limitation, the Mortgaged Property, to the full
extent of such rights and remedies at law or in equity including, without
limitation, all such rights and remedies as set forth in this Deed of Trust, the
Note and the other Security Documents.
The foregoing provisions of this section shall not affect in any way
the validity or enforceability of any guaranty (whether of payment and/or
performance) given to Beneficiary in connection with the loan secured hereby or
constitute a waiver by Beneficiary of any rights to damages or other monetary
relief or any other remedy at law or equity against Grantor or its general
partner by reason of any one or more of the following: any actual loss,
liability, damage, cost or expense (including reasonable attorneys' fees but
expressly excluding consequential damages) incurred or to be incurred by
Beneficiary (a) from Grantor's failure to perform its
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obligation to properly account to Beneficiary as mortgagee for any proceeds of
insurance or awards of condemnation as required by this Deed of Trust, to
properly apply same in accordance with the terms and provisions of the Loan
Documents, or for the misapplication or misappropriation by Grantor of
condemnation or insurance proceeds, or any use by Grantor without the prior
written consent of Beneficiary of condemnation or insurance proceeds after an
Event of Default has occurred and is continuing (provided, however, that to the
extent condemnation and insurance proceeds are applied in accordance with this
Deed of Trust, Grantor will not be liable pursuant to the terms of the foregoing
clause); or (b) because of Grantor's attempts to interfere with Beneficiary's
rights under the Security Agreement or the Assignment of Leases and Rents
contained in this Deed of Trust (provided, however, that this provision is not
intended to prevent Grantor from exercising any of its rights or remedies under
law or equity); or (c) because Grantor misappropriates or fails to apply
security deposits, rents (advance, prepaid or otherwise), proceeds of rents and
other income of the Mortgaged Property, working capital reserves, any other
project reserves or project escrows towards the costs of maintenance and
operation of the Mortgaged Property and to payment of real estate taxes and
assessments, lien claims, insurance premiums and debt service to Beneficiary and
on other permitted indebtedness; provided, however, that to the extent Grantor
achieves a positive cash flow for any period after payment of debt service and
Mortgaged Property expenses attributable to such period, Grantor shall have no
personal liability for its failure to reserve or use any portion of such
positive cash flow to cover operating deficits or debt service expenses in later
periods (i.e., distributions to partners of Grantor are permissible during
periods of positive cash flow); or (d) from Grantor's failure to pay for any
loss, liability, damage, cost or expense (including attorneys' fees) incurred by
Beneficiary in connection with either (i) any violation, directive (threatened
or otherwise), order, consent decree, settlement, judgment or verdict arising
from the presence, deposit, storage, disposal, burial, dumping, injecting,
spilling, leaking or other placement or release in, on, over, under or from the
Mortgaged Property of asbestos or a "hazardous substance" as defined in 42
U.S.C. Section 9601, et seq. as amended from time to time, or any other toxic or
hazardous waste or waste products, or any Hazardous Materials, or (ii) any other
cost or expense related to the environmental condition of the Mortgaged Property
which results in a material diminution in value of the Mortgaged Property and
results in actual loss, liability, damage, cost or expense to Beneficiary or
which is otherwise covered by the indemnity set forth in the Indemnity
Agreement; or (e) from any fraud, material misrepresentation, material
misstatement and/or omission, or breach of material representations or
warranties (including, without limitation, those related to the environmental
condition of the Mortgaged Property and those related to Grantor's title to the
Mortgaged Property) of Grantor whether contained in the Loan Documents or other
writing in connection with the Loan evidenced by the Note and the other Loan
Documents; or (f) because of Grantor's failure or refusal to pay any Impositions
except to the extent being properly contested in accordance with the terms of
this Deed of Trust; or (g) because of any waste (ordinary wear and tear
excepted) committed by Grantor with respect to the Mortgaged Property; or (h)
from Grantor's failure to purchase and maintain the insurance required by the
terms of this Deed of Trust; or (i) any damages sustained by Beneficiary as a
result of claims made by tenants at the Mortgaged Property arising out of
matters occurring prior to the date on which Beneficiary succeeds to the
interest of Grantor under the leases, unless such tenants have agreed in writing
that Beneficiary is not responsible for such claims.
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In addition, in the event Grantor files any petition or commences any
proceeding pursuant to the United States Bankruptcy Reform Act of 1978, as
amended, or any successor statute or equivalent debtor relief law, or any such
proceeding is commenced or filing made with respect to Grantor by any member,
partner, or shareholder of Grantor or any affiliate of Grantor or any such
entity, or any other person or entity acting, directly or indirectly, in concert
with one or more of the foregoing, Grantor and Guarantor shall be personally
liable on a full recourse basis for all amounts payable pursuant to the Note and
the other Loan Documents and for all losses, costs and expenses of any nature,
including, without limitation, attorneys fees and disbursements, paid or
incurred by Beneficiary in connection with or arising out of such petition or
proceeding.
The foregoing limitations on personal liability shall in no way impair
or constitute a waiver of the validity of the Note, the indebtedness secured by
the Mortgaged Property or the liens on, security title to, or security interests
in the Mortgaged Property or the right of Beneficiary, as beneficiary or secured
party, to foreclose and/or enforce its rights with respect to the Mortgaged
Property after an Event of Default. Nothing herein shall be deemed to be a
waiver of any right which Beneficiary may have under the United States
Bankruptcy Code to file a claim for the full amount of the debt owing to
Beneficiary by Grantor or to require that all Mortgaged Property shall continue
to secure all of the indebtedness owing to Beneficiary in accordance with the
Loan Documents. Beneficiary may seek a judgment on the Note as part of judicial
proceedings to foreclose under this Deed of Trust or to foreclose pursuant to
any other instrument securing the indebtedness evidenced by the Note, or as a
prerequisite to any such foreclosure or to confirm any foreclosure or sale
pursuant to power of sale thereunder, and in the event any suit is brought on
the Note, or with respect to any indebtedness evidenced by the Note or secured
by this Deed of Trust or any judgment rendered in such judicial proceedings,
such judgment shall constitute a lien on and will be and can be enforced on and
against the Mortgaged Property conveyed by this Deed of Trust or any such other
security instruments and the rents, profits, issues, products and proceeds
thereof. Nothing herein stated shall impair the right of the Beneficiary to
accelerate the maturity of the Note (or to avail itself of any of its other
rights and impair the right of the Beneficiary to accelerate the maturity of the
Note (or to avail itself of any of its other rights and remedies) upon the
occurrence of an Event of Default hereunder or under any other instrument
securing or evidencing the indebtedness represented by the Note, nor shall
anything herein stated impair or be construed to impair the right of Beneficiary
to seek personal judgments and all rights and remedies to enforce same allowed
by law, jointly and severally against any guarantors to the extent allowed by
any applicable guarantees. The provisions set forth in this Section 9.24 are not
intended as any release or discharge of the Indebtedness, or any monies due
under the Note or under any other Loan Documents, but are intended as a
limitation on Beneficiary's right to sue for deficiency or personal judgment
except as provided in this section.
9.25 WAIVER OF JURY TRIAL. GRANTOR AND BENEFICIARY MUTUALLY,
EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
FOR ANY PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS DEED
OF TRUST, IN THE INTEREST OF AVOIDING DELAYS AND EXPENSES ASSOCIATED
WITH JURY TRIALS.
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9.26 Partial Release of Collateral. The Mortgaged Property is comprised
of three (3) distinct Hotel Projects: Harvey Hotel-DFW (Irving, Texas); Crowne
Plaza Hotel (Addison, Texas); and Crowne Plaza Suites Hotel (Dallas, Texas)
(collectively, the "Hotel Projects", individually, a "Hotel Project"). In
connection with the sale of any of the Hotel Projects comprising the Mortgaged
Property, Beneficiary agrees that Grantor shall have the right to obtain a
release of the Mortgaged Property from the lien of this Deed of Trust upon
compliance with all of the following conditions:
(a) no Event of Default shall then exist under this Deed of
Trust or any other document evidencing or further securing any
indebtedness secured hereby;
(b) Beneficiary shall receive thirty (30) days prior written
notice from Grantor identifying the Hotel Project to be released;
(c) Grantee shall have received a cash payment (the "Release
Price") to reduce the Principal Balance (as defined in the Note) equal
to (i) the greater of (x) the Par Agreement amount set forth below for
the respective Hotel Projects and (y) 100% of the net sales proceeds
(i.e., gross sales price less reasonable and customary closing costs
approved in writing by Beneficiary) from the subject Hotel Project (but
in no event shall the Release Price exceed the Principal Balance of the
Note):
1. Harvey Hotel-DFW ($28,500,000.00);
2. Crowne Plaza Hotel (Addison) ($18,500,000.00); and
3. Crowne Plaza Suites Hotel (Dallas) ($16,000,000.00),
plus (ii) the pro rata portion of the prepayment premium, plus (iii)
all accrued interest on the portion of the Principal Balance being
prepaid.
(d) The debt service coverage for the remaining Hotel Projects
is no less than 2.00 to 1 at the greater of (i) 10% per annum or (ii)
the interest rate of the Note in effect at the time.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Grantor has executed this Deed of Trust effective
as of the date first above written.
GRANTOR:
FELCOR HOTEL COMPANY II, LTD.,
a Texas limited partnership
By: FelCor Hotels GenPar II, L.L.C.,
a Delaware limited liability
company, its general partner
By: /s/ JOEL M. EASTMAN
------------------------------
Joel M. Eastman
Vice President
ACKNOWLEDGMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me this __ day of March, 1999,
by the said Joel M. Eastman, Vice President of FelCor Hotels GenPar II, L.L.C.,
a Delaware limited liability company, general partner of FELCOR HOTEL COMPANY
II, LTD., a Texas limited partnership, on behalf of said limited partnership.
/s/ SOPHIE MALESKI
--------------------------------------
Notary Public in and for the State of
Texas
My Commission Expires:
11/21/00 Sophie Maleski
- ---------------------------- --------------------------------------
Printed Name of Notary
41
<PAGE> 1
EXHIBIT 10.22.1
U.S. $375,000,000
LOAN AGREEMENT
Dated as of April 1, 1999
Among
FELCOR LODGING TRUST INCORPORATED
and FELCOR LODGING LIMITED PARTNERSHIP
as Borrower
and
THE LENDERS PARTY HERETO
and
THE CHASE MANHATTAN BANK
as Administrative Agent
& Collateral Agent
==================================================
CHASE SECURITIES INC.
as Lead Arranger
& Book Manager
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Article I DEFINITIONS AND ACCOUNTING TERMS..................................................1
1.1. Defined Terms.........................................................................1
1.2. Computation of Time Periods..........................................................26
1.3. Accounting Terms.....................................................................26
1.4. Certain Terms........................................................................27
Article II AMOUNTS AND TERMS OF THE LOANS...................................................27
2.1. The Loans............................................................................27
2.2. Making the Loans.....................................................................27
2.3. Fees.................................................................................28
2.4. Collateral...........................................................................28
2.5. Repayment............................................................................29
2.6. Prepayments..........................................................................29
2.7. Conversion/Continuation Option.......................................................30
2.8. Interest.............................................................................30
2.9. Interest Rate Determination and Protection...........................................31
2.10. Increased Costs......................................................................31
2.11. Illegality...........................................................................32
2.12. Capital Adequacy.....................................................................32
2.13. Payments and Computations............................................................33
2.14. Taxes................................................................................34
2.15. Sharing of Payments, Etc.............................................................35
Article III CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT AND OF LENDING....................36
3.1. Conditions Precedent to Effectiveness of this Agreement and to the Loans.............36
3.2. Additional Conditions Precedent to Effectiveness of this Agreement and to the Loans..38
Article IV REPRESENTATIONS AND WARRANTIES...................................................39
4.1. Existence; Compliance with Law.......................................................39
4.2. Power; Authorization; Enforceable Obligations........................................39
4.3. Taxes................................................................................40
4.4. Full Disclosure......................................................................41
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
4.5. Financial Matters....................................................................41
4.6. Litigation...........................................................................42
4.7. Margin Regulations...................................................................42
4.8. Ownership of Borrower and DJONT; Subsidiaries........................................42
4.9. ERISA................................................................................43
4.10. Indebtedness.........................................................................44
4.11. Restricted Payments..................................................................44
4.12. No Burdensome Restrictions; No Defaults..............................................44
4.13. Investments..........................................................................44
4.14. Government Regulation................................................................44
4.15. Insurance............................................................................45
4.16. Labor Matters........................................................................45
4.17. Force Majeure........................................................................46
4.18. Use of Proceeds......................................................................46
4.19. Environmental Protection.............................................................46
4.20. Contractual Obligations Concerning Assets............................................48
4.21. Intellectual Property................................................................48
4.22. Title................................................................................48
4.23. Status as REIT.......................................................................50
4.24. Operator: Compliance with Law........................................................50
4.25. Operating Leases, Licenses and Management Agreement..................................50
4.26. FF&E Reserves........................................................................51
4.27. Year 2000 Compliance.................................................................51
Article V FINANCIAL COVENANTS..............................................................51
5.1. Unsecured Interest Expense Coverage..................................................51
5.2. Fixed Charge Coverage Ratio..........................................................52
5.3. Maintenance of Tangible Net Worth....................................................52
5.4. Limitations on Total Indebtedness....................................................52
5.5. Limitations on Total Secured Indebtedness............................................52
5.6. Adjusted NOI and Hotels..............................................................52
5.7. Limitations on Recourse Secured Indebtedness.........................................52
</TABLE>
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Article VI AFFIRMATIVE COVENANTS............................................................52
6.1. Compliance with Laws, Etc............................................................52
6.2. Conduct of Business..................................................................53
6.3. Payment of Taxes, Etc................................................................53
6.4. Maintenance of Insurance.............................................................53
6.5. Preservation of Existence, Etc.......................................................53
6.6. Access...............................................................................54
6.7. Keeping of Books.....................................................................54
6.8. Maintenance of Properties, Etc.......................................................54
6.9. Performance and Compliance with Other Covenants......................................54
6.10. Application of Proceeds..............................................................54
6.11. Financial Statements.................................................................54
6.12. Reporting Requirements...............................................................56
6.13. Leases and Operating Leases; Management Agreements and Licenses......................58
6.14. Employee Plans.......................................................................59
6.15. Fiscal Year..........................................................................59
6.16. Environmental Matters................................................................59
6.17. REIT Requirements....................................................................60
6.18. Maintenance of FF&E Reserves.........................................................60
6.19. Further Assurances...................................................................60
6.20. Unencumbered Hotel Properties/Financial Covenant Imbalance...........................60
6.21. Hotel Documents......................................................................60
Article VII NEGATIVE COVENANTS...............................................................61
7.1. Restrictions on Wholly-Owned Subsidiaries............................................61
7.2. Operation/Ownership of Hotels........................................................62
7.3. Lease Obligations....................................................................62
7.4. Restricted Payments..................................................................62
7.5. Mergers, Stock Issuances, Asset Sales, Etc...........................................63
7.6. Restrictions on Construction/Budget Hotels...........................................63
7.7. Change in Nature of Business or in Capital Structure.................................63
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7.8. Modification of Material Agreements..................................................64
7.9. Accounting Changes...................................................................64
7.10. Transactions with Affiliates.........................................................64
7.11. Adverse or Speculative Transactions..................................................64
7.12. Environmental Matters................................................................64
7.13. Joint Enterprises....................................................................65
7.14. ERISA Plan Assets....................................................................65
Article VIII EVENTS OF DEFAULT................................................................65
8.1. Events of Default....................................................................65
8.2. Remedies.............................................................................67
Article IX THE ADMINISTRATIVE AGENT.........................................................67
9.1. Authorization and Action.............................................................67
9.2. Administrative Agent's Reliance, Etc.................................................68
9.3. Chase and Affiliates.................................................................68
9.4. Lender Credit Decision...............................................................69
9.5. Indemnification......................................................................69
9.6. Successor Agent......................................................................70
Article X MISCELLANEOUS....................................................................70
10.1. Amendments, Etc......................................................................70
10.2. Notices, Etc.........................................................................71
10.3. No Waiver; Remedies..................................................................72
10.4. Costs; Expenses; Indemnities.........................................................72
10.5. Right of Set-off.....................................................................73
10.6. Binding Effect.......................................................................73
10.7. Assignments and Participations.......................................................74
10.8. Governing Law; Severability..........................................................76
10.9. Submission to Jurisdiction; Service of Process.......................................77
10.10. Section Titles.......................................................................77
10.11. Execution in Counterparts............................................................77
10.12. Entire Agreement.....................................................................77
10.13. Confidentiality......................................................................77
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10.14. WAIVER OF JURY TRIAL.................................................................78
10.15. Joint and Several Obligations........................................................78
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SCHEDULES
Schedule I - Loan Commitments
Schedule II - Applicable Lending Offices and Addresses for Notices
Schedule III - Operating Lessees
Schedule IV - Permitted Transferees
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
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EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Conversion or Continuation
Exhibit C - Form(s) of Opinion(s) of Counsel for the Loan
Parties
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Operating Lease
Exhibit G - Form of Guaranty
Exhibit H - Form of Pledge and Security Agreement
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LOAN AGREEMENT ("Agreement"), dated as of April 1, 1999 among
FELCOR LODGING TRUST INCORPORATED, a Maryland corporation ("FelCor") and FELCOR
LODGING 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").
W I T N E S S E T H :
WHEREAS, the Borrower desires to obtain the Loans (hereafter
defined) from the Lenders; and
WHEREAS, subject to and upon the terms and conditions set
forth herein, the Lenders are willing to make Loans to the Borrower as provided
for herein;
NOW, THEREFORE, in consideration of the promises 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 parties hereto hereby agree as follows:
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 FF&E Reserve for such Person.
"Adjusted Funds From Operations" means, for any Person, for
any period, Net Income (Loss) of such Person for such period plus (a) the sum
(without duplication) 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 (without
duplication) of the following amounts of such Person and its Subsidiaries for
such period determined on a consolidated
<PAGE> 10
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 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, Eligible Joint Ventures or
Unconsolidated Entities, 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.
"Allerton Hotel" shall mean that certain Hotel located in
Chicago Illinois and commonly known as the Allerton Hotel.
"Alternative Currency Contract" means a currency swap
agreement, currency cap agreement, currency collar agreement or forward currency
agreement entered into to provide protection against fluctuations in an
Alternative Currency.
"Alternative Currency" means any lawful currency of a country
where a Hotel is located, other than Dollars, which is freely transferable and
convertible into Dollars.
"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 2.5% per annum.
"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 D.
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"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 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.
"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 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.
"Bristol" shall mean Bristol Hotels & Resorts and any Person
controlled by Bristol Hotels & Resorts that is a Manager.
"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 construction, during such period for property, plant
or equipment,
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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.
"Cash" shall mean coin or currency of the United States of
America or immediately available federal funds.
"Cash Equivalents" means (i) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the United States government or any agency thereof, (ii) certificates of
deposit, eurodollar time deposits, overnight bank deposits and bankers'
acceptances of any 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 having maturities of one year or less from the date of
acquisition, and (iii) commercial paper of an issuer rated at least "A-1" by S&P
or "P-1" by Moody's, or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings
of investments.
"Closing Date" means April 1, 1999.
"Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"Collateral" has the meaning specified in the Pledge
Agreement.
"Collateral Agent" means Chase.
"Commitment" has the meaning specified in Section 2.1.
"Compliance Certificate" shall have the meaning specified in
Section 3.1(l).
"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
4
<PAGE> 13
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 the 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 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.
"Credit Agreement" means that certain Fourth Amended and
Restated Credit Agreement, dated as of July 1, 1998, as may be amended, modified
or supplemented from time to time, among FelCor Suite Hotels, Inc. and FelCor
Suites Limited Partnership (as predecessors in interest to Borrower), those
certain lending institutions included as signatories thereto, and Chase as
administrative agent, for indebtedness of up to $1.1 billion.
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"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
"DJONT" means DJONT Operations, L.L.C., a Delaware limited
liability company.
"DOL" means the United States Department of Labor, or any
successor thereto.
"Dollars" and the sign "$" 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 (without duplication) 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 (without duplication) of the following amounts of such
Person and its Subsidiaries determined 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, (iii) cash payments made with respect
to any non-cash charge which was added back to Net Operating Income to determine
EBITDA for any prior period; plus (c) such Person's Pro Rata Share of EBITDA of
such Person's Unconsolidated Entities.
"Effective Date" has the meaning specified in Section 3.1.
"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;
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(iv) a mutual fund or an insurance company organized under the laws of the
United States, or any State thereof, in each case having total assets in excess
of $5,000,000,000; (v) any Lender; (vi) any Affiliate of any Lender; (vii) any
Person other than an Affiliate of a Loan Party; and (viii) only with respect to
any Lender that is a fund that invests in bank loans, any other fund or trust
entity that invests in bank loans and is advised by or managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor,
in each case ((i) through (vii) above) 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 Entity" shall mean any Eligible Joint Venture in
which the Borrower owns, directly or indirectly, at least a 90% equity interest
and the remainder of such equity interest is owned by either (i) Promus, (ii)
Starwood or (iii) Bristol, provided, however, such Eligible Joint Venture shall
only be an Eligible Entity if (i) Borrower (x) is the sole general partner (or
equivalent) in such Eligible Joint Venture or (y) owns directly or indirectly at
least 90% of the Stock of the sole general partner (or equivalent) in such
Eligible Joint Venture and all other Stock of such sole general partner (or
equivalent) which is not owned by Borrower is owned by either Promus, Starwood
or Bristol, (ii) such sole general partner (or equivalent) is the only Person
who can unilaterally authorize the sale or encumbrance of the assets of such
Eligible Joint Venture (iii) Borrower alone controls the sole general partner
(or equivalent) and (iv) such Eligible Joint Venture has no debt other than
unsecured trade debt incurred in the ordinary course of business. 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
(including without limitation the power to authorize the sale or encumbrance of
the assets of such Person), whether through the ownership of voting securities,
by contract or otherwise.
"Eligible Joint Venture" means any joint venture, corporation,
partnership or other business entity in which the Borrower (i) owns directly or
indirectly a JV% of at least 50% and (ii) is (or owns directly or indirectly a
majority of the voting Stock of and controls) the managing general partner or
equivalent thereof for such entity and (iii) Borrower alone controls such
managing general partner or equivalent. 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 (including without limitation the power
to authorize the sale or encumbrance of the assets of such Person), whether
through the ownership of voting securities, by contract or otherwise.
"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,
7
<PAGE> 16
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.
"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 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.
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"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, 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 commencement 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.
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"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.
"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.
"FelCor Bonds" means the debt securities issued under the
Indenture.
"FF&E Reserve" means, for any Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP (or with respect to
any Hotel) for any period, a reserve equal to four percent (4%) of Room Revenues
from any Hotel owned by such Person or its Subsidiary (or from such Hotel), for
such period (unless such Person is contractually obligated to reserve a greater
percentage of Room Revenues, in which case such Person shall be required to
reserve such greater amount with respect to such Hotel), plus, for any Person,
such Person's Pro Rata Share of any FF&E Reserve for any Hotel owned by such
Person's Unconsolidated Entities.
"Financial Covenant Imbalance" shall have the meaning
specified in Section 2.6(c).
"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.
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"Fixed Charges" 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 such
Total Indebtedness which is payable in a single installment at final maturity)
required to be made during such period plus (c) dividends required to be paid by
such Person (and its Subsidiaries determined on a consolidated basis in
conformity with GAAP) in connection with preferred Stock issued by such Person
(including such Person's Pro Rata Share of such dividends required to be paid by
such Person's Unconsolidated Entities.)
"Free Cash Flow" means, for any Person for any period, the
Adjusted Funds From Operations for such period less (a) the aggregate FF&E
Reserve for such Person and its Subsidiaries for such period, and (b) the
aggregate amount of scheduled principal payments on the Total Indebtedness of
such Person (excluding optional prepayments and scheduled principal payments in
respect of any such Indebtedness which is payable in a single installment at
final maturity) required to be made during such period.
"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.
"Guarantor" means the Initial Guarantors and each direct and
indirect wholly owned Subsidiary of the Borrower formed or acquired after the
date hereof, provided however, a wholly owned Subsidiary of the Borrower which
is formed or acquired after the date hereof shall only be required to be a
Guarantor if such Subsidiary is a Required Guarantor.
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"Guaranty" means that certain guaranty entered into in
connection herewith, in substantially the form of Exhibit G, executed by each
Guarantor, as such guaranty may be amended, supplemented or otherwise modified
from time to time.
"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.
"Hotel Documents" means, with respect to any Hotel, the
following documents:
(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 available (or able to be reasonably obtained), 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 Person
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
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; and
(viii) Such other information as the Administrative Agent
may reasonably request in order to evaluate the Hotel.
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"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 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.
"Indenture" means that certain Indenture dated as of October
1, 1997, as amended to date and as may be amended, modified, or supplemented
from time to time, among FelCor Suites Limited Partnership (predecessor in
interest to FelCor LP) as issuer, various Borrower affiliates as guarantors, and
SunTrust Bank, Atlanta, as trustee providing for the initial issuance of up to
$175,000,000 aggregate principal amount of 7-3/8% senior notes due 2004 and
$125,000,000 aggregate principal amount of 7-5/8% senior notes due 2007.
"Initial Guarantors" means (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, (v) FelCor/LAX Holdings, L.P., a Delaware limited partnership, (vi)
FelCor Eight Hotels L.L.C., a Delaware limited liability company, (vii) FelCor
Hotel Asset Company, L.L.C., a limited liability company, (viii) FelCor Nevada
Holdings, L.L.C., a Nevada limited liability company, (ix) FHAC Nevada Holdings,
L.L.C., a Nevada limited liability company, and (x) FHAC Texas Holdings L.P., a
Texas limited partnership.
"Interest Period" means, 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,
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two, three, six, nine (upon consent of each Lender) or twelve (upon consent of
each Lender) months thereafter, as selected by the Borrower pursuant to Section
2.2, and (ii) thereafter, if such Loan is continued in whole or in part, as a
Eurodollar Rate Loan pursuant to Section 2.7, a period commencing on the last
day of the immediately preceding Interest Period therefor and ending one, two,
three, six, nine (upon consent of each Lender) or twelve (upon consent of each
Lender) months thereafter, as selected by the Borrower in its Notice of
Conversion or Continuation given to the Administrative Agent pursuant to Section
2.7; 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 Maturity Date;
(D) the Borrower may not select any Interest Period
in respect of Loans having an aggregate principal amount of
less than $5,000,000; and
(E) there shall be outstanding at any one time no
more than fifteen (15) 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) 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.
"Investment Grade" means a rating by both S&P and Moody's,
each such rating being in one of such agency's four highest generic rating
categories that signifies investment grade (i.e. BBB- (or the equivalent) or
higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided, in
each case, such ratings are publicly available; provided further, that in the
event Moody's or S&P is no longer in existence for purposes of determining
Investment Grade, such organization may be replaced by a
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<PAGE> 23
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act of 1933, as amended) designated by FelCor LP and
FelCor.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"Joint Enterprise" shall mean with respect to any Person, any
joint venture, corporation, partnership or other business entity which is not
(directly or indirectly) owned 100% by such Person.
"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 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.
"Leverage Ratio" shall mean, at any date, a fraction
(expressed as a percentage) the numerator of which is Total Indebtedness, on
such date, and the denominator of which is Total Value, on such date.
"License" means either (x) 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 or (y) a Management Agreement, provided the Manager
under such Management Agreement owns the rights to 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" means a loan made by a Lender to the Borrower pursuant
to Article II and "Loans" means the aggregate Loans.
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"Loan Documents" means, collectively, this Agreement, the
Notes, the Pledge Agreement, the 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.
"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 the Loans.
"Management Agreement" means an agreement relating to the
operation and/or management of any Hotel on behalf of the Operating Lessee.
"Manager" means Promus, Starwood, MeriStar Hotels & Resorts,
Inc., Coastal Hotel Group, Inc., Bristol or such other manager as shall be
reasonably approved by the Borrower and the Administrative Agent (such consent
not to be unreasonably withheld or delayed) 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) either entity which comprises the
Borrower or (B) the Borrower and its Subsidiaries taken as one enterprise, (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 (x) any
Operating Lessee to perform its obligations under any material Operating Lease
or (y) DJONT or Bristol to perform its obligations under their respective
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.
"Maturity Date" shall mean March 31, 2004.
"Minimum Tangible Net Worth" means, with respect to the
Borrower, at any time, the sum of (a) $858,000,000; plus (b) 50% of the
aggregate net proceeds received by the Borrower or any of its Subsidiaries after
March 31, 1998 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 Investors Service.
"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-
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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 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.
"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).
"Note" means a promissory note of the Borrower payable to the
order of any Lender in a principal amount equal to the amount of such Lender's
Loan as originally in effect, in substantially the form of Exhibit A, evidencing
the Indebtedness of the Borrower to such Lender resulting from the Loan made by
such Lender and "Notes" means the aggregate Notes.
"Notice of Conversion or Continuation" shall have the meaning
specified in Section 2.7.
"Obligations" means the Loans, 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'
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<PAGE> 26
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 or Unconsolidated Entities, as lessor, and an Operating Lessee, as
lessee, substantially in a form as approved by Administrative Agent.
"Operating Lessee" means either (x) DJONT or its Subsidiary
(provided DJONT owns at least 50% of the voting Stock in such Subsidiary and
maintains voting control over such Subsidiary), or (y) any entity listed on
Schedule III attached hereto, each 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.
"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award.
"Other Taxes" has the meaning specified in Section 2.14(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 unless the
Borrower or such Subsidiary or Eligible Joint
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<PAGE> 27
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.
"Permitted Transferee" shall be those entities named on
Schedule IV.
"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.
"Pledge Agreement" means that certain Pledge and Security
Agreement entered into in connection herewith in substantially the same form of
Exhibit H, under which ownership interests in certain entities of or affiliated
with the Borrower (as set forth in the Pledge Agreement) are pledged under
certain circumstances as collateral for, inter alia, the Loans, as such Pledge
Agreement may be amended, modified, or supplemented from time to time.
"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 1999 through 2001, inclusive, delivered to the Lenders by
the Borrower.
"Promus" means Promus Hotels, Inc., a Delaware corporation or
any Person controlled by Promus Hotel Corporation, that is a Manager.
"Pro Rata Share" means, for any Person, with respect to such
Person's Unconsolidated Entities (or Subsidiaries), the percentage ownership
interest of such Person in such Unconsolidated Entity (or Subsidiary), provided
that, in the event that such Person is the general partner of such
Unconsolidated Entity (or Subsidiary), such Person's Pro Rata Share with respect
to such Unconsolidated Entity (or Subsidiary) shall be the percentage of the
general partner interests owned by such Person in such Unconsolidated Entity (or
Subsidiary) with respect to any Indebtedness for which recourse may be made
against any general partner of such Unconsolidated Entity (or Subsidiary).
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"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 35 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
(or as to which the Lease expressly provides that (i) a security interest in
such lease may be granted with the consent of the lessor and (ii) such consent
shall not be unreasonably withheld or delayed), and (f) which contains lender
protection provisions reasonably acceptable to the Administrative Agent.
"Ratable Portion" or "ratably" means, except as otherwise
specifically provided herein, with respect to any Lender, the quotient obtained
by dividing the amount of the Loan of such Lender by the amount of the Loans 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.
"Recourse Secured Indebtedness" of any Person means the sum of
the following: (A) all Indebtedness of such Person and its Subsidiaries
determined on a consolidated basis in conformity with GAAP which (x) is secured
by a Lien (other than in connection with the Pledge Agreement) and (y) recourse
for payment is not limited to the specific assets encumbered by such Lien,
provided, however, that personal recourse of a holder of Indebtedness against
(i) any Subsidiary (or Unconsolidated Entity) of Borrower formed specifically
for the limited purpose of owning specific assets which secure Indebtedness
which does not exceed 65% of the value of the assets owned by such Subsidiary
(or Unconsolidated Entity) or (ii) 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, cause any Indebtedness to be characterized as
Recourse Secured Indebtedness, provided further that if a personal recourse
claim is made in connection therewith, such
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claim shall constitute Recourse Secured Indebtedness for the purposes of this
Agreement; plus (B) such Person's Pro Rata Share of Recourse Secured
Indebtedness of such Person's Unconsolidated Entities.
"Refurbishment Hotel" shall mean Hotels, designated by
Borrower, which (i) will experience or are experiencing a disruption in hotel
operations due to refurbishment and (ii) are continuously operating with at
least 65% of its rooms in service at all times. Any given Hotel may only be
characterized as a Refurbishment Hotel for a maximum of six consecutive Fiscal
Quarters provided, however, that the requirement of continuous operation shall
not apply with respect to the Allerton Hotel or the Tampa Hotel.
"Register" has the meaning specified in Section 10.7.
"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.
"Reporting Operating Lessee" shall mean any Operating Lessee
which is a party to Operating Leases which in the aggregate provide at least 25%
of Borrower's consolidated Operating Lease revenue.
"Requested Operating Lessee" shall mean each Operating Lessee
which is a party to Operating Leases which in the aggregate provide at least 10%
of Borrower's consolidated Operating Lease revenue provided such Operating
Lessee has been designated by the Administrative Agent as a Requested Operating
Lessee.
"Required Guarantor" shall mean any direct or indirect
wholly-owned Subsidiary of Borrower which is formed after the date hereof,
provided, the value of the assets of such Subsidiary plus the value of the
assets of such Person's Subsidiaries' exceed 10% of Total Value, provided,
further, that in the event the aggregate value of the assets of all wholly-owned
Subsidiaries which are not Guarantors exceed 20% of Total Value then each direct
or indirect wholly-owned Subsidiary formed thereafter shall be deemed a Required
Guarantor if the value of the assets of such Subsidiary plus the value of the
assets of such Person's Subsidiaries' exceed 1% of Total Value.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such
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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.
"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.
"Room Revenues" has the meaning ascribed to such term in the
form of Operating Lease attached as Exhibit F hereto.
"S&P" means Standard & Poor's Ratings Services 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.
"Starwood" shall mean Starwood Hotels and Resorts and any
Person controlled by Starwood Hotels & Resorts Worldwide, Inc. (or its
successors or assigns) that is a Manager.
"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.
"Tampa Hotel" shall mean that certain Holiday Inn Hotel
located in Tampa (Busch Gardens), Florida.
"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 book value of all partnership interests in FelCor LP owned by Persons other
than FelCor; minus (b) the sum of all intangible assets of 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 2.14(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.
"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 of such Person's Unconsolidated
Entities, provided, however, Indebtedness of a Person's Subsidiary shall only be
included in the calculation of Total Indebtedness to the extent of the greater
of (x) such Person's Pro-Rata Share of such Indebtedness and (y) the amount of
such Indebtedness guaranteed by such Person.
"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 (other than in connection with the Pledge
Agreement) on any assets of such Person or its Subsidiaries or Unconsolidated
Entities.
"Total Value" means the sum of:
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(A) for Hotels owned or leased pursuant to a Qualified Lease
(including newly acquired Hotels and Hotels to be immediately acquired using the
proceeds of any Loans), other than Hotels described in clause (B) below,
Adjusted NOI on a consolidated basis from such Hotels for the preceding four (4)
Fiscal Quarters divided by ten percent (10%); plus
(B) for Hotels owned or leased pursuant to a Qualified Lease
by Borrower (or any Subsidiary or Unconsolidated Entity of Borrower) for less
than four (4) fiscal Quarters and (x) for which the Borrower (or any Subsidiary
or Unconsolidated Entity of Borrower) does not have, or is not able to
reasonably obtain, trailing four quarter audited financial information or (y)
which the Borrower has designated as a Refurbishment Hotel, in each such case
95% of the Borrower's Investment in such Hotels (provided that if the Allerton
Hotel is designated as a Refurbishment Hotel, then such Hotel shall be valued at
85% of the Borrower's Investment in such Hotel); plus
(C) the sum of $15,000,000, being the agreed aggregate sum of
the Borrower's investment at cost in (x) certain vacant land at the Kingston
Plantation Hotel in Myrtle Beach, South Carolina, and (y) the Myrtle Beach Condo
Management Company; plus
(D) unencumbered Cash or Cash Equivalents held by the Borrower
and its Subsidiaries (determined on a consolidated basis in accordance with
GAAP) plus the Borrower's Pro Rata Share of unencumbered Cash or Cash
Equivalents held by the Borrower's Unconsolidated Entities;
provided, however, that in the case of (A) above, Adjusted NOI with respect to a
Hotel shall only be included in the calculation of Total Value if such Hotel is,
as at the date of such calculation, owned or leased by Borrower, its Subsidiary
or its Unconsolidated Entity but only to the extent (i) in the case of Adjusted
NOI attributable to the Borrower's Subsidiaries, financial statements prepared
in accordance with GAAP would consolidate such Subsidiary with the Borrower and
(ii) in the case of Adjusted NOI attributable to the Borrower's Unconsolidated
Entities, of the Borrower's Pro Rata Share of such Adjusted NOI, and provided,
further, in the case of (B) above, the Borrower's Investment with respect to a
Hotel shall only be included in the calculation of Total Value if such Hotel is,
as of the date of such calculation, owned by Borrower, its Subsidiary or
Unconsolidated Entity. Notwithstanding the foregoing, in no event shall more
than 20% of Total Value be attributable to Refurbishment Hotels which are valued
at 95% (or 85% in the case of the Allerton Hotel) of Borrower's Investment.
"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.
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"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), 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 (x) which limits generally the amount of Indebtedness
which may be incurred by the Borrower or its Subsidiaries or Eligible Joint
Ventures or (y) in the case of an Eligible Joint Venture which is not an
Eligible Entity, which requires the consent of partners (or the equivalent) in
such Eligible Joint Venture (other than the Borrower or its wholly owned
Subsidiaries) to create, incur, assume or suffer to exist any Lien upon such
Hotel); 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, other than those
certain equal and ratable clauses contained in the Indenture).
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.
"Unencumbered Hotel Property" 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 in each
case shall meet at any time and from time to time, each of the following minimum
criteria:
(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, as of the date upon which such Hotel is
included as an Unencumbered Hotel Property and as of the end of each succeeding
Fiscal Quarter, (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
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verified by a written report of an environmental consultant reasonably
acceptable to the Administrative Agent;
(d) such Hotel is (i) owned in fee simple by, 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;
provided that, if a Joint Venture Hotel is owned by an Eligible Joint Venture
which owns more than a single Hotel, such Joint Venture Hotel shall only be an
Unencumbered Hotel Property if it satisfies all of the requirements set forth in
subparagraphs (a) through (d) above and all other Hotels owned by such Eligible
Joint Venture satisfy the conditions set forth in subparagraphs (a) and (c)
above, provided further that the parties acknowledge and agree that 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 Unencumbered (for purposes of clause (a) above)
provided that such Hotel shall cease to be Unencumbered (for purposes of clause
(a) above), inter alia, in the event that FelCor LP assigns its mortgage to any
other Person.
"Unencumbered NOI" shall mean Adjusted NOI from each
Unencumbered Hotel Property, provided, that (i) only Borrower's JV% of Adjusted
NOI generated by any Joint Venture Hotel shall be included in Unencumbered NOI
and (ii) in no event shall more than 25% of Unencumbered NOI be attributable to
Unencumbered Hotel Properties leased pursuant to Qualified Leases.
"Unsecured Interest Expense" means, for any Person for any
period, the greater of (I) the sum of (a) the total interest expense in respect
of all unsecured Indebtedness of such Person (excluding, on an annual basis, up
to $3,000,000 of non-cash expense which is attributable to the amortization of
costs and expenses incurred in connection with the incurrence of such
Indebtedness) and its Subsidiaries for such period determined on a consolidated
basis in conformity with GAAP, plus capitalized interest of such Person and its
Subsidiaries in respect of unsecured Indebtedness, plus (b) such Person's Pro
Rata Share of Unsecured Interest Expense of such Person's Unconsolidated
Entities and (II) 7.5% of the sum of (a) the average outstanding balance of all
unsecured Indebtedness of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP plus (b) such
Person's Pro Rata Share of unsecured Indebtedness of such Person's
Unconsolidated Entities for such period.
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".
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.
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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 a loan (each a
"Loan", and in the aggregate, the "Loans") to Borrower and Borrower agrees to
borrow the Loans on the Closing Date, in an amount equal to the amount set
opposite such Lender's name on Schedule I as its Loan Commitment (such Lender's
"Commitment", and in the aggregate, "Commitments"). Any amounts prepaid may not
be reborrowed. The Loan of each Lender shall be evidenced by the Note to the
order of such Lender.
2.2. Making the Loans. (a) The Loans shall be made on the
Closing Date. Not later than 11:00 A.M. (New York City time) on the third (3rd)
Business Day prior to the Closing Date, Borrower shall give to the
Administrative Agent notice of the initial Interest Period or Periods, which
notice shall specify each Interest Period and the respective pro rata portion of
the aggregate Loan amount to which such Interest Period shall apply; 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. If the Administrative Agent does not receive such
notice of the initial Interest Period as provided above, the initial Interest
Period shall equal one month and shall apply to the aggregate principal balance
of the Loans.
(b) Each Lender shall, before 12:00 Noon (New York City time)
on the Closing Date, 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 Loan. By 12:00 Noon (New York City
time) on the Closing Date, 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 Closing Date that such Lender will not make
available to the Administrative Agent such Lender's Loan, the Administrative
Agent shall be under no obligation to fund such Lender's Loan.
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(c) Unless the Administrative Agent shall have received notice
from a Lender prior to the Closing Date that such Lender will not make available
to the Administrative Agent such Lender's Loan, the Administrative Agent may
assume that such Lender has made such Loan available to the Administrative Agent
on the Closing Date in accordance with this Section 2.2 and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower on
the Closing Date a corresponding amount. If and to the extent that such Lender
shall not have so made such Loan 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 to the Loan 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 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.
(d) The failure of any Lender to make the Loan to be made by
it hereunder shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the Closing Date, 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 Closing Date.
2.3. Fees. 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.
2.4. Collateral. (a) During such time that, and only for so
long as, the FelCor Bonds are rated below Investment Grade, the Loans shall be
secured by ownership interests in certain entities of, or affiliated with, the
Borrower as set forth in the Pledge Agreement. In the event that the FelCor
Bonds attain a rating of Investment Grade, upon written request from the
Borrower, the Administrative Agent shall direct the Collateral Agent to release
the Collateral. Should the FelCor Bonds thereafter become rated below Investment
Grade, the Collateral shall be re-pledged pursuant to a new pledge and security
agreement in substantially the same form as Exhibit H hereto and any other
instruments and documents reasonably required by the Administrative Agent in
order to effect such new pledge, including but not limited to a new guaranty in
substantially the same for as Exhibit G hereto. During any period in which the
Collateral secures the Loans, the Collateral may also secure, equally and
ratably, (i) the FelCor Bonds and (ii) the Indebtedness under the Credit
Agreement.
(b) Upon consent from or at the request of the Majority
Lenders, the Administrative Agent may direct the Collateral Agent to take any
action with respect to the Collateral other than such action requiring consent
of all the Lenders under Section 10.1 hereof. Notwithstanding the preceding
sentence, the Administrative Agent shall have the sole and absolute discretion
to direct the Collateral Agent to release (i) any
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portion of the Collateral representing, in the aggregate, no more than 10% of
Total Value, or (ii) all or any portion of the Collateral as contemplated by
Section 2.4(a).
2.5. Repayment. (a) The Borrower shall make a one million
dollar ($1,000,000.00) payment in reduction of the principal balance of the Loan
on each anniversary of the Closing Date during the term of the Loan, with the
first such payment being due on April 1, 2000.
(b) The Borrower shall repay the entire unpaid principal
amount of the Loans on the Maturity Date.
2.6. Prepayments. (a) The Borrower shall have no right to
prepay the principal amount of any Loan other than as provided in this Section
2.6.
(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 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 Borrower shall not be in compliance
with the covenant contained in Section 5.1 hereof, (a "Financial Covenant
Imbalance"), the Borrower shall prepay the Loans then outstanding in an amount
necessary to cure such Financial Covenant Imbalance, together with accrued
interest as follows:
(i) in the event that the Financial Covenant Imbalance is
due to (A) any sale, conveyance, transfer, assignment or other
disposition of an Unencumbered Hotel Property, (B) a financing secured
by a Hotel or (C) any drawing on the revolving credit line under the
Credit Agreement, the prepayment shall be made within one (1) Business
Day of such event occurring;
(ii) in the event that the Financial Covenant Imbalance is
due to any (A) condemnation or taking by eminent domain of an
Unencumbered Hotel Property, or (B) loss, damage or destruction by
casualty to any 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
(iii) in the event that the Financial Covenant Imbalance is
due to a determination by the Administrative Agent, after review of the
applicable Hotel
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Documents, that an Unencumbered Hotel Property, represented by Borrower
in a Compliance Certificate to be an Unencumbered Hotel Property, fails
to meet (and never actually met) the requirements for Unencumbered
Hotel Properties set forth herein, the prepayment shall be made within
5 Business Days of the Administrative Agent notifying Borrower of such
Hotel's failure to meet the Unencumbered Hotel Property requirements.
2.7. Conversion/Continuation Option. The Borrower may elect
(i) at any time after the date hereof to convert Base Rate Loans or any portion
thereof to Eurodollar Rate Loans, or (ii) 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 Rate 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 B 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 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 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 2.7, 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.
2.8. 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, payable monthly on
the first day of each month, on the Maturity Date and on the date any
Base Rate Loan is converted or paid in full.
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(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, payable on the last day of such Interest
Period, on the Maturity Date and, if such Interest Period has a
duration of more than three months, on the last day of each calendar
quarter during such Interest Period commencing on March 31, 1999.
(b) If the principal indebtedness of the Loans 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 Maturity Date, the Borrower shall thereafter, unless and
until such date, if any, as the 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 Maturity 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 (x) 13% or (y) 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.
2.9. 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 (2) 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 2.8.
(c) If 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 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 Rate Loan will automatically, on the
last day of the then existing Interest Period therefor, convert into a
Base Rate Loan; and
(ii) The Base Rate Loan shall continue in effect until the
Administrative Agent shall notify the Borrower that such Lenders have
determined that the circumstances that required the Base Rate no longer
exist, after which time Borrower may convert the Loans to Eurodollar
Rate Loans by submitting a Notice of Conversion or Continuation in
accordance with the terms set forth herein.
2.10. 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
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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 2.10, the Borrower may either (A) prepay in full all
Eurodollar Rate Loans of such Lender then outstanding in accordance with Section
2.6(b) and, additionally, reimburse such Lender for such increased cost in
accordance with this Section 2.10 or (B) convert all Eurodollar Rate Loans of
all Lenders then outstanding into Base Rate Loans in accordance with Section 2.7
and, additionally, reimburse such Lender for such increased cost in accordance
with this Section 2.10.
2.11. 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.
2.12. 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 Loans and its other commitments, letters of credit or loans of
this type, then, upon demand 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 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.
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2.13. 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
2.10, 2.11, 2.12, or 2.14) 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 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 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
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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.
2.14. 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 (including but not limited to Form W8), 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 (including but not limited to Form W8),
completed in a manner reasonably satisfactory to the Administrative Agent or the
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 2.14) 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 2.14) 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
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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.
(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 2.14 shall survive the payment in full of the
Obligations.
(f) Prior to the Effective 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 (including but not limited to Form W8),
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 2.14 shall use its best 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.
2.15. Sharing of Payments, Etc. If 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 2.12 or 2.14) 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.
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Article III
CONDITIONS TO EFFECTIVENESS
OF THIS AGREEMENT AND OF LENDING
3.1. Conditions Precedent to Effectiveness of this Agreement
and to the Loans. The effectiveness of this Agreement and the obligation of each
Lender to make its Loan hereunder is subject to satisfaction of the conditions
precedent that the Administrative Agent shall have received counterparts of this
Agreement duly executed by each Borrower, each Lender and the Administrative
Agent, together with the following, each dated the Effective Date (hereinafter
defined) unless otherwise indicated, in form and substance satisfactory to the
Administrative Agent and (except for the Notes) in sufficient copies for each
Lender (the date of satisfaction of the conditions precedent set forth in this
Section 3.1 and in Section 3.2 being the "Effective Date"):
(a) The Notes to the order of the Lenders, respectively.
(b) The Guaranty, duly executed by the Guarantor parties
thereto.
(c) The Pledge Agreement, duly executed by the pledgors
thereto covering the present and future rights and interests in the collateral
as set forth in the Pledge Agreement, together with:
(i) proper Financing Statements (Form UCC-1) fully executed
for filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be
created by the Pledge Agreement;
(ii) copies of Requests for Information (Form UCC-11), or
equivalent reports, listing all effective financing statements that
name as debtor any entity whose ownership interests are pledged as
collateral under the Pledge Agreement and that are filed in the
jurisdictions referred to in preceding clause (i), together with copies
of such financing statements (none of which shall cover the Pledge
Agreement Collateral except to the extent evidencing Permitted Liens);
(iii) evidence of the completion of all other recordings
and filings of, or with respect to, such Pledge Agreement as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect the security interests intended to be created by
the Pledge Agreement; and
(iv) evidence that all other actions necessary or, in the
opinion of the Collateral Agent, desirable to perfect the security
interests purported to be created by the Pledge Agreement have been
taken.
In addition to the foregoing requirements, pursuant to the
Pledge Agreement, each pledgor thereunder shall have delivered to the Collateral
Agent, as pledgee, all pledged collateral referred to therein (to the extent
evidenced by any certificate, note or other written instrument), together with
executed and undated
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irrevocable stock powers in the case of pledged stock and together with
irrevocable assignments in the case of pledged partnership interests and pledged
limited liability company interests in each case which are evidenced by
certificates, instruments, documents or other writings.
(d) 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 Effective 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.
(e) 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.
(f) Favorable opinion(s) of counsel to the Loan Parties, in
substantially the form(s) of Exhibit C, and as to such other matters as any
Lender through the Administrative Agent may reasonably request.
(g) A certificate of the chief financial officer of the
Borrower, stating that the Borrower is Solvent after giving effect to the 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.
(h) Evidence that the insurance required by Section 6.4 is in
full force and effect.
(i) Such additional documents, information and materials as
any Lender, through the Administrative Agent, may reasonably request.
(j) A certificate, signed by a Responsible Officer of the
Borrower, stating that the following statements are true and correct on the
Effective Date:
(i) All costs and accrued and unpaid fees and expenses
(including, without limitation, legal fees and expenses) required to be
paid to the Administrative Agent and the Lenders on or before the
Effective Date, including, without limitation, those referred to in
Sections 2.3 and 10.4, to the extent then due and payable, have been
paid.
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(ii) 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.
(iii) There exists no judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions upon
any of the transactions contemplated hereby.
(iv) 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.
(v) There has been no Material Adverse Change since
December 31, 1998 in the corporate, capital or legal structure of the
Borrower or any of its Subsidiaries without the consent of the
Administrative Agent.
(vi) The Borrower's Tangible Net Worth is not less than the
Minimum Tangible Net Worth.
(k) Administrative Agent's reasonable satisfaction with the
form and substance of each Operating Lease.
(l) A Compliance Certificate, executed by the Chief Financial
Officer of the Borrower substantially in the form attached as Exhibit E hereto
(a "Compliance Certificate"), and if requested by the Administrative Agent,
together with copies (to the extent not already delivered) of the Hotel
Documents in respect of each Hotel indicated by Administrative Agent.
3.2. Additional Conditions Precedent to Effectiveness of this
Agreement and to the Loans. The effectiveness of this Agreement and the
obligation of each Lender to make its Loan hereunder 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
December 31, 1998 or (ii) that there has occurred any adverse change which such
Lender deems material in the financial markets generally, since December 31,
1998 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 December 31, 1998 which,
in the judgment of any Lender, has had a Material Adverse Effect.
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(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 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.
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 on and after the Effective Date:
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 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;
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(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, 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 other than as contemplated under the Loan
Documents; 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 Effective Date will be in full force and effect.
(b) This Agreement has been, and each of the other Loan
Documents has been, or will have been upon delivery thereof pursuant to Section
3.1, duly executed and delivered by each Loan Party thereto. This Agreement is,
and the other Loan Documents are or will be, when delivered hereunder, the
legal, valid and binding obligation of each Loan 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.
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
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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 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, 1998, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, audited by
PricewaterhouseCoopers LLP, and the consolidated balance sheets of the Borrower
and its Subsidiaries as at December 31, 1998, and the related consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the twelve 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 December 31,
1998, and said statements of income, retained earnings and cash flows for the
twelve 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 December 31, 1998, 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 December 31, 1998 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 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.
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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 Loan 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) as of the date hereof
200,000,000 shares of common stock, $.01 par value per share, of which
68,062,887 shares are issued and outstanding as of the date hereof, and (ii) as
of the date hereof 20,000,000 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, and 57,500
shares designated as 9% Series B Cumulative Redeemable Preferred Stock,
$2,500.00 per share liquidation preference (and represented by 5,750,000
Depository Shares, each representing a 1/100 interest in such preferred stock)
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.
(b) FelCor is the sole general partner of FelCor LP and, as of
the date hereof, owns beneficially and of record 1% of the partnership interests
of FelCor LP free and clear of all Liens. FelCor is the sole member and sole
equity owner of FelCor Nevada Holdings, L.L.C., which owns beneficially and of
record 94.8% of the partnership interests of FelCor LP.
(c) There are no outstanding classes of voting membership
interests of DJONT other than the Class A membership interests. As of the date
hereof Hervey A. Feldman and Thomas J. Corcoran, Jr. own, beneficially, all 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 Effective Date, 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
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Borrower is subject to any outstanding option, warrant, right of conversion or
purchase or any similar right other than certain rights of first refusal
contained in partnership agreements to which the Borrower or a Subsidiary is a
party. 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; provided that mortgage loan
agreements executed by certain single purpose entities which do not constitute
Collateral under the Pledge Agreement may contain such restrictions.
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.
(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.
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(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 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 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
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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 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 Effective 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 entire proceeds of the Loans will
be applied by the Borrower solely to the indebtedness incurred under the Credit
Agreement as follows: (a) first, to repay in whole the aggregate Term Loans (as
defined in the Credit Agreement), (b) second, to reduce the aggregate
outstanding principal amount of the Revolving Credit Loans (as defined in the
Credit Agreement), and (c) third, to the extent any proceeds are remaining, to
pay any unpaid fees and expenses owed to the Administrative Agent or the
Lenders.
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 $5,000,000 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 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 $5,000,000
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
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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 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
Contractual Obligation, 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 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
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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 their
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 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.
(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
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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 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 aggregate, are reasonably likely to have a Material
Adverse Effect.
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(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, 1998. 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 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 except to the extent that
the aggregate value of any Hotels owned or leased by the Borrower (directly or
indirectly) which are not leased to an Operating Lessee, managed by a Manager,
and operated pursuant to and with the benefit of a License does not exceed 10%
of Total Value.
(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
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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 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 contributions to such FF&E Reserve as required by the
terms of the Operating Lease and/or the Management Agreement relating thereto.
4.27. Year 2000 Compliance. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of (i) the
Borrower's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Borrower's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, has been completed. The cost to the Borrower of such reprogramming
and testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or a Material Adverse
Effect. Except for such of the reprogramming referred to in the preceding
sentence as may be necessary, the computer and management information systems of
the Borrower and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower to conduct its business without the occurrence of a Material
Adverse Effect.
Article V
FINANCIAL COVENANTS
As long as any of the Obligations 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. Unsecured Interest Expense Coverage. The Borrower shall
maintain at the end of each Fiscal Quarter, commencing with the Fiscal Quarter
ending on March 31, 1999, a ratio of (a) Unencumbered NOI to (b) Unsecured
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 2.5:1.0.
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5.2. Fixed Charge Coverage Ratio. The Borrower shall maintain
at the end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
March 31, 1999, a ratio of (a) Adjusted EBITDA to (b) Fixed Charges, in each
case determined on the basis of the four (4) Fiscal Quarters ending on the date
of determination, of not less than 2.0:1.0.
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 50% of Total
Value.
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, Capitalized Lease
Obligations) of the Borrower, to exceed (x) prior to and including June 30,
1999, 30% of Total Value and (y) after June 30, 1999, 25% of Total Value.
5.6. Adjusted NOI and Hotels. The Borrower shall ensure that
at the end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
March 31, 1999 at least 50% of the aggregate Adjusted NOI generated by all
Hotels during the preceding four (4) Fiscal Quarters shall be generated by
Hotels wholly owned or leased by the Borrower or its wholly-owned Subsidiaries,
provided that, for Hotels owned or leased for less than four (4) Fiscal Quarters
only the Adjusted NOI generated by such Hotels since the date of acquisition of
such Hotel shall be included in calculating such aggregate Adjusted NOI.
5.7. Limitations on Recourse Secured Indebtedness. The
Borrower shall not, during each Fiscal Quarter on a consolidated basis, permit
the Recourse Secured Indebtedness (including, without limitation, Capitalized
Lease Obligations) of the Borrower, to exceed the lesser of (x) 7.5% of Total
Value and (y) $200,000,000.00.
Article VI
AFFIRMATIVE COVENANTS
As long as any of the Obligations 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,
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instruments, licenses, permits and franchises, 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 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.
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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 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 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 the
Reporting Operating Lessees and any Requested Operating Lessee as of the end of
such quarter and consolidated statements of income, retained earnings and cash
flow of the Borrower and its Subsidiaries and the Reporting Operating Lessees
and any Requested Operating Lessee 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
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officer of the Borrower or the chief financial officer of the Reporting
Operating Lessees or a Requested Operating Lessee, as appropriate, as fairly
presenting the financial condition and results of operations of the Borrower and
its Subsidiaries and the Reporting Operating Lessees and any Requested Operating
Lessee 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, any Reporting Operating Lessees or any Requested Operating Lessee, 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 any Reporting Operating Lessee or any Requested Operating Lessee, 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 any Reporting Operating Lessee or any Requested Operating Lessee, as
appropriate, of the financial statements furnished in respect of such Fiscal
Quarter;
(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 the Reporting Operating Lessees as of the end of such year and
consolidated statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries and the Reporting Operating Lessees 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
PricewaterhouseCoopers LLP, 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 a Reporting
Operating Lessee's, as appropriate, compliance with all financial covenants
contained herein, and (ii) a written discussion and analysis by the management
of the Borrower or any Reporting Operating Lessee, as appropriate, of the
financial statements furnished in respect of such Fiscal Year; provided,
however, that for purposes of this subparagraph (b) of this paragraph 6.11 only,
"Reporting Operating Lessees" shall not include Bristol.
(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; and
(d) within 45 days after the end of each Fiscal Quarter, a
Compliance Certificate as of the end of such Fiscal Quarter, executed by the
Chief Financial Officer of the Borrower and if requested by the Administrative
Agent, together with copies (to the extent not already delivered) of the Hotel
Documents in respect of each Hotel indicated by Administrative Agent.
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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 Total Value 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 Compliance 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 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, 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,
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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.;
(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 $5,000,000 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 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 $5,000,000 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
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reasonably likely to subject the Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs of $5,000,000 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 $5,000,000;
(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
$5,000,000;
(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) If requested by Administrative Agent, the Borrower shall provide
the Administrative Agent, within 30 days of such request, with a copy of each
Qualified Lease and each Operating Lease (to the extent not already delivered).
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 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
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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. 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 that such plan is so qualified; and (ii)
cause such plan to be so qualified.
6.15. Fiscal Year. The Borrower shall maintain as its Fiscal
Year the twelve month period ending on December 31 of each year.
6.16. 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.
6.17. 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.
6.18. Maintenance of FF&E Reserves. The Borrower shall cause
to be maintained the FF&E Reserves pursuant to the terms of the Operating
Leases.
6.19. 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;
6.20. Unencumbered Hotel Properties/Financial Covenant
Imbalance. (a) 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 the
calculation of a prior Compliance Certificate as an Unencumbered Hotel Property,
ceases, for any reason whatsoever, to be an Unencumbered Hotel Property or (ii)
a Financial Covenant Imbalance exists, and the amount of the Loans which must be
repaid to cure such Financial Covenant Imbalance.
(b) 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 Unencumbered Hotel Property in any
material respect) may make physical and other verifications of any Hotels
included as Unencumbered Hotel Properties in any reasonable manner 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.
6.21. Hotel Documents. Within 30 days of Administrative
Agent's request, Borrower shall deliver to Administrative Agent Hotel Documents
(to the extent not already delivered) for any Hotel indicated by Administrative
Agent.
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Article VII
NEGATIVE COVENANTS
As long as any of the Obligations 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 Wholly-Owned Subsidiaries. (a) The
Borrower shall not create or acquire any direct or indirect wholly-owned
Subsidiary after the Closing Date unless (i) if such Subsidiary is a Required
Guarantor, concurrently with the creation or acquisition thereof, (x) such
Subsidiary executes and delivers to the Administrative Agent counterparts of the
Guaranty, at which time such Subsidiary shall become a Guarantor hereunder, and
(y) if the Administrative Agent, in its sole discretion, so requires, the holder
of such Subsidiary's ownership interests executes and delivers to the
Administrative Agent counterparts to the Pledge Agreement; or (ii) if such
Subsidiary is not a Required Guarantor the organizational documents and
agreement of limited partnership (or equivalent) of such Subsidiary provide that
such Subsidiary shall not incur any Indebtedness (other than (A) intercompany
Indebtedness owed to Borrower and (B) Indebtedness which is either (x)
Non-Recourse Indebtedness or (y) recourse to such Subsidiary provided such
Indebtedness (I) does not exceed 65% of the value of such Subsidiary's assets
which secures such Indebtedness and (II) is secured by all of the Hotels owned
by such Subsidiary).
(b) No wholly-owned Subsidiary which is acquired or created
after the Closing Date may (i) incur any Indebtedness (other than (A)
intercompany Indebtedness owed to Borrower and (B) Indebtedness which is either
(x) Non-Recourse Indebtedness or (y) recourse to such Subsidiary provided such
Indebtedness (I) does not exceed 65% of the value of such Subsidiary's assets
which secures such Indebtedness and (II) is secured by all of the Hotels owned
by such Subsidiary) or (ii) be subject to any contractual restriction on such
Subsidiary's ability to declare or pay dividends or distribute cash or other
assets to Borrower or any of its Subsidiaries.
(c) Borrower shall not permit any direct or indirect
wholly-owned Subsidiary to own assets (including the assets of such Person's
Subsidiaries) the value of which exceed 10% of Total Value unless (i) such
Subsidiary executes and delivers to the Administrative Agent counterparts of the
Guaranty, at which time such Subsidiary shall become a Guarantor hereunder, and
(ii) if the Administrative Agent, in its sole discretion, so requires, the
holder of such Subsidiary's ownership interests executes and delivers to the
Administrative Agent counterparts to the Pledge Agreement; provided, that in the
event the aggregate value of the assets of all wholly-owned Subsidiaries which
are not Guarantors exceed 20% of Total Value then Borrower shall not permit any
direct or indirect wholly-owned Subsidiary formed thereafter to own assets
(including the assets of such Person's Subsidiaries) the value of which exceed
1% of Total Value unless (x) such Subsidiary executes and delivers to the
Administrative Agent counterparts of the Guaranty, at which time such Subsidiary
shall become a Guarantor hereunder, and (y) if the Administrative Agent, in its
sole discretion, so requires, the holder of such
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Subsidiary's ownership interests executes and delivers to the Administrative
Agent counterparts to the Pledge Agreement.
(d) Any Subsidiary required to take action pursuant to this
Section 7.1 shall execute and deliver, or cause to be executed and delivered,
all other relevant documentation of the type described in Article III (including
without limitation opinions of counsel) as such Subsidiary would have had to
deliver if such Subsidiary were a Loan Party on the Closing Date, with all
actions to be taken pursuant to this Section 7.1 to be taken to the reasonable
satisfaction of the Administrative Agent and the Collateral Agent.
7.2. Operation/Ownership of Hotels. (a) Borrower shall not own
or lease (directly or indirectly) any Hotels which are not (i) leased to an
Operating Lessee pursuant to an Operating Lease within 90 days of Borrower's (or
a Subsidiary's) acquisition of such Hotel, (ii) managed pursuant to a Management
Agreement and (iii) operated pursuant to and with the benefit of a License,
except to the extent that the aggregate value of any Hotels owned or leased by
the Borrower (directly or indirectly) which are not leased to an Operating
Lessee, managed by a Manager, and operated pursuant to and with the benefit of a
License does not exceed 10% of Total Value.
(b) The aggregate value of any Hotels owned or leased by the
Borrower (directly or indirectly) which are not operated under a nationally
recognized brand may not exceed 10% of Total Value.
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.
(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,
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
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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 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 at the time of such transaction.
(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. (a) The
Borrower shall not, and shall not permit any of its Subsidiaries or Eligible
Joint Ventures to (i) engage in the construction of new hotels (provided that
nothing herein shall prohibit expansions to existing Hotels) or (ii) 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 (A) such
Persons' obligations, in the aggregate at the time of the transaction, exceed
the lesser of (x) 15% of the Total Value of the Borrower as of the end of the
Fiscal Quarter immediately preceding the date of any such commitment or
agreement and (y) $400,000,000, or (B) 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.
(b) Other than Borrower's (or its Subsidiary's or
Unconsolidated Entity's) investments in budget hotels, limited service hotels or
extended stay hotels which are in existence as of the Effective Date, the
Borrower's investments (direct or indirect) in any budget hotels, limited
service hotels or extended stay hotels, shall not exceed, in the aggregate, 10%
of Total Value.
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 Closing Date.
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(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 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 and Alternative Currency 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.
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(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
Eligible Joint Ventures except in material compliance with all applicable
Environmental Laws currently and hereinafter in effect.
7.13. Joint Enterprises. Other than investments in (x) Joint
Enterprises in existence as of the Effective Date and (y) Eligible Entities, the
Borrower's investments (direct or indirect) in Joint Enterprises shall not
exceed, in the aggregate, 15% of Total Value.
7.14. 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:
(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
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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
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 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 $5,000,000; 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 $5,000,000; or
(i) There shall occur a Material Adverse Change or an event
which is reasonably likely to have a Material Adverse Effect; or
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(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 or Thomas J. Corcoran, Jr. shall sell,
transfer or encumber (otherwise than to (i) members of their respective
families, (ii) entities controlled by them, (iii) trusts for the benefit of any
of the foregoing or (iv) a Permitted Transferee) their voting Class A membership
interest in DJONT; or
(m) Any provision of the Guaranty after delivery thereof under
this Agreement 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 shall at the request, or may with the
consent, of the Majority 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, 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 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.
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(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 willful
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 accordance 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 any Commitment or
Loan made by Chase, and any 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
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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 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. (a) The Lenders agree to indemnify the
Administrative Agent and their 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, 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 Documents; 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 willful
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.
(b) 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 Closing Date 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
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part of such proposed Borrowing when such Eurodollar Rate Loan, as a result of
such failure, is not made on such date.
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 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
Majority Lenders' removal of the retiring 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, (x) the Administrative Agent shall have the right to waive
or depart from any of the requirements or criteria contained in the definition
of Qualified Lease and (y) subject to Section 10.1(b) 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 waiver of any provision of this Agreement or
any other Loan Document shall be effective upon the execution by the party so
charged of a written agreement to such effect.
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(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) increase the amount of any Loan or
subject the Lenders to any additional obligations; (ii) reduce the principal of,
or interest on, the Loans or any fees or other amounts payable hereunder; (iii)
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; (iv) change the
aggregate unpaid principal amount of the Loans; (v) release all or substantially
all of the Collateral, except as provided in Section 2.4(a); (vi) permit other
debt to be secured by the Collateral; (vii) change the definition of Majority
Lenders; (viii) change the number of Lenders which shall be required for the
Lenders or any of them to take any action hereunder; (ix) release any Loan Party
from its obligations under any Note or material Guaranty; or (x) amend this
Section 10.1; provided 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) Each Lender shall reply promptly, but in any event within
ten (10) Business Days of receipt by such Lender of a written 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 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,
11th Floor, New York, New York 10017 (telecopy number: 212-622-3580) (telephone
number: 212-622-3419), Attention Alan Breindel with a copy to One Chase
Manhattan Plaza, 8th Floor, New York, New York 10081 (telecopy number:
212-552-5701) (telephone number: 212-552-7469), Attention Thierry LeJouam; 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 designated 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.
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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, each document prepared in connection with any
re-pledge of the Collateral pursuant to Section 2.4(a), and each of the other
documents to be delivered hereunder and thereunder, including, without
limitation, the reasonable 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 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.
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, 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 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
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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.
(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 as
of the Effective Date and thereafter shall be binding upon and inure to the
benefit of the
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Borrower, the Administrative Agent, 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.
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 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
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 (which consent shall not be
unreasonably withheld or delayed), or (y) during the continuance of an Event of
Default, or (z) a Lender may assign a portion of its Loans to another existing
Lender or Lenders or a fund or trust entity that invests in bank loans and is
advised by or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor only, provided that the aggregate amount of
the Loans retained by the assignor shall in no event be less than $5,000,000,
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 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
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<PAGE> 83
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 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 Borrower hereby instructs the Administrative Agent for
the benefit of the Borrower to 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 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. No assignment
shall be effective unless it has been recorded in the Register as provided in
this paragraph (d). Within five Business Days after its receipt of such notice,
the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for such surrendered Notes, new Notes to the
order of such Eligible Assignee in an amount equal to the outstanding principal
balance of the Loan assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained any portion of such Loan hereunder,
new Notes to the order of the assigning Lender in an amount equal to the
outstanding principal balance of the Loan 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.
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<PAGE> 84
(e) In addition to the other assignment rights provided in
this Section 10.7, each Lender may, without prior notice to or consent of the
Borrower or the Administrative Agent: (i) 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, or
(ii) subject, nevertheless, to the restrictions on assignment set forth in this
Section 10.7, pledge its rights under this Agreement to any Person to secure
such Lender's obligations to such Person; provided, however, that such Person
shall have no rights under this Agreement unless such Person is an Eligible
Assignee and unless and until such rights have been assigned to such Person in
accordance with the terms of this Agreement; provided further, however, that no
such assignment or pledge shall release the assigning or pledging 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 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 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 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 2.10, 2.12, 2.14 and 10.4 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 2.10, 2.12, 2.14 or 10.4, 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.
10.8. Governing Law; Severability. This Agreement and the
Notes and the rights and obligations of the parties hereto and thereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.
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<PAGE> 85
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.
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 agreement referred to in Section 2.3 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,
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<PAGE> 86
Affiliates, 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 participants 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.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
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<PAGE> 87
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 LODGING TRUST INCORPORATED, a
Maryland corporation
By: /s/ LAWRENCE D. ROBINSON
----------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
FELCOR LODGING LIMITED PARTNERSHIP, a
Delaware limited partnership
By: FELCOR LODGING TRUST INCORPORATED, a
Maryland corporation, its sole
general partner
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 88
THE CHASE MANHATTAN BANK, as Administrative
Agent, Book Manager, and Collateral Agent
By: /s/ THOMAS H. KOZLAN
---------------------------------------
Name: Thomas H. Kozlan
Title: VP
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 89
Lenders
THE CHASE MANHATTAN BANK
By: /s/ THOMAS H. KOZLAN
--------------------------------------
Name: Thomas H. Kozlan
Title: VP
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 90
CHASE SECURITIES INC., as agent for
THE CHASE MANHATTAN BANK
By: /s/ ERIC S. ROSEN
------------------------------------
Name: Eric S. Rosen
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 91
USTRUST
By: /s/ BRIAN W. SOPP
-----------------------------------
Name: Brian W. Sopp
Title: Executive Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 92
KZH APPALOOSA LLC
By: /s/ VIRGINIA CONWAY
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 93
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/ JEFFREY W. MAILLET
-------------------------------------
Name: JEFFREY W. MAILLET
Title: Senior Vice President & Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 94
KZH IV LLC
By: /S/ VIRGINIA CONWAY
-------------------------------------
Name: Virginia Conway
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 95
OCTAGON LOAN TRUST
By: OCTAGON CREDIT INVESTORS, as Manager
By: /s/ JAMES P. FERGUSON
--------------------------------------
Name: JAMES P. FERGUSON
Title: MANAGING DIRECTOR
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 96
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ KENT HOWARD
-------------------------------------
Name: Kent Howard
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 97
KZH BDC LLC
By: /s/ VIRGINIA CONWAY
------------------------------------
Name: Virginia Conway
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 98
FRANKLIN FLOATING RATE TRUST
By: /s/ CHAUNCEY LUFKIN
------------------------------------
Name: Chauncey Lufkin
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 99
KZH RIVERSIDE LLC
By: /s/ VIRGINIA CONWAY
------------------------------------
Name: Virginia Conway
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 100
MORGAN STANLEY DEAN WITTER PRIME INCOME
TRUST
By: /s/ PETER GEWIRTZ
----------------------------------
Name: Peter Gewirtz
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 101
KZH-CNC LLC
By: /s/ VIRGINIA CONWAY
------------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE> 102
STEIN ROE FARNHAM, INCORPORATED, as Agent
for KEYPORT LIFE INSURANCE COMPANY, as a
Lender
By: /s/ BRIAN W. GOOD
-------------------------------------
Name: Brian W. Good
Title: Vice President and Portfolio
Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 103
SRF TRADING, INC.
By: /s/ KELLY C. WALKER
------------------------------------
Name: Kelly C. Walker
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 104
'
FLOATING RATE PORTFOLIO
By: INVESCO, Senior Secured Management,
Inc., as Attorney-in-fact
By: /s/ ANNE M. McCARTHY
--------------------------------------
Name: Anne M. McCarthy
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 105
KZH WATERSIDE LLC
By: /s/ VIRGINIA CONWAY
------------------------------------
Name: Virginia Conway
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 106
KZH CYPRESSTREE-1 LLC
By: /s/ VIRGINIA CONWAY
------------------------------------
Name: Virginia Conway
Title: Authorized Agent
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 107
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By: /s/ TIMOTHY M. BARNS
--------------------------------------
Name: Timothy M. Barns
Title: Managing Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 108
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
Inc., as Portfolio Manager
By: /s/ TIMOTHY M. BARNS
--------------------------------------
Name: Timothy M. Barns
Title: Managing Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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EXHIBIT 10.22.2
GUARANTY
GUARANTY, dated as of April 1, 1999 (as amended, modified or
supplemented from time to time, this "GUARANTY"), made by each of the
signatories hereto (each a "GUARANTOR" and, together with any other entity that
becomes a party hereto pursuant to Section 22(f) hereof, the "GUARANTORS"),
each having an address as provided on Annex 2 hereto, in favor of the
Guarantied Parties referred to below. Unless otherwise defined herein,
capitalized terms used herein shall have the respective meaning set forth in
the Loan Agreement referred to below.
W I T N E S S E T H:
WHEREAS, FelCor Lodging Trust Incorporated (the "REIT") and
FelCor Lodging Limited Partnership (the "OPERATING PARTNERSHIP"), each a
"BORROWER" and collectively, the "BORROWERS"), various lenders from time to
time party thereto (the "LENDERS"), The Chase Manhattan Bank, as Administrative
Agent (in such capacity and together with any successor agent, the
"ADMINISTRATIVE AGENT" and, together with the the Lenders and their respective
successors and assigns, and together with any other lenders from time to time
party to the Loan Agreement hereinafter referred to, the "GUARANTIED PARTIES"),
have entered into a Loan Agreement, dated as of April 1, 1999, providing for
the making of a Loan to the Borrowers all as contemplated therein (as used
herein, the term "LOAN AGREEMENT" means the Loan Agreement described above in
this paragraph, as the same may be amended, modified, extended, renewed,
replaced, restated, supplemented or refinanced from time to time, and including
any agreement extending the maturity of, or refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers or
guarantor thereunder or any increase in the amount borrowed) all or any portion
of, the indebtedness under such agreement or any successor agreement, whether
or not with the same agent, trustee, representative, lenders or holders);
WHEREAS, Borrowers either directly or indirectly own
beneficially 100% of the capital stock of the Guarantors, the Borrowers are the
principal financing entities for capital requirements of their Subsidiaries,
and from time to time the Borrowers have made and will continue to make capital
contributions and advances to their Subsidiaries, including the Guarantors, the
Borrowers and the Guarantors are members of the same consolidated group of
companies and are engaged in related businesses; and the Guarantors will derive
direct and indirect economic benefit from the Loans; and
WHEREAS, it is a condition precedent under the Loan Agreement
to the making of Loans that the Guarantors shall have executed and delivered
this Guaranty;
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans under the Loan Agreement and, accordingly, desires to
execute this Guaranty in order to satisfy the condition precedent described in
the preceding paragraph; and
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NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Guarantied Parties and hereby covenants and agrees with
each Guarantied Party as follows:
SECTION 1. Guaranty. Each Guarantor hereby jointly and
severally, unconditionally and irrevocably, guarantees to the Guarantied
Parties the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of (x) the principal of and interest on the Notes
issued by, and the Loans made to, each Borrower under the Loan Agreement; (y)
all other obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
owing by any Borrower to the Guarantied Parties under the Loan Agreement or any
other Loan Document to which such Borrower is a party (including, without
limitation, indemnities, Fees and interest thereon), whether now existing or
hereafter incurred under, arising out of or in connection with the Loan
Agreement or any such other Loan Document and the due performance and
compliance with all of the terms, conditions and agreements contained in such
Loan Documents by any Borrower; and (z) all Obligations (as defined in the
Pledge Agreement) (all such principal, interest, liabilities and obligations
being herein collectively called the "GUARANTEED Obligations"). Each Guarantor
understands, agrees and confirms that the Guarantied Parties may enforce this
Guaranty up to the full amount of the Guaranteed Obligations against each
Guarantor without proceeding against any other Guarantor, any other Loan Party,
against any security for the Guaranteed Obligations, or under any other
guaranty covering all or a portion of the Guaranteed Obligations. For purposes
of this Section 1, the term "GUARANTOR" as applied to any Guarantor shall refer
to such Guarantor as a guarantor of indebtedness incurred by others, as opposed
to indebtedness directly incurred by it. This Guaranty is an absolute guaranty
of payment and performance and not a guaranty of collection.
SECTION 2. Guaranty Absolute. Each Guarantor guaranties that
the Guaranteed Obligations will be paid strictly in accordance with the terms
of the Loan Agreement, the Notes and the other Loan Documents, as the case may
be (with all such instruments and agreements being herein collectively called
the "GUARANTEED OBLIGATIONS 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 each Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of any provision
of any other Guaranteed Obligations Documents or any other
agreement or instrument relating to any Guaranteed Obligations
Documents, or avoidance or subordination of any of the Guaranteed
Obligations;
(b) 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 Guaranteed
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Obligations, or any other amendment or waiver of any term of, or
any consent to departure from any requirement of, the Loan
Agreement, the Notes or any of the other Guaranteed Obligations
Documents;
(c) consent to or waiver of any breach, or any act, omission
or default under, any of the Guaranteed Obligations Documents or
any of the instruments or agreements referred to therein, or
other amendment, modification or supplementation of any of the
Guaranteed Obligations Documents or any of such other instruments
or agreements;
(d) the absence of any attempt to collect any of the
Guaranteed Obligations from any 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;
(e) any waiver, consent, extension, forbearance or granting
of any indulgence by any of the Guarantied Parties with respect
to any provision of any other Guaranteed Obligations Document;
(f) 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;
(g) any borrowing or grant of a security interest by any
Borrower, as debtor-in-possession, under section 364 of the
Bankruptcy Code;
(h) 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 Guaranteed
Obligations; and/or
(i) any other circumstances which might otherwise constitute
a legal or equitable discharge or defense of any Borrower or a
Guarantor.
SECTION 3. Waiver. (a) Each Guarantor hereby (i) waives (A)
promptness, diligence, notice or acceptance and any and all other notices with
respect to any of the Guaranteed Obligations or this Guaranty or any other
liability to which it may apply, (B) the filing of any claim with a court in
the event of receivership or bankruptcy of any Borrower, (C) presentment,
demand of payment, protest or notices of dishonor or nonpayment of all or any
of the Guaranteed Obligations, (D) the benefit of any statute of limitation,
(E) all demands whatsoever (and any requirement that same be made on the
Borrowers as a condition precedent to the Guarantor's Guaranteed Obligations
hereunder); and (ii) covenants and agrees that this Guaranty will not be
discharged except by complete performance of the Guaranteed Obligations of the
Guarantor contained herein.
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(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 Borrowers 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 any
Borrower shall not impair the obligation of each Guarantor to pay the full
amount of the Guaranteed Obligations or any other obligation of such Guarantor
contained herein.
(c) Each 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 Guaranteed Obligations, to collect interest on
the Guaranteed Obligations, or to enforce or exercise any other right or remedy
with respect to the Guaranteed Obligations, each 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.
(d) Each Guarantor hereby assumes responsibility for keeping
itself informed of the financial condition of the Borrowers and of each other
Guarantor of all or any part of the Guaranteed Obligations, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations
or any part thereof, that diligent inquiry would reveal. Each Guarantor hereby
agrees that the Guarantied Parties shall have no duty to advise such 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 any 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 any Guarantor.
(e) Each Guarantor consents and agrees that the Guarantied
Parties shall be under no obligation to marshall any assets in favor of such
Guarantor or otherwise in connection with obtaining payment of any or all of
the Guaranteed Obligations from any Person or source.
SECTION 4. No Subrogation Etc. Except as provided in Sections
12 and 18 hereof, each Guarantor waives and relinquishes any and all rights
which it may acquire by way of subrogation (whether contractual, under Section
509 of the Bankruptcy Code or otherwise), contribution or reimbursement by
reason of this Guaranty or by any payment made hereunder.
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SECTION 5. Representations and Warranties. In order to induce
the Lenders to make the Loans pursuant to the Loan Agreement, each Guarantor
represents, warrants and covenants that:
(a) Each Guarantor (i) is a limited liability company,
limited partnership, general partnership, corporation or trust, as applicable,
duly organized, validly existing and in good standing under the laws of the
State of its organization; (ii) is duly qualified as a foreign (if applicable)
limited liability company, limited partnership, general partnership,
corporation or trust, as applicable, and is in good standing under the laws of
each jurisdiction where such Guarantor owns or operates property, except for
failures which in the aggregate would not reasonably be expected to have a
Material Adverse Effect; (iii) has all requisite company, partnership,
corporate or trust, as applicable, 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 partnership and
partnership agreement, articles of organization and operating agreement,
certificate of incorporation, by-laws and declaration of trust, as applicable;
(v) is in compliance with all other applicable Requirements of Law except for
such noncompliance which in the aggregate would not reasonably be expected to
have a 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 not reasonably be expected to have a
Material Adverse Effect.
(b) The execution, delivery and performance by each Guarantor
of this Guaranty and the other Loan Documents to which it is a party:
(i) are within its company, partnership, corporate or trust
powers, as applicable;
(ii) have been duly authorized by all necessary company,
partnership, trust or corporate action, as applicable, including,
without limitation, the consent of members, partners, trustees or
directors, as applicable, where required; and
(iii) do not and will not (A) contravene its certificate of
partnership or partnership agreement, articles of organization or
operating agreement, declaration of trust, or certificate of
incorporation or by-laws, as applicable, 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
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termination or acceleration of, any of its Contractual
Obligations, (D) result in the creation or imposition of any Lien
(other than pursuant to the Pledge Agreement 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 or made, and each of which is in full
force and effect.
(c) This Guaranty has been duly executed and delivered by
each Guarantor and is the legal, valid and binding obligation of each Guarantor
enforceable against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditor's rights and remedies generally.
(d) There are no pending or, to the knowledge of such
Guarantor, threatened actions, investigations or proceedings affecting such
Guarantor or any of its subsidiaries before any Governmental Authority or
arbitrator other than those that in the aggregate, if adversely determined,
would not reasonably be expected to have a Material Adverse Effect. The
performance by each Guarantor under this Guaranty and under each of the other
Guaranteed Obligations 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 not reasonably be expected to 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 any Guarantor
herefrom shall in any event be effective unless the same shall be in writing,
approved by each Guarantor directly affected thereby and the Administrative
Agent (in accordance with the provisions of the Loan Agreement) at all times
prior to the time that the Loans have been terminated and all Loan Document
Obligations have been repaid in full; provided, however, that (x) additional
Guarantors may be added as parties hereto in accordance with the provisions of
Section 22(f) and (y) Guarantors may cease to be parties hereto in accordance
with the provisions of Section 22(h) hereof.
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 any Guarantor,
addressed to it at the address specified in the first paragraph of this
Guaranty, if to any Guarantied Party, addressed to it at the address of such
Guarantied Party specified in the Loan 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 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.
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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 rights and remedies herein provided are
cumulative and not exclusive of any remedies provided by law or by any of the
other Loan Documents. No notice to or demand on any Guarantor in any case shall
entitle such Guarantor or any other Guarantor or to any other further notice or
demand in similar or other circumstances or constitute a waiver of the rights
of any Guarantied Party to any other or further action in any circumstances
without notice or demand.
(b) Failure by any of the Guarantied Parties at any time or
times hereafter to require strict performance by any Borrower, any Guarantor or
any other Person of any of the provisions, warranties, terms or conditions
contained in any of the Guaranteed Obligations Documents now or at any time or
times hereafter executed by any Borrower, any Guarantor or such other Person
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 that
right shall not be deemed to have been modified or waived by any course of
conduct or knowledge or any of the Guarantied Parties or any agent, officer,
employee or 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 Guarantied Obligations of any Guarantor under this Guaranty or under any
of the other Guaranteed Obligations Documents. Any determination by a court of
competent jurisdiction of the amount of any principal and/or interest or other
amount constituting any of the Guaranteed Obligations shall be conclusive and
binding on each Guarantor irrespective of whether such 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 (such term to mean and include any
"EVENT OF DEFAULT" as defined in the Loan Agreement), each of the Guarantied
Parties is hereby authorized at any time and from time to time, to the fullest
extent permitted by law (including, without limitation, Section 151 of the New
York Debtor and Creditor 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 any Guarantor against any and all of the Guaranteed
Obligations of such 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 Guaranteed Obligations, liabilities,
deposits or claims or any of them may be contingent and unmatured. Each of the
Guarantied Parties agrees promptly to notify the Guarantors after any such
set-off and application made by such Guarantied Party; provided, however, that
the failure to give such notice shall not effect the validity of such set-off
and application and any such notice is hereby expressly
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waived. 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 all liabilities to which it applies or
may apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon, and shall (i) remain in full force and effect as to
each Guarantor until the termination of the Loans and when no Note remains
outstanding and all Guaranteed Obligations have been indefeasibly paid in full,
(ii) be binding upon the Guarantors, their 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 any Notes 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 Guaranteed Obligations so
transferred or assigned, subject, however, to compliance with the provisions of
Section 10.7 of the Loan Agreement in respect of assignments.
SECTION 11. Limitation of Guaranty. Each Guarantor hereby
confirms that it is its intention that this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of any bankruptcy, insolvency or
similar law, the Uniform Fraudulent Conveyance Act or any similar Federal,
state or foreign law. To effectuate the foregoing intention, if enforcement of
the liability of any Guarantor under this Guaranty for the full amount of the
Guaranteed Obligations would be an unlawful or voidable transfer under any
applicable fraudulent conveyance or fraudulent transfer of law or any
comparable law, then the liability of such Guarantor hereunder shall be reduced
to the maximum amount for which such liability may then be enforced without
giving rise to an unlawful or voidable transfer under any such law.
SECTION 12. Contribution. To the extent that any Guarantor
shall be required hereunder to pay a portion of the Guaranteed Obligations
which shall exceed the greater of (i) the amount of the economic benefit
actually received by such Guarantor from the incurrence of the Loans under the
Loan Agreement and (ii) the amount which such Guarantor would otherwise have
paid if such Guarantor had paid the aggregate amount of the Guaranteed
Obligations (excluding the amount thereof repaid by the Borrowers 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 (the "CONTRIBUTION
PERCENTAGE"), then such Guarantor shall have a right of contribution against
each other Guarantor who has made payments in respect of the Guaranteed
Obligations to and including the date enforcement hereunder is sought in an
aggregate amount less than such other Guarantor's Contribution Percentage of
the aggregate payments made to and including the date enforcement hereunder is
sought by all Guarantors in respect of the Guaranteed Obligations; provided,
that no Guarantor may take any action to enforce such right until the
Guaranteed Obligations have been indefeasibly paid in full and the Loans
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have been terminated, it being expressly recognized and agreed by all parties
hereto that any Guarantor's right of contribution arising pursuant to this
Section 12 against any other Guarantor shall be expressly junior and
subordinate to such other Guarantor's obligations and liabilities in respect of
the Guaranteed Obligations and any other obligations owing under this Guaranty.
All parties hereto recognize and agree that, except for any right of
contribution arising pursuant to this Section 12, each Guarantor who makes any
payment in respect of the Guaranteed Obligations shall have no right of
contribution or subrogation against any other Guarantor in respect of such
payment. Each of the Guarantors recognizes and acknowledges that the rights to
contribution arising hereunder shall constitute an asset in favor of the party
entitled to such contribution. In this connection, each Guarantor has the right
to waive its contribution right against any Guarantor to the extent that after
giving effect to such waiver such Guarantor would remain solvent, in the
determination of the Administrative Agent.
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 Guaranteed 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 Guaranteed 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 Guaranteed 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, each Guarantor hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each Guarantor hereby irrevocably waives
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non convenient, which it may now or
hereafter
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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) Each 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
thirty (30) days after such mailing.
(c) Nothing contained in this Section 15 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 any Guarantor or
any of the Guarantors' property in any other jurisdiction.
(d) EACH GUARANTOR AND EACH GUARANTIED PARTY (BY ITS
ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY 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 TO WHICH SUCH GUARANTOR IS A PARTY, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF ANY LOAN PARTY OR
ANY GUARANTIED PARTY CONTEMPLATED HEREBY OR THEREBY.
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, 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. INTENTIONALLY DELETED.
SECTION 19. INTENTIONALLY DELETED.
SECTION 20. INTENTIONALLY DELETED.
SECTION 21. INTENTIONALLY DELETED.
SECTION 22. Miscellaneous. (a) All references herein to the
Borrowers or to the Guarantors shall include their respective successors and
assigns, including, without limitation, a receiver, trustee or
debtor-in-possession of or for any Borrower or any Guarantor. All references to
the singular shall be deemed to include the plural where the context so
requires.
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(b) Intentionally Deleted.
(c) The Guaranteed Obligations and liabilities of each
Guarantor are joint and several.
(d) By executing and delivering this Guaranty, each Guarantor
agrees to be bound by all covenants and agreements in the Loan Agreement that
apply to such Guarantor by name, or in its capacity as Guarantor or Loan Party.
(e) All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
made by the Borrowers pursuant to Sections 2.13 and 2.15 of the Loan Agreement.
(f) Pursuant to Section 7.1 of the Loan Agreement or
otherwise, certain Subsidiaries of the Borrowers may after the date hereof be
required to enter into this Guaranty as a Guarantor. Upon execution and
delivery, after the date hereof, by the Collateral Agent and such Subsidiary of
an instrument in the form of Annex 1 hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor hereunder. The execution and delivery of any such instrument shall
not require the consent of any other Guarantor hereunder.
(g) The Guarantors hereby jointly and severally agree to pay
all reasonable out-of-pocket costs and expenses of each Guarantied Party in
connection with the enforcement of this Guaranty and any amendment, waiver or
consent relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel employed by any of the Guarantied Parties).
(h) In the event that all of the Capital Stock that is owned
by the Borrowers and their Subsidiaries of one or more Guarantors is sold or
otherwise disposed of (but not to any Borrower or a Subsidiary thereof) or
liquidated in compliance with the requirements of Section 7.5 of the Loan
Agreement (or such sale or other disposition to a Person other than a Borrower
or a Subsidiary thereof has been approved in accordance with the Loan
Agreement)) and the proceeds of such sale, disposition or liquidation are
applied in accordance with the provisions of the Loan Agreement, to the extent
applicable, such Guarantor shall be released from this Guaranty and this
Guaranty shall, as to each such Guarantor or Guarantors, terminate, and have no
further force or effect (it being understood and agreed that the sale of one or
more Persons which are not Borrowers (but not to any Borrower or any Subsidiary
thereof) that own, directly or indirectly, all of the Capital Stock of any
Guarantor shall be deemed to be a sale of such Guarantor for purposes of this
Section 22(h)). The release of any Guarantor as provided in this clause (h)
shall not require the consent of any other Guarantor hereunder.
SECTION 23. Continuing Guarantors. The rights and obligations
of each Guarantor (other than the respective released Guarantor in the case of
the following clause (y)) hereunder shall remain in full force and effect
notwithstanding (x) the addition of any new Guarantor as a party to this
Agreement as contemplated by preceding Section
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22(f) or otherwise and/or (y) the release of any Guarantor under this Agreement
as contemplated by Section 22(h) or otherwise.
NO FURTHER TEXT ON THIS PAGE
12
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IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be duly
executed and delivered by its duly authorized officer on the date first above
written.
[BORROWERS]
[GUARANTORS]
13
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IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/CSS HOTELS, L.L.C., a Delaware
limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 15
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR HOTEL ASSET COMPANY, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 16
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/LAX HOTELS, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 17
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR NEVADA HOLDINGS, L.L.C., a
Nevada limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President & Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 18
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FHAC NEVADA HOLDINGS, L.L.C., a
Nevada limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President & Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 19
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/CSS HOLDINGS, L.P., a Delaware
limited partnership
By: FELCOR/CSS HOTELS, L.L.C., a
Delaware limited liability
company, its general partner
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 20
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR EIGHT HOTELS, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 21
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/LAX HOLDINGS, L.P., a
Delaware limited partnership
By: FELCOR/LAX HOTELS, L.L.C., a
Delaware limited liability
company, its general partner
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 22
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FHAC TEXAS HOLDINGS, L.P., a
Texas limited partnership
By: FELCOR HOTEL ASSET COMPANY,
L.L.C., a Delaware limited
liability company, its general
partner
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 23
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/ST. PAUL HOLDINGS, L.P., a
Delaware limited partnership
By: FELCOR/CSS HOTELS, L.L.C., a
Delaware limited liability
company, its general partner
By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
<PAGE> 1
EXHIBIT 10.22.3
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of April 1, 1999 (as
amended, modified or supplemented from time to time, this "AGREEMENT"), made by
each of the undersigned (each a "PLEDGOR", and together with any entity that
becomes a party hereto pursuant to Section 24 hereof, the "PLEDGORS"), in favor
of THE CHASE MANHATTAN BANK, as Collateral Agent (the "PLEDGEE"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise
defined herein, terms used herein and defined in the Loan Agreement (as defined
below) shall be used herein as therein defined.
W I T N E S S E T H:
WHEREAS, FelCor Lodging Trust Incorporated (the "REIT") and
FelCor Lodging Limited Partnership (the "OPERATING PARTNERSHIP"), (each a
"BORROWER" and collectively, the "BORROWERS"), various lenders from time to
time party thereto (the "LENDERS"), The Chase Manhattan Bank, as Administrative
Agent (in such capacity and together with any successor agent, the
"ADMINISTRATIVE AGENT"), and, together with the Pledgee, the Administrative
Agent, and the Lenders and their respective successors and assigns, and
together with any other lenders from time to time party to the Loan Agreement
hereinafter referred to, the "LENDER CREDITORS"), have entered into a Loan
Agreement, dated as of April 1, 1999, providing for the making of a Loan to the
Borrowers all as contemplated therein (as used herein, the term "LOAN
AGREEMENT" means the Loan Agreement described above in this paragraph, as the
same may be amended, modified, extended, renewed, replaced, restated,
supplemented or refinanced from time to time, and including any agreement
extending the maturity of, or refinancing or restructuring (including, but not
limited to, the inclusion of additional borrowers or guarantor thereunder or
any increase in the amount borrowed) all or any portion of, the indebtedness
under such agreement or any successor agreement, whether or not with the same
agent, trustee, representative, lenders or holders);
WHEREAS, pursuant to the Guaranty, the Guarantors have
jointly and severally guaranteed to the Lender Creditors the payment when due
of all obligations and liabilities of each Borrower under or with respect to
the Loan Documents (as used herein, the term "LOAN DOCUMENTS" shall have the
meaning provided in the Loan Agreement and shall include any documentation
executed and delivered in connection with any replacement or refinancing Loan
Agreement), the R/C Documents (as hereinafter defined) and the Felcor Note
Documents (as hereinafter defined);
WHEREAS, the Operating Partnership has, prior to the date
hereof, issued $300,000,000.00 in aggregate principal amount of notes pursuant
to the Indenture (the "FELCOR NOTES"; with the holders from time to time of
such FelCor Notes being herein called the "FELCOR NOTEHOLDERS");
<PAGE> 2
WHEREAS, the Borrowers entered into a revolving credit
facility and term loan pursuant to the Fourth Amended and Restated Credit
Agreement dated as of July 1, 1998 among Borrowers (formerly known as FelCor
Suite Hotels, Inc. and FelCor Suites Limited Partnership) and various lenders
from time to time party thereto (the "R/C CREDITORS") and The Chase Manhattan
Bank, as Administrative Agent (the "CREDIT AGREEMENT");
WHEREAS, the Term Loan is being made, among other reasons, to
refinance the term loans made to the Borrowers under the Credit Agreement;
WHEREAS, the Term Loan Obligations (as defined below) are to
be secured hereunder on an equal and ratable basis as with the R/C Obligations
(as defined below) and the FelCor Note Obligations (as defined below) as
provided herein;
WHEREAS, it is a condition precedent to the advance of sums
under the Loan Agreement that each Pledgor shall have executed and delivered to
the Pledgee this Agreement;
WHEREAS, each Pledgor desires to execute this Agreement to
satisfy the conditions described in the immediately preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor hereby makes the following representations and warranties to the
Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS; CERTAIN EXCLUDED OBLIGATIONS,
SUBORDINATION OF CERTAIN SECURITY INTERESTS. This Agreement is made by each
Pledgor for the benefit of the Lender Creditors and the R/C Creditors
(collectively, the "INSTITUTIONAL LENDERS"), and each of the FelCor Noteholders
(the Institutional Lenders and the FelCor Noteholders, collectively, together
with the Pledgee, the "SECURED CREDITORS"), to secure:
(a) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, Fees and interest thereon) of such Pledgor and
Borrowers to the Lender Creditors, now existing or hereafter incurred under,
arising out of or in connection with the Loan Agreement and all other Loan
Documents to which it is at any time a party (including, without limitation,
all such obligations and liabilities of such Pledgor and Borrowers under the
Loan Agreement and under the Guaranty or under any other guarantee by it of
obligations pursuant to any Loan Agreement) and the due performance and
compliance by such Pledgor and Borrowers with the terms of each such Loan
Document (all such obligations and liabilities under this clause (i) being
herein collectively, called the "TERM LOAN OBLIGATIONS");
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<PAGE> 3
(b) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor and
Borrowers to the R/C Creditors, now existing or hereafter incurred under,
arising out of or in connection with the Credit Agreement and the other
documents executed in connection with or pursuant to the Credit Agreement
(together with the Credit Agreement, (the "R/C DOCUMENTS") and the due
performance and compliance by such Pledgor and the Borrowers with the terms of
such Credit Agreement (all such obligations and liabilities under this clause
(ii) being herein collectively, called the "R/C OBLIGATIONS" and, together with
the Term Loan Obligations, collectively the "LOAN DOCUMENT OBLIGATIONS");
(c) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor (as obligor
or guarantor, as applicable) and the Operating Partnership to the FelCor
Noteholders, whether now existing or hereafter incurred under, arising out of
or in connection with the FelCor Notes and the other documents executed in
connection with or pursuant to the Indenture (the "FELCOR NOTE DOCUMENTS") to
which such Pledgor is at any time a party and the due performance and
compliance by such Pledgor and the Operating Partnership with all of the terms,
conditions and agreements on its part contained in the FelCor Note Documents
(all such obligations and liabilities under this clause (iii) being herein
collectively, called the "FELCOR NOTE OBLIGATIONS" and collectively, with the
R/C Obligations, the "OTHER OBLIGATIONS");
(d) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its security
interest in the Collateral;
(e) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred to in
clauses (a) through (d) above, after an Event of Default (such term, as used in
this Agreement, shall mean any Event of Default at any time under, and as
defined in, the Loan Agreement and, if the related Obligations (as defined
below) are secured hereunder at such time, the FelCor Note Documents, the
Credit Agreement and any payment default (after the expiration of any
applicable grace period) on any of the Obligations secured hereunder at such
time) shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
or realizing on the Collateral, or of any exercise by the Pledgee of its rights
hereunder, together with reasonable attorneys' fees and court costs; and
(f) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (a)
through (f) of this Section 1, subject to the provisions of following clause
(b), being herein collectively called the "OBLIGATIONS," it being acknowledged
and agreed that the "OBLIGATIONS" shall
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<PAGE> 4
include extensions of credit of the type described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK, LIMITED LIABILITY COMPANY INTERESTS,
PARTNERSHIP INTERESTS, SECURITIES, ETC. (a) As used herein: (i) the term
"STOCK" shall mean (x) with respect to corporations incorporated under the laws
of the United States or any State or territory thereof (each a "DOMESTIC
CORPORATION"), all of the issued and outstanding shares of capital stock of any
Domestic Corporation at any time owned by any Pledgor and (y) with respect to
corporations that are not Domestic Corporations (each a "FOREIGN CORPORATION"),
all of the issued and outstanding shares of capital stock of any Foreign
Corporation at any time owned by any Pledgor, provided that, (A) except as
provided in the last sentence of this Section 2(a), such Pledgor shall not be
required to pledge hereunder more than 65% of the total combined voting power
of all classes of capital stock entitled to vote for the directors of such
Foreign Corporation (herein called "VOTING Stock") owned by such Pledgor of any
Foreign Corporation, (B) the Pledgor shall be required to pledge hereunder 100%
of the issued and outstanding shares of all capital stock which is not Voting
Stock (herein called "NON-VOTING STOCK") at any time owned by the Pledgor of
any Foreign Corporation; (ii) the term "LIMITED LIABILITY COMPANY INTEREST"
shall mean the entire limited liability company interests at any time owned by
each Pledgor in any limited liability company; (iii) the term "PARTNERSHIP
INTEREST" shall mean the entire partnership interests (whether general and/or
limited partnership interests) at any time owned by each Pledgor in any Person;
and (iv) the term "SECURITIES" shall mean all of the Stock, Limited Liability
Company Interests and Partnership Interests.
(b) All Stock at any time pledged or required to be pledged hereunder
is hereinafter called the "PLEDGED STOCK," all Limited Liability Company
Interests at any time pledged or, required to be pledged hereunder are
hereinafter called the "PLEDGED LIMITED LIABILITY COMPANY INTERESTS," all
Partnership Interests at any time pledged or required to be pledged hereunder
are hereinafter called the "PLEDGED PARTNERSHIP INTERESTS" all of the Pledged
Stock, Pledged Limited Liability Company Interests and Pledged Partnership
Interests together are hereinafter called the "PLEDGED SECURITIES" which
together with all proceeds thereof, including any securities and moneys
received and at the time held by the Pledgee hereunder and all rights under
Section 3.1(a)(iv) and (v) are hereinafter called the "COLLATERAL". Each
Pledgor represents and warrants that on the date hereof (i) the Pledged Stock
held by such Pledgor consists of the number and type of shares of the stock of
the corporations as described in Annex A hereto; (ii) such Pledged Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Annex A hereto; (iii) the Pledged
Limited Liability Company Interests held by such Pledgor consist of the number
and type of interest of the issuing Person (each a "PLEDGED LIMITED LIABILITY
COMPANY") as described in Annex B hereto; (iv) such Pledged Limited Liability
Company Interests constitute that percentage of the issued and outstanding
equity interests of the issuing Person as set forth in Annex B hereto; (v) the
Pledged Partnership Interests held by such
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<PAGE> 5
Pledgor constitute that percentage of the entire Partnership Interest of the
respective partnership (each a "PLEDGED PARTNERSHIP") as is set forth in Annex
C hereto for such Pledgor; and (vi) on the date hereof, such Pledgor owns no
other Pledged Securities.
3. PLEDGE OF SECURITIES, ETC.
3.1 Pledge. (a) To secure all Obligations of such Pledgor and
for the purposes set forth in Section 1 hereof, each Pledgor hereby: (i) grants
to the Pledgee a security interest in all of the Collateral owned by such
Pledgor; (ii) pledges and deposits as security with the Pledgee the Securities
owned by such Pledgor on the date hereof, and delivers to the Pledgee
certificates or instruments therefor, accompanied by undated stock powers duly
executed in blank by such Pledgor in the case of Stock, or such other
instruments of transfer as are reasonably acceptable to the Pledgee; (iii)
assigns, transfers, hypothecates, mortgages, charges and sets over to the
Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement; (iv) transfers and assigns to the Pledgee all of such
Pledgor's Pledged Limited Liability Company Interests and all of such Pledged
Pledgor's right, title and interest in each limited liability company to which
such interests relate, whether now existing or hereafter acquired, including,
without limitation:
(A) all the capital thereof and its interest in all profits,
losses, Limited Liability Company Assets (as defined below) and other
distributions to which such Pledgor shall at any time be entitled in respect of
such Pledged Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor
in respect of Pledged Limited Liability Company Interests, whether under any
limited liability company agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interest, liens and remedies, if any, under any limited
liability company agreement or operating agreement, or at law or otherwise in
respect of such Pledged Limited Liability Company Interests;
(D) all present and future claims, if any, of such Pledgor
against any such limited liability company for moneys loaned or advanced, for
services rendered or otherwise;
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<PAGE> 6
(E) all of such Pledgor's rights under any limited liability
company agreement or operating agreement or at law to exercise and enforce
every right, power, remedy, authority, option and privilege of such Pledgor
relating to such Pledged Limited Liability Company Interests, including any
power to terminate, cancel or modify any limited liability company agreement or
operating agreement, to execute any instruments and to take any and all other
action on behalf of and in the name of such Pledgor in respect of such Pledged
Limited Liability Company Interest and any such limited liability company, to
make determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and authority to
demand, receive, enforce, collect or receipt for any of the foregoing or for
any Limited Liability Company Asset, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in connection
with any of the foregoing;
(F) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all thereof; and (G) to the extent not otherwise included, all
proceeds of any or all of the foregoing;
and (v) transfers and assigns to the Pledgee such Pledgor's Pledged Partnership
Interests (and delivers any certificates or instruments evidencing such
partnership interests, duly endorsed in blank) and all of such Pledgor's right,
title and interest in each Pledged Partnership including, without limitation:
(A) all of the capital thereof and its interest in all
profits, losses, Partnership Assets (as defined below) and other distributions
to which such Pledgor shall at any time be entitled in respect of any such
Collateral;
(B) all other payments due or to become due to such Pledgor
in respect of any such Collateral, whether under any partnership agreement or
otherwise, whether as contractual obligations, damages, insurance proceeds or
otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interest, liens and remedies, if any, under any partnership
or other agreement or at law or otherwise in respect of any such Collateral;
(D) all present and future claims, if any, of such Pledgor
against any Pledged Partnership for moneys loaned or advanced, for services
rendered or otherwise;
(E) all of such Pledgor's rights under any partnership
agreement or at law to exercise and enforce every right, power, remedy,
authority, option and privilege of such Pledgor relating to any Pledged
Partnership Interest, including any power, if any, to
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<PAGE> 7
terminate, cancel or modify any general or limited partnership agreement, to
execute any instruments and to take any and all other action on behalf of and
in the name of such Pledgor in respect of such Pledged Partnership Interest and
any Pledged Partnership, to make determinations, to exercise any election
(including, but not limited to, election of remedies) or option or to give or
receive any notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for any of
the foregoing or for any Partnership Asset, to enforce or execute any checks,
or other instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(F) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all thereof; and
(G) to the extent not otherwise included, all proceeds of any
or all of the foregoing.
(b) As used herein, the term "LIMITED LIABILITY COMPANY
ASSETS" shall mean all assets, whether tangible or intangible and whether real,
personal or mixed (including, without limitation, all limited liability company
capital and interests in other limited liability companies), at any time owned
or represented by any Pledged Limited Liability Company Interest.
(c) As used herein, the term "PARTNERSHIP ASSETS" shall mean
all assets, whether tangible or intangible and whether real, personal or mixed
(including, without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership or represented by
any Pledged Partnership Interest.
3.2 Subsequently Acquired Securities. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities
which represent ownership interests in any Required Guarantor at any time or
from time to time after the date hereof, such Securities shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant to Section 3.1(a) and,
furthermore, such Pledgor will forthwith deliver and deposit such Securities
(or certificates or instruments representing such Securities) as security with
the Pledgee and deliver to the Pledgee certificates therefor or instruments
thereof, and accompanied by undated stock powers duly executed in blank in the
case of Stock, Limited Liability Company Interests or Partnership Interests or
such other instruments of transfer as are reasonably acceptable to the Pledgee,
and will promptly thereafter deliver to the Pledgee a certificate executed by
any Authorized Officer of such Pledgor describing such Securities and
certifying that the same have been duly pledged with the Pledgee hereunder.
Subject to the last sentence of Section 2(a) hereof, any pledge of Voting Stock
of any Foreign Corporation shall be subject to the provisions of part (A) of
the proviso to clause (i)(y) of Section 2(a) hereof.
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3.3 Uncertificated Securities. If any Pledged Securities
(whether now owned or hereafter acquired) are uncertificated securities, the
respective Pledgor shall promptly notify the Pledgee thereof, and shall
promptly take all actions required to perfect the security interest of the
Pledgee under applicable law (including, in any event, under Sections 8-106 and
9-115 of the New York UCC, if applicable). Each Pledgor further agrees to take
such actions as the Pledgee deems reasonably necessary or desirable to effect
the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon request of the Pledgee.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held (in
the discretion of the Pledgee) in the name of such Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee. The Pledgee agrees to promptly
notify the relevant Pledgor after the appointment of any sub-agent; provided,
however, that the failure to give such notice shall not affect the validity of
such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
an Event of Default shall have occurred and be continuing, each Pledgor shall
be entitled to (i) exercise any and all voting and other consensual rights
pertaining to the Pledged Stock and to give all consents, waivers or
ratifications in respect thereof; and (ii) exercise any and all voting,
consent, administration, management and other rights and remedies under (x) any
limited liability company agreement or operating agreement or otherwise with
respect to the Pledged Limited Liability Interests of such Pledgor and (y) any
partnership agreement or otherwise with respect to the Pledged Partnership
Interests of such Pledgor; provided, that no vote shall be cast or any consent,
waiver or ratification given or any action taken which would violate or be
inconsistent with any of the terms of this Agreement or any other Loan
Document, or which would have the effect of impairing the rights, priorities or
remedies of the Pledgee or any other Secured Creditor under this Agreement or
any other Loan Documents. All such rights of such Pledgor to vote and to give
consents, waivers and ratifications shall cease in case an Event of Default
shall occur and be continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of
Default shall have occurred and be continuing, all cash dividends and other
cash distributions payable in respect of the Pledged Securities shall be paid
to the respective Pledgor. The Pledgee shall also be entitled to receive
directly, and to retain as part of the Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or otherwise
in respect of the Pledged Stock, Pledged Limited Liability Company Interests
and Pledged Partnership Interests;
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(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged Stock,
Pledged Limited Liability Company Interests or Pledged Partnership Interests by
way of stock-split, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the Collateral by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict
in any way the Pledgee's right to receive proceeds of the Collateral in any
form in accordance with Section 3 of this Agreement. All dividends,
distributions or other payments which are received by the Pledgor contrary to
the provisions of this Section 6 and Section 7 below shall be received in trust
for the benefit of the Pledgee, shall be segregated from other property or
funds of the Pledgor and shall be forthwith paid over to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other Loan Document or, to the extent then in effect and
secured hereby the Credit Agreement and any FelCor Note Document (with all of
the Documents listed above being herein collectively called the "SENIOR
DOCUMENTS" or the "SECURED DEBT AGREEMENTS") or by law) for the protection and
enforcement of its rights in respect of the Collateral, and the Pledgee shall
be entitled to exercise all the rights and remedies of a secured party under
the UCC and also shall be entitled, without limitation, to exercise the
following rights, which each Pledgor hereby agrees to be commercially
reasonable:
(i) to receive all amounts payable in respect of the
Collateral payable to such Pledgor under Section 6 hereof; ---------
(ii) to transfer all or any part of the Pledged Securities
into the Pledgee's name or the name of its nominee or nominees (the Pledgee
agrees to promptly notify the relevant Pledgor after such transfer; provided,
however, that the failure to give such notice shall not affect the validity of
such transfer);
(iii) to vote all or any part of the Pledged Stock, Pledged
Limited Liability Company Interests or Pledged Partnership Interests (whether
or not transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with respect
thereto as though it were the outright owner thereof (each Pledgor hereby
irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do so);
and
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral, or
any interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to
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sell or of the time or place of sale or adjournment thereof or to redeem or
otherwise (all of which are hereby waived by each Pledgor), for cash, on credit
or for other property, for immediate or future delivery without any assumption
of credit risk, and for such price or prices and on such terms as the Pledgee
in its absolute discretion may determine; provided, that at least ten (10)
Business Days' notice of the time and place of any such sale shall be given to
such Pledgor. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the Pledgee
on behalf of the Secured Creditors may bid for and purchase all or any part of
the Collateral so sold free from any such right or equity of redemption.
Neither the Pledgee nor any Secured Creditor shall be liable for failure to
collect or realize upon any or all of the Collateral or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy
of the Pledgee provided for in this Agreement or any other Secured Debt
Agreement or now or hereafter existing at law or in equity or by statute shall
be cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the
Pledgee or any other Secured Creditor of any one or more of the rights, powers
or remedies provided for in this Agreement or any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by the Pledgee or any
other Secured Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any other Secured Creditor to
exercise any such right, power or remedy shall operate as a waiver thereof. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Administrative Agent or the Pledgee, in each case acting in accordance
with the Loan Agreement and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agents or the
Pledgee, as the case may be, for the benefit of the Secured Creditors upon the
terms of this Agreement. The Secured Creditors further agree that the Pledgee
has sole discretion to release all or any portion of the Collateral in
accordance with the Loan Agreement from time to time and that any such release
shall automatically, without any further action by Pledgee, serve to release
such Collateral as security for all of the Obligations and no consent from or
notice to any Secured Creditor is required in connection with any such release.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral of each
Pledgor, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:
first, to the payment of all Obligations owing to the
Collateral Agent of the type provided in clauses (e) and (f) of
the definition of Obligation;
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second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding Primary Obligations (as hereinafter defined) of the
respective Pledgor shall be paid to the Secured Creditors (with
such Secured Creditors being herein called the "SENIOR SECURED
CREDITORS") as provided in Section 9(e) hereof, with each Senior
Secured Creditor receiving an amount equal to its outstanding
Primary Obligations of such Pledgor or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro
Rata Share (as hereinafter defined) of the amount remaining to be
distributed;
third, to the extent proceeds remain after the application
pursuant to the preceding clauses first and second, an amount
equal to the outstanding Secondary Obligations of the respective
Pledgor shall be paid to the Senior Secured Creditors as provided
in Section 9(e) hereof, with each Senior Secured Creditor
receiving an amount equal to its outstanding Secondary
Obligations (as hereinafter defined) of such Pledgor or, if the
proceeds are insufficient to pay in full all such Secondary
Obligations, its Pro Rata Share of the amount remaining to be
distributed; and
fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses first through third inclusive,
and following the termination of this Agreement pursuant to
Section 18 hereof, to the relevant Pledgor or to whomever may be
legally entitled to receive such surplus.
(b) For purposes of this Agreement (x) "PRO RATA SHARE" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, of the respective Pledgor and the
denominator of which is the then outstanding amount of all Primary Obligations
or Secondary Obligations, as the case may be, of the respective Pledgor, (y)
"PRIMARY OBLIGATIONS" of any Pledgor shall mean (i) in the case of the Term
Loan Obligations, all Obligations of such Pledgor arising out of or in
connection with (including, without limitation, as obligor or guarantor, as the
case may be) the principal of, and interest on, the Loan and all regularly
accruing fees, (ii) in the case of the FelCor Note Obligations, all Obligations
of such Pledgor secured hereby arising out of or in connection with (including,
without limitation, as obligor or guarantor, as the case may be) the principal
of, and interest on, the FelCor Notes, and (iii) in the case of the R/C
Obligations and all Obligations of such Pledgor secured hereby arising out of
or in connection with (including, without limitation, as obligor or guarantor,
as the case may be) the principal of, and interest on, the R/C Obligations and
all Unpaid Drawings theretofore made (together with all interest accrued
thereon), and the regularly accruing Fees, (z) "SECONDARY OBLIGATIONS" of any
Pledgor shall mean all Obligations of such Pledgor secured hereby other than
Primary Obligations.
(c) When payments to Senior Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Senior Secured
Creditors hereunder shall be applied (for purposes of making determinations
under this Section 9 only) (i) first, to the Primary Obligations of the
respective Pledgor and (ii) second, to the Secondary Obligations of the
respective Pledgor.
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(i) INTENTIONALLY DELETED
(d) All payments required to be made hereunder shall be made (i) if to
the Lender Creditors, to the Administrative Agent under the Loan Agreement for
the account of the Lender Creditors, and (ii) if to any other Secured Creditors
(other than the Collateral Agent), to the trustee, Administrative Agent or
other similar representative (each a "Representative") for such Secured
Creditors or, in the absence of such a Representative, directly to the other
Secured Creditors.
(e) For purposes of applying payments received in accordance with this
Section 9, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Loan Agreement and (ii) the Representative for
any other Secured Creditors or, in the absence of such a Representative, upon
the respective Secured Creditors for a determination (which the Administrative
Agent, each Representative for any other Secured Creditors and the Secured
Creditors agree (or shall agree) to provide upon request of the Collateral
Agent) of the outstanding Primary Obligations and Secondary Obligations owed to
the Secured Creditors.
(f) It is understood and agreed that each Pledgor shall remain liable
to the extent of any deficiency between the amount of the proceeds of the
Collateral pledged by it hereunder and the aggregate amount of the Obligations
of such Pledgor.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (a) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor from and against any and all claims, demands, losses, judgments and
liabilities of whatsoever kind or nature, and (b) to reimburse the Pledgee and
each other Secured Creditor for all reasonable costs and expenses, including
reasonable attorneys' fees, in each case to the extent growing out of or
resulting from the exercise by the Pledgee of any right or remedy granted to it
hereunder or under any other Secured Debt Agreement except, with respect to
clauses (a) and (b) above, to the extent arising from the Pledgee's or such
other Secured Creditor's gross negligence or willful misconduct. In no event
shall the Pledgee be liable, in the absence of gross negligence or willful
misconduct on its part, for any matter or thing in connection with this
Agreement other than to account for moneys actually received by it in
accordance with the terms hereof. If and to the extent that the obligations of
the Pledgors under this Section 11 are unenforceable for any reason, each
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Pledgor hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the applicable UCC or such other law such
financing statements, continuation statements and other documents in such
offices as the Pledgee may reasonably deem necessary or appropriate and
wherever required or permitted by law in order to perfect and preserve the
Pledgee's security interest in the Collateral and hereby authorizes the Pledgee
to file financing statements and amendments thereto relative to all or any part
of the Collateral without the signature of such Pledgor where permitted by law,
and agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably deem necessary or advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee
its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, to act from time to time after
the occurrence and during the continuance of an Event of Default in the
Pledgee's reasonable discretion to take any action and to execute any
instrument which the Pledgee may deem necessary or advisable to accomplish the
purposes of this Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth in Annex G hereto, the terms of which shall be
deemed incorporated herein by reference as fully as if same were set forth
herein in their entirety.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or otherwise encumber
any of the Collateral or any interest therein (except in accordance with the
terms of this Agreement and as permitted by the terms of the Loan Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS. (a) Each
Pledgor represents, warrants and covenants that:
(i) it is the legal, record and beneficial owner of, and has good
title to, all Pledged Securities purported to be owned by such Pledgor
(including as shown on Annexes A, B and C hereof), subject to no Lien, except
the Liens created by this Agreement and Liens permitted under Section 5.7 of
the Loan Agreement;
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(ii) it has full power, authority and legal right to pledge all the
Pledged Securities;
(iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes the legal, valid and binding obligation of such
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by equitable principles (regardless of whether enforcement is
sought in equity or at law);
(iv) no consent of any other party (including, without limitation, any
stockholder or creditor of such Pledgor or any of its Subsidiaries and any
other partners or members of such Pledgor's partnerships or limited liability
companies) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing (except any filings
required under the UCC, which filings have been made) or declaration with, any
governmental authority is required to be obtained by such Pledgor in connection
with the execution, delivery or performance of this Agreement, or in connection
with the exercise of its rights and remedies pursuant to this Agreement, except
those which have been obtained or made or as may be required by laws affecting
the offer and sale of securities generally in connection with the exercise by
the Pledgee of certain of its remedies hereunder or which may be required to be
obtained by the Pledgee pursuant to Section 22 or 23 hereof in connection with
the exercise of its rights and remedies hereunder;
(v) the execution, delivery and performance of this Agreement by such
Pledgor does not violate any provision of any applicable law or regulation or
of any order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, or of the certificate of
incorporation or by-laws (or analogous organizational documents) of such
Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries,
or of any mortgage, indenture, lease, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument to which
such Pledgor or any of its Subsidiaries is a party or which purports to be
binding upon such Pledgor or any of its Subsidiaries or upon any of their
respective assets and will not result in the creation or imposition (or the
obligation to create or impose) of any lien or encumbrance on any of the assets
of such Pledgor or any of its Subsidiaries except as contemplated by this
Agreement;
(vi) all the shares of Stock and all Pledged Limited Liability Company
interests have been duly and validly issued, are fully paid and nonassessable
and subject to no options to purchase or similar rights;
(vii) the pledge, assignment and delivery (which delivery has been
made) to the Pledgee of the Pledged Stock creates a valid and perfected first
security interest in such Stock, subject to no prior lien or encumbrance or to
any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Securities;
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(viii) each Pledged Partnership Interest has been validly acquired and
is fully paid for (to the extent applicable) and is duly and validly pledged
hereunder;
(ix) each partnership agreement is the legal, valid and binding
obligation of the applicable Pledgor, enforceable in accordance with its terms;
(x) no Pledgor is in default in the payment of any portion of any
mandatory capital contribution, if any, required to be made under any general
or limited partnership agreement to which such Pledgor is a party, and no
Pledgor is in violation of any other material provisions of any partnership
agreement to which such Pledgor is a party, or otherwise in default or
violation thereunder;
(xi) no Pledged Partnership Interest is subject to any defense, offset
or counterclaim, nor have any of the foregoing been asserted or alleged against
such Pledgor by any Person with respect thereto;
(xii) the pledge and assignment of the Pledged Partnership Interests
and/or Pledged Limited Liability Company Interests pursuant to this Agreement,
together with the relevant filings or recordings under the UCC (which filings
and recordings have been or will be made), create a valid perfected and
continuing first priority security interest in such Partnership Interests
and/or Limited Liability Company Interests and the proceeds thereof, subject to
no prior lien or encumbrance or to any agreement purporting to grant to any
third party a lien or encumbrance on the property or assets of such Pledgee or
which would include the Collateral;
(xiii) there are no currently effective financing statements in
respect of the UCC covering property which is now or hereafter may be included
in the Collateral and such Pledgor will not, without the prior written consent
of the Pledgee, execute and, until the Termination Date (as hereinafter
defined), there will not ever be on file in any public office any enforceable
financing statement or statements covering any or all of the Collateral, except
financing statements filed or to be filed in favor of the Pledgee as secured
party;
(xiv) each Pledgor shall give the Pledgee prompt notice of any written
claim it receives relating to the Collateral; and
(xv) each Pledgor shall deliver to the Pledgee a copy of each other
demand, notice or document received by it which may adversely affect the
Pledgee's interest in the Collateral promptly upon, but in any event within 10
days after, such Pledgor's receipt thereof.
Each Pledgor covenants and agrees that it will defend the Pledgee's
right, title and security interest in and to the Securities and the proceeds
thereof against the claims and demands of all persons whomsoever; and such
Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter
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pledged to the Pledgee as Collateral hereunder and will likewise defend the
right thereto and security interest therein of the Pledgee and the other
Secured Creditors.
(b) Each Pledgor hereby further represents, warrants and covenants
that as of the date hereof, the chief executive office of such Pledgor is
located at the address indicated on Annex F hereto for such Pledgor. Such
Pledgor will not move its chief executive office except to such new location as
such Pledgor may establish in accordance with the last sentence of this Section
15(b). No Pledgor shall establish new locations for such offices until (i) it
shall have given to the Pledgee not less than thirty (30) days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Pledgee may
reasonably request, (ii) it shall have delivered to the Pledgee a written
supplement to Annex F hereto in the form of Exhibit A-1 hereto as provided in
clause (c) below showing the new location of its chief executive office and
(iii) with respect to such new location, it shall have taken all action,
reasonably satisfactory to the Pledgee, to maintain all security interest of
the Pledgee in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.
(c) Without in any way limiting Section 3.2 hereof, at any time and
from time to time that any Pledgor (x) determines that the information with
respect to it contained on Annex A, B, C and/or F, as the case may be, is
inaccurate or (y) acquires any additional Securities which have not already
been pledged hereunder and reflected on Annexes A through C, as appropriate,
such Pledgor shall deliver a supplement to this Agreement, substantially in the
form of Exhibit A-1 hereto (each a "PLEDGE AND SECURITY AGREEMENT SUPPLEMENT")
adding (or, in the case of any Securities released pursuant to Section 18(b)
hereof, deleting) such Securities to (from) Annexes A through C hereto, as
appropriate. The execution and delivery of any such supplement shall not
require the consent of any Pledgor hereunder. It is understood and agreed that
the pledge and security interests granted hereunder shall apply to all
Collateral as provided in Section 3.1 regardless of the failure of any Pledgor
to deliver, or any inaccurate information stated in, the Pledge and Security
Agreement Supplement as otherwise provided above.
(d) Each Pledgor hereby covenants and agrees that with respect to all
Partnership Interests or Limited Liability Company Interests, in each case
required to be pledged by it hereunder, such Pledgor will deliver to the
respective Pledged Partnerships or Pledged Limited Liability Companies, as the
case may be (with copies to the Collateral Agent) a notice (appropriately
completed) in the form of Annex D attached hereto and by this reference made a
part hereof (each such notice a "PARTNERSHIP/LLC NOTICE") and such Pledgor will
use its reasonable best efforts to cause to be delivered to the Collateral
Agent an acknowledgment in the form set forth as Annex E attached hereto (each
such acknowledgment, a "PLEDGE ACKNOWLEDGMENT"), duly executed by the relevant
Pledged Partnership and/or Pledged Limited Liability Company, as the case may
be, in each case within forty-five days following the date of any pledge of any
Pledged Partnership Interests or Pledged Limited Liability Company Interests
hereunder.
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(e) Each Pledgor hereby represents and warrants that none of
the Pledged Partnership Interests or Pledged Limited Liability Company
Interests pledged by such Pledgor pursuant to this Agreement are dealt in or
traded on securities exchange or in securities markets, and none of the
partnership agreements or limited liability company agreements relating to such
Pledged Partnership Interests or Pledged Limited Liability Company Interests
expressly provide that any such interests is a security governed by Article 8
of the UCC as it is in effect in the State of Texas.
(f) Each Pledgor pledging Pledged Stock in FelCor Canada
Company hereby represents and warrants that such Pledged Stock is certificated.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any renewal,
extension, amendment or modification of or addition or supplement to or
deletion from any Secured Debt Agreement or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof; (b) any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such agreement or instrument or this Agreement; (c) any
furnishing of any additional security to the Pledgee or its assignee or any
acceptance thereof or any release of any security by the Pledgee or its
assignee; (d) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; (e) any
limitation on any other Pledgor's liability or obligations under this
Agreement, the Guaranty or any other Loan Document or any invalidity or
unenforceability, in whole or in part, of this Agreement, the Guaranty or any
other Loan Document or any term thereof; or (f) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to such Pledgor or any Subsidiary of such Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall have occurred
and be continuing and any Pledgor shall have received from the Pledgee a
written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or State securities law or laws
to be effected to the extent practicable with respect to all or any part of the
Pledged Securities, such Pledgor as soon as practicable and at its expense will
use its best efforts to cause such registration to be effected (and be kept
effective) and will use its best efforts to cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such Pledged
Securities, including, without limitation, registration under the Securities
Act as then in effect (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other government requirements; provided, that
the Pledgee shall furnish to such Pledgor such information regarding the
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Pledgee as such Pledgor may request in writing and as shall be required in
connection with any such registration, qualification or compliance. Such
Pledgor will cause the Pledgee to be kept reasonably advised in writing as to
the progress of each such registration, qualification or compliance and as to
the completion thereof, will furnish to the Pledgee such number of
prospectuses, offering circulars or other documents incident thereto as the
Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of the Pledged Securities against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to
such Pledgor by the Pledgee or such other Secured Creditor expressly for use
therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, such Pledged Securities or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act, as
then in effect, the Pledgee may, in its sole and absolute discretion, sell such
Pledged Securities or part thereof by private sale in such manner and under
such circumstances as the Pledgee may deem necessary or advisable in order that
such sale may legally be effected without such registration; provided, that at
least ten (10) Business Days' notice of the time and place of any such sale
shall be given to such Pledgor. Without limiting the generality of the
foregoing, in any such event the Pledgee, in its sole and absolute discretion:
(i) may proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Securities or part
thereof shall have been filed under such Securities Act; (ii) may approach and
negotiate with a single possible purchaser to effect such sale; and (iii) may
restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a
view to the distribution or sale of such Pledged Securities or part thereof. In
the event of any such sale, the Pledgee shall incur no responsibility or
liability for selling all or any part of the Pledged Securities at a price
which the Pledgee, in its sole and absolute discretion, may in good faith deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Term Loan Obligations
Termination Date (as defined in Section 20), this Agreement shall terminate
(provided that all indemnities set forth herein including, without limitation,
in Section 11 hereof shall survive any such termination) and the Pledgee, at
the request and expense of the respective Pledgor, will promptly execute and
deliver to such Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to such Pledgor (without recourse and without any
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representation or warranty) such of the Collateral as may be in the possession
of the Pledgee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement.
(b) At any time and from time to time Pledgee is authorized, upon
written instruction by Administrative Agent to release any portion of the
Collateral as may be in possession of the Pledgee and has not theretofore been
released pursuant to this Agreement
(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing Section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by an Authorized Officer of such Pledgor stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b), and the Pledgee shall be entitled (but not required) to conclusively rely
thereon.
19. NOTICES, ETC. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been given or made when delivered to the party
to which such notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to any Pledgor, at the address indicated therefor on Annex F
hereto.
(b) if to the Pledgee, at:
THE CHASE MANHATTAN BANK
380 Madison Avenue, 10th Floor
New York, New York 10017
Facsimile: (212) 622-3395
Phone: (212) 622-3369
Attn: Charles Hoagland
With a copy to:
THE CHASE MANHATTAN BANK
Loan and Agency Services
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Facsimile: (212) 552-5701
Phone: (212) 552-7469
Attn: Linda Rodriguez
(c) if to any Lender Creditor (other than the Pledgee), (x) to the
Administrative Agent, at the address of the Administrative Agent specified in
the Loan Agreement or (y) at such address as such Lender Creditor shall have
issued in the Loan Agreement;
19
<PAGE> 20
(d) if to any other Secured Creditor, (x) to the Representative for
such Secured Creditor or (y) if there is no such representative, at such
address as such Secured Creditor shall have specified in writing to each
Pledgor and the Pledgee;
or at such other address as shall have been finished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Pledgor directly affected thereby (it
being understood that additional Pledgors may be added as parties hereto from
time to time in accordance with Section 24 and Pledgors may be released as
parties hereto in accordance with Section 21, and that no consent of any other
Pledgor or of the Secured Creditors shall be required in connection therewith)
and the Pledgee (with the written consent of the Administrative Agent at all
times prior to the time at which all Term Loan Obligations have been paid in
full and all commitments pursuant to the Loan Agreement have terminated (with
such date being herein called the "TERM LOAN OBLIGATIONS TERMINATION DATE".
21. RELEASE OF GUARANTORS. In the event any Pledgor which is a
Subsidiary of any Borrower party to the Guaranty is released from the Guaranty,
such Pledgor (so long as not a Borrower) shall be released from this Agreement
and this Agreement shall, as to such Pledgor only, have no further force or
effect.
22. INTENTIONALLY DELETED
23. INTENTIONALLY DELETED
24. ADDITIONAL PLEDGORS. Pursuant to Section 7.1 of the Loan
Agreement, certain Subsidiaries of a Borrower may after the date hereof be
required to enter into this Agreement as a Pledgor. Upon execution and
delivery, after the date hereof, by the Collateral Agent and such Subsidiary of
an instrument in the form of Exhibit A-2, such Subsidiary shall become a
Pledgor hereunder with the same force and effect as if originally named as a
Pledgor hereunder. Each Subsidiary which is required to become a party to this
Agreement shall so execute and deliver a copy of Exhibit A-2 to the Collateral
Agent and, at such time, shall execute a Pledge and Security Agreement
Supplement in the form of Exhibit A-1 to this Agreement with respect to all
Collateral of such Pledgor required to be pledged hereunder, which Supplement
shall be completed in accordance with Exhibit A-1. The execution and delivery
of any such instrument shall not require the consent of any other Pledgor
hereunder. Upon the execution and delivery by the Collateral Agent and such
Subsidiary of an instrument in the form of Exhibit A-2 as provided above, it is
understood and agreed that the pledge and security interests hereunder shall
apply to all Collateral of such additional Pledgor provided in Section 3.1
hereof regardless of any failure of any additional Pledgor to deliver, or any
inaccurate information stated in, the Pledge and Security Agreement Supplement.
20
<PAGE> 21
25. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all representations, warranties, covenants
and agreements on the part of the Pledgors contained herein and otherwise in
writing in connection herewith.
26. LIMITATION BY LAW; SEVERABILITY. All rights, remedies and powers
in this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable law and may be limited to the extent necessary
so that they will not render this Agreement invalid or unenforceable, in whole
or in part.
27. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed to make
the Pledgee or any other Secured Creditor liable as a member of any limited
liability company or any partnership and the Pledgee or any other Secured
Creditor by virtue of this Agreement or otherwise (except as referred to in the
following sentence) shall not have any of the duties, obligations or
liabilities of a member of any limited liability company or partnership. The
parties hereto expressly agree that, unless the Pledgee shall become the
absolute owner of the respective Pledged Limited Liability Interest or Pledged
Partnership Interest pursuant hereto, this Agreement shall not be construed as
creating a partnership or joint venture among the Pledgee, any other Secured
Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of this
Section, the Pledgee, by accepting this Agreement, did not intend to become a
member of any limited liability company or partnership or otherwise be deemed
to be a co-venturer with respect to any Pledgor or any limited liability
company or partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and shall
assume none of the duties, obligations or liabilities of a member of any
limited liability company or partnership or any Pledgor.
(c) The Pledgee shall not be obligated to perform or discharge any
obligation of any Pledgor as a result of the collateral assignment hereby
effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or
in any event obligate the Pledgee to appear in or defend any action or
proceeding relating to the Collateral to which it is not a party or to take any
action hereunder or thereunder, or to expend any money or incur any expenses or
perform or discharge any obligation, duty or liability under the Collateral.
28. CONTINUING PLEDGORS. The rights and obligations of each Pledgor
(other than the respective released Pledgor in the case of following clause
(y)) hereunder shall remain in full force and effect notwithstanding (x) the
addition of any new Pledgor as a party to this Agreement as contemplated by
preceding Section 24 or otherwise and/or (y) the release of any Pledgor under
this Agreement as contemplated by Section 21 or otherwise.
<PAGE> 22
29. NO FRAUDULENT CONVEYANCE. Each Pledgor hereby confirms that it is
its intention that this Agreement not constitute a fraudulent transfer or
conveyance for purposes of any bankruptcy, insolvency or similar law, the
Uniform Fraudulent Conveyance Act or any similar Federal, state or foreign law.
To effectuate the foregoing intention, each Pledgor hereby irrevocably agrees
that its obligations and liabilities hereunder shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
(contingent or otherwise) liabilities of such Pledgor that are relevant under
such laws, result in the obligations and liabilities of such Pledgor hereunder
in respect of such maximum amount not constituting a fraudulent transfer or
conveyance.
30. INTENTIONALLY DELETED
31. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns; provided that no
Pledgor may assign any of its rights or obligations hereunder without the prior
written consent of the Pledgee. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS). The headings in this Agreement are
for purposes of reference only and shall not limit or define the meaning
hereof. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
<PAGE> 23
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to
be duly executed and delivered by its duly authorized officer on the date first
above written.
[PLEDGOR SIGNATURES]
23
<PAGE> 24
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR LODGING TRUST INCORPORATED,
a Maryland corporation
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 25
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR LODGING LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: FELCOR LODGING TRUST INCORPORATED,
a Maryland corporation, its sole
general partner
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 26
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR CANADA HOLDING GP, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 27
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR CANADA HOLDING, L.P., a
Delaware limited partnership
By: FELCOR CANADA HOLDING GP, L.L.C., a
Delaware limited liability company,
its sole general partner
By: /s/ LAWRENCE D. ROBINSON
---------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 28
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
HHHC GENPAR, L.P., a Delaware limited
partnership
By: FELCOR HOTELS GENPAR, L.L.C., a
Delaware limited liability company, its sole
general partner
By: /s/ LAWRENCE D. ROBINSON
------------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 29
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/CSS HOTELS, L.L.C., a Delaware
limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 30
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR HOTELS LIMPAR, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 31
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR HOTELS GENPAR, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 32
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR HOTEL ASSET COMPANY, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 33
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR/LAX HOTELS, L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 34
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR NEVADA HOLDINGS, L.L.C., a
Nevada limited liability company
By: /s/ LAWRENCE D. ROBINSON
--------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President & Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 35
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FHAC NEVADA HOLDINGS, L.L.C., a
Nevada limited liability company
By: /s/ LAWRENCE D. ROBINSON
--------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President & Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 36
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned as of the day and year first above written.
FELCOR HHCL COMPANY,L.L.C., a
Delaware limited liability company
By: /s/ LAWRENCE D. ROBINSON
----------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
<PAGE> 1
EXHIBIT 10.23
RECORDING REQUESTED BY:
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
WHEN RECORDED MAIL TO:
SONNENSCHEIN NATH & ROSENTHAL
8000 SEARS TOWER
CHICAGO, ILLINOIS 60606
ATTENTION: SCOTT A. LINDQUIST, ESQ.
- --------------------------------------------------------------------------------
LOAN NO: 6-103-269
Property: ________
FELCOR/CSS HOLDINGS, L.P., AS MORTGAGOR
(BORROWER)
TO
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, AS MORTGAGEE
(LENDER)
------------------
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
------------------
DATED: AS OF _________, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I ADDITIONAL DEFINITIONS.................................................................................2
ARTICLE II GRANT.................................................................................................2
2.1 Grant....................................................................................................2
2.2 Assignment of Leases and Rents...........................................................................3
2.3 Release..................................................................................................3
ARTICLE III OBLIGATIONS..........................................................................................4
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................4
4.1 Title, Legal Status and Authority........................................................................4
4.2 Validity of Loan.........................................................................................4
4.3 Litigation...............................................................................................5
4.4 Status of Property.......................................................................................5
4.5 Tax Status of Borrower...................................................................................6
4.6 Bankruptcy and Equivalent Value..........................................................................6
4.7 Disclosure...............................................................................................6
4.8 Illegal Activity.........................................................................................6
4.9 Primary Lease............................................................................................6
ARTICLE V COVENANTS AND AGREEMENTS...............................................................................6
5.1 Payment of Obligations...................................................................................6
5.2 Continuation of Existence................................................................................7
5.3 Taxes and Other Charges..................................................................................7
5.4 Defense of Title, Litigation, and Rights under Loan Documents............................................8
5.5 Operation and Maintenance of Property....................................................................8
5.6 Insurance...............................................................................................10
5.7 Damage and Destruction of Property......................................................................11
5.8 Condemnation............................................................................................13
5.9 Liens and Liabilities...................................................................................15
5.10 Tax and Insurance Deposits...........................................................................15
5.11 ERISA................................................................................................16
5.12 Environmental Representations, Warranties, and Covenants.............................................16
5.13 Electronic Payments..................................................................................18
5.14 Inspection...........................................................................................18
5.15 Records, Reports, and Audits.........................................................................18
5.16 Borrower's Certificates..............................................................................19
5.17 Full Performance Required; Survival of Warranties....................................................20
5.18 Leasing Restrictions.................................................................................20
5.19 Management Agreement and License Agreement Restrictions..............................................21
5.20 Additional Security..................................................................................22
5.21 Further Acts.........................................................................................22
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI ADDITIONAL ADVANCES: EXPENSES; SUBROGATION...........................................................22
6.1 Expenses and Advances...................................................................................22
6.2 Subrogation.............................................................................................23
ARTICLE VII SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY......................................................23
7.1 General Restrictions....................................................................................23
7.2 Provisions for Merger of FelCor or FelCor REIT:.........................................................23
7.3 Provisions on Sale of Lessee:...........................................................................24
ARTICLE VIII DEFAULTS AND REMEDIES..............................................................................25
8.1 Events of Default.......................................................................................25
8.2 Remedies................................................................................................27
8.3 Expenses................................................................................................29
8.4 Rights Pertaining to Sales..............................................................................29
8.5 Application of Proceeds.................................................................................30
8.6 Additional Provisions as to Remedies....................................................................30
8.7 Waiver of Rights and Defenses...........................................................................32
ARTICLE IX SECURITY AGREEMENT AND FIXTURE FILING................................................................33
9.1 Security Agreement......................................................................................33
9.2 Fixture Filing..........................................................................................33
ARTICLE X LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES......................................................33
10.1 Limited Recourse Liability...........................................................................33
10.2 General Indemnity....................................................................................36
10.3 Transaction Taxes Indemnity..........................................................................37
10.4 ERISA Indemnity......................................................................................37
10.5 Broker Indemnity.....................................................................................37
10.6 Environmental Indemnity..............................................................................37
10.7 Duty to Defend, Costs and Expenses...................................................................37
10.8 Recourse Obligation and Survival.....................................................................38
ARTICLE XI ADDITIONAL PROVISIONS................................................................................38
11.1 Usury Savings Clause.................................................................................38
11.2 Notices:.............................................................................................38
11.3 Sole Discretion of Lender............................................................................39
11.4 Applicable Law and Submission to Jurisdiction........................................................40
11.5 Construction of Provisions...........................................................................40
11.6 Transfer of Loan.....................................................................................40
11.7 Miscellaneous........................................................................................42
11.8 Entire Agreement.....................................................................................42
11.9 WAIVER OF TRIAL BY JURY..............................................................................42
ARTICLE XII LOCAL LAW PROVISIONS................................................................................42
</TABLE>
ATTACHMENTS:
Exhibit A - Schedule of Defined Terms
Exhibit B - Legal Description of Land
Exhibit C - Description of Personal Property Security
Exhibit D - Other Hotel Properties
ii
<PAGE> 4
DEFINITIONS
The terms set forth below are defined in the following sections of this
Mortgage, Security Agreement and Fixture Filing:
<TABLE>
<S> <C>
Action Section 11.4
Additional Funds Section 5.7(c)
Affecting the Property Section 5.12(a)
Amount Realized Upon Foreclosure Section 8.6(c)
Assessments Section 5.3(a)
Assignment of Leases and Rents Section 2.2
Award Section 5.8(b)
Bankruptcy Code Section 2.1(i)
Borrower Preamble
Costs Section 6.1
Damage Section 5.7(a)
Deposits Section 5.10
Environmental Indemnity Section 10.6
Environmental Liens Section 5.12(b)
Environmental Report Section 5.12(a)
ERISA Section 5.11
ERISA Certificate and Indemnification Agreement Section 10.4
Event of Default Section 8.1
Exculpated Parties 10.1(a)
Flood Acts Section 4.4(a)
GAAP Section 5.15(a)
Grace Period Section 8.1(b)
Impositions Section 5.10
Improvements Section 2.1(b)
Indemnified Parties Section 10.2
Instrument Preamble
Insurance Premiums Section 5.10
Investor Section 11.6
Land Section 2.1(a)
Laws Section 5.5(c)
Leases Section 2.1(i)
Lender Preamble
Lessee Personal Property Section 2.1
Liens Section 5.9
Loan Recitals
Losses Section 10.2
Net Proceeds Section 5.7(d)
Non-Material Leases Section 5.18
Note Recitals
Notice Section 11.2
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Obligations Section 3
Partial Foreclosure Section 8.6(a)
Person Section 11.5(i)
Personal Property Section 2.1(f)
Property Section 2.1
Property State Section 4.1
Rating Agency Section 5.6(c)
Rent Loss Proceeds Section 5.7(c)
Rents Section 2.1(j)
Restoration Section 5.7(a)
Successor Entity Section 7.2
Successor Lessee Section 7.3
Taking Section 5.8(a)
Transaction Taxes Section 5.3(c)
UCC Section 4.2
Violation Section 5.11
</TABLE>
iv
<PAGE> 6
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (this
"INSTRUMENT") is made as of the ___ day of _________, 1999, by FELCOR/CSS
HOLDINGS, L.P., a Delaware limited partnership, having its principal office and
place of business at c/o FelCor Lodging Limited Partnership, 545 E. John
Carpenter Freeway, Suite 1300, Irving, Texas 75062-3933, as mortgagor
("BORROWER"), to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation, having an office at Two Ravinia Drive, Suite 1400, Atlanta, Georgia
30346, as mortgagee ("LENDER").
R E C I T A L S:
A. Borrower has delivered to Lender a promissory note of even date
herewith (the "NOTE") evidencing a loan to be made by Lender to Borrower in the
principal amount of One Hundred Million Dollars ($100,000,000.00) (the "LOAN").
The Loan is made pursuant to that certain First Mortgage Loan Application No.
6-103-269 dated February 22, 1999 (the "APPLICATION").
B. The Note evidences a Loan requested by Borrower, and which Lender
has agreed to make, on the understanding and condition that the indebtedness
evidenced by the Note and all of the other obligations of Borrower under all of
the Loan Documents (as hereinafter defined) are to be secured by, among other
things, a portfolio of hotel properties, which includes (i) the Property (as
hereinafter defined) encumbered by this Instrument, and (ii) the other
properties identified in Exhibit D attached hereto (upon which Borrower is
executing and delivering concurrently herewith mortgage instruments similar to
this Instrument) (the Property and the other hotel properties listed in Exhibit
D are collectively referred to as the "HOTEL PROPERTIES").
C. The Property is subject to the Primary Lease (as hereinafter
defined), pursuant to which the Lessee holds a leasehold estate in all of the
Land and Improvements and operates the Property (pursuant to the Management
Agreement and License Agreement) as an "Embassy Suites Hotel" (all of the
foregoing defined terms having the definitions set forth in Exhibit A attached
hereto). The Lessee owns certain of the Personal Property, Leases, Rents, and
other Property that is the subject of this Instrument.
D. It is intended that the indebtedness evidenced by the Note and all
of the other obligations of Borrower under all of the Loan Documents are not to
be apportioned among any of the Hotel Properties, or any of the security of the
mortgages thereon, so that each of the Hotel Properties and each and every lien,
assignment and security interest thereon is intended to secure the entire amount
of such indebtedness and obligations.
E. The execution and delivery of this Instrument by Borrower is
required by the Application as a condition to Borrower's receipt of proceeds of
the Loan.
<PAGE> 7
IN CONSIDERATION of the principal sum of the Note, and other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
Borrower irrevocably agrees as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
Initially capitalized terms used in this Instrument and not otherwise
defined in the body of this Instrument shall have the meanings specified in the
Schedule of Defined Terms attached hereto as Exhibit A.
ARTICLE II
GRANT
2.1 GRANT. For valuable consideration, Borrower hereby grants,
bargains, sells, assigns, transfers, pledges, mortgages, warrants, and conveys
to Lender, and grants Lender a security interest in, the following property,
rights, interests and estates now or hereafter owned by Borrower (collectively,
the "PROPERTY"), it being expressly provided that certain of the Personal
Property, Leases, Rents, and other Property described in paragraphs (e) through
(j) below is presently owned or held by Lessee (collectively, the "LESSEE
PERSONAL Property") pursuant to the Primary Lease, rather than Borrower:
(a) All that certain real property in _______ County, _______
described in Exhibit B attached hereto (the "LAND");
(b) All buildings, structures, parking facilities and other
improvements (including fixtures) now or later located in or on the
Land (the "IMPROVEMENTS");
(c) All easements, estates, and real property interests
including hereditaments, servitudes, appurtenances, tenements, mineral
and oil/gas rights, water rights, air rights, development power or
rights, options, reversion and remainder rights, and any other similar
rights owned by Borrower and relating to or usable in connection with
or access to the Property;
(d) All right, title, and interest owned by Borrower in and to
all land lying within the rights-of-way, roads, or streets, open or
proposed, adjoining the Land to the center line thereof, and all
sidewalks, alleys, and strips and gores of land adjacent to or used in
connection with the Property;
(e) All right, title, and interest of Borrower in, to, and
under all plans, specifications, surveys, studies, reports, permits,
licenses, agreements, contracts, instruments, books of account,
insurance policies, and any other documents relating to the use,
construction, occupancy, leasing, or operation of the Property;
2
<PAGE> 8
(f) All furniture, furnishings, fixtures, inventory and
equipment located on or used in connection with the Property, including
the fixtures and personal property, contractual rights, rights to
payment or recovery, books and records, permits and licenses, plans and
manuals, funds in accounts held by or for the benefit of Borrower, and
all other intangible personal property required or used in the
operation of the Property and owned by Borrower, and expressly
including the property described in Exhibit C and replacements thereof
(collectively, the "PERSONAL PROPERTY");
(g) All of Borrower's right, title and interest in the
proceeds (including conversion to cash or liquidation claims) of (i)
insurance relating to the Property and (ii) all awards made for the
taking by eminent domain (or by any proceeding or purchase in lieu
thereof) of the Property, including awards resulting from a change of
any streets (whether as to grade, access, or otherwise) and for
severance damages;
(h) All tax refunds, including interest thereon, tax rebates,
tax credits, and tax abatements, and the right to receive the same,
which may be payable or available with respect to the Property;
(i) All leasehold estates, ground leases, leases, subleases,
occupancy agreements, concessions, licenses, or other agreements
affecting the use, enjoyment or occupancy of the Property now or later
existing, including the Primary Lease and any use or occupancy
arrangements created pursuant to Title 7 or 11 of the United States
Code, as amended from time to time, or any similar federal or state
laws now or later enacted for the relief of debtors (the "BANKRUPTCY
CODE"), and all extensions and amendments thereto (collectively, the
"LEASES") and all Borrower's right, title and interest under the
Leases, including all guaranties thereof; and
(j) All rents, deposits, issues, guest receipts, meeting
facility revenue, profits, royalties, receivables, use and occupancy
charges (including all oil, gas or other mineral royalties and
bonuses), income and other benefits now or later derived from any
portion or use of the Property (including any payments received with
respect to any Tenant or the Property pursuant to the Bankruptcy Code)
and all cash, security deposits, advance rentals, or similar payments
relating thereto (collectively, the "RENTS") and all proceeds from the
cancellation, termination, surrender, sale or other disposition of the
Leases, and the right to receive and apply the Rents to the payment of
the Obligations.
2.2 ASSIGNMENT OF LEASES AND RENTS. Borrower hereby absolutely and
unconditionally assigns, sets over, and transfers to Lender all of Borrower's
right, title, interest and estates in and to the Leases and the Rents, subject
to the terms and license granted to the Borrower under that certain Assignment
of Leases and Rents made by Borrower to Lender dated the same date as this
Instrument (the "ASSIGNMENT OF LEASES AND RENTS"), which document shall govern
and control the provisions of this assignment.
2.3 RELEASE. If Borrower shall pay and perform the Obligations as
provided for in the Loan Documents and shall comply with all the provisions in
the Loan Documents, the presents and the estates hereby granted pursuant to this
Article II (except for the obligations of Borrower
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set forth in this Instrument that expressly survive repayment of the
Obligations) shall cease, terminate and be void.
ARTICLE III
OBLIGATIONS
This Instrument is executed, acknowledged, and delivered by Borrower to
secure and enforce the following obligations (collectively, the "OBLIGATIONS"):
(a) Payment and performance of all covenants, obligations,
agreements, indebtedness and liabilities arising under or in connection
with the Note, this Instrument, each of the Other Mortgages and any
other Loan Document;
(b) All renewals, extensions, amendments, modifications,
supplements, consolidations, restatements, and changes of, or
substitutions for, all or any part of the items described in item (a)
above; and
(c) Payment of all sums advanced (including costs and
expenses) by Lender pursuant to the Loan Documents including renewals,
extensions, and amendments of the Loan Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
4.1 TITLE, LEGAL STATUS AND AUTHORITY. Borrower (i) is seized of the
Land and Improvements in fee simple and has good and marketable title to the
Property (other than the Lessee Personal Property), free and clear of all liens,
charges, encumbrances, and security interests, except the Permitted
Encumbrances; (ii) will forever warrant and defend title to the Property and the
validity, enforceability, and priority of the lien and security interest created
by this Instrument against the claims of all persons; (iii) is a limited
partnership duly organized, validly existing, and in good standing and qualified
to transact business under the laws of its state of organization and the state
where the Property is located ("PROPERTY STATE"); and (iv) has all necessary
approvals, governmental and otherwise, and full power and authority to own its
properties (including the Property) and carry on its business.
4.2 VALIDITY OF LOAN. The execution, delivery and performance of the
Loan Documents by Borrower and the borrowing evidenced by the Note (i) are
within the power of Borrower; (ii) have been authorized by all requisite action;
(iii) have received all necessary approvals and consents; (iv) will not violate,
conflict with, breach, or constitute (with notice or lapse of time, or both) a
default under (A) any law, order or judgment of any court or governmental
authority applicable to Borrower, or the governing instrument of Borrower or (B)
any indenture, agreement, or other instrument to which Borrower is a party or by
which Borrower or any of its property is bound or affected; (v) will not result
in the creation or imposition of any
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lien, charge, or encumbrance upon any of its properties or assets except for
those in this Instrument and those created by the other Loan Documents; and (vi)
will not require any authorization or license from, or any filing with, any
governmental or other body (except for the recordation of this Instrument, the
Assignment of Leases and Rents and the UCC-1 Financing Statement under the
Uniform Commercial Code as enacted in the state in which the Property is located
(the "UCC")). The Loan Documents executed by Borrower constitute legal, valid,
and binding obligations of Borrower.
4.3 LITIGATION. There is no action, suit, or proceeding, judicial,
administrative, or otherwise (including any condemnation or similar proceeding),
pending or, to the best knowledge of Borrower, threatened or contemplated
against, or affecting, Borrower or the Property which would have a material
adverse affect on either the Property or Borrower's ability to perform the
Obligations.
4.4 STATUS OF PROPERTY.
(a) The Land and Improvements are not located in an area
identified by the Secretary of Housing and Urban Development, or any
successor, as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act
of 1973, or the National Flood Insurance Reform Act of 1994, as each
has been or may be amended, or any successor law (collectively, the
"FLOOD ACTS") or, if located within any such area, Borrower has and
will maintain the insurance prescribed in Section 5.6(a)(iii) below.
(b) Borrower or Lessee, as the case may be, has all necessary
(i) certificates, licenses, and other approvals, governmental and
otherwise, for the operation of the Property and the conduct of its
business and (ii) zoning, building code, land use, environmental and
other similar permits or approvals, all of which are currently in full
force and effect and not subject to revocation, suspension, forfeiture,
or modification. The Property and its use and occupancy is in full
compliance with all Laws and Borrower has not received any notice of
any violation or potential violation of the Laws which has not been
remedied or satisfied.
(c) The Property is served by all utilities (including water
and sewer) required for its use.
(d) All public roads and streets necessary to serve the
Property for its use have been completed, are serviceable, are legally
open, and have been dedicated to and accepted by the appropriate
governmental entities.
(e) The Property is free from damage caused by fire or other
casualty.
(f) All costs and expenses for labor, materials, supplies, and
equipment used in the construction of the Improvements have been paid
in full except for the Permitted Encumbrances.
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(g) Except for property owned by (i) Lessee, (ii) tenants
under the Leases, and (iii) the Manager, lessors under equipment leases
or vendors under service contracts affecting the Property as more
particularly described in the Certificate of Representations and
Warranties, Borrower owns and has paid in full for all tangible
PERSONAL Property used in connection with the operation of the
Property, free of all security interests, liens, or encumbrances except
the Permitted Encumbrances and those created by this Instrument.
(h) The Property is assessed for real estate tax purposes as
one or more wholly independent tax lot(s), separate from any adjoining
land or improvements and no other land or improvements is assessed and
taxed together with the Property.
4.5 TAX STATUS OF BORROWER. Borrower is not a "foreign person" within
the meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder. FelCor REIT qualifies as a "real estate
investment trust" as such term is used in the Internal Revenue Code of 1986, as
amended (the "IRC"), and the regulations thereunder, and none of FelCor,
Borrower or Borrower's General Partner is subject to separate taxation under the
IRC.
4.6 BANKRUPTCY AND EQUIVALENT VALUE. No bankruptcy, reorganization,
insolvency, liquidation, or other proceeding for the relief of debtors has been
instituted by or against Borrower, the General Partner of Borrower or FelCor.
Borrower has received reasonably equivalent value for granting this Instrument.
4.7 DISCLOSURE. Borrower has disclosed to Lender all material facts and
has not failed to disclose any material fact that could cause any representation
or warranty made herein to be materially misleading. There has been no adverse
change in any condition, fact, circumstance, or event that would make any such
information materially inaccurate, incomplete or otherwise misleading.
4.8 ILLEGAL ACTIVITY. No portion of the Property has been or will be
purchased, improved, fixtured, equipped or furnished with proceeds of any
illegal activity and, to the best of Borrower's knowledge, there are no illegal
activities at or on the Property.
4.9 PRIMARY LEASE. The Primary Lease is in full force and effect; no
default by Borrower has occurred under the Primary Lease; and there is no
existing condition which, but for the passage of time or the giving of notice,
would result in a default by Borrower or, to Borrower's knowledge, by Lessee
under the terms of the Primary Lease. Borrower's interest in the Property is
assignable to Lender without the consent of, or notice to, Lessee.
ARTICLE V
COVENANTS AND AGREEMENTS
Borrower covenants and agrees with Lender as follows:
5.1 PAYMENT OF OBLIGATIONS. Borrower shall timely pay and perform the
Obligations.
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5.2 CONTINUATION OF EXISTENCE. Borrower shall not (and Lessee, by its
joinder to this Instrument, agrees not to) (a) dissolve, terminate, or
otherwise dispose of, directly, indirectly or by operation of law, all or
substantially all of its assets; (b) reorganize or change its legal structure
without Lender's prior written consent; (c) change its name, address, or the
name under which it conducts its business without promptly notifying Lender; or
(d) do anything to cause the representations in Section 4.2 to become untrue.
5.3 TAXES AND OTHER CHARGES.
(a) PAYMENT OF ASSESSMENTS. Borrower shall (except to the
extent Lessee is required to do so under the Primary Lease, in which
case Borrower shall cause Lessee to) pay when due all taxes, liens,
assessments, utility charges (public or private and including sewer
fees), ground rents, maintenance charges, dues, fines, impositions, and
public and other charges of any character (including penalties and
interest) assessed against, or which could become a lien against, the
Property ("ASSESSMENTS") ten (10) days prior to the date any fine,
penalty, interest or charge for nonpayment may be imposed. Unless
Borrower is making deposits per Section 5.10, Borrower shall provide
Lender with receipts evidencing such payments (except for income taxes,
franchise taxes, ground rents, maintenance charges, and utility
charges) within thirty (30) days after their due date. Lender may
retain at its sole cost and expense a firm to monitor payment of
Assessments by Borrower or Lessee.
(b) RIGHT TO CONTEST. So long as no Event of Default (defined
below) is continuing, Borrower or Lessee (if permitted under the
Primary Lease) may, prior to delinquency and at its sole expense,
contest any Assessment, but this shall not change or extend Borrower's
obligation to pay the Assessment as required above unless (i) Borrower
or Lessee, as the case may be, gives Lender prior written notice of
its intent to contest an Assessment; (ii) Borrower or Lessee, as the
case may be, demonstrates to Lender's reasonable satisfaction that (A)
the Property will not be sold to satisfy the Assessment prior to the
final determination of the legal proceedings, (B) Borrower or Lessee,
as the case may be, has taken such actions as are required or
permitted to accomplish a stay of any such sale, or (C) Borrower or
Lessee, as the case may be, has furnished a bond or surety
(satisfactory to Lender in form and amount) sufficient to prevent a
sale of the Property; (iii) at Lender's option, Borrower or Lessee, as
the case may be, has deposited the full amount necessary to pay any
unpaid portion of the Assessments with Lender; and (iv) such
proceeding shall be permitted under any other instrument to which
Borrower, Lessee or the Property is subject (whether superior or
inferior to this Instrument); provided, however, that the foregoing
shall not apply to the contesting of any income taxes, franchise
taxes, ground rents, maintenance charges, and utility charges.
(c) DOCUMENTARY STAMPS AND OTHER CHARGES. Borrower shall pay
all taxes, assessments, charges, expenses, costs and fees (including
registration and recording fees and revenue, mortgage, transfer, stamp,
intangible, indebtedness and any similar taxes) (collectively, the
"TRANSACTION TAXES") required in connection with the making and/or
recording of the Loan Documents. If Borrower fails to pay the
Transaction Taxes after demand, Lender may (but is not obligated to)
pay these and Borrower shall reimburse
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Lender on demand for any amount so paid with interest at the applicable
interest rate specified in the Note, which shall be the Default Rate
unless prohibited by Laws.
(d) CHANGES IN LAWS REGARDING TAXATION. If any law (i) taxes
mortgages or debts secured by mortgages for federal, state or local
purposes or changes the manner of the collection of any such existing
taxes, and/or (ii) imposes a tax, either directly or indirectly, on any
of the Loan Documents or the Obligations, Borrower shall, if permitted
by law, pay such tax within the statutory period or within twenty (20)
days after demand by Lender, whichever is less; provided, however, that
if, in the opinion of Lender, Borrower is not permitted by law to pay
such taxes, Lender shall have the option to declare the Obligations
immediately due and payable (without any Prepayment Premium) upon sixty
(60) days' notice to Borrower.
5.4 DEFENSE OF TITLE, LITIGATION, AND RIGHTS UNDER LOAN DOCUMENTS.
Borrower shall (and Lessee, by its joinder to this Instrument, agrees to)
forever warrant, defend and preserve title to the Property, the validity,
enforceability and priority of this Instrument and the lien or security interest
created thereby, and any rights of Lender under the Loan Documents against the
claims of all persons, and shall promptly notify Lender of any such claims. If
at any time in Lender's good faith judgment it believes it necessary in order to
protect its interests hereunder, Lender (whether or not named as a party to such
proceedings) is authorized and empowered (but shall not be obligated) to take
such additional steps as it may deem necessary or proper for the defense of any
such proceeding or the protection of the lien, security interest, validity,
enforceability, or priority of this Instrument, title to the Property, or any
rights of Lender under the Loan Documents, including the employment of counsel,
the prosecution and/or defense of litigation, the compromise, release, or
discharge of such adverse claims, the purchase of any tax title, the removal of
such any liens and security interests, and any other actions Lender deems
necessary to protect its interests. Borrower hereby (and Lessee, by its joinder
to this Instrument, thereby) authorizes Lender to take any actions required to
be taken by Borrower or Lessee which Lender so determines in good faith to be
necessary to protect its interests hereunder, or permitted to be taken by
Lender, in the Loan Documents in the name and on behalf of Borrower or Lessee.
Borrower shall reimburse Lender on demand for all expenses (including attorneys'
fees) incurred by it in connection with the foregoing and Lender's exercise of
its rights under the Loan Documents. All such expenses of Lender, until
reimbursed by Borrower, shall be part of the Obligations, bear interest at the
applicable interest rate specified in the Note, which shall be the Default Rate
unless prohibited by Laws, and shall be secured by this Instrument.
5.5 OPERATION AND MAINTENANCE OF PROPERTY.
(a) REPAIR AND MAINTENANCE. Borrower will (and Lessee, by its
joinder to this Instrument, agrees to) (i) operate and maintain the
Property in good order, repair, and operating condition, (ii) promptly
make all necessary repairs, replacements, additions, and improvements
necessary to ensure that the Property shall not in any way be
diminished or impaired, (iii) not cause or allow any of the Property to
be misused, wasted, or to deteriorate and Borrower will not abandon the
Property. No new building, structure, or other improvement shall be
constructed on the Land nor shall any material part of the
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Improvements be removed, demolished, or structurally or materially
altered, without Lender's prior written consent.
(b) REPLACEMENT OF PROPERTY. Borrower (and Lessee, by its
joinder to this Instrument, agrees to) (i) keep the Property fully
equipped and will replace all worn out or obsolete Property with new
fixtures or Property of comparable quality and function, (ii) not,
without Lender's prior written consent, dispose of, pledge, convey or
assign any Personal Property (other than sales of items normally held
for sale in the ordinary course of business), unless the same is
replaced by Borrower or Lessee with a new, comparable article (A) owned
by Borrower or Lessee free and clear of any lien or security interest
(other than the Permitted Encumbrances and those created by this
Instrument) or (B) leased by Borrower or Lessee (x) with Lender's prior
written consent or (y) if the replaced Property was leased at the time
of execution of this Instrument. Notwithstanding anything to the
contrary contained herein, provided no Event of Default exists,
Borrower or Lessee may enter into leases for items of tangible Personal
Property to be used at the Property, provided that (i) the aggregate
value of such Personal Property leased under all such leases (as
reflected in such leases and as the same reduces from time to time as
the result of payments made under such leases) does not exceed
$350,000.00 at any time, and (ii) Borrower or Lessee, as the case may
be, shall deliver to Lender an agreement substantially in the form of
Exhibit E attached hereto fully executed by each lessor thereunder.
(c) COMPLIANCE WITH LAWS. Borrower, Lessee and the Property
shall be maintained, used, and operated in compliance with all of the
following: (i) present and future laws, Environmental Laws, ordinances,
regulations, and requirements (including zoning and building codes) of
any governmental or quasi-governmental authority or agency applicable
to Borrower or the Property (collectively, the "LAWS"); (ii) orders,
rules, and regulations of any regulatory, licensing, accrediting,
insurance underwriting or rating organization, or other body exercising
similar functions; (iii) duties or obligations of any kind imposed
under any Permitted Encumbrance or by law, covenant, condition,
agreement, or easement, public or private; and (iv) policies of
insurance at any time in force with respect to the Property. If
proceedings are initiated or Borrower receives notice that it, Lessee
or the Property is not in compliance with any of the foregoing,
Borrower will promptly send Lender notice and a copy of the proceeding
or violation notice. If the Property is not in compliance with all
Laws, Lender may impose additional requirements upon Borrower including
monetary reserves or financial equivalents.
(d) ZONING AND TITLE MATTERS. Borrower shall not (and Lessee,
by its joinder to this Instrument, agrees not to), without Lender's
prior written consent, (i) initiate or support any zoning
reclassification of the Property or variance under existing zoning
ordinances; (ii) modify or supplement any of the Permitted
Encumbrances; (iii) impose any restrictive covenants or encumbrances
upon the Property; (iv) execute or file any subdivision plat affecting
the Property; (v) consent to the annexation of the Property to any
municipality; (vi) permit the Property to be used by the public or any
person in a way that might make a claim of adverse possession or any
implied dedication or easement possible; (vii) cause or permit the
Property to become a non-conforming use under zoning
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ordinances or any present or future non-conforming use of the Property
to be discontinued; or (viii) fail to comply with the terms of the
Permitted Encumbrances.
5.6 INSURANCE.
(a) CASUALTY INSURANCE. Borrower shall keep the Property
insured for the benefit of Lender (i) by an "All Risk of Physical Loss"
policy or the broadest form of extended coverage endorsement in an
amount sufficient to prevent Lender from ever becoming a co-insurer
under the policy or Laws, but in no event less than the lesser of (A)
the Obligations or (B) the Full Insurable Value of the Property,
subject to verification by Lender and with a deductible not to exceed
Twenty-Five Thousand Dollars ($25,000.00); (ii) by rent, business
interruption, and/or use and occupancy insurance in an amount equal to
one (1) year's total income from the Property including all Rent and
other income; (iii) against damage by flood if the Property is located
in an area identified by the Secretary of Housing and Urban
Development, or any successor, as an area having special flood hazards
and in which flood insurance has been made available under the Flood
Acts in an amount equal to the lesser of (1) the original amount of the
Note or (2) the maximum limit of coverage available for the Property
under the Flood Acts; (iv) against damage or loss from (1) sprinkler
system leakage and (2) boilers, boiler tanks, heating and
air-conditioning equipment, pressure vessels, auxiliary piping, and
similar apparatus, in the amount required by Lender; and (v) during the
period of any construction, repair, restoration, or replacement of the
Property, by a standard builder's risk policy with extended coverage in
an amount at least equal to the Full Insurable Value of such Property,
and worker's compensation, in statutory amounts.
(b) LIABILITY AND OTHER INSURANCE. Borrower or Lessee (to the
extent Lessee is required to maintain such type of insurance pursuant
to the Primary Lease) Lessee shall maintain comprehensive general
liability insurance on an occurrence basis covering Borrower, Lessee,
and Lender, as an additional insured, against claims for bodily injury
or death or property damage occurring in, upon, or about the Property
or any street, drive, sidewalk, curb, or passageway adjacent thereto,
in the amount of $1,000,000.00 combined single limit per occurrence
primary coverage, with umbrella/excess coverage of not less than
$10,000,000.00, which insurance shall include operations and blanket
contractual liability coverage which insures contractual liability
under the indemnifications set forth in Article X below (but such
coverage or the amount thereof shall in no way limit such
indemnifications). Upon request by Lender, Borrower or (to the extent
Lessee is required to maintain such type of insurance pursuant to the
Primary Lease) Lessee shall maintain insurance or carry additional
amounts of insurance covering Borrower or the Property as Lender shall
reasonably require including against war risks.
(c) FORM OF POLICY. All insurance required under this Section
shall be fully paid for, non-assessable, and the policies shall contain
such provisions, endorsements, and expiration dates as Lender shall
reasonably require. The policies shall be issued by
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insurance companies authorized to do business in the Property State,
approved by Lender, and having (i) an investment grade rating or claims
paying ability assigned by one or more credit rating agencies approved
by Lender (a "RATING AGENCY") and (ii) a general policy rating of B+
XII or better by A.M. Best Company, Inc. (or if a rating of A.M. Best
Company, Inc. is no longer available, a similar rating from a similar
or successor service). In addition, all policies shall (x) include a
standard mortgagee clause, without contribution, in the name of Lender
and (y) provide that they shall not be canceled, amended, or materially
altered (including reduction in the scope or limits of coverage)
without at least thirty (30) days' prior notice to Lender.
(d) ORIGINAL POLICIES. Borrower or Lessee, as the case may be,
shall deliver to Lender (i) duplicate original or certified copies of
all policies (and renewals) required under this Section and (ii)
receipts evidencing payment of all premiums on such policies at least
thirty (30) days prior to their expiration. If original and renewal
policies are unavailable or if coverage is under a blanket policy,
Borrower or Lessee, as the case may be, shall deliver duplicate
originals, or, if unavailable, original certificates evidencing that
such policies are in full force and effect together with certified
copies of the original policies.
(e) GENERAL PROVISIONS. Borrower or Lessee, as the case may
be, shall not carry separate or additional insurance concurrent in form
or contributing in the event of loss with that required under this
Section unless endorsed in favor of Lender as per this Section and
approved by Lender in all respects. In the event of foreclosure of this
Instrument or other transfer of title or assignment of the Property in
extinguishment, in whole or in part, of the Obligations, all right,
title, and interest of Borrower or Lessee, as the case may be, in and
to all policies of insurance then in force regarding the Property and
all proceeds payable thereunder and unearned premiums thereon shall
immediately vest in the purchaser or other transferee of the Property.
No approval by Lender of any insurer shall be construed to be a
representation, certification, or warranty of its solvency. No approval
by Lender as to the amount, type, or form of any insurance shall be
construed to be a representation, certification, or warranty of its
sufficiency. Borrower and Lessee shall comply with all insurance
requirements and shall not cause or permit any condition to exist which
would be prohibited by an insurance requirement or would invalidate the
insurance coverage on the Property.
5.7 DAMAGE AND DESTRUCTION OF PROPERTY.
(a) BORROWER'S OBLIGATIONS. If any damage to, loss, or
destruction of the Property occurs (any "DAMAGE"), (i) Borrower shall
promptly notify Lender and take all necessary steps to preserve any
undamaged part of the Property and (ii) if the insurance proceeds are
made available for Restoration (but regardless of whether any proceeds
are sufficient for Restoration), Borrower shall promptly commence and
diligently pursue to completion (and Lessee, by its joinder to this
Instrument, agrees to cooperate and/or participate in, as necessary)
the restoration, replacement, and rebuilding of the Property as nearly
as possible to its value and condition immediately prior to the Damage
or a Taking (defined below) in accordance with plans and specifications
approved by Lender
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("RESTORATION"). Borrower shall comply with other reasonable
requirements established by Lender to preserve the security under this
Instrument.
(b) LENDER'S RIGHTS. If any Damage occurs and some or all of
it is covered by insurance, then (i) Lender may, but is not obligated
to, make proof of loss if not made promptly by Borrower, and Lender is
authorized and empowered by Borrower to settle, adjust, or compromise
any claims for the Damage if not promptly settled by Borrower (with the
prior, written consent of Lender, which consent shall not be
unreasonably withheld) or at any time if an Event of Default shall have
occurred; (ii) each insurance company concerned is authorized and
directed to make payment directly to Lender for the Damage; and (iii)
Lender may apply the insurance proceeds in any order it determines (1)
to reimburse Lender for all Costs (defined below) related to collection
of the proceeds and (2) subject to Section 5.7(c) and at Lender's
option, to (A) payment (without any Prepayment Premium) of all or part
of the Obligations, whether or not then due and payable, in the order
determined by Lender (provided that if any Obligations remain
outstanding after this payment, the unpaid Obligations shall continue
in full force and effect and Borrower shall not be excused in the
payment thereof); (B) the cure of any default under the Loan Documents;
or (C) the Restoration. Any insurance proceeds held by Lender shall be
held without the payment of interest thereon. If Borrower receives any
insurance proceeds for the Damage, Borrower shall promptly deliver the
proceeds to Lender. Notwithstanding anything in this Instrument or at
law or in equity to the contrary, none of the insurance proceeds paid
to Lender shall be deemed trust funds and Lender may dispose of these
proceeds as provided in this Section. Borrower expressly assumes all
risk of loss from any Damage, whether or not insurable or insured
against.
(c) APPLICATION OF PROCEEDS TO RESTORATION. Lender shall make
the Net Proceeds (defined below) available to Borrower for Restoration
if: (i) there shall then be no Event of Default; (ii) Lender shall be
satisfied that (A) Restoration can and will be completed within one (1)
year after the Damage occurs and at least one (1) year prior to the
maturity of the Note, (B) each of the Primary Lease, the Management
Agreement and the License Agreement (or replacements thereof entered
into in accordance with the terms of Section 8 of the Loan Agreement)
shall remain in full force and effect during and after the Restoration,
and (C) the tenants under the Major Leases agree in writing to continue
their Leases, or Borrower or Lessee shall have entered into replacement
Leases acceptable in all respects to Lender for the premises demised
under the Major Leases; (iii) Borrower shall have entered into a
general construction contract acceptable in all respects to Lender for
Restoration, which contract must include provision for retainage of not
less than ten percent (10%) until final completion of the Restoration;
and (iv) in Lender's reasonable judgment, after Restoration has been
completed the net cash flow of the Property will be sufficient to cover
all costs and operating expenses of the Property, including payments
due and reserves required under the Loan Documents. Notwithstanding any
provision of this Instrument to the contrary, Lender shall not be
obligated to make any portion of the Net Proceeds available for
Restoration unless, at the time of the disbursement request, Lender has
determined in its reasonable discretion that (y) Restoration can be
completed at a cost which does not exceed the aggregate of the
remaining Net Proceeds and any funds deposited with Lender by Borrower
("ADDITIONAL FUNDS") and (z) the aggregate of
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any loss of rental income insurance proceeds which the carrier has
acknowledged to be payable ("RENT LOSS PROCEEDS") and any funds
deposited with Lender by Borrower are sufficient to cover all costs and
operating expenses of the Property, including payments due and reserves
required under the Loan Documents.
(d) DISBURSEMENT OF PROCEEDS. If Lender elects or is required
to make insurance proceeds available for Restoration, Lender shall,
through a disbursement procedure established by Lender, periodically
make available to Borrower in installments the net amount of all
insurance proceeds received by Lender after deduction of all reasonable
costs and expenses incurred by Lender in connection with the collection
and disbursement of such proceeds ("NET PROCEEDS") and, if any, the
Additional Funds. The amounts periodically disbursed to Borrower shall
be based upon the amounts currently due under the construction contract
for Restoration and Lender's receipt of (i) appropriate lien waivers,
(ii) a certification of the percentage of Restoration completed by an
architect or engineer acceptable to Lender, and (iii) title insurance
or similar indemnification reasonably acceptable to Lender against
materialmen's and mechanic's liens. At Lender's election, the
disbursement of funds may be handled by a disbursing agent selected by
Lender, and such agent's reasonable fees and expenses shall be paid by
Borrower. The Net Proceeds, Rent Loss Proceeds, and any Additional
Funds shall constitute additional security for the Loan and Borrower
shall execute, deliver, file and/or record, at its expense, such
instruments as Lender requires to grant to Lender a perfected,
first-priority security interest in these funds. If the Net Proceeds
are made available for Restoration and (x) Borrower refuses or fails to
complete the Restoration, (y) an Event of Default occurs, or (z) the
Net Proceeds or Additional Funds are not applied to Restoration, then
any undisbursed portion may, at Lender's option, be applied to the
Obligations in any order of priority, and any application to principal
shall be deemed a voluntary prepayment subject to the Prepayment
Premium.
5.8 CONDEMNATION.
(a) BORROWER'S OBLIGATIONS. Borrower will promptly notify
Lender of any threatened or instituted proceedings for the condemnation
or taking by eminent domain of the Property including any change in any
street (whether as to grade, access, or otherwise) (a "TAKING").
Borrower shall, at its expense, (i) diligently prosecute these
proceedings, (ii) deliver to Lender copies of all papers served in
connection therewith, and (iii) consult and cooperate with Lender in
the handling of these proceedings. No settlement of these proceedings
shall be made by Borrower or Lessee without Lender's prior written
consent. Lender may participate in these proceedings (but shall not be
obligated to do so) and Borrower will sign and deliver (and cause
Lessee to sign and deliver) all instruments requested by Lender to
permit this participation.
(b) LENDER'S RIGHTS TO PROCEEDS. All condemnation awards,
judgments, decrees, or proceeds of sale in lieu of condemnation
("AWARD") are assigned and shall be paid to Lender. Borrower authorizes
Lender to collect and receive them, to give receipts for them, to
accept them in the amount received without question or appeal, and/or
to
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appeal any judgment, decree, or award. Borrower will sign and deliver
all instruments requested by Lender to permit these actions.
(c) APPLICATION OF AWARD. Lender shall have the right to apply
any Award, subject to Section 5.8(d), as per Section 5.7 for insurance
proceeds held by Lender, including the waiver of Prepayment Premium. If
Borrower receives any Award, Borrower shall promptly deliver them to
Lender. Notwithstanding anything in this Instrument or at law or in
equity to the contrary, none of the Award paid to Lender shall be
deemed trust funds and Lender may dispose of these proceeds as provided
in this Section.
(d) APPLICATION OF AWARD TO RESTORATION. With respect to any
portion of the Award that is not for loss of value of property, Lender
shall permit the application of the Award to Restoration in accordance
with the provisions of Section 5.7 if: (i) no more than (A) twenty
(20%) of the gross area of the Improvements are affected by the Taking,
(ii) no portion of the Improvements that are critical for the operation
of the Property as a full service hotel are affected by the Taking,
(iii) no more than ten percent (10%) of the parking spaces are affected
by the Taking, (iv) the amount of the loss does not exceed twenty
percent (20%) of the original amount of the Note; (v) the Taking does
not materially and adversely affect access to the Property from any
public right-of-way; (vi) there is no Event of Default at the time of
application; (vii) after Restoration, the Property and its use will be
in compliance with all Laws; (viii) in Lender's reasonable judgment,
Restoration is practical and can be completed within one (1) year after
the Taking and at least one (1) year prior to the maturity of the Note;
and (ix) each of the Primary Lease, the Management Agreement and the
License Agreement (or replacements thereof entered into in accordance
with the terms of Section 8 of the Loan Agreement) shall remain in full
force and effect during and after the Restoration; (ix) the tenants
under the Major Leases agree in writing to continue their Leases, or
Borrower or Lessee shall have entered into replacement Leases
acceptable in all respects to Lender for the premises demised under the
Major Leases; (x) Borrower shall have entered into a general
construction contract acceptable in all respects to Lender for
Restoration, which contract must include provision for retainage of not
less than ten percent (10%) until final completion of the Restoration;
and (xi) in Lender's reasonable judgment, after Restoration has been
completed the net cash flow of the Property will be sufficient to cover
all costs and operating expenses of the Property, including payments
due and reserves required under the Loan Documents. Any portion of the
Award that is (i) for loss of value or property or (ii) in excess of
the cost of any Restoration permitted above may, in Lender's sole
discretion, be applied against the Obligations (without any Prepayment
Premium) or paid to Borrower.
(e) EFFECT ON THE OBLIGATIONS. Notwithstanding any Taking,
Borrower shall continue to pay and perform the Obligations as provided
in the Loan Documents. Any reduction in the Obligations due to
application of the Award shall take effect only upon Lender's actual
receipt and application of the Award to the Obligations. If the
Property shall have been foreclosed, sold pursuant to any power of sale
granted hereunder, or transferred by deed-in-lieu of foreclosure prior
to Lender's actual receipt of the Award, Lender may apply the Award
received to the extent of any deficiency upon such sale and Costs
incurred by Lender in connection with such sale.
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5.9 LIENS AND LIABILITIES. Borrower shall pay, bond, or otherwise
discharge all claims and demands of mechanics, materialman, laborers, and others
which, if unpaid, might result in a lien or encumbrance on the Property or the
Rents (collectively, "LIENS") and Borrower shall, at its sole expense, do
everything necessary to preserve the lien and security interest created by this
Instrument and its priority. As to such Liens for which the Lessee is
responsible under the Primary Lease, Lessee (by its joinder to this Instrument)
agrees to comply with the foregoing provisions with respect to such Liens.
Nothing in the Loan Documents shall be deemed or construed as constituting the
consent or request by Lender, express or implied, to any contractor,
subcontractor, laborer, mechanic or materialman for the performance of any labor
or the furnishing of any material for any improvement, construction, alteration,
or repair of the Property. Borrower (and Lessee, by its joinder to this
Instrument) further agrees that Lender does not stand in any fiduciary
relationship to Borrower or Lessee. Any contributions made, directly or
indirectly, to Borrower or Lessee by or on behalf of any of its partners,
members, principals or any party related to such parties shall be treated as
equity and shall be subordinate and inferior to the rights of Lender under the
Loan Documents.
5.10 TAX AND INSURANCE DEPOSITS. At Lender's option, at any time after
(a) an Event of Default has occurred, or (b) the aggregate Debt Service Coverage
Ratio for the Hotel Properties for the immediately preceding twelve (12) month
period shall be less than 1.50, Borrower shall make monthly deposits
("DEPOSITS") with Lender equal to one-twelfth (1/12) of the annual Assessments
(except for income taxes, franchise taxes, ground rents, maintenance charges and
utility charges) and the premiums for insurance required under Section 5.6 (the
"INSURANCE PREMIUMS") together with amounts sufficient to pay these items thirty
(30) days before they are due (collectively, the "IMPOSITIONS"). Lender shall
estimate the amount of the Deposits until ascertainable. At that time, Borrower
shall promptly deposit any deficiency. Borrower shall promptly notify Lender of
any changes to the amounts, schedules and instructions for payment of the
Impositions. Borrower authorizes Lender or its agent to obtain copies of the
bills for Assessments directly from the appropriate tax or governmental
authority. All Deposits are pledged to Lender and shall constitute additional
security for the Obligations. The Deposits shall be held by Lender without
interest (except to the extent required under Laws) and may be commingled with
other funds. If (i) there is no Event of Default at the time of payment, (ii)
Borrower has delivered bills or invoices to Lender for the Impositions in
sufficient time to pay them when due, (iii) the Deposits are sufficient to pay
the Impositions or Borrower has deposited the necessary additional amount, then
Lender shall pay the Impositions prior to their due date. Any Deposits remaining
after payment of the Impositions shall, at Lender's option, be credited against
the Deposits required for the following year or paid to Borrower. If an Event of
Default occurs, the Deposits may, at Lender's option, be applied to the
Obligations in any order of priority, and any application to principal following
an Event of Default shall be deemed a voluntary prepayment subject to the
Prepayment Premium. Borrower shall not claim any credit against the principal
and interest due under the Note for the Deposits unless and until such Deposits
are applied by Lender towards the Obligations. Upon an assignment or other
transfer of this Instrument, Lender may pay over the Deposits in its possession
to the assignee or transferee and then it shall be completely released from all
liability with respect to the Deposits. Borrower shall look solely to the
assignee or transferee with respect thereto. This provision shall apply to every
transfer of the Deposits to a new assignee or transferee. Subject to Article
VII, a transfer
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of title to the Land shall automatically transfer to the new owner the
beneficial interest in the Deposits. Upon full payment and satisfaction of this
Instrument or, at Lender's option, at any prior time, the balance of the
Deposits in Lender's possession shall be paid over to the record owner of the
Land and no other party shall have any right or claim to the Deposits. Lender
may transfer all its duties under this Section to such service or financial
institution as Lender may periodically designate and Borrower agrees to make the
Deposits to such service or institution. Notwithstanding the foregoing, so long
as no Event of Default has occurred, if the Debt Service Coverage Ratio for the
Hotel Properties for the immediately preceding twelve (12) month period
increases to 2.00 or more at any time subsequent to Lender's requirement that
Deposits be made, the requirement for future Deposits shall terminate and all
Deposits held by Lender shall be released to Borrower, subject to Lender's right
to require further Deposits if at any time thereafter the Debt Service Coverage
Ratio shall again be less than 1.50.
5.11 ERISA. Borrower represents and warrants to Lender that (i)
Borrower is not an "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a
"governmental plan" within the meaning of Section 3(32) of ERISA; (ii) Borrower
is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; (iii) the assets of the Borrower
do not constitute "plan assets" of one or more plans within the meaning of 29
C.F.R. Section 2510.3-10 1; and (iv) one or more of the following circumstances
is true as to Borrower: (1) equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (2) less
than twenty-five percent (25%) of all equity interests in Borrower are held by
"benefit plan investors" within the meaning of 29 C.F.R. Section
2510.3-101(f)(2); or (3) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. Section 2510.3-101(c)
or (e). Borrower shall deliver to Lender such certifications and/or other
evidence periodically requested by Lender, in its sole discretion, to verify
these representations and warranties. Failure to deliver these certifications or
evidence, breach of these representations and warranties, or consummation of any
transaction which would cause this Instrument or any exercise of Lender's rights
under this Instrument to (i) constitute a non-exempt prohibited transaction
under ERISA or (ii) violate ERISA or any state statute regulating governmental
plans (collectively, a "VIOLATION"), shall be an Event of Default.
Notwithstanding anything in the Loan Documents to the contrary, no sale,
assignment, or transfer of any direct or indirect right, title, or interest in
Borrower or the Property (including creation of a junior lien, encumbrance or
leasehold interest) shall be permitted which would, in Lender's opinion, negate
the representations in this Section or cause a Violation. At least fifteen (15)
days before consummation of any of the foregoing, Borrower shall obtain from the
proposed transferee or lienholder (i) a certification to Lender that the
representations and warranties of this Section will be true after consummation
and (ii) an agreement to comply with this Section.
5.12 ENVIRONMENTAL REPRESENTATIONS, WARRANTIES, AND COVENANTS.
(a) ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants, to the best of Borrower's knowledge (after due
inquiry and investigation) and additionally based upon the
environmental site assessment report of the Property delivered to and
approved by Lender in connection with the Loan (the "ENVIRONMENTAL
REPORT"), that except as fully disclosed in the Environmental Report:
(i) there are no
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Hazardous Materials (defined below) or underground storage tanks
affecting the Property ("affecting the Property" shall mean "in, on,
under, stored, used or migrating to or from the Property") except for
(A) routine office, cleaning, janitorial and other materials and
supplies necessary to operate the Property for its current use and (B)
Hazardous Materials that are (1) in compliance with Environmental Laws,
(2) have all required permits, and (3) are in only the amounts
necessary to operate the Property; (ii) there are no past, present or
threatened Releases of Hazardous Materials in violation of any
Environmental Law affecting the Property; (iii) there is no past or
present non-compliance with Environmental Laws or with permits issued
pursuant thereto; (iv) Borrower does not know of, and has not received,
any written or oral notice or communication from any person relating to
Hazardous Materials affecting the Property; and (v) Borrower has
provided to Lender, in writing, all information relating to
environmental conditions affecting the Property known to Borrower or
contained in Borrower's files.
(b) ENVIRONMENTAL COVENANTS. Borrower covenants and agrees
that (and Lessee, by its joinder to this Instrument, covenants and
agrees that): (i) all use and operation of the Property shall be in
compliance with all Environmental Laws and required permits; (ii) there
shall be no Releases of Hazardous Materials affecting the Property
except in compliance with Environmental Laws; (iii) there shall be no
Hazardous Materials affecting the Property except (A) routine office,
cleaning and janitorial supplies, (B) in compliance with all
Environmental Laws, (C) in compliance with all required permits, and
(D)(1) in only the amounts necessary to operate the Property or (2)
fully disclosed to and approved by Lender in writing; (iv) Borrower
shall (and Lessee, by its joinder to this Instrument, agrees to) keep
the Property free and clear of all liens and encumbrances imposed by
any Environmental Laws (the "ENVIRONMENTAL LIENS"); (v) Borrower shall
(and Lessee, by its joinder to this Instrument, agrees to), at its sole
expense, fully and expeditiously cooperate in all activities in Section
5.12(c) including providing all relevant information and making
knowledgeable persons available for interviews; (vi) Borrower shall
(and Lessee, by its joinder to this Instrument, agrees to), at its sole
expense, (A) perform any environmental site assessment or other
investigation of environmental conditions at the Property upon Lender's
request based on Lender's reasonable belief that the Property is not in
compliance with all Environmental Laws, (B) share with Lender the
results and reports and Lender and the Indemnified Parties (defined
below) shall be entitled to rely on such results and reports, and (C)
complete any remediation of Hazardous Materials affecting the Property
or other actions required by any Environmental Laws; (vii) Borrower
shall (and Lessee, by its joinder to this Instrument, agrees to)
prevent any Tenant, the Manager or other user of the Property from
violating any Environmental Law; and (viii) Borrower shall (and Lessee,
by its joinder to this Instrument, agrees to) immediately notify Lender
in writing after it becomes aware of (A) the presence, Release, or
threatened Release of Hazardous Materials affecting the Property that
might violate any Environmental Laws, (B) any non-compliance of the
Property with any Environmental Laws, (C) any actual or potential
Environmental Lien, (D) any required or proposed remediation of
environmental conditions relating to the Property, and (E) any written
or oral communication or notice from any person relating to
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Hazardous Materials. Any failure of Borrower or Lessee to perform its
obligations under this Section 5.12 shall constitute waste of the
Property.
(c) LENDER'S RIGHTS. After reasonable prior notice to
Borrower, Lender and any person designated by Lender may enter the
Property to assess the environmental condition of the Property and its
use including (i) conducting any environmental assessment or audit (the
scope of which shall be determined in good faith by Lender) and (ii)
taking samples of soil, groundwater or other water, air, or building
materials, and conducting other invasive testing at all reasonable
times when (A) a default has occurred under the Loan Documents, (B)
Lender reasonably believes that a Release that might violate any
Environmental Laws has occurred or the Property is not in compliance
with all Environmental Laws, or (C) the Loan is being considered for
sale. Borrower shall (and Lessee, by its joinder to this Instrument,
agrees to) cooperate with and provide access to Lender and such person.
5.13 ELECTRONIC PAYMENTS. Prior to the occurrence of an Event of
Default, Borrower shall make payments due under the Loan Documents by wire
transfer to an account specified by Lender from time to time. Following an Event
of Default, all payments due under the Loan Documents shall be made by
electronic funds transfer from a bank account established and maintained by
Borrower for this purpose with a depository satisfactory to Lender in its good
faith judgment. Lender hereby approves NationsBank and Chase Manhattan Bank as
depositories that may act in this capacity. Borrower shall direct the depository
to transmit such payments on or before their respective due dates to an account
designated in writing by Lender. Lender shall have the right to require Borrower
to select a different depository after thirty (30) days' prior notice. All costs
of (i) establishing and maintaining such account and (ii) the electronic funds
transfers shall be paid by Borrower.
5.14 INSPECTION. Borrower shall (and Lessee, by its joinder to this
Instrument, agrees to) allow Lender and any person designated by Lender to enter
upon the Property and conduct tests or inspect the Property at all reasonable
times. Borrower shall (and Lessee, by its joinder to this Instrument, agrees to)
assist Lender and such person in effecting said inspection.
5.15 RECORDS, REPORTS, AND AUDITS.
(a) RECORDS AND REPORTS. Borrower shall (and Lessee, by its
joinder to this Instrument, agrees to) maintain, in accordance with
generally-accepted accounting principles ("GAAP"), complete and
accurate books and records with respect to all operations of or
transactions involving the Property. Annually, Borrower shall furnish
Lender financial statements for the most current fiscal year (including
a schedule of all related Obligations and contingent liabilities) for
(i) Borrower, (ii) the General Partner of Borrower, (iii) FelCor, (iv)
the FelCor REIT, and (v) Lessee. On an annual basis, Borrower shall
furnish Lender operating statements for the Property including income
and expenses (before and after Obligations service), certified by an
authorized senior financial officer of Borrower. Annually, Borrower
shall furnish Lender (i) copies of paid tax receipts for the Property;
(ii) a certified rent roll including security deposits held, the
expiration of the terms of the Leases, and identification and
explanation of any Tenants in
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default; (iii) a budget showing projected income and expenses (before
and after Obligations service) for the next twelve (12) month budget
period; (iv) a budget showing projected expenditures for FF&E and other
capital items for the next twelve (12) month budget period; and (v)
upon Lender's request, (A) evidence of the continuity of FelCor REIT's
status as a real estate investment trust and the continued exemption
from taxation under the IRC of each of FelCor, Borrower and Borrower's
General Partner, (B) the distribution of economic interests in the
Property, and (C) copies of any other loan documents affecting the
Property.
(b) INSPECTION OF REPORTS. All of the reports, statements, and
items required under this Section shall be (i) prepared in accordance
with GAAP and REASONABLY satisfactory to Lender in form and substance;
and (ii) delivered within ninety (90) days after the end of Borrower's
fiscal year. The financial statements for Borrower and the General
Partner of Borrower shall be certified as being true, correct and
accurate by an authorized senior financial official of Borrower. The
financial statements for FelCor, the FelCor REIT and Lessee shall be
audited by a "Big-Five" accounting firm (or their successors). If any
one report, statement, or item is not received by Lender on its due
date, a late fee of Five Hundred and No/100 Dollars ($500.00) per month
shall be due and payable by Borrower. If any one report, statement, or
item is not received within thirty (30) days after written notice from
Lender, Lender may immediately declare an Event of Default under the
Loan Documents. Borrower shall (i) provide Lender with such additional
financial, management, or other information regarding Borrower, the
General Partner of Borrower, FelCor, the FelCor REIT or the Property,
as Lender may reasonably request and (ii) upon Lender's request,
deliver all items required by Section 5.15 in an electronic format
(i.e., on computer disks) or by electronic transmission in the form
prepared by or for Borrower or the FelCor REIT and in an electronic
format accessible to Lender. By its joinder to this Instrument, Lessee
agrees to provide Lender with such additional financial management, or
other information regarding Lessee or the Property as Lender may
reasonably request, in a form and manner that complies with the
provisions of this Section.
(c) INSPECTION OF RECORDS. Borrower shall (and Lessee, by its
joinder to this Instrument, agrees to) allow Lender or any person
designated by Lender to examine, audit, and make copies of all such
books and records and all supporting data at the place where these
items are located at all reasonable times after reasonable advance
notice; provided that no notice shall be required after any Event of
Default under the Loan Documents. Borrower shall (and Lessee, by its
joinder to this Instrument, agrees to) assist Lender in effecting such
examination.
5.16 BORROWER'S CERTIFICATES. Within ten (10) days after Lender's
request, Borrower shall furnish a written certification to Lender and any
Investors as to (a) the amount of the Obligations outstanding; (b) the interest
rate, terms of payment, and maturity date of the Note; (c) the date to which
payments have been paid under the Note; (d) whether any offsets or defenses are
known by Borrower to exist against the Obligations and a detailed description of
any listed; (e) whether the Primary Lease, the Management Agreement and/or the
License Agreement are in full force and effect and have not been modified (or if
modified, setting forth all modifications); (f)
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the date to which the Rents under the Primary Lease have been paid; (g) whether,
to the best knowledge of Borrower, any defaults exist under the Primary Lease,
the Management Agreement and/or the License Agreement and a detailed description
of any listed; (h) whether there are any defaults (or events which with the
passage of time and/or notice would constitute a default) under the Loan
Documents which are known by Borrower and a detailed description of any listed;
(i) whether the Loan Documents are in full force and effect; and (j) any other
matters reasonably requested by Lender related to the Primary Lease, the
Management Agreement, the License Agreement, the Obligations, the Property, or
the Loan Documents.
5.17 FULL PERFORMANCE REQUIRED; SURVIVAL OF WARRANTIES. All
representations and warranties of Borrower in the Application or made in writing
in connection with the Loan shall survive the execution and delivery of the Loan
Documents and shall remain continuing warranties, and representations of
Borrower.
5.18 LEASING RESTRICTIONS. Neither Borrower nor Lessee shall, without
the prior, written consent of Lender, (i) amend or modify the Primary Lease or
any other Lease, (ii) extend or renew the Primary Lease or any other Lease
(except in accordance with the existing Lease provisions, if any, or in the case
of the Primary Lease, the provisions of Section 8 of the Loan Agreement), (iii)
terminate or accept the surrender of the Primary Lease or any other Lease (other
than a termination of a Primary Lease on account of a material default by Lessee
where Borrower timely cures any resulting default under the Loan Documents and
enters into a replacement lease in accordance with the provisions of Section 8
of the Loan Agreement), (iv) enter into any new Primary Lease (other than in
accordance with Section 8 of the Loan Agreement) or any other Lease, (v) grant
any consent or approval required under the Primary Lease or any other Lease that
is inconsistent with the terms of the Loan Documents, or (vi) accept any
prepayment of rent, termination fee, or any similar payment under any Lease;
provided, however, that so long as the aggregate Debt Service Coverage Ratio for
all Hotel Properties is at least 1.50, the following provisions shall apply with
respect to Leases of restaurant, gift shop, and other commercial spaces and
Leases of rooftop space for antennas, relay stations, or other customary
purposes:
(a) Without Lender's consent or approval, Borrower or Lessee
may enter into new Leases on an arms-length basis, with tenants or
subtenants whose businesses and operations are consistent with the
class and character of the Property, as determined by Borrower or
Lessee in its reasonable judgment, provided each such Lease shall meet
the following requirements: (i) such Lease shall provide for payment of
rent and all other amounts as Borrower or Lessee shall determine, in
the exercise of its reasonable judgment, to be in the best interest of
the Property taken as a whole (taking into account the type and quality
of the tenant, the nature of its business, the length of tenancy and
the location and configuration of the space so rented) as of the date
such Lease is executed; (ii) such Lease shall have a term that is
reasonable in relation to the type of Lease, but not more than (A) a
total of ten (10) years (including renewal options) with respect to
space leases and (B) a total of 25 years (including renewal options)
with respect to rooftop leases (it being agreed that a Lease with one
or more cancellation options on the part of the landlord that may be
exercised without a substantial penalty or termination payment shall be
deemed to have a term that ends on the date the earliest such
cancellation option may be exercised); (iii) no such Lease shall
require alterations to the Property that are not permitted to be
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made under the terms of the Loan Documents; and (iv) no such Lease
shall include asbestos, environmental, or hazardous substances
representations, warranties, or indemnifications, purchase options,
rights of first refusal to purchase, or expansion options in favor of
tenants or subtenants.
(b) Without Lender's consent or approval, Borrower or Lessee
may amend, modify, or waive the provisions of any such Lease or
terminate, reduce rents under, or shorten the term of any such Lease,
provided that such action (taking into account, in the case of a
termination, reduction in rent or shortening of term, or any change in
the use of the affected space under any such modification or amendment)
does not materially adversely affect the value of the Property taken as
a whole, in the reasonable judgment of Borrower or Lessee (as
applicable), and provided further that such Lease, as amended, modified
or waived, is otherwise in compliance with the requirements of the Loan
Documents.
(c) No later than thirty (30) days after Borrower or Lessee
executes any such Lease pursuant to the provisions of this Section,
Borrower or Lessee shall deliver to Lender (i) a complete copy of such
Lease certified as true, correct and complete by an officer of Borrower
or Lessee, and (ii) a summary of the rental provisions and other
principal terms of such Lease, including (A) the term, (B) renewal or
extension options, (C) any cancellation or termination options (other
than those customarily provided for casualty and condemnation), (D) any
"free" rent or rent abatement provisions, (E) the amount and terms of
payment of any tenant allowances, (F) the scope of the Tenant's
permitted uses, (G) any exclusive use restrictions, (H) any expansion
options or rights of first offer or first refusal on any other space in
the Project, and (I) any other provision that (x) departs from
Borrower's normal leasing practices and (y) creates material
obligations or liabilities on the part of the landlord.
If the Debt Service Coverage Ratio shall fall below 1.5, but no Event
of Default shall have occurred under the Loan Documents, then Borrower or Lessee
(as applicable) may enter into Leases that are not Material Leases for
commercial spaces and rooftop space for antennas, relay stations, and other
customary purposes (collectively, "NON-MATERIAL LEASES"), and may amend, modify,
or terminate the same, without the consent or approval of Lender, provided
Borrower or Lessee complies with the provisions of paragraphs (a) through (c)
above with respect to such Non-Material Leases
5.19 MANAGEMENT AGREEMENT AND LICENSE AGREEMENT RESTRICTIONS. Neither
Borrower nor Lessee shall, without the prior, written consent of Lender, (i)
amend or modify the Management Agreement or License Agreement, (ii) extend or
renew the Management Agreement or License Agreement (except in accordance with
the provisions of Section 8 of the Loan Agreement), (iii) terminate or accept
the surrender of the Management Agreement or the License Agreement (other than a
termination of the Management Agreement or the License Agreement on account of a
material default by the Manager or the Licensor, respectively, where Borrower
timely cures any resulting default under the Loan Documents and enters into a
replacement agreement in accordance with the provisions of Section 8 of the Loan
Agreement), (iv) enter into any new Management Agreement or License Agreement
(other than in accordance with Section 8
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of the Loan Agreement), or (v) grant any consent or approval required under the
Management Agreement or License Agreement that is inconsistent with the terms of
the Loan Documents.
5.20 ADDITIONAL SECURITY. No other security now existing or taken later
to secure the Obligations shall be affected by the execution of the Loan
Documents and all additional security shall be held as cumulative. The taking of
additional security, execution of partial releases, or extension of the time of
payment obligations of Borrower shall not diminish the effect and lien of this
Instrument and shall not affect the liability or obligations of any maker or
guarantor. Neither the acceptance of the Loan Documents nor their enforcement
shall prejudice or affect Lender's right to realize upon or enforce any other
security now or later held by Lender. Lender may enforce the Loan Documents or
any other security in such order and manner as it may determine in its
discretion.
5.21 FURTHER ACTS. Borrower shall (and Lessee, by its joinder to this
Instrument, agrees to) take all necessary actions to (i) keep valid and
effective the lien and rights of Lender under the Loan Documents and (ii)
protect the lawful owner of the Loan Documents. Promptly upon request by Lender
and at Borrower's expense, Borrower shall execute additional instruments and
take such actions as Lender reasonably believes are necessary or desirable to
(a) maintain or grant Lender a first-priority, perfected lien on the Property,
(b) ensure Lender that Lender will be able to realize on the Property following
an Event of Default under the Loan Documents, (c) correct any error or omission
in the Loan Documents, and (d) effect the intent of the Loan Documents,
including filing/recording the Loan Documents, additional mortgages or deeds of
trust, financing statements, and other instruments.
ARTICLE VI
ADDITIONAL ADVANCES; EXPENSES; SUBROGATION
6.1 EXPENSES AND ADVANCES. Borrower shall pay all reasonable appraisal,
recording, filing, registration, brokerage, abstract, title insurance (including
premiums), UCC search, escrow, attorneys' (but not in-house staff), engineers',
environmental engineers', environmental testing, and architects' fees, costs
(including travel), expenses, and disbursements incurred by Borrower or Lender
in connection with the granting, closing, servicing, and enforcement of (a) the
Loan and Documents or (b) attributable to Borrower or Lessee as owners of the
Property. The term "COSTS" shall mean any of the foregoing incurred in
connection with (a) any default by Borrower or Lessee under the Loan Documents,
(b) the servicing of the Loan, or (c) the exercise, enforcement, compromise,
defense, litigation, or settlement of any of Lender's rights or remedies under
the Loan Documents or relating to the Loan or the Obligations. If Borrower or
Lessee fails to pay any amounts or perform any actions required under the Loan
Documents, Lender may (but shall not be obligated to) advance sums to pay such
amounts or perform such actions. Borrower (and, by its subordination to this
Instrument, Lessee) grants to Lender the right to enter upon and take possession
of the Property to prevent or remedy any such failure and the right to take such
actions in Borrower's or Lessee's name. No advance or performance shall be
deemed to have cured a default by Borrower or Lessee. All (a) sums advanced by
or payable to Lender per this Section or under applicable Laws, (b) except as
expressly provided in the Loan Documents, payments due under the Loan Documents
which are not paid in full when due, and (c) all Costs,
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shall: (i) be deemed demand obligations, (ii) bear interest at the applicable
interest rate specified in the Note, which shall be the Default Rate unless
prohibited by Laws, until paid if not paid on demand, (iii) be part of, together
with such interest, the Obligations , and (iv) be secured by the Loan Documents.
Lender, upon making any such advance, shall also be subrogated to rights of the
person receiving such advance.
6.2 SUBROGATION. If any proceeds of the Note were used to extinguish,
extend or renew any indebtedness on the Property, then, to the extent of the
funds so used, (a) Lender shall be subrogated to all rights, claims, liens,
titles and interests existing on the Property held by the holder of such
indebtedness and (b) these rights, claims, liens, titles and interests are not
waived but rather shall (i) continue in full force and effect in favor of Lender
and (ii) are merged with the lien and security interest created by the Loan
Documents as cumulative security for the payment and performance of the
Obligations.
ARTICLE VII
SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY
7.1 GENERAL RESTRICTIONS. It shall be an Event of Default and, at the
sole option of Lender, Lender may accelerate the Obligations and the entire
Obligations (including any Prepayment Premium) shall become immediately due and
payable, if either Borrower or Lessee shall cause, permit, or suffer any
Transfer of the Property or any portion thereof, or any Indirect Transfer other
than a Permitted Indirect Transfer, without the prior written consent of Lender
(which consent may be given or withheld for any reason, or for no reason, or
given conditionally, in Lender's sole discretion); provided, however, that
Borrower and Lessee shall be permitted to make those Transfers provided for
under Sections 4, 5, and 6 of the Loan Agreement (subject to satisfaction of the
terms of the Loan Agreement).
7.2 PROVISIONS FOR MERGER OF FELCOR OR FELCOR REIT. In the event of a
Transfer in the nature of a merger, tender offer, or similar transaction in
which FelCor or the FelCor REIT, or all or substantially all of assets of either
of them, are merged into, acquired by, or combined with another entity
(collectively, a "SUCCESSOR Entity"), such Transfer shall constitute a Permitted
Indirect Transfer if (and only if) the following conditions are satisfied:
(i) such Successor Entity has existing business experience in
the ownership and portfolio management of real estate assets;
(ii) such Successor Entity has a net Worth at least equal to
the net worth of FelCor or FelCor REIT (whichever party is engaged in
such transaction) as of the date of such transaction;
(iii) such Successor Entity expressly assumes the obligations
of FelCor or the FelCor REIT (as the case may be) under the Loan
Documents and executes any documents reasonably required by Lender to
confirm the same, which documents shall be satisfactory in form and
substance to Lender;
(iv) such Successor Entity is a United States person;
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(v) at the time of the Transfer, the aggregate Debt Service
Coverage Ratio for the Hotel Properties for the most recent full twelve
(12) month period is not less than 1.50;
(vi) at the time of the Transfer, the Loan to Value Ratio does
not exceed sixty percent (60%);
(vii) Borrower pays to Lender a non-refundable servicing fee
of $25,000 at the time of the request, and an additional fee equal to
one-quarter of one percent (0.25%) of the outstanding principal balance
of the Loan (less the $25,000 servicing fee) at the time of such
Transfer;
(viii) Borrower delivers to Lender copies of all documents
evidencing and governing such Transfer;
(ix) the Transfer does not cause a violation of the provisions
of the ERISA Certificate and Indemnification Agreement delivered to
Lender at Closing, and the Successor Entity executes a new ERISA
Certificate and Indemnification Agreement in favor of Lender in
accordance with the guidelines with respect thereto then applicable to
Lender's mortgage loans; and
(x) Borrower or the Successor Entity pays all reasonable fees,
costs and expenses incurred by Lender in connection with the proposed
Transfer, including (without limitation) all legal fees for Lender's
outside counsel, whether or not the Transfer is actually consummated.
Notwithstanding the foregoing, however, if the result of such Transfer
is that the Loan, together with other loans then held by Lender to the
Successor Entity (or its predecessor) and its subsidiaries or
affiliates, would exceed the total amount of loans that Lender may have
outstanding to any one entity or group of related entities under the
lending policies then generally applied by Lender or under lending
regulations to which Lender is then subject, Lender shall be entitled
to elect, by written notice to Borrower, to accelerate the maturity
date of the Loan to a date no earlier than the date of closing of such
Transfer or thirty (30) days following the date of such notice
(whichever is later), but in such case Borrower shall not be required
to pay any Prepayment Premium.
7.3 PROVISIONS ON SALE OF LESSEE. It shall be a Permitted Indirect
Transfer and Lender shall consent to a sale of (a) all of the membership
interests in Lessee or (b) all of the assets of the Lessee, if (and only if) the
following conditions are satisfied:
(i) the proposed purchaser of such membership interests or
assets is a reputable, nationally-recognized operator or manager of
hotel properties similar to the Property reasonably acceptable to
Lender;
(ii) such purchaser has a net worth at least equal to Thirty
Million Dollars ($30,000,000);
(iii) such purchaser expressly assumes (in the case of an
asset sale) the obligations of the Lessee under, or must expressly
acknowledge (in the case of a sale of
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membership interests) that the Lessee will be and remain subject to,
the terms and provisions of the Primary Lease, the Loan Documents, and
the Management Agreements and License Agreements, and such purchaser
executes any documents reasonably required by Lender to confirm the
same, which documents shall be satisfactory in form and substance to
Lender;
(iv) the purchaser is a United States person;
(v) at the time of the sale, the aggregate Debt Service
Coverage Ratio for all of the Hotel Properties for the most recent full
twelve (12) month period is not less than 1.50;
(vi) Borrower or Lessee pays to Lender a non-refundable
servicing fee of $50,000;
(vii) Borrower or Lessee delivers to Lender copies of all
documents evidencing and governing such sale;
(viii) the sale does not cause a violation of the provisions
of the ERISA Certificate and Indemnification Agreement delivered to
Lender at Closing; and
(ix) Borrower, Lessee or the purchaser pays all reasonable
fees, costs and expenses incurred by Lender in connection with the
proposed sale, including (without limitation) all legal fees for
Lender's outside counsel, whether or not the sale is actually
consummated. Upon the consummation of a sale permitted under this
Section 7.3 in accordance with the foregoing requirements, the
successor lessee as then owned or constituted shall be referred to
herein as a "Successor Lessee".
ARTICLE VIII
DEFAULTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The following shall be an "EVENT OF DEFAULT"
(regardless of whether the breach, failure, default, or other event or
circumstance specified below was caused or permitted by, or attributable to the
actions or failure to act, of Borrower or Lessee):
(a) if Borrower fails to make any payment required under the
Note, this Instrument, the Other Mortgages or any other Loan Documents
when due and such failure continues for five (5) days, provided,
however, that if Borrower fails to make any payment required under the
Note when due twice within any twelve (12) month period, Borrower shall
have no further right to any grace period during that twelve (12) month
period;
(b) except for defaults listed in the other subsections of
this Section 8.1, if Borrower or Lessee fails to perform or comply with
any other provision contained in the Loan Documents and the default is
not cured within thirty (30) days following written notice to Borrower
(the "GRACE PERIOD"); provided, however, that Lender may extend the
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Grace Period up to an additional thirty (30) days (for a total of sixty
(60) days from the date of default) if (i) Borrower or Lessee, as the
case may be, immediately commences and diligently pursues the cure of
such default and delivers (within the Grace Period) to Lender a written
request for more time and (ii) Lender determines in good faith that (1)
such default cannot be cured within the Grace Period but can be cured
within sixty (60) days after the default, (2) no lien or security
interest created by the Loan Documents will be impaired prior to
completion of such cure, and (3) Lender's immediate exercise of any
remedies provided hereunder or by law is not necessary for the
protection or preservation of the Property or Lender's security
interest;
(c) if any representation made (i) in connection with the Loan
or Obligations or (ii) in the Application or Loan Documents shall be
false or misleading in any material respect;
(d) there is a Transfer or Indirect Transfer (other than a
Permitted Indirect Transfer) without Lender's consent;
(e) the occurrence of a default or event of default after the
expiration of applicable cure periods, if any, under any of the other
Loan Documents, including, without limitation, the Other Mortgages;
(f) the occurrence of (i) a default resulting in the
termination of the Primary Lease, the Management Agreement or the
License Agreement after the expiration of applicable cure periods
(unless the same shall be replaced in accordance with the provisions of
Section 8 of the Loan Agreement within thirty (30) days after the
termination of the existing agreement), (ii) the expiration of the
Primary Lease, Management Agreement, or License Agreement (unless the
same is being replaced as of the expiration date thereof in accordance
with Section 8 of the Loan Agreement), or (iii) the occurrence of any
other termination of the Primary Lease, Management Agreement or License
Agreement without the prior, written consent of Lender;
(g) if Borrower or Lessee (excluding a Successor Lessee, but
subject to paragraph (f) above) shall (i) become insolvent, (ii) make a
transfer in fraud of creditors, (iii) not be able to pay its debts as
such debts become due, or (iv) admit in writing its inability to pay
its debts as they become due;
(h) if Borrower or Lessee shall make an assignment for the
benefit of creditors; or if any bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceeding, or any other
proceedings for the relief of debtors, is instituted by or against
Borrower or Lessee, and, if instituted against Borrower or Lessee, is
allowed, consented to, or not dismissed within the earlier to occur of
(i) ninety (90) days after such institution or (ii) the filing of an
order for relief,
(i) if any of the events in Sections 8.1(g) or (h) shall occur
with respect to (i) the General Partner of Borrower, (ii) FelCor or
FelCor REIT, or (iii) any guarantor of payment or performance of any of
the Obligations;
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(j) if the Property shall be taken, attached, or sequestered
on execution or other process of law in any action against Borrower;
(k) if any default occurs under the Environmental Indemnity
and such default is not cured within any applicable grace period in
that document;
(l) if Borrower or Lessee shall fail at any time to obtain,
maintain, renew, or keep in force the insurance policies required by
Section 5.6 within ten (10) days after written notice;
(m) if Borrower shall be in material default under any other
mortgage or security agreement covering any part of the Property,
whether it be superior or junior in lien to this Instrument, other than
any equipment lease(s) permitted under the Loan Documents as to which
(i) the aggregate liability of Borrower under any and all such
equipment leases that may be in default at any one time does not exceed
$20,000 and (ii) none of the personal property covered thereby is
essential to the proper operation of the Property in accordance with
the provisions of the License Agreement, Management Agreement, and Loan
Documents;
(n) if any claim of priority (except based upon a Permitted
Encumbrance) to the Loan Documents by title, lien, or otherwise shall
be upheld by any court of competent jurisdiction or shall be consented
to by Borrower or Lessee; or
(o) (i) the consummation by Borrower or Lessee of any
transaction which would cause (A) the Loan or any exercise of Lender's
rights under the Loan Documents to constitute a non-exempt prohibited
transaction under ERISA or (B) a violation of a state statute
regulating governmental plans; (ii) the failure of any representation
in Section 5.11 to be true and correct in all respects; or (iii) the
failure of Borrower or Lessee to provide Lender with the written
certifications required by Section 5.11.
8.2 REMEDIES. If an Event of Default occurs, Lender or any person
designated by Lender may (but shall not be obligated to) take any action
(separately, concurrently, cumulatively, and at any time and in any order)
permitted under any Laws, without notice, demand, presentment, or protest (all
of which are hereby waived), to protect and enforce Lender's rights under the
Loan Documents or Laws including the following actions:
(a) accelerate and declare the entire unpaid Obligations
immediately due and payable, except for defaults under Sections 8.1
(g), (h), (i) or (j) which shall automatically make the Obligations
immediately due and payable;
(b) judicially or otherwise, (i) completely foreclose this
Instrument or (ii) partially foreclose this Instrument for any portion
of the Obligations due and the lien and security interest created by
this Instrument shall continue unimpaired and without loss of priority
as to the remaining Obligations not yet due;
(c) sell for cash or upon credit the Property and all right,
title and interest of Borrower therein and rights of redemption
thereof, pursuant to power of sale;
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(d) recover judgment on the Note either before, during or
after any proceedings for the enforcement of the Loan Documents and
without any requirement of any action being taken to (i) realize on the
Property or (ii) otherwise enforce the Loan Documents;
(e) seek specific performance of any provisions in the Loan
Documents;
(f) apply for the appointment of a receiver, custodian,
trustee, liquidator, or conservator of the Property without (i) notice
to any person, (ii) regard for (A) the adequacy of the security for the
Obligations or (B) the solvency of Borrower, Lessee or any other person
liable for the payment of the Obligations; and Borrower, Lessee and any
other person so liable waives or shall be deemed to have waived the
foregoing and any other objections to the fullest extent permitted by
Laws and consents or shall be deemed to have consented to such
appointment;
(g) with or without entering upon the Property, (i) exclude
Borrower, Lessee and any other person from the Property without
liability for trespass, damages, or otherwise, (ii) take possession of,
and Borrower shall (and Lessee, by its joinder to this Instrument,
agrees to) surrender on demand, all books, records, and accounts
relating to the Property, (iii) give notice to Tenants or any person,
make demand for, collect, receive, sue for, and recover in its own name
all Rents and cash collateral derived from the Property; (iv) use,
operate, manage, preserve, control, and otherwise deal with every
aspect of the Property including (A) conducting its business, (B)
insuring it, (C) making all repairs, renewals, replacements,
alterations, additions, and improvements to or on it, (D) completing
the construction of any Improvements in manner and form as Lender deems
advisable, (E) executing, modifying, enforcing, and terminating new and
existing Leases on such terms as Lender deems advisable and evicting
any Tenants in default, and (F) executing, modifying, enforcing and
terminating the Management Agreement, License Agreement, or any other
management agreement or license agreement for the operation of the
Property, as Lender deems advisable; (v) apply the receipts from the
Property to payment of the Obligations, in any order or priority
determined by Lender, after first deducting all Costs, expenses, and
liabilities incurred by Lender in connection with the foregoing
operations and all amounts needed to pay the Impositions and other
expenses of the Property, as well as just and reasonable compensation
for the services of Lender and its attorneys, agents, and employees;
and/or (vi) in every case in connection with the foregoing, exercise
all rights and powers of Borrower, Lessee or Lender with respect to the
Property, either in Borrower's or Lessee's name or otherwise;
(h) release any portion of the Property for such
consideration, if any, as Lender may require without, as to the
remainder of the Property, impairing or affecting the lien or priority
of this Instrument or improving the position of any subordinate
lienholder with respect thereto, except to the extent that the
Obligations shall have been actually reduced, and Lender may accept by
assignment, pledge, or otherwise any other property in place thereof as
Lender may require without being accountable for so doing to any other
lienholder;
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(i) apply any Deposits to the following items in any order and
in Lender's sole discretion: (A) the Obligations, (B) Costs, (C)
advances made by Lender under the Loan Documents, and/or (D)
Impositions;
(j) take all actions permitted under the UCC, including (i)
the right to take possession of all of the Personal Property and take
such actions as Lender deems advisable for the care, protection and
preservation of the Personal Property and (ii) request Borrower and/or
Lessee at its expense to assemble the Personal Property and make it
available to Lender at a convenient place acceptable to Lender. Any
notice of sale, disposition or other intended action by Lender with
respect to the Personal Property sent to Borrower or Lessee at least
five (5) days prior to such action shall constitute commercially
reasonable notice to Borrower or Lessee; or
(k) take any action permitted under any Laws or any other Loan
Document. If Lender exercises any of its rights under Section 8.2(g),
Lender shall not (a) be deemed to have entered upon or taken possession
of the Property except upon the exercise of its option to do so,
evidenced by its demand and overt act for such purpose; (b) be deemed a
beneficiary or mortgagee in possession by reason of such entry or
taking possession; nor (c) be liable (i) to account for any action
taken pursuant to such exercise other than for Rents actually received
by Lender, (ii) for any loss sustained by Borrower or Lessee resulting
from any failure to lease the Property, or (iii) any other act or
omission of Lender except for losses caused by Lender's willful
misconduct or gross negligence. Borrower hereby (and Lessee, by its
subordination to this Instrument, thereby) consents to, ratifies, and
confirms the exercise by Lender of its rights under this Instrument and
appoints Lender as its attorney-in- fact, which appointment shall be
deemed to be coupled with an interest and irrevocable, for such
purposes.
8.3 EXPENSES. All Costs, expenses, or other amounts paid or incurred by
Lender in the exercise of its rights and remedies under the Loan Documents,
together with interest thereon at the applicable interest rate specified in the
Note, which shall be the Default Rate unless prohibited by Laws, shall be (a)
part of the Obligations, (b) secured by this Instrument, and (c) allowed and
included as part of the Obligations in any foreclosure, decree for sale, power
of sale, or other judgment or decree enforcing Lender's rights under the Loan
Documents.
8.4 RIGHTS PERTAINING TO SALES. To the extent permitted under (and in
accordance with) any Laws, the following provisions shall, as Lender may
determine in its sole discretion, apply to any sales of the Property under this
Article VIII, whether by judicial proceeding, judgment, decree, power of sale,
foreclosure or otherwise: (a) Lender may conduct multiple sales of any part of
the Property in separate tracts or in its entirety and Borrower hereby (and
Lessee, by its subordination to this Instrument, thereby) waives any right to
require otherwise; (b) any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for such postponed
or adjourned sale without further notice; and (c) Lender may acquire the
Property and, in lieu of paying cash, may pay by crediting against the
Obligations the amount of its bid, after deducting therefrom any sums which
Lender is authorized to deduct under the provisions of the Loan Documents.
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8.5 APPLICATION OF PROCEEDS. Any proceeds received from any sale or
disposition under this Article VIII or otherwise, together with any other sums
held by Lender, shall, except as expressly provided to the contrary, be applied
in the order determined by Lender to: (a) payment of all Costs and expenses of
any enforcement action or foreclosure sale, including interest thereon at the
applicable interest rate specified in the Note, which shall be the Default Rate
unless prohibited by Laws, (b) all taxes, Assessments, and other charges unless
the Property was sold subject to these items; (c) payment of the Obligations in
such order as Lender may elect; (d) payment of any other sums secured or
required to be paid by Borrower; and (e) payment of the surplus, if any, to any
person lawfully entitled to receive it. Borrower and Lender intend and agree
that during any period of time between any foreclosure judgment that may be
obtained and the actual foreclosure sale that the foreclosure judgment will not
extinguish the Loan Documents or any rights contained therein including the
obligation of Borrower to pay all Costs and to pay interest at the applicable
interest rate specified in the Note, which shall be the Default Rate unless
prohibited by Laws.
8.6 ADDITIONAL PROVISIONS AS TO REMEDIES.
(a) The Obligations and Indebtedness under all of the Loan
Documents are not intended to be, and shall not be, apportioned among
any of the Hotel Properties, or any of the other security of Lender for
the Loan, so that each of the Hotel Properties and each and every other
lien, assignment, and security interest is intended to secure the
entire amount of the Indebtedness. In no event shall any internal
apportionment or allocation by Lender of the Indebtedness among the
Hotel Properties, whether for purposes of Lender's underwriting,
analysis, or administration of the Loan or otherwise, be binding on
Lender for any purpose.
(b) Upon an Event of Default, Lender shall be entitled to
foreclose against any one or more of the Hotel Properties in any order,
as Lender shall elect in its sole and absolute discretion, and no
election by Lender to foreclose against fewer than all of the Hotel
Properties shall constitute or be deemed to be (i) an election of
remedies by Lender or (ii) a waiver of Lender's right to foreclose
against any of the other Hotel Properties. Without in any manner
limiting Lender's remedies, Lender shall be entitled to commence
separate actions for foreclosure in any or all of the different
jurisdictions in which the Hotel Properties are located, either
concurrently or successively as Lender shall elect in its sole and
absolute discretion. Borrower hereby waives any and all rights to
object to Lender maintaining multiple actions for foreclosure and/or
collection of the Indebtedness (or, to the extent any such rights or
provisions are not waivable as a matter of law, Borrower stipulates and
agrees that such provisions shall not be interpreted to prevent Lender
from commencing, maintaining, and pursuing to judgment multiple actions
for foreclosure and collection of the Indebtedness in the different
jurisdictions in which the Hotel Properties are located, subject to
Lender applying the amounts realized in any such foreclosures to the
Indebtedness and Obligations as provided in this Instrument and the
Other Mortgages).
(c) In addition, upon the entry of any judgment of foreclosure
against any one or more (but fewer than all) of the Hotel Properties
and the completion of the sale of such
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Hotel Properties (including any necessary proceedings subsequent to
such sale in order to confirm or approve the same), the Amount Realized
Upon Foreclosure (as hereinafter defined) shall be applied to the
Indebtedness and Obligations in the manner provided in this Instrument
and the Other Mortgages, and the remaining Indebtedness and Obligations
which remain unsatisfied after each and any such application of the
Amount Realized Upon Foreclosure of such Hotel Properties shall
continue to be secured by this Instrument or the Other Mortgages (as
the case may be) as to which a foreclosure judgment and sale shall not
have been entered and completed as aforesaid, until all of the
Indebtedness and Obligations shall be satisfied in full. For purposes
of this Instrument and all Other Mortgages, the "AMOUNT REALIZED UPON
FORECLOSURE" as used in the preceding sentence with respect to any of
the Hotel Properties shall mean the amount of the successful bid in any
foreclosure sale with respect to the applicable Hotel Properties, as
confirmed in any confirmation of the foreclosure sale in the applicable
foreclosure proceedings or, if no confirmation proceedings are
available under the laws and procedures applicable to such foreclosure,
then as otherwise customarily determined under the applicable laws and
procedures (including by way of return of sale or deficiency judgment),
without regard to whether the successful bid is made by Lender, any
agent or affiliate of Lender, or any other person. Without limiting any
other remedies of Lender, Borrower agrees that Lender shall be entitled
to obtain a deficiency judgment against Borrower in any foreclosure
proceedings for the purpose of obtaining a judicial determination of
the Amount Realized Upon Foreclosure in any such foreclosure
proceedings.
(d) It is further agreed that if default be made in the
payment of any part of the Indebtedness secured by this Instrument, as
an alternative to the right of foreclosure for the full Indebtedness
after acceleration thereof, Lender shall have the right to institute
partial foreclosure proceedings with respect to any portion or portions
of said Indebtedness so in default (either for recovery of those
payments or installments which shall then be due and payable, without
acceleration of the Note, or for recovery of such payments and amounts
due under the Note as Lender may elect to accelerate, without
accelerating the entire Note) against any one or more of the Hotel
Properties, as Lender may elect, as if under a full foreclosure, and
without declaring the entire Indebtedness due (such proceeding being
hereinafter referred to as a "PARTIAL FORECLOSURE"), and provided that
if foreclosure judgment is entered with respect to the Property
pursuant to a partial foreclosure proceeding because of default of a
part of the Indebtedness, such judgment and sale pursuant thereto may
be made subject to the continuing lien of each of the Other Mortgages
for the unmatured part of the Indebtedness; and it is agreed that such
judgment or sale pursuant to a partial foreclosure, if so made, shall
not in any manner affect the unmatured or unaccelerated part of the
Indebtedness, but as to such unmatured or unaccelerated part, this
Instrument (to the extent foreclosure and sale shall not have been made
against all of the Property encumbered hereby) and each of the Other
Mortgages and the liens thereof shall remain in full force and effect
just as though no foreclosure judgment or sale had been entered or made
under the provisions of this Section. Notwithstanding the filing of any
partial foreclosure or entry of a judgment of foreclosure therein,
Lender may elect at any time prior to a foreclosure sale pursuant to
such
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judgment, to discontinue such partial foreclosure and to accelerate the
Indebtedness by reason of any uncured default or defaults upon which
such partial foreclosure was predicated or by reason of any other
defaults, and proceed with full foreclosure proceedings. It is further
agreed that several foreclosure sales may be made pursuant to partial
foreclosure without exhausting the right of full or partial foreclosure
sale for any unmatured part of the secured indebtedness, it being the
purpose to provide for a partial foreclosure sale of the Indebtedness
for any matured or accelerated portion of the Indebtedness without
exhausting the power to foreclose and to sell any of the Property or
any of the other Hotel Properties pursuant to any such partial
foreclosure for any other part of the Indebtedness whether matured at
the time or subsequently maturing, and without exhausting any right of
acceleration and full foreclosure.
(e) No failure, refusal, waiver, or delay by Lender to
exercise any rights under the Loan Documents upon any default or Event
of Default shall impair Lender's rights or be construed as a waiver of,
or acquiescence to, such or any subsequent default or Event of Default.
No recovery of any judgment by Lender and no levy of an execution upon
the Property or any other property of Borrower or Lessee shall affect
the lien and security interest created by this Instrument and such
liens, rights, powers, and remedies shall continue unimpaired as
before. Lender may resort to any security given by this Instrument or
any other security now given or hereafter existing to secure the
Obligations, in whole or in part, in such portions and in such order as
Lender may deem advisable, and no such action shall be construed as a
waiver of any of the liens, rights, or benefits granted hereunder.
Acceptance of any payment after any Event of Default shall not be
deemed a waiver or a cure of such Event of Default and such acceptance
shall be deemed an acceptance on account only. If Lender has started
enforcement of any right by foreclosure, sale, entry, or otherwise and
such proceeding shall be discontinued, abandoned, or determined
adversely for any reason, then Borrower, Lessee and Lender shall be
restored to their former positions and rights under the Loan Documents
with respect to the Property, subject to the lien and security interest
hereof.
8.7 WAIVER OF RIGHTS AND DEFENSES. To the fullest extent Borrower and
Lessee may do so under Laws, (a) neither Borrower nor Lessee will at any time
insist on, plead, claim, or take the benefit of (i) any statute or rule of law
now or later enacted providing for any appraisement, valuation, stay, extension,
moratorium, or redemption or (ii) any statute of limitations now or hereafter
applicable to any of the Obligations to the extent that such statute of
limitations would bar the assertion by Lender of any claim prior to the date
that is two (2) years after the maturity date of Loan; (b) each of Borrower and
Lessee, for itself, its successors and assigns, and for any person ever claiming
an interest in the Property (other than Lender), waives and releases all rights
of redemption, reinstatement, valuation, appraisement, notice of intention to
mature or declare due the whole of the Obligations, all rights to a marshaling
of the assets of Borrower or Lessee, including the Property, or to a sale in
inverse order of alienation, in the event of foreclosure of the liens and
security interests created under the Loan Documents; and (c) neither Borrower
nor Lessee shall be relieved of its obligation to pay the Obligations as
required in the Loan Documents nor shall the lien or priority of the Loan
Documents be impaired by any agreement renewing, extending, or modifying the
time of payment or the provisions of the Loan Documents (including a
modification of any interest rate), unless expressly released, discharged, or
modified by such
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agreement. Regardless of consideration and without any notice to or consent by
the holder of any subordinate lien, security interest, encumbrance, right,
title, or interest in or to the Property, Lender may (i) release any person
liable for payment of the Obligations or any portion thereof or any part of the
security held for the Obligations or (ii) modify (with the agreement of Borrower
or other applicable party or parties thereto) any of the provisions of the Loan
Documents without impairing or affecting the Loan Documents or the lien,
security interest, or the priority of the modified Loan Documents as security
for the Obligations over any such subordinate lien, security interest,
encumbrance, right, title, or interest.
ARTICLE IX
SECURITY AGREEMENT AND FIXTURE FILING
9.1 SECURITY AGREEMENT. This Instrument constitutes both a real
property mortgage and a "security agreement" within the meaning of the UCC. The
Property includes real and personal property and all tangible and intangible
rights and interest of Borrower in the Property. Borrower grants to Lender, as
security for the Obligations, a security interest in the Personal Property to
the fullest extent that the same may be subject to the UCC. Borrower authorizes
Lender to file any financing or continuation statements and amendments thereto
relating to the Personal Property without the signature of Borrower if permitted
by Laws.
9.2 FIXTURE FILING. This Instrument, upon recording or registration in
the real estate records of the proper office, shall constitute a "fixture
filing" within the meaning of Sections 9-313 and 9-402 of the UCC with respect
to any and all fixtures included within the term "Property" and any Personal
Property that may now be or hereafter become "fixtures" within the meaning of
Section 9-313 of the UCC.
ARTICLE X
LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES
10.1 LIMITED RECOURSE LIABILITY.
(a) GENERAL LIMITATION ON PERSONAL LIABILITY. Except as
provided in this Section 10.1, none of Borrower, the General Partner of
Borrower or FelCor (singularly or collectively, the "EXCULPATED
Parties") shall have any personal liability for the Loan or any
obligations set forth in the Loan Documents. Notwithstanding the
preceding sentence, Lender may bring a foreclosure action or other
appropriate action to enforce the Loan Documents or realize upon and
protect the Property (including, without limitation, naming the
Exculpated Parties in the actions);
(b) PARTIAL RECOURSE CARVEOUTS. Notwithstanding Section 10.1
(a), each of the Exculpated Parties shall have joint and several
personal liability for:
(i) any separate indemnity agreement, guaranty or
similar instrument furnished in connection with the Loan (including,
without limitation, the Environmental Indemnity and the ERISA
Certificate and Indemnification Agreement);
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(ii) any Assessments (accrued and/or payable) with
respect to the Property, whether payable by Borrower or Lessee;
(iii) any security deposits of tenants or subtenants
(whether held by Borrower or Lessee [other than a Successor Lessee])
(A) not turned over to Lender upon foreclosure, sale (pursuant to power
of sale), or conveyance in lieu thereof, or (B) not turned over to a
receiver or trustee for any Property after his/her appointment;
(iv) any insurance proceeds or condemnation awards
neither turned over to Lender nor used in compliance with the Loan
Documents (whether held by Borrower or Lessee [other than a Successor
Lessee]);
(v) if any of the Exculpated Parties or Lessee (other
than a Successor Lessee) executes an amendment or termination of any
Lease (other than the Primary Lease) in violation of the provisions of
the Loan Documents, the Exculpated Parties shall have personal
liability for the greater of:
(1) the present value (calculated at the
Discount Rate) of the aggregate total dollar amount (if any) by which
(x) rental income and/or other tenant obligations prior to the
amendment of such Lease exceeds (y) rental income and/or other tenant
obligations after the amendment of such Lease; or
(2) any termination fee or other
consideration paid;
(vi) intentional waste of all or any portion of the
Property;
(vii) any Rents received by any of the Exculpated
Parties or Lessee (other than a Successor Lessee) after an Event of
Default and not otherwise applied by Lessee to the rent payable under
the Primary Lease and by the Borrower to the Obligations, or applied to
the current (not deferred) operating expenses of the Property;
provided, however, that the Exculpated Parties shall have personal
liability for amounts paid as expenses to a person or entity related to
or affiliated with any of the Exculpated Parties unless the payments
are expressly permitted in the Loan Documents; and further provided,
that for purposes of this provision, Promus Hotels, Inc. or its
subsidiaries, as Manager of the Properties, shall not be deemed
affiliated with Borrower;
(viii) Borrower's failure to maintain a letter or
letters of credit, (if any), required under the Loan Documents or
otherwise in connection with the Loan;
(ix) any payments required to be made by Lessee to
Borrower under the Primary Lease that are withheld, set off, or
otherwise not made by Lessee when due, in any case in which Borrower
shall have approved or consented to the same;
(x) Borrower's or Lessee's failure to cause funds to
be paid into the FF&E Account or the failure by either of them to use
or apply funds disbursed from the FF&E Account in accordance with the
provisions of Section 3 of the Loan Agreement; or
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(xi) all legal fees (excluding the allocated costs of
Lender's staff attorneys) and other expenses incurred by Lender in
enforcing the Loan Documents if Borrower contests, delays, or otherwise
hinders or opposes (including, without limitation, the filing of a
bankruptcy) any of Lender's enforcement actions, other than in the
event that Borrower finally prevails in establishing that Borrower was
not in default and Lender was not entitled to exercise its remedies
under the Loan Documents.
(c) FULL RECOURSE CARVEOUTS. Notwithstanding Section 10.1(a),
each of the Exculpated Parties shall have joint and several personal
liability for all of the Obligations if:
(i) there is a Transfer or Indirect Transfer (other
than a Permitted Indirect Transfer) without Lender's consent;
(ii) there shall be any fraud or material
misrepresentation by any of the Exculpated Parties or Lessee
in connection with the Property, the Loan Documents, the
Application, any due diligence materials delivered to Lender
in with respect to the Loan or any other aspect of the Loan;
(iii) the Property or any part thereof (including either the
interests of Borrower or the interests of Lessee) shall become
an asset in:
(A) a voluntary bankruptcy or insolvency
proceeding filed by Borrower or Lessee, or
(B) an involuntary bankruptcy or insolvency
proceeding filed against Borrower or Lessee which is
not dismissed within ninety (90) days of filing;
provided, however, that this subsection 10.1(c)(iii) shall not apply if
(x) an involuntary bankruptcy is filed by Lender, (y) any voluntary
bankruptcy proceeding is filed by a Successor Lessee, or (z) an
involuntary bankruptcy proceeding is filed against a Successor Lessee
(other than a proceeding filed by, or with the express consent of, the
Borrower); and provided further, that if:
(1) after ninety (90) days following the
filing of any involuntary bankruptcy proceeding described in
clause (B) above, such proceeding is dismissed with prejudice
and without adversely affecting the enforceability or priority
of any of the Loan Documents;
(2) such dismissal occurs prior to the
occurrence of any of the following: (aa) the entry of any
order that adversely affects the enforceability or priority of
any of the Loan Documents (other than solely by reason of the
automatic stay), (bb) the entry of any order granting any
person relief from the automatic stay to foreclose against,
enforce any lien or security interest in, levy upon, or
repossess any material assets of Borrower or Lessee that
constitute a part
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of, or that relate to, the Property, or to terminate any of
the Management Agreements, License Agreements, or Material
Leases, (cc) the liquidation of any material assets of
Borrower or Lessee (other than a Successor Lessee) that
constitute a part of, or that relate to, the Property, (dd)
the entry of any order approving the rejection or termination
of any Primary Lease, any Management Agreement, any License
Agreement, or any Material Lease, or (ee) the entry of any
order approving any plan of reorganization for Borrower or
Lessee (other than a Successor Lessee); and
(3) throughout the period following the
filing of such bankruptcy proceeding, Borrower or one or more
of the Exculpated Parties shall have continued to make regular
payments of debt service on a timely basis in accordance with
the provisions of the Loan Documents; then, the Exculpated
Parties shall be personally liable only for the actual
damages, losses, costs and expenses (including attorneys'
fees) incurred by Lender (expressly including any diminution,
loss or damage to the Property) as a result of such bankruptcy
filing;
(iv) any of the Exculpated Parties or Lessee executes
an amendment or termination of the Primary Lease, or any of the
Exculpated Parties or Lessee (other than a Successor Lessee) executes
or authorizes any amendment of or terminates the Management Agreement
or License Agreement, in each case without Lender's prior written
consent (in any case in which Lender's consent was required under the
Loan Documents) or other than in accordance with the provisions of
Section 8 of the Loan Agreement; or
(v) such liability shall arise by reason of the
application of the provisions of Section 8 of the Loan Agreement.
Notwithstanding the foregoing, following the occurrence of an event described in
provisions of subsections 10.1(c)(i), 10.1(c)(ii) and 10.1(c)(iv), above, if
Borrower (1) establishes that the same was inadvertent, (2) promptly gives
Lender written notice of such event, and (3) cures the same to the reasonable
satisfaction of Lender within thirty (30) days after any senior officer of
Borrower, FelCor, or the FelCor REIT first had actual knowledge thereof
(regardless of whether Lender shall have given any notice on account thereof),
the Exculpated Parties shall be personally liable only for any actual damages,
losses, costs and expenses incurred by Lender (including reasonable attorneys'
fees) incurred by Lender as a result of the events described in subsections
10.1(c)(i), 10.1(c)(ii) and 10.1(c)(iv).
10.2 GENERAL INDEMNITY. Borrower agrees that while Lender has no
liability to any person in tort or otherwise as lender and that Lender is not an
owner or operator of the Property, Borrower shall, at its sole expense, protect,
defend, release, indemnify and hold harmless the Indemnified Parties (defined
below) from any Losses (defined below) imposed on, incurred by, or asserted
against the Indemnified Parties, directly or indirectly, arising out of or in
connection with the Property, Loan, or Loan Documents, including Losses;
provided, however, that the foregoing indemnities shall not apply to any Losses
caused by the gross negligence or willful misconduct of the Indemnified Parties.
The term "LOSSES" shall mean any claims, suits, liabilities (including
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strict liabilities), actions, proceedings, obligations, debts, damages, losses,
Costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts
paid in settlement of whatever kind including attorneys' fees (but not in-house
staff) and all other costs of defense. The term "INDEMNIFIED PARTIES" shall mean
(a) Lender, (b) any prior owner or holder of the Note, (c) any existing or prior
servicer of the Loan, (d) the officers, directors, shareholders, partners,
employees and trustees of any of the foregoing, and (e) the heirs, legal
representatives, successors and assigns of each of the foregoing.
10.3 TRANSACTION TAXES INDEMNITY. Borrower shall, at its sole expense,
protect, defend, release, indemnify and hold harmless the Indemnified Parties
from all Losses imposed upon, incurred by, or asserted against the Indemnified
Parties or the Loan Documents relating to Transaction Taxes.
10.4 ERISA INDEMNITY. Borrower and the other persons, if any, have
executed and delivered the Erisa Certificate and Indemnification Agreement dated
the date hereof to Lender (the "ERISA CERTIFICATE AND INDEMNIFICATION
AGREEMENT").
10.5 BROKER INDEMNITY. Borrower represents and warrants that it has not
retained or used the services of any broker in connection with the Loan and that
no brokerage commissions or fees shall be payable by either party with respect
to the Loan. Borrower shall, at its sole expense, protect, defend, release,
indemnify and hold harmless the Indemnified Parties against all Losses imposed
upon, incurred by, or asserted against the Indemnified Parties from the payment
of any brokerage commissions or fees of any kind with respect to the Loan (other
than brokers claiming through or retained by Lender), and for any legal fees or
expenses incurred by Lender in connection with any claims for such commissions
or fees.
10.6 ENVIRONMENTAL INDEMNITY. Borrower and other persons, if any, have
executed and delivered the Environmental Indemnity Agreement dated the date
hereof to Lender ("ENVIRONMENTAL INDEMNITY").
10.7 DUTY TO DEFEND, COSTS AND EXPENSES. Upon request, whether
Borrower's obligation to indemnify Lender arises under this Article X or in the
Loan Documents, Borrower shall defend the Indemnified Parties (in Borrower's or
the Indemnified Parties' names) by attorneys and other professionals approved by
the Indemnified Parties. Notwithstanding the foregoing, the Indemnified Parties
may, in their sole discretion, engage their own attorneys and professionals to
defend or assist them and, if there exists an Event of Default, at their option,
their attorneys shall control the resolution of any claims or proceedings. Upon
demand, Borrower shall pay or, in the sole discretion of the Indemnified
Parties, reimburse and/or indemnify the Indemnified Parties for all Costs
imposed on, incurred by, or asserted against the Indemnified Parties by reason
of any items set forth in this Article X and/or the enforcement or preservation
of the Indemnified Parties' rights under the Loan Documents. Any amount payable
to the Indemnified Parties under this Section shall (a) be deemed a demand
obligation, (b) be part of the Obligations, (c) bear interest at the applicable
interest rate specified in the Note, which shall be the Default Rate unless
prohibited by Laws, until paid if not paid on demand, and (d) be secured by this
Instrument.
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10.8 SURVIVAL. Notwithstanding anything to the contrary in the Loan
Documents, the obligations of Borrower under Sections 10.3, 10.4, 10.5, 10.6 and
10.7 shall survive (a) repayment of the Obligations, (b) any termination,
satisfaction, assignment or foreclosure of this Instrument, (c) the acceptance
by Lender (or any nominee) of a deed in lieu of foreclosure, (d) a plan of
reorganization filed under the Bankruptcy Code, or (e) the exercise by the
Lender of any rights in the Loan Documents; provided, however, that Lender's
recourse for any such surviving obligations shall be limited to Borrower's
rights, title, and interests in the Hotel Properties and any and all income and
proceeds thereof. Borrower's obligations under this Article X shall not be
affected by the absence or unavailability of insurance covering the same or by
the failure or refusal by any insurance carrier to perform any obligation under
any applicable insurance policy.
ARTICLE XI
ADDITIONAL PROVISIONS
11.1 USURY SAVINGS CLAUSE. All agreements in the Loan Documents are
expressly limited so that in no event whatsoever shall the amount paid or agreed
to be paid under the Loan Documents for the use, forbearance, or detention of
money exceed the highest lawful rate permitted by Laws. If, at the time of
performance, fulfillment of any provision of the Loan Documents shall involve
transcending the limit of validity prescribed by Laws, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity. If
Lender shall ever receive as interest an amount which would exceed the highest
lawful rate, the receipt of such excess shall be deemed a mistake and (a) shall
be canceled automatically or (b) if paid, such excess shall be (1) credited
against the principal amount of the Obligations to the extent permitted by Laws
or (ii) rebated to Borrower if it cannot be so credited under Laws. Furthermore,
all sums paid or agreed to be paid under the Loan Documents for the use,
forbearance, or detention of money shall to the extent permitted by Laws be
amortized, prorated, allocated, and spread throughout the full stated term of
the Note until payment in full so that the rate or amount of interest on account
of the Obligations does not exceed the maximum lawful rate of interest from time
to time in effect and applicable to the Obligations for so long as the
Obligations is outstanding.
11.2 NOTICES. Any notice, request, demand, consent, approval,
direction, agreement, or other communication (any "NOTICE") required or
permitted under the Loan Documents shall be in writing and shall be validly
given if sent by a nationally-recognized courier that obtains receipts,
delivered personally by a courier that obtains receipts, or mailed by United
States certified mail (with return receipt requested and postage prepaid)
addressed to the applicable person as follows:
If to Borrower: FELCOR/CSS HOLDINGS, L.P.
c/o FelCor Lodging Limited Partnership
545 E. John Carpenter Freeway, Suite 1300
Irving, Texas 75062-3933
Attention: Andrew Welch
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With a copy of notices sent to Borrower to:
FelCor/CSS Holdings, L.P.
545 E. John Carpenter Freeway, Suite 1300
Irving, Texas 75062-3933
Attention: Joel Eastman, Esq.
and
Jenkens & Gilchrist
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery, Esq.
If to Lender: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
Prudential Capital Group
Two Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Mortgage Loan Customer Service
Reference Loan No. 6-103-269
With a copy of notices sent to Lender to:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
Prudential Capital Group
Two Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Regional Counsel
Reference Loan No. 6-103-269
Each notice shall be effective upon being so sent, delivered, or mailed, but the
time period for response or action shall run from the date of receipt as shown
on the delivery receipt. Refusal to accept delivery or the inability to deliver
because of a changed address for which no notice was given shall be deemed
receipt. Any party may periodically change its address for notice and specify up
to two (2) additional addresses for copies by giving the other party at least
ten (10) days' prior notice.
11.3 GOOD FAITH DISCRETION OF LENDER. Except as otherwise expressly
stated, whenever Lender's judgment, consent, or approval is required or Lender
shall have an option or election under the Loan Documents, such judgment, the
decision as to whether or not to consent to or approve the same, or the exercise
of such option or election shall be in the good faith discretion of Lender.
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11.4 APPLICABLE LAW AND SUBMISSION TO JURISDICTION. The Loan Documents
(subject to any contrary provisions contained therein) shall be governed by and
construed in accordance with the laws of the State of Illinois, except to the
extent that the law of the State in which the Property is located shall require
that the laws and procedures governing the manner of foreclosure of this
Instrument and the exercise of remedies under this Instrument be governed by
the law of such State, in which event the law of such State shall apply
thereto. Without limiting Lender's right to bring any action or proceeding
against Borrower, Lessee or the Property relating to the Obligations (an
"ACTION") in the courts of other jurisdictions, each of Borrower, Lender, and
(by its joinder to this Instrument) Lessee irrevocably (a) submits to the
jurisdiction of any state or federal court in the State of Illinois or the
Property State, (b) agrees that any Action may be heard and determined in such
court, and (c) waives, to the fullest extent permitted by Laws, the defense of
an inconvenient forum to the maintenance of any Action in such jurisdiction.
11.5 CONSTRUCTION OF PROVISIONS. The following rules of construction
shall apply for all purposes of this Instrument unless the context otherwise
requires: (a) all references to numbered Articles or Sections or to lettered
Exhibits are references to the Articles and Sections hereof and the Exhibits
annexed to this Instrument and such Exhibits are incorporated into this
Instrument as if fully set forth in the body of the Instrument; (b) all Article,
Section, and Exhibit captions are used for convenience and reference only and in
no way define, limit, or in any way affect this Instrument; (c) words of
masculine, feminine, or neuter gender shall mean and include the correlative
words of the other genders, and words importing the singular number shall mean
and include the plural number, and vice versa; (d) no inference in favor of or
against any party shall be drawn from the fact that such party has drafted any
portion of this Instrument; (e) all obligations of Borrower hereunder shall be
performed and satisfied by or on behalf of Borrower at Borrower's sole expense;
(f) the terms "include," "including," and similar terms shall be construed as if
followed by the phrase "without being limited to"; (g) the terms "Property",
"Land", "Improvements", and "Personal Property" shall be construed as if
followed by the phrase "or any part thereof"; (h) the term "Obligations" shall
be construed as if followed by the phrase "or any other sums secured hereby, or
any part thereof"; (i) the term "person" shall include natural persons, firms,
partnerships, corporations, governmental authorities or agencies, and any other
public or private legal entities; (j) the term "provisions," when used with
respect hereto or to any other document or instrument, shall be construed as if
preceded by the phrase "terms, covenants, agreements, requirements, and/or
conditions"; (k) the term "lease" shall mean "tenancy, subtenancy, lease,
sublease, or rental agreement," the term "lessor" shall mean "landlord,
sublandlord, lessor, and sublessor," and the term "Tenant" or "lessee" shall
mean "tenant, subtenant, lessee, and sublessee"; (1) the term "owned" shall mean
"now owned or later acquired"; (m) the terms "any" and "all" shall mean "any or
all"; and (n) the term "on demand" or "upon demand" shall mean "within five (5)
business days after written notice".
11.6 TRANSFER OF LOAN. Lender shall have the right, in its sole
discretion, at any time and from time to time, to sell, assign, syndicate,
participate out, or otherwise transfer and/or dispose of all or any portion of
its interest in the Loan, and, in connection therewith, Borrower shall (i)
permit any proposed purchaser, assignee, participant or co-lender (collectively,
"INVESTOR") access to the Property during reasonable hours and after reasonable
advance notice for inspection of same, and (ii) permit Lender to submit to
Investors any financial data and other
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information furnished by Borrower or any other person to Lender in connection
with the operation of the Property. As a precondition to the receipt of any
non-public or otherwise confidential information about Borrower or the Property,
such Investor shall agree to be bound by a confidentiality agreement. Borrower
shall, at the request of Lender and in connection with any such sale, assignment
or other transfer, cooperate as requested, and shall provide a certificate in
accordance with Section 5.16 and such other representations, warranties,
agreements and documents as are customary and usual in the marketplace or as may
be reasonably required by Lender in any such sale, assignment or other transfer,
and shall use diligent efforts to obtain such documents and agreements from
tenants and other third parties as may be reasonably requested; provided, that
Borrower shall not be required to incur (i) any liability beyond the scope of
the Loan Documents, or (ii) any material unreasonable expense (unless the same
is reimbursed by Lender). For purposes of the preceding sentence, any expense in
excess of $5,000 shall be deemed a "material unreasonable expense."
11.7 MISCELLANEOUS. If any provision of the Loan Documents shall be
held to be invalid, illegal, or unenforceable in any respect, this shall not
affect any other provisions of the Loan Documents and such provision shall be
limited and construed as if it were not in the Loan Documents. If title to the
Property becomes vested in any person other than Borrower or Lessee, Lender may,
without notice to Borrower or Lessee, deal with such person regarding the Loan
Documents or the Obligations in the same manner as with Borrower or Lessee
without in any way vitiating or discharging Borrower's or Lessee's liability
under the Loan Documents or being deemed to have consented to the vesting. If
both the lessor's and lessee's interest under any Lease ever becomes vested in
any one person, this Instrument and the lien and security interest created
hereby shall not be destroyed or terminated by the application of the doctrine
of merger and Lender shall continue to have and enjoy all its rights and
privileges as to each separate estate. Upon foreclosure of this Instrument, none
of the Leases shall be destroyed or terminated as a result of such foreclosure,
by application of the doctrine of merger or as a matter of law, unless Lender
takes all actions required by law to terminate the Leases as a result of
foreclosure. All of Borrower's and Lessee's covenants and agreements under the
Loan Documents shall run with the land and time is of the essence. Borrower
appoints Lender as its attorney-in-fact, which appointment is irrevocable and
shall be deemed to be coupled with an interest, with respect to the execution,
acknowledgment, delivery, filing or recording for and in the name of Borrower of
any of the documents required in accordance with Sections 5.4, 5.21, and 6.1
which Borrower fails to execute and deliver within ten (10) business days after
written request by Lender. The Loan Documents cannot be amended, terminated, or
discharged except in a writing signed by the party against whom enforcement is
sought. No waiver, release, or other forbearance by Lender will be effective
unless it is in a writing signed by Lender and then only to the extent expressly
stated. The provisions of the Loan Documents shall be binding upon Borrower and
Lessee and their successors and assigns including successors in interest to the
Property and inure to the benefit of Lender and its heirs, successors,
substitutes, and assigns. Where two or more persons have executed the Loan
Documents, the obligations of such persons shall be joint and several, except to
the extent the context clearly indicates otherwise. The Loan Documents may be
executed in any number of counterparts with the same effect as if all parties
had executed the same document. All such counterparts shall be construed
together and shall constitute one instrument, but in making proof hereof it
shall only be necessary to produce one such counterpart. Upon receipt of
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an affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of any Loan Document which is not of public record, and, in the case
of any mutilation, upon surrender and cancellation of the Loan Document,
Borrower will issue, in lieu thereof, a replacement Loan Document, dated the
date of the lost, stolen, destroyed or mutilated Loan Document containing the
same provisions.
11.8 ENTIRE AGREEMENT. Except as provided in Section 5.17, (a) the Loan
Documents constitute the entire understanding and agreement between Borrower and
Lender with respect to the Loan and supersede all prior written or oral
understandings and agreements with respect to the Loan including the Application
and (b) Borrower is not relying on any representations or warranties of Lender
except as expressly set forth in the Loan Documents.
11.9 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY ANY OF BORROWER, LENDER, OR LESSEE, WHETHER IN CONTRACT,
TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE LOAN
DOCUMENTS, OR ANY ACTS OR OMISSIONS OF BORROWER, LESSEE, OR LENDER IN CONNECTION
THEREWITH.
ARTICLE XII
LOCAL LAW PROVISIONS
[ADD STATE SPECIFIC PROVISIONS]
IN WITNESS WHEREOF, the undersigned has executed this Instrument as of
the day first set forth above.
BORROWER:
FELCOR/CSS HOLDINGS, L.P.,
a Delaware limited partnership
By: FelCor/CSS Hotels, L.L.C.,
its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
42
<PAGE> 48
STATE OF )
----------
)
COUNTY OF )
--------
On _________________ before me, _____________________, personally
appeared ___________________ (here insert name and title of the officer),
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
--------------------
<PAGE> 49
EXHIBIT A
SCHEDULE OF DEFINED TERMS
As used in this Instrument, the following terms shall have the meaning
specified:
Certificate of Representations and Warranties: That certain Certificate
of Representations and Warranties dated as of the date of this Instrument
executed by Borrower in favor of Lender, as the same may be amended, modified,
extended, renewed or restated from time to time.
Debt Service Coverage Ratio: The ratio, as reasonably determined by
Lender, calculated by dividing (i) NOI by (ii) the aggregate debt service
payments for any given calendar year on the Loan and on all other indebtedness
secured, or to be secured, by any part of the Hotel Properties. An example
calculation of the Debt Service Coverage Ratio is attached as Schedule A-1
hereto.
Default Rate: The meaning specified in the Note.
Discount Rate: The meaning specified in the Note.
Environmental Law: Any present and future federal, state and local
laws, statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, that apply to
Borrower or the Property and relate to Hazardous Materials including the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act.
Fair Market Value: With respect to any Hotel Property, the amount that
a willing buyer under no compulsion to buy would pay, and a willing seller under
no compulsion to sell would accept, for the purchase and sale of such Hotel
Property, in an arms-length, all-cash sale with customary closing pro-rations
and adjustments and based on the current state of title to the Hotel Property,
but free and clear of this Instrument and the Other Mortgages, the Primary Lease
and the Other Primary Leases, the Management Agreement and the Other Management
Agreements and the License Agreement and the Other License Agreements (it being
agreed that any termination fee or similar payment required to terminate any of
the Management Agreements and/or License Agreements prior to expiration of their
respective terms shall be taken into account and shall constitute deductions in
determining Fair Market Value).
FelCor: FelCor Lodging Limited Partnership, a Delaware limited
partnership, which, as of the date of this Instrument, is the holder of all of
the limited partnership interests in Borrower and all of the membership
interests in Borrower's General Partner.
FelCor REIT: FelCor Lodging Trust Incorporated, a Delaware corporation,
which, as of the date of this Instrument, is the sole general partner of FelCor.
FF&E Account: The meaning specified in the Loan Agreement.
<PAGE> 50
Full Insurable Value: The one hundred percent (100%) replacement cost
of the Property, without allowance for depreciation and exclusive of the cost of
excavations, foundations, and footings, as determined, at Borrower's expense,
periodically (but at least once per year) by the insurance company or an
appraiser, engineer, architect, or contractor approved by said company and
Lender.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental and quasi-governmental
unit (federal, state, county, district, municipal, city, regional, or otherwise)
whether now or hereafter in existence.
General Partner: FelCor/CSS Hotels, LLC, a Delaware limited liability
company.
Hazardous Materials: Petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls ("PCBS") and
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Property is prohibited by
any federal, state or local authority; any substance that requires special
handling or poses a hazard to the Property, the environment or the health and
safety of persons on or about the Property; and any other material or substance
now or in the future defined as a "hazardous substance," "hazardous material,"
"hazardous waste," "toxic substance," "toxic pollutant," "contaminant," or
"pollutant" within the meaning of any Environmental Law.
Hotel Properties: Along with the Property, the hotel properties
securing the Loan, as the same may be released, replaced or modified pursuant to
the terms of the Loan Agreement.
Indirect Transfer: Any Transfer of, or with respect to, any equity
interests in Borrower or Lessee held either directly or indirectly through one
or more intermediate entities.
Indebtedness: The indebtedness evidenced by the Note (including any
prepayment Premium due thereunder) and any extensions, modifications or renewals
thereof, whether or not evidenced by a new or additional promissory note or
notes, and all other amounts due from Borrower to Lender hereunder or under any
of the Other Mortgages, or evidenced and/or secured by the Loan Documents, plus
interest on all such amounts as provided in the Loan Documents.
Lessee: DJONT Operations, L.L.C., a Delaware limited liability company.
License Agreement: The existing license Agreement with the Licensor
with respect to the Property as of the date of this Instrument, as the same may
be amended from time to time (subject to obtaining Lender's consent to any such
amendment), or any extension, renewal, or replacement thereof entered into in
accordance with the provisions of Section 8 of the Loan Agreement.
2
<PAGE> 51
Licensor: Promus Hotels, Inc., a Delaware corporation, or in the event
Borrower shall enter into a replacement License Agreement in accordance with the
provisions of Section 8 of the Loan Agreement, the licensor under such
replacement license agreement.
Loan Agreement: That certain Mortgage Loan Agreement dated as of the
date of this Instrument entered into by and between Borrower and Lender, as the
same may be amended, modified, extended, renewed or restated from time to time.
Loan Documents: The Note, this Instrument, the Loan Agreement, the
Other Mortgages, the Assignment of Leases and Rents, all Assignments of Leases
and Rents with respect to the other Hotel Properties, the Environmental
Indemnity, the ERISA Certificate and Indemnification Agreement, the Assignment
of Agreements with respect to the Property and all Assignments of Agreements
with respect to the other Hotel Properties, the Certificate of Representations
and Warranties, the Multi-Party Agreement with respect to the Property and all
Multi-Party Agreements with respect to the other Hotel Properties, all other
documents now or hereafter evidencing, securing or relating to the Loan, the
payment or performance of the Obligations, as any of the foregoing may be
amended, modified, renewed, supplemented, restated, or extended from time to
time.
Loan to Value Ratio: The ratio, as of the time at which such ratio is
to be determined hereunder, of (i) the aggregate principal balance of all
encumbrances against the Hotel Properties to (ii) the Fair Market Value of the
Hotel Properties. In any case in which the Loan-to-Value Ratio is to be
determined, Lender shall promptly make a determination, based on its standard
property valuation methods, of the Fair Market Value and shall notify Borrower
in writing of Lender's determination. If, within ten (10) business days after
Borrower's receipt of Lender's determination, the parties are unable to reach
agreement on the Fair Market Value of the applicable Hotel Properties, then such
Fair Market Value shall be determined by appraisal as provided in Section 9 of
the Loan Agreement.
Manager: Collectively, Promus Hotels, Inc., a Delaware corporation, or
in the event Borrower shall enter into a replacement Management Agreement in
accordance with the provisions of Section 8 of the Loan Agreement, the manager
under such replacement management agreement.
Management Agreement: The existing management agreement with respect to
the Property with the Manager as of the date of this Instrument, as the same may
be amended from time to time (subject to obtaining Lender's consent to any such
amendment), or any extension, renewal, or replacement thereof entered into in
accordance with the provisions of Section 8 of the Loan Agreement.
Material Leases: Any Lease for restaurant space.
NOI: The total, for all Hotel Properties of the aggregate rental
payments made under the Primary Lease and the Other Primary Leases for the
applicable twelve (12) month period, less all expenses and obligations payable
by Borrower under the Primary Lease and the Other Primary
3
<PAGE> 52
Leases or with respect to Borrower's ownership and operation of the Hotel
Properties for that twelve (12) month period, including, without limitation,
payments (if any) for ground rent, reserves for replacements of FF&E in the
amounts required from time to time pursuant to Section 3 of the Loan Agreement,
Assessments and Insurance Premiums, but excluding deductions for federal, state
and other income taxes, debt service expense, depreciation or amortization of
capital expenditures and other similar non-cash items. For purposes of
calculating NOI, (i) rental income shall not be anticipated for any greater time
period than that approved by generally accepted accounting principles, and (ii)
expense items shall not be prepaid. Documentation of NOI and expenses shall be
certified by an officer of Borrower with detail reasonably satisfactory to
Lender.
Note: That certain Promissory Note of even date with this Instrument
made by Borrower to the order of Lender in the aggregate amount of the Loan, as
the same may be amended, supplemented, restated, consolidated or otherwise
modified from time to time.
Other License Agreements. Collectively, all of those certain other
license agreements with respect to the other Hotel Properties with the Licensor,
as the same may be amended from time to time (subject to obtaining Lender's
consent to any such amendment), or any extension, renewal or replacement thereof
entered into in accordance with the provisions of Section 8 of the Loan
Agreement.
Other Management Agreements. Collectively, all of those certain other
management agreements with respect to the other Hotel Properties with the
Manager, as the same may be amended from time to time (subject to obtaining
Lender's consent to any such amendment), or any extension, renewal or
replacement thereof entered into in accordance with the provisions of Section 8
of the Loan Agreement.
Other Mortgages: Collectively, all of those certain other mortgages or
deeds of trust of even date with this Instrument made by Borrower in favor of
Lender to secure the Obligations, which encumber the other Hotel Properties, as
the same may be amended, supplemented, restated, consolidated or otherwise
modified from time to time.
Other Primary Leases. Collectively, all of those certain other lease
agreements between Borrower, as landlord, and Lessee, as tenant, pursuant to
which other Hotel Properties are leased to Lessee.
Permitted Encumbrance: Collectively, (a) the Liens, encumbrances and
other matters shown as exceptions in the title insurance policy with respect to
the Property approved by Lender, (b) Liens for Assessments from time to time
which are not yet delinquent, (c) the Lien of this Instrument and the other Loan
Documents, (d) the Primary Lease, the Material Leases, the Management Agreement,
the License Agreement and the Non-Material Leases, and (e) such other title
exceptions as Lender shall have approved in its sole discretion.
Permitted Indirect Transfer: The following (and only the following)
Indirect Transfers, which shall not require the consent or approval of Lender
and shall not constitute a default or Event of Default under the Loan Documents:
(i) any Transfer of any direct or indirect equity
4
<PAGE> 53
interests in either Borrower or FelCor, to any of FelCor, FelCor REIT, or any
entity wholly-owned (directly or indirectly) by FelCor or the FelCor REIT; (ii)
any Transfer of limited partnership interests in FelCor, expressly including any
conversion of such limited partnership interests to stock in the FelCor REIT;
provided, that in the event all limited partnership interests in FelCor have
been converted to stock of the FelCor REIT and FelCor is dissolved, the FelCor
REIT shall succeed to all of the assets, and shall assume all of the obligations
and liabilities, of FelCor at the time of such dissolution, including all of the
obligations and liabilities of FelCor under the Loan Documents; (iii) any
Transfer of stock in the FelCor REIT; provided, that in any case in which a
Transfer is in the nature of a merger, tender offer, or similar transaction in
which the FelCor REIT or all or substantially all of its assets are merged into,
acquired by, or combined with a Successor Entity, the requirements of Section
7.2 of this Instrument must be satisfied; (iv) any sale of all of the membership
interests in Lessee, in accordance with the requirements of Section 7.3 of this
Instrument, or any Transfer between or among the persons holding the membership
interests in Lessee as of the date of the Loan Documents or to or among such
persons' immediate family members or family trusts; (v) any Transfer of limited
partnership interests in Borrower, provided that FelCor or the FelCor REIT, or
any entity wholly-owned (directly or indirectly) by FelCor or the FelCor REIT,
shall retain at least 50.1% of all such limited partnership interests; and (vi)
any Transfer under any will (or applicable law of descent), or any Transfer into
any grantor trust or family trust for estate planning purposes.
Primary Lease: That certain Lease Agreement dated as of between
Borrower, as landlord, and Lessee, as tenant, pursuant to which the Property has
been leased to Lessee, as the same may be amended from time to time (subject to
obtaining Lender's consent to any such amendment), or any extension, renewal or
replacement thereof entered into in accordance with Section 8 of the Loan
Agreement.
Prepayment Premium: The meaning specified in the Note.
Release of Hazardous Materials: Any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, pumping, pouring, escaping,
dumping, disposing or other movement of Hazardous Materials.
Transfer: With respect to any property or interest, any manner of sale,
conveyance, assignment, transfer, divestiture, exchange, conversion, mortgage,
pledge, assignment for security, or encumbrance of such property or interest,
whether voluntarily or involuntarily, and expressly including any merger,
consolidation, or dissolution with respect to any entity holding such property
or interest.
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1999 10-Q OF FELCOR LODGING TRUST INCORPORATED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 26,644
<SECURITIES> 0
<RECEIVABLES> 31,513
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 58,157
<PP&E> 4,225,293
<DEPRECIATION> (214,333)
<TOTAL-ASSETS> 4,231,771
<CURRENT-LIABILITIES> 110,865
<BONDS> 1,671,191
0
295,000
<COMMON> 693
<OTHER-SE> 2,013,583
<TOTAL-LIABILITY-AND-EQUITY> 4,231,771
<SALES> 0
<TOTAL-REVENUES> 126,917
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,422
<INCOME-PRETAX> 36,747
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,747
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,747
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
