<PAGE>
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 September 30, 1995
-------------------
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 1-13700
--------
Red Lion Hotels, Inc.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 91-1634199
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4001 Main Street, Vancouver, Washington 98663
--------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(360) 696-0001
--------------
(Registrant's telephone number, including area code)
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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 __.
---
As of October 31, 1995 there were issued and outstanding 31,312,500 shares of
the registrant's common stock.
1
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RED LION HOTELS, INC.
REPORT ON FORM 10-Q
For the quarter ended September 30, 1995
Table of Contents
Page
----
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements (Unaudited):
Consolidated Statements of Income 3
Consolidated Balance Sheet 4
Consolidated Statement of Stockholders' Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 7-14
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-18
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 19
2
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PART I: FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
- - - -------------------------------------------
RED LION HOTELS, INC.
---------------------
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Seven
Months Ended Months Ended
September 30, 1995 September 30, 1995
------------------- -------------------
(Note 2)
REVENUES:
<S> <C> <C>
Rooms $ 53,332 $ 53,332
Food and beverage 26,351 26,351
Other 9,591 13,012
----------- -----------
Total revenues 89,274 92,695
----------- -----------
OPERATING COSTS AND EXPENSES:
Departmental direct expenses-
Rooms 11,805 11,805
Food and beverage 19,791 19,791
Other 3,146 3,146
Property indirect expenses 17,241 17,241
Other costs 6,018 6,502
Depreciation and amortization 3,197 3,918
Payments due to owners of managed
hotels 9,124 9,124
Expenses resulting from the
Formation and Offering (Note 7) 14,662 14,662
----------- -----------
OPERATING INCOME 4,290 6,506
EQUITY IN EARNINGS OF UNCONSOLIDATED 271 271
JOINT VENTURES (Note 3)
OTHER EXPENSE:
Interest expense, net 3,402 4,658
----------- -----------
Total other expense 3,402 4,658
----------- -----------
INCOME BEFORE JOINT VENTURERS'
INTERESTS 1,159 2,119
INCOME ATTRIBUTABLE TO JOINT
VENTURERS' INTERESTS (500) (1,070)
----------- -----------
INCOME BEFORE INCOME TAXES 659 1,049
INCOME TAX BENEFIT (PROVISION):
Current (2,821) (2,977)
Deferred 10,064 11,264
----------- -----------
Total income tax benefit 7,243 8,287
----------- -----------
NET INCOME $ 7,902 $ 9,336
=========== ===========
EARNINGS PER COMMON SHARE $0.38 $1.04
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 20,875,033 8,946,500
</TABLE>
(see notes to financial statements)
3
<PAGE>
RED LION HOTELS, INC.
---------------------
CONSOLIDATED BALANCE SHEET
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
September 30, 1995
-------------------
ASSETS
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 71,166
Accounts receivable, net 20,063
Accounts receivable - affiliates 17,822
Inventories 6,173
Prepaid expenses and other current
assets 5,366
Deferred income taxes 1,292
--------
Total current assets 121,882
--------
PROPERTY AND EQUIPMENT:
Land 48,126
Buildings and improvements 240,158
Furnishings and equipment 35,857
Construction in progress 8,388
--------
332,529
Less--accumulated depreciation (3,695)
--------
328,834
--------
INVESTMENT IN UNCONSOLIDATED JOINT
VENTURES (Note 3) 12,899
GOODWILL, net 21,689
DEFERRED INCOME TAXES 9,972
OTHER ASSETS, net 21,637
--------
Total assets $516,913
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,488
Accrued expenses 38,394
Current portion of long-term debt 5,584
--------
Total current liabilities 61,466
--------
LONG-TERM DEBT, NET OF CURRENT PORTION 219,034
OTHER LONG-TERM OBLIGATIONS 10,534
JOINT VENTURERS' INTEREST 1,665
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value
31,312,500 shares issued and
outstanding 313
Additional paid-in capital and net
assets contributed 214,565
Retained earnings 9,336
--------
Total stockholders' equity 224,214
--------
Total liabilities and
stockholders' equity $516,913
========
</TABLE>
(see notes to financial statements)
4
<PAGE>
RED LION HOTELS, INC.
---------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the seven months ended September 30, 1995
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Additional
Paid-in
Capital and
Common Net Assets Retained
Stock Contributed Earnings Total
------- ----------- --------- -----
<S> <C> <C> <C> <C>
Balance, February 28, 1995 $ -- $ -- $ -- $ --
Net assets contributed 209 30,740 -- 30,949
Issuance of common stock in
connection with the Offering and
adjustments to
the Incentive Unit Plan 104 183,825 -- 183,929
Net income -- -- 9,336 9,336
------- ------- ------ -------
Balance September 30, 1995 $313 $214,565 $9,336 $224,214
======= ======== ======= ========
</TABLE>
(see notes to financial statements)
5
<PAGE>
RED LION HOTELS, INC.
---------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the seven months ended September 30, 1995
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net income $ 9,336
Adjustments to reconcile net income
to cash provided by operating activities:
Income attributable to joint
venturer's interest 1,070
Equity in earnings of
unconsolidated joint ventures (271)
Depreciation and amortization 3,918
Amortization of other assets
(principally deferred loan costs) 763
Increase in deferred tax asset (11,264)
Issuance of common stock in
connection with adjustments
to the incentive unit plan 6,650
Change in certain current assets
and liabilities 6,607
---------
Net cash provided by
operating activities 16,809
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,601)
Distributions to joint venturers (830)
Other investing activities (1,028)
---------
Net cash used in investing
activities (6,459)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from contribution of
assets 10,480
Net proceeds from common stock issued
in the Offering 177,279
Proceeds from long-term borrowings 135,000
Repayment of contributed long-term
borrowings (255,051)
Other financing activities (6,892)
---------
Net cash provided by
financing activities 60,816
---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 71,166
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD --
---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 71,166
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for:
Interest $ 1,732
</TABLE>
(see notes to financial statements)
6
<PAGE>
Notes to Consolidated Financial Statements
September 30, 1995
(unaudited)
1. General
Red Lion Hotels, Inc. (the "Company") was incorporated in Delaware in March 1994
as a wholly owned subsidiary of Red Lion, a California Limited Partnership
("Historical Red Lion").
The Company initiated an initial public offering of its common stock on July 26,
1995 (the "Offering"), which was closed August 1, 1995, raising net proceeds of
approximately $177 million (including the over-allotment option granted to the
underwriters which was exercised in full). After giving effect to the Offering,
Historical Red Lion owned 67% of the Company.
On March 6, 1995, Historical Red Lion contributed to the Company a 49.4%
interest in the joint venture which owns the Santa Barbara Red Lion Hotel (the
"Hotel") located in California. On August 1, 1995, prior to the closing of the
Offering, Historical Red Lion repaid certain of its outstanding indebtedness
with existing cash balances and contributed substantially all of its assets
(excluding 17 hotels, the "Leased Hotels" and certain minority joint venture
interests and cash) and certain liabilities to the Company (the "Formation").
See "Basis of Presentation." The Partnership (Historical Red Lion subsequent to
the Formation and refinancing of the Company) retained the Leased Hotels and
the related goodwill, deferred loan costs and mortgage debt, certain minority
joint venture interests and certain current assets.
On August 1, 1995, the Company refinanced or repaid substantially all of the
debt contributed pursuant to the Formation with the net proceeds of the
Offering, borrowings under a new term loan and existing cash. The Company also
entered into a long-term master lease with the Partnership for the Leased
Hotels.
The accompanying consolidated financial statements of the Company have been
prepared by the Company without audit. Certain information and footnote
disclosures normally included in financial statements presented in accordance
with generally accepted accounting principles have been condensed or omitted.
The Company believes the disclosures made are adequate to make the information
presented not misleading. These consolidated financial statements should be
read in connection with the Company's registration statement on Form S-1, file
No. 33-90306.
In the opinion of the Company, the accompanying unaudited consolidated financial
statements reflect all adjustments (which include only normal recurring
adjustments except for recording the expenses resulting from the Formation and
Offering and the initial recording of a deferred income tax benefit) necessary
to present fairly the financial position of the Company as of September 30,
1995, and the results of operations and cash flows for the three and seven
months ended September 30, 1995, giving effect to the Formation as of August 1,
1995. Interim results are not necessarily indicative of fiscal year performance
because of the impact of seasonal and short-term variations.
7
<PAGE>
2. Basis of Presentation
On March 6, 1995, Historical Red Lion assigned to the Company, as a contribution
to capital, a 49.4% interest in the joint venture (the "Santa Barbara Joint
Venture") which owns the Hotel located in Santa Barbara, California (the "Santa
Barbara Assignment"). The accompanying financial statements reflect the
contribution, at Historical Red Lion's cost, of the interest in the Santa
Barbara Joint Venture. Accordingly, the Santa Barbara Joint Venture has been
consolidated with the Company in the accompanying financial statements prior to
the Formation. In connection with the Formation, the other assets and
liabilities contributed by Historical Red Lion have been recorded in the
accompanying consolidated financial statements at Historical Red Lion's cost
effective August 1, 1995. There were no operations of the Company prior to the
contribution of the Santa Barbara Joint Venture. Therefore, the accompanying
consolidated financial statements reflect seven months rather than nine months
of the 1995 operations, consisting of the results of the Santa Barbara Joint
Venture for seven months and the results of the other hotels and operations
contributed pursuant to the Formation for two months.
The Santa Barbara Assignment did not transfer the right to manage the operations
of the Hotel to the Company. Since the right to manage the Hotel had not been
transferred to the Company, the financial statements of the Company prior to the
Formation do not include the operating revenues and expenses of the Hotel or the
Hotel's working capital. These amounts were included in the financial
statements of Historical Red Lion which continued to manage the Hotel. The
right to manage the operations of the Hotel was transferred to the Company at
the completion of the Formation, and the Hotel's operating revenues, expenses
and working capital are reflected in the consolidated financial statements of
the Company as of September 30, 1995 and for the two month period ended
September 30, 1995.
The accompanying consolidated financial statements of the Company include five
of its seven partially owned joint ventures. The Company consolidates those
entities which it controls. The remaining joint ventures are accounted for on
the equity method of accounting.
On April 14, 1987, Historical Red Lion sold its interest in 10 hotels to Red
Lion Inns Limited Partnership, a publicly traded limited partnership (the
"MLP"). Red Lion Properties, Inc., the general partner of the MLP, was
contributed to the Company in connection with the Formation and is a wholly
owned subsidiary of the Company. The MLP's public limited partners have had an
effective 98.01 percent ownership interest in the MLP's hotels with the general
partner retaining the remaining 1.99 percent ownership interest. The Company
operates the MLP's hotels under a management agreement.
Operating revenues and expenses and the working capital of the MLP and other
management contract hotels (including the two unconsolidated joint ventures
which are also managed by the Company) are included in the accompanying
consolidated financial statements because the operating responsibilities
associated with these hotels are substantially the same as those for owned
hotels. The operating profit net of management fee income for managed hotels is
recorded as an expense in the accompanying consolidated statements of income.
The consolidated financial statements also include the following amounts related
to managed hotels (including the two unconsolidated joint ventures which are
also managed by the Company) current assets and current liabilities of
$9,840,000 at September 30, 1995; operating revenues of $30,408,000 for both the
three and seven months ended September 30, 1995; and operating expenses of
$19,249,000 for both the three and seven months ended September 30, 1995.
8
<PAGE>
One wholly owned hotel was acquired by Historical Red Lion in 1989 subject to a
nonrecourse cash-flow mortgage which requires interest payments contingent on
achieving certain levels of performance. Because of the nonrecourse and cash
flow nature of the loan, the mortgage has not been recorded as an obligation and
the property and equipment of the hotel are excluded from the accompanying
consolidated financial statements. The mortgage is in substance a management
contract with a purchase option. Accordingly, the hotel is treated as a
management contract in the accompanying consolidated financial statements.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
3. Summary of Significant Accounting Policies:
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, certificates of
deposit, time deposits and U.S. government and other short-term securities with
maturities of three months or less when purchased. The carrying amount
approximates fair value because of the short-term maturity of these instruments.
Property and Equipment
Property and equipment are stated at Historical Red Lion's net cost at the date
of contribution, plus additions, at cost, made subsequent to the contribution.
Additions and improvements are capitalized at cost, including interest costs
incurred during construction. There was no capitalized interest during the
seven months ended September 30, 1995. Normal repairs and maintenance are
charged to expense as incurred. Upon the sale or retirement of property and
equipment, the cost and related accumulated depreciation and amortization are
removed from the respective accounts and the resulting gain or loss, if any, is
included in income.
Base Stock (linens, china, silverware and glassware) is depreciated to 50% of
its initial cost on a straight-line basis over three years. Subsequent
replacements are expensed when placed in service. The carrying value of base
stock is included in furnishings and equipment.
Depreciation was computed on a straight-line basis using the following estimated
useful lives:
Building and improvements........................10 to 40 years
Furnishings and equipment.........................5 to 15 years
Investment in Unconsolidated Joint Ventures
The Company is a partner in two joint ventures which are accounted for on the
equity method of accounting. The Company's equity in and advances to these
joint ventures are shown under the caption "investment in unconsolidated joint
ventures" in the accompanying consolidated balance sheet. Because the Company
manages these joint ventures, they are accounted for as managed hotels and,
therefore, the operating working capital of the hotels is consolidated in the
accompanying consolidated balance sheet.
9
<PAGE>
Profits and losses of these joint ventures are allocated in accordance with the
joint venture agreements. Because the hotels are accounted for as managed
hotels, the operating revenues and expenses are consolidated in the accompanying
consolidated statements of income, with the Company's share of the income or
losses of the joint ventures (after management fee income) recorded under the
caption "equity in earnings of unconsolidated joint ventures." If a joint
venture experiences operating losses which reduce the other joint venture
partners' equity to a zero balance, the loss which would otherwise be
attributable to the other joint venturers is absorbed within the Company's
consolidated operating results.
Income Taxes
The Company utilizes the liability method of accounting for income taxes, as set
forth in Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"). Under the liability method, deferred taxes are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect in the years the
differences are expected to reverse.
Goodwill
Historical Red Lion acquired interests in certain hotels, motor inns and
supporting auxiliary enterprises on April 10, 1985. Goodwill resulted from the
acquisition and represents the excess of purchase price over the net fair value
of assets acquired. Goodwill reflected in the accompanying consolidated
financial statements relates to the hotels contributed to the Company by
Historical Red Lion and is being amortized on a straight-line basis over the
remaining period to be amortized of approximately 30 years. For the Company,
accumulated amortization was $120,000 at September 30, 1995. Management
evaluates its accounting for goodwill considering such factors as historical and
future profitability and believes that the asset is realizable and the
amortization period is appropriate.
Deferred Loan Costs
Deferred loan costs incurred in connection with the Company's indebtedness are
included in other assets, net, in the accompanying consolidated balance sheet
and are amortized over the life of the associated debt.
Insurance Reserves
The Company provides for the uninsured costs of medical, property, liability and
workers compensation claims. Such costs are estimated each year based on
historical claim data relating to operations conducted through September 30,
1995. The long-term portion of accrued claims costs relate primarily to general
liability and workers compensation claims and are reflected in other long-term
obligations in the accompanying consolidated balance sheet.
Payments Due to Owners of Managed Hotels
Payments due to owners of managed hotels is analogous to rent owed to outside
owners due to the nature of the management contracts and the control the Company
has over operations. The amounts shown on the consolidated statements of income
are net of management fee income of $2,036,000 earned for the period August 1 to
September 30, 1995.
10
<PAGE>
Joint Venturers' Interests
The Company is a partner in seven joint ventures, each of which owns a separate
hotel. The assets and liabilities of five of the seven joint ventures are fully
consolidated in the accompanying financial statements. The other joint ventures
are accounted for on the equity method of accounting (see "Investment in
Unconsolidated Joint Ventures"). The caption "joint venturers' interests"
represents the net equity attributable to the joint venturers' interests,
including their share of income and losses and distributions and contributions.
Profits and losses of each joint venture are allocated in accordance with the
joint venture agreements. If a joint venture experiences operating losses which
reduce the other joint venture partners' equity to a zero balance, the loss
which would otherwise be attributable to other joint venturers is absorbed
within the Company's consolidated operating results.
Earnings per Share and Stock Options
Earnings per share has been computed based on the weighted average number of
common shares outstanding, which includes 10,062,500 shares issued in connection
with the Offering effective August 1, 1995, and 350,000 shares of common stock
issued in connection with the termination of an incentive unit plan of
Historical Red Lion. Pursuant to the Offering, Historical Red Lion received
20,899,900 shares of common stock for the net assets contributed on August 1.
For purposes of the calculation of earnings per share, the 20,899,900 shares
have been included from the date of issuance. In connection with the Offering,
the Company issued to certain employees and officers of the Company stock
options to acquire 2,183,333 shares of common stock at $19 per share which was
the initial public offering price of the stock. In August 1995 , the Company
issued to certain employees stock options to acquire 67,500 shares of common
stock at $21.50 per share which was the fair market value at the date of grant.
Stock options have not been included in the earnings per share calculation since
their effect is immaterial.
4. Long-Term Debt
Long-term debt at September 30, 1995, consists of the following (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Term loan, secured, variable rate, 7.9%,
payable through 2002 $135,000
Mortgages, secured, variable rates, 7.1% - 7.7%
payable through 1998 85,000
Note payable, fixed rate, 8.69%,
payable through 2022 4,618
-------
224,618
Current portion of long-term debt (5,584)
--------
Long-term debt, excluding current
portion $219,034
========
</TABLE>
The Company had outstanding letters of credit of $5,428,000 at September 30,
1995. Refer to Management's Discussion and Analysis-Liquidity and Capital
Resources for discussion of the term loan and other available credit.
11
<PAGE>
Interest Rate Swap Agreements
The Company enters into interest rate swap agreements in order to lessen its
exposure to interest rate changes. The agreements have effectively converted
floating rate debt, which is tied to LIBOR, to fixed rates.
At September 30, 1995, the Company had three interest rate swap agreements
outstanding which have substantially converted $75 million of debt from floating
LIBOR based rates to all-in fixed rates ranging from 6.91 percent to 7.29
percent. The original terms of the agreements range from four and one half to
five years. Interest income earned by the Company relating to interest rate swap
agreements for the period August 1 to September 30, 1995, was $107,500 and is
included in interest expense, net, in the accompanying consolidated statements
of income.
These agreements are with major commercial banks and the exposure to a credit
loss in the event of nonperformance by the banks is minimal.
Disclosures About Fair Value of Financial Instruments
Based on the borrowing rates currently quoted by financial institutions for bank
loans with terms and maturities similar to the Company's long-term debt, the
carrying value of such debt approximates its fair value.
5. Related Party Transactions
As discussed in Note 1, prior to the Formation the Santa Barbara Hotel was
operated and managed by Historical Red Lion. Management fees paid to Historical
Red Lion were $90,000 and $385,000 for the three and seven months ended
September 30, 1995 and are included in other costs in the accompanying
consolidated statements of income.
At September 30, 1995, other assets, net, includes $1,816,000 of an interest
bearing note receivable from a joint venturer.
Transactions with Red Lion Inns Limited Partnership
As discussed in Note 2, Red Lion Properties, Inc. ("Properties"), a wholly owned
subsidiary of the Company, serves as general partner and owns 1.99 percent of
the MLP.
The Company manages the MLP hotels pursuant to a management agreement and
receives a base management fee equal to 3 percent of annual gross revenues plus
an incentive management fee based on adjusted gross operating profit, as defined
in the management agreement. The management agreement, which began in 1987, has
a seventy-five year term including renewal options. The Company also charges
the MLP hotels for their pro rata share of support services such as computer,
advertising, public relations, promotional and sales and central reservation
services.
All the MLP personnel are employees of the Company and its affiliates.
Additionally, the Company arranges for the purchase of operating supplies,
furnishings and equipment for the MLP. In the opinion of management, purchases
by the MLP were at prices and terms which approximate arms-length transactions.
12
<PAGE>
Incentive management fees are subordinate to distributions by the MLP to
facilitate current payment of distributions to the limited partners. The
subordinated fees accrue without interest up to a maximum amount of $6 million.
This ceiling was reached by Historical Red Lion in 1988 and the $6 million
receivable was contributed to the Company in the Formation. Because management
does not anticipate these fees will be paid during 1995, this amount has been
classified as noncurrent under the caption other assets, net, in the
accompanying consolidated balance sheet at September 30, 1995.
At September 30, 1995, other assets, net, also includes a receivable contributed
by Historical Red Lion of $3,726,000 representing amounts advanced by Properties
to the MLP under a $4 million credit facility made available to facilitate cash
distributions to partners during the MLP's first 36 months of operations. The
amount outstanding under this facility will be repaid to the Company out of
either (i) cash flow after payment of priority distributions and incentive
management fees, or (ii) sale or refinancing proceeds prior to any distribution
to limited partners.
In addition to the incentive management fee and general partner loan discussed
above, as of September 30, 1995, the Company was due $15,336,000 from the MLP
for capital expenditures, support services, base management fees, payroll and
payroll taxes and operating supplies provided by Historical Red Lion before the
Formation and the Company after the Formation. These amounts are included in
accounts receivable-affiliates in the accompanying consolidated balance sheet,
net of working capital related to the managed MLP hotels of $1,865,000 as of
September 30, 1995.
6. Income Taxes
Historical Red Lion is a limited partnership and income taxes are the
responsibility of the individual partners. Accordingly, no deferred income
taxes were recorded by Historical Red Lion. The Company is a corporation and
will be subject to income taxes. At the date of contribution of the Santa
Barbara Joint Venture and on August 1, the date of contribution of substantially
all of Historical Red Lion's assets, the Company recorded net deferred income
tax assets of approximately $1.2 million and $8.5 million, respectively, which
represents the estimated tax effect of the difference in the Company's basis for
income tax and financial reporting purposes. In accordance with SFAS 109, these
amounts have been recorded as an income tax benefit in the accompanying
consolidated statements of income for the three and seven months ended September
30, 1995.
The components of the contributed net deferred income tax assets as of the date
of contribution, primarily August 1, 1995, are as follows (in thousands):
<TABLE>
<CAPTION>
Net Deferred Income Tax Assets
------------------------------
<S> <C>
Basis difference in joint ventures $17,359
Other 564
-------
Total Deferred Income Tax Assets 17,923
Deferred Income Tax Liabilities
-------------------------------
Basis difference in property and equipment (8,187)
-------
Net Deferred Income Tax Assets $ 9,736
=======
</TABLE>
13
<PAGE>
The Company's effective income tax rates for the three and seven months ended
September 30, 1995 differ from the statutory federal income tax rate of 34% due
primarily to certain expenses incurred in connection with the Formation and the
Offering, state income taxes and the initial recording of the deferred income
tax benefits discussed above.
7. Expenses Resulting from Formation and Offering
Expenses resulting from Formation and Offering include certain Formation costs
of $1,314,000 and expenses resulting from the Offering of $11,348,000 and
$2,000,000 related to the termination of an incentive unit plan and assumption
of the obligation of a supplemental income retirement agreement, respectively.
8. Commitments and Contingencies
In connection with the Formation, the Company assumed commitments relating to
capital improvement projects of approximately $12,000,000.
The Company is party to litigation arising in the ordinary course of business.
In the opinion of management, these actions will not have a material adverse
effect, if any, on the Company's financial position, results of operation or
liquidity.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- - - --------------------------------------------------------------------------------
of Operations
-------------
The only operations of the Company prior to the Formation related to a joint
venture interest in one Red Lion hotel that was contributed to the Company by
Historical Red Lion. On a historical basis, which includes the actual
operations of the Company following the August 1 Formation, the Company had net
income of $7.9 million and $9.3 million for the quarter ended and seven months
ended September 30, 1995, respectively. Each period's net income includes an
income tax benefit recorded in accordance with Statement of Financial Accounting
Standards No. 109 of approximately $8.5 million and $9.7 million, respectively,
and expenses net of income tax benefits resulting from the Formation and
Offering of approximately $9.8 million for both the quarter ended and seven
months ended September 30, 1995.
On August 1, 1995, Historical Red Lion contributed substantially all of its
assets (excluding the Leased Hotels and certain other assets) and certain
liabilities to the Company in the Formation. Also effective August 1, 1995, the
Company entered into a long-term master lease with the Partnership for the
Leased Hotels. Pro forma results on the accompanying pro forma statements
include the actual results of the Company and the results of Historical Red Lion
adjusted to give effect to the Formation, the leasing of the Leased Hotels, and
the repayment and refinancing of substantially all debt with borrowings under a
new credit facility and the net proceeds of the public offering, assuming that
such events were completed at the beginning of the respective period. The
Company believes that a comparison of pro forma results provides a more
meaningful presentation than the historical operations.
The following discussion of the results of operations and financial condition
should be read in conjunction with the accompanying financial statements and
notes thereto and the Company's Registration Statement on Form S-1 (No. 33-
90306), as amended, as filed with the Securities and Exchange Commission and the
pro forma results of operations included herein.
14
<PAGE>
Pro Forma Results of Operations
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
1995 1994 1995 1994
Pro Forma(a) Pro Forma(a) Pro Forma(a) Pro Forma(a)
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Rooms $ 79,248 $ 75,343 $ 215,166 $ 200,660
Food and beverage 38,128 37,316 118,921 114,176
Other 12,094 11,581 36,208 34,307
----------- ----------- ----------- -----------
Total revenues 129,470 124,240 370,295 349,143
----------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Departmental direct expenses
Rooms 17,941 17,154 51,475 47,776
Food and beverage 29,587 29,722 93,060 90,044
Other 4,578 4,508 13,738 13,198
Property indirect expenses 26,023 25,413 77,583 74,767
Other costs 8,882 8,688 25,836 25,211
Depreciation and amortization 4,646 5,016 14,530 14,611
Payments due to owners of managed 12,733 10,902 36,591 34,090
hotels
Expenses resulting from Formation
and Offering(b)(d) 14,662 -- 14,662 --
----------- ----------- ----------- -----------
OPERATING INCOME 10,418 22,837 42,820 49,446
EQUITY IN EARNINGS (LOSSES) OF
UNCONSOLIDATED JOINT VENTURES 196 (75) 1,885 1,228
OTHER EXPENSE:
Interest expense, net 4,572 4,991 14,613 14,184
----------- ----------- ----------- -----------
Total other expense 4,572 4,991 14,613 14,184
----------- ----------- ----------- -----------
INCOME BEFORE JOINT VENTURERS'
INTERESTS 6,042 17,771 30,092 36,490
INCOME ATTRIBUTABLE TO JOINT
VENTURERS' INTERESTS (304) (706) (463) (1,003)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 5,738 17,065 29,629 35,487
INCOME TAX BENEFIT (EXPENSE) (c) (d) 6,409 (6,826) (3,147) (14,195)
----------- ----------- ----------- -----------
NET INCOME $ 12,147 $ 10,239 $ 26,482 $ 21,292
=========== =========== =========== ===========
PRO FORMA EARNINGS PER COMMON SHARE $0.39 $0.33 $0.85 $0.68
COMMON SHARES (e) 31,312,500 31,312,500 31,312,500 31,312,500
</TABLE>
(see notes to financial statements)
15
<PAGE>
(a) The pro forma results give effect to the Formation, leasing of the Leased
Hotels and the repayment and refinancing of substantially all of the
Company debt as if each of these events were completed at the beginning
of the respective periods.
(b) Includes certain formation costs of $1,314 and expenses resulting from
Offering of $11,348 and $2,000 related to the termination of an incentive
unit plan and assumption of the obligation of a supplemental income
retirement agreement, respectively.
(c) Income taxes have been provided on a pro forma basis assuming an
effective tax rate of 40%. Pro forma income taxes for the quarter and
nine months ended September 30, 1995, include a deferred income tax
benefit of $9,736 resulting from the tax effect of the differences in the
book and tax basis of the assets and liabilities transferred to the
Company.
(d) The "Expenses resulting from Formation and Offering" of $14,662 (pre-tax)
and the deferred income tax benefit of $9,736 as discussed above result
in a net negative effect on pro forma net income of $96 or less than $.01
on an earnings per share basis.
(e) Based on the number of shares of common stock outstanding after the
offering plus 350,000 shares issued in connection with the termination of
an incentive unit plan.
Results of Operations
Comparison of the Quarter and Nine Months Ended September 30, 1995
Pro forma revenues increased in the 1995 quarter, from $124.2 million in the
1994 quarter to $129.5 million, an increase of $5.3 million, or 4.2%. For the
nine months ended September 30, pro forma revenues increased from $349.1 million
in the comparable 1994 period to $370.3 million in the 1995 period, an increase
of $21.2 million, or 6.1%. The changes in specific revenue categories are
discussed below.
Pro forma room revenues in the 1995 quarter increased from $75.3 million in the
1994 quarter to $79.2 million, an increase of 5.2%. The increase in pro forma
room revenues was due to an increase in average daily room rate. Average daily
room rates increased by 5.8% to approximately $77 in the 1995 quarter. Occupancy
for the 1995 quarter remained relatively flat at approximately 81% compared to
the 1994 quarter. For the nine months ended September 30, pro forma room
revenues increased from $200.7 million in the comparable 1994 period to $215.2
million in the 1995 period, an increase of 7.2%. The increase in room revenues
for the nine months ended September 30, 1995, is due to an increase in both
occupancy and average daily room rates. For the nine months ended September 30,
occupancy increased modestly to approximately 75% and average daily room rates
increased 6.6% to approximately $76 compared to the 1994 period.
For the 1995 quarter, pro forma food and beverage revenues increased 2.2% from
the prior year quarter. For the nine months ended September 30, 1995, pro forma
food and beverage revenues increased 4.2%. The increase in pro forma food and
beverage revenues for the quarter and nine months ended September 30, 1995, is
due to an increase in banquet revenues resulting from higher meeting room
rentals and the addition of an airport restaurant facility which opened in late
1994.
Other pro forma revenues for the quarter and nine-month period increased 4.4%
and 5.5%, respectively, over the comparable period in 1994 due mainly to an
increase in meeting room rentals.
16
<PAGE>
Operating results are affected by seasonality. The quarter pro forma results
reflect late summer and early fall in which revenues are typically higher than
in the quarter ending December 31st and in the quarter ended June 30. There can
be no assurance, however, that such trends will continue.
Pro forma departmental direct expenses for the 1995 quarter increased 1.4%. As
a percentage or revenues, pro forma departmental direct expenses remained
relatively constant. For the nine months ended September 30, pro forma
departmental direct expenses increased 4.8%. As a percentage of revenues, pro
forma departmental direct expenses remained relatively constant.
Pro forma property indirect expenses for the 1995 quarter increased 2.4%, but
decreased as a percentage of revenues from 20.5% to 20.1%. For the nine months
ended September 30, pro forma indirect expenses increased 3.8%, but decreased as
a percentage of revenues from 21.4% to 21.0%.
Pro forma other costs for the 1995 quarter increased 106%. For the nine months
ended September 30, pro forma other costs increased 38.2%. The majority of the
increase for both the quarter and nine-month period is due to the expenses
resulting from the Formation and Offering. Excluding these expenses would
result in little or no increase in pro forma other costs for both the quarter
and nine-month periods, and would remain relatively constant as a percentage of
revenues.
Pro forma payments due to owners of managed hotels for the 1995 quarter
increased 16.8%. For the nine months ended September 30, pro forma payments due
to owners of managed hotels increased 7.3%. These increases in pro forma
payments to owners of managed hotels for both the quarter and nine month periods
were primarily due to improved operating performance.
Management fees in connection with the managed hotels for the 1995 quarter
decreased 18.7% and for the nine months increased 4.3%. The majority of the
management fees are incentive fees related mainly to the MLP (see Note 5), which
are determined based on cash flows available for incentive management fees. For
the nine month period ended September 30, 1995, incentive management fees were
approximately equal to the comparable 1994 period. However, as a result of
significantly higher cash flow available for incentive management fees generated
in the first six months of 1995 compared to the prior year period, more
incentive management fees were earned earlier in the 1995 year. The decrease in
management fees for the quarter is due to the earlier recognition of incentive
management fees described above.
Pro forma operating income decreased from $22.8 million in the 1994 quarter to
$10.4 million in the 1995 quarter. For the nine months ended September 30, pro
forma operating income decreased from $49.4 million in the comparable 1994
period to $42.8 million in the 1995 period. This decrease for both the quarter
and nine month periods reflects the expenses resulting from the Formation and
Offering. Excluding these expenses would result in an increase in the 1995
quarter of $2.2 million and an increase in the 1995 nine-month period of $8.0
million.
Pro forma interest expense decreased from $5.0 million in the 1994 quarter to
$4.6 million in the 1995 quarter. This decrease is primarily due to the
interest income earned on cash equivalents. Pro forma interest expense for nine
months ended September 30, increased from $14.2 million in the comparable 1994
period to $14.6 in the 1995 period. This increase is primarily due to higher
amortization of loan costs in the current year partially offset by interest
income earned on cash equivalents.
Pro forma income taxes decreased from an income tax expense of $6.8 million in
the 1994 quarter to an income tax benefit of $6.4 million in the 1995 quarter, a
decrease of $13.2 million. This decrease resulted from a deferred income tax
benefit of $9.7 million associated with assets and liabilities contributed to
the Company and a tax deduction of $4.8 million on a portion of the expenses
resulting from the Formation and Offering. Pro forma income taxes for the nine
months ended September 30, decreased from $14.2 million in the comparable 1994
period to $3.1 million, in the 1995 period, a decrease of $11.1 million. This
decrease in pro forma income tax expense is mainly due to the deferred income
tax benefit and tax deduction described above.
17
<PAGE>
Pro forma income attributable to joint venturers' interest decreased from $.7
million in the 1994 quarter to $.3 million in the 1995 quarter. For the nine-
month period ended September 30, pro forma income attributable to joint
venturers' interest decreased from $1.0 million in 1994 to $.5 million in 1995.
As a result of the factors described above, pro forma net income increased from
$10.2 million in the 1994 quarter to $12.1 million in the 1995 quarter, an
increase of 18.6%. For the nine months ended September 30, pro forma net income
increased from $21.3 million in the comparable 1994 period to $26.5 million in
the 1995 period, an increase of 24.4%. Excluding the expenses resulting from the
Formation and Offering of $14,662 (pre-tax) and the deferred income tax benefit
of $9,736 results in a net negative effect on pro forma net income of $.1
million for both the quarter ended and nine months ended September 30, 1995.
Liquidity and Capital Resources: In connection with the Formation, the Company
repaid the majority of the debt contributed to the Company by Historical Red
Lion debt with the proceeds of the equity offering and a new $135 million seven
year term loan. The term loan bears interest at a rate that varies based on
LIBOR (7.9% at September 30, 1995). In addition, on August 1, 1995, the Company
obtained a $130 million credit line facility of which $80 million is available
for acquisitions and $50 million is available for working capital requirements.
The credit line facility has a seven year term and an interest rate that varies
based on LIBOR. As of September 30, 1995 the interest rate was 7.9% and there
was no outstanding balance.
In connection with the Formation, the Company assumed capital commitments of
approximately $12 million. The Company believes that its operating cash flows
along with existing cash and amounts available under its credit facility will be
sufficient to meet its capital and operating needs for the foreseeable future.
18
<PAGE>
RED LION HOTELS, INC.
PART II: OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
- - - ------------------------------------------
(a) Exhibits:
*3.1 Certificate of Incorporation of the Company.
*3.2 Bylaws of the Company.
*4.1 Specimen Common Stock Certificate.
4.2 Registration Rights Agreement dated August 1, 1995 between the
Company and Red Lion, a California Limited Partnership.
10.1 Master Lease, dated August 1, 1995, between RLH Partnership,
L.P., as Landlord, and the Company, as Tenant.
*10.2 Form of Indemnification Agreement among the Company and its
directors and officers.
*10.3 Management Agreement dated April 6, 1987 between Red Lion Inns
Operating L.P. and Red Lion, a California Limited Partnership.
10.4 Credit Agreement dated as of July 31, 1995 among the Company and
Credit Lyonnais New York Branch.
10.5 Contribution Agreement dated as of August 1, 1995 between the
Company and Red Lion, a California Limited Partnership.
10.6 1995 Equity Participation Plan.
*10.7 Supplemental Employee Retirement Plan.
*10.8 Incentive Unit Plan, as amended.
10.9 Supplemental Income Retirement Agreement with David J. Johnson.
10.10 Management Bonus Plan
10.11 Non-Qualified Stock Option Agreement with David J. Johnson
27 Article 5 Financial Data Schedule for 3rd Quarter 10-Q.
* Incorporated by reference to the Registrant's Registration Statement on Form
S-1, File No. 33-90306.
19
<PAGE>
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter
for which this report is being filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Vancouver, Washington, on
the 13th day of November 1995.
RED LION HOTELS, INC.
- - - ---------------------
(Registrant)
By: /S/ DAVID J. JOHNSON
--------------------
David J. Johnson
President and Chief Executive Officer
By: /S/ C. MICHAEL VERNON
----------------------
C. Michael Vernon
Chief Financial Officer
20
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of August 1, 1995, is
made and entered into by and between Red Lion Hotels, Inc., a Delaware
corporation (the "Company"), and Red Lion, a California Limited Partnership (the
"Partnership").
1. Background. As of the date hereof, the Company has issued
----------
20,900,000 shares of its common stock, $.01 par value per share (the "Common
Stock"), to the Partnership.
2. Definitions. As used in this Agreement, the following
-----------
capitalized terms shall have the following respective meanings:
Exchange Act - The Securities Exchange Act of 1934, as amended from
time to time.
Holder - Any party hereto (other than the Company) and any holder of
Registrable Securities who agrees in writing to be bound by the provisions
of this Agreement.
Person - Any individual, partnership, joint venture, limited liability
company, corporation, trust, unincorporated organization or government or
any department or agency thereof.
Registrable Securities - Any Common Stock issued or issuable to the
Partnership and any Common Stock which may be issued or distributed in
respect of such Common Stock by way of stock dividend or stock split or
other distribution, recapitalization or reclassification. As to any
particular Registrable Securities, once issued such Securities shall cease
to be Registrable Securities when (i) a registration statement with respect
to the sale of such Securities shall have become effective under the
Securities Act and such Securities shall have been disposed of in
accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 or 144A (or any successor
provisions) under the Securities Act, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of them
under the Securities Act or any state securities or blue sky law then in
force, or (iv) the Partnership shall have delivered the notice set forth in
Section 8(c).
Registration Expenses - Any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i)
all SEC and stock exchange or National Association of Securities Dealers,
Inc. registration and filing
<PAGE>
fees, (ii) all fees and expenses of complying with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) all fees and
expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to clause (viii) of Section
5, (v) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements of
one counsel selected by the Holders of a majority of the Registrable
Securities being registered to represent all Holders of the Registrable
Securities being registered in connection with each such registration, and
(vii) any fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, including liability insurance if the
Company so desires or if the underwriters so require, and the reasonable
fees and expenses of any special experts retained in connection with the
requested registration, but excluding underwriting discounts and
commissions and transfer taxes, if any.
Securities Act - The Securities Act of 1933, as amended from time to
time.
SEC - The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
3. Incidental Registrations.
------------------------
(a) Right to Include Registrable Securities. If the Company at
---------------------------------------
any time after the date hereof proposes to register its Common Stock under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, pursuant to a registration statement on which it is permissible
to register Registrable Securities for sale to the public under the Securities
Act, it will each such time give prompt written notice to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 3. Upon the written request of any such Holder made within
15 days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder), the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the Holders thereof; provided, that (i) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), and (ii) if such registration involves an underwritten offering, all
Holders of Registrable Securities requesting to be included in the Company's
registration must sell their Registrable Securities to the underwriters selected
by the Company on the same terms and conditions as
2
<PAGE>
apply to the Company, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 3(a) involves an underwritten public offering, any Holder of
Registrable Securities requesting to be included in such registration may elect,
in writing prior to the effective date of the registration statement filed in
connection with such registration, not to register such securities in connection
with such registration.
(b) Expenses. The Company will pay all Registration Expenses in
--------
connection with each registration of Registrable Securities requested pursuant
to this Section 3.
(c) Priority in Incidental Registrations. If a registration
------------------------------------
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the amount of
securities requested to be included in such registration exceeds the amount
which can be sold in such offering, so as to be likely to have an adverse effect
on such offering as contemplated by the Company (including the price at which
the Company proposes to sell such securities), then the Company will include in
such registration (i) first, 100% of the securities the Company or the person
initiating the registration statement proposes to sell, (ii) second, to the
extent of the amount of securities requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the amount of securities which the persons
have requested to be included in such registration, such amount to be allocated
pro rata among all persons requesting to have Common Stock included in the
registration statement on the basis of the relative number of shares of Common
Stock then held by each such person, provided, that any Common Stock thereby
allocated to any such person that exceeds such person's request will be
reallocated among the remaining requesting persons in like manner.
4. Registration on Request.
-----------------------
(a) Request by Holders. Upon the written request of any Holder or
------------------
Holders requesting that the Company effect the registration under the Securities
Act of all or part of such Holder's or Holders' Registrable Securities and
specifying the intended method of disposition thereof, the Company will promptly
give written notice of such requested registration to all other Holders of
Registrable Securities, and thereupon will, as expeditiously as possible, use
its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Holder or Holders; and
(ii) all other Registrable Securities which the Company has been
requested to register by any other Holder thereof by written request given
to the Company within 15 days after the giving of such written notice by
the Company (which request shall specify the intended method of disposition
of such Registrable
3
<PAGE>
Securities), so as to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to
be registered.
(b) Registration Statement Form. If any registration requested
---------------------------
pursuant to this Section 4 which is proposed by the Company to be effected by
the filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) shall be in connection with an underwritten
public offering, and if the managing underwriter shall advise the Company in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in
--------
connection with the first six registrations of Registrable Securities pursuant
to this Section 4 upon the written request of any of the Holders. All expenses
for any subsequent registrations of Registrable Securities pursuant to this
Section 4 shall be paid pro rata by the Company and all other Persons (including
the Holders) participating in such registration on the basis of the relative
number of shares of Common Stock of each such Person included in such
registration.
(d) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 4 will not be deemed to have been effected unless it
has become effective; provided, that if, within 180 days after it has become
effective, the offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected.
(e) Selection of Underwriters. If a requested registration
-------------------------
pursuant to this Section 4 involves an underwritten offering, the Company shall
have the right to select the investment banker or bankers and managers to
administer the offering; provided, however, that such investment banker or
bankers and managers shall be satisfactory to Holders of a majority of the
Registrable Securities which are held by Holders and which the Company has been
requested to register.
(f) Priority in Requested Registrations. If a requested
-----------------------------------
registration pursuant to this Section 4 involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering without a significant
adverse effect on the price, timing or distribution of the securities offered,
the Company will include in such registration only the Registrable Securities
requested to be included in such registration. In the event that the number of
Registrable Securities requested to be included in such registration exceeds the
number which, in the opinion of such managing underwriter, can be sold without a
significant adverse effect on the price, timing or distribution of the
securities offered, the number of such Registrable Securities to be included in
such registration shall be allocated pro rata among all requesting Holders on
the basis of the relative number of shares of Registrable Securities then held
by each such
4
<PAGE>
Holder (provided that any shares thereby allocated to any such Holder that
exceed such Holder's request shall be reallocated among the remaining requesting
Holders in like manner). In the event that the number of Registrable Securities
requested to be included in such registration is less than the number which, in
the opinion of the managing underwriter, can be sold without a significant
adverse effect on the price, timing or distribution of the securities offered,
the Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of the underwriter,
can be sold without a significant adverse effect on the price, timing or
distribution of the securities offered.
(g) Additional Rights. If the Company at any time grants to any
-----------------
other holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 4,
the terms of this Section 4 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
5. Registration Procedures. If and whenever the Company is
-----------------------
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Agreement,
the Company will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the end of the
period within which a request for registration may be given to the Company,
file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective; provided, however, that the Company may discontinue any
registration of its securities which is being effected pursuant to Section
3 at any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
for a period not in excess of 180 days and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance
with the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement; provided, that before filing a
registration statement or prospectus, or any amendments or supplements
thereto, the Company will furnish to one counsel selected by the Holders of
a majority of the Registrable Securities covered by such registration
statement to represent all Holders of Registrable Securities covered by
such registration statement, copies of all documents proposed to be filed,
which documents will be subject to the review of such counsel;
5
<PAGE>
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this clause (iv), it
would not be obligated to be so qualified, to subject itself to taxation in
any such jurisdiction, or to consent to general service of process in any
such jurisdiction;
(v) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of any such Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) of this Section 5, of the
Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such seller, prepare
and furnish to such seller a reasonable number of copies of an amended or
supplemented prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;
6
<PAGE>
(viii) use its best efforts to list such Registrable Securities on
any securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is
then permitted under the rules of such exchange, and to provide a transfer
agent and registrar for such Registrable Securities covered by such
registration statement not later than the effective date of such
registration statement;
(ix) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as
sellers of a majority of such Registrable Securities or the underwriters,
if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of
the type customarily covered by "cold comfort" letters as the seller or
sellers of a majority of such Registrable Securities shall reasonably
request; and
(xi) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vi) of this Section 5, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 5 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 5 and including the date when each seller of Registrable
7
<PAGE>
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5.
6. Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act pursuant
to Section 3 or 4, the Company will, and it hereby does, indemnify and hold
harmless, to the extent permitted by law, the seller of any Registrable
Securities covered by such registration statement, each affiliate of such seller
and their respective directors and officers or general and limited partners (and
the directors, officers, affiliates and controlling Persons thereof), each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses to which such Indemnified Party may
become subject under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof, whether or not such Indemnified Party is a party thereto) arise
out of or are based upon (a) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto, or
(b) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and the Company will reimburse
such Indemnified Party for any legal or any other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be liable
to any Indemnified Party in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or amendment
or supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information with respect to such
seller furnished to the Company by such seller for use in the preparation
thereof; and provided, further, that the Company will not be liable to any
Person who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within the
meaning of the Securities Act, under the indemnity agreement in this Section
6(a) with respect to any preliminary prospectus or the final prospectus or the
final prospectus as amended or supplemented, as the case may be, to the extent
that any such loss, claim, damage or liability of such underwriter or
controlling Person results from the fact that such underwriter sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein) or of the final prospectus as then
amended or supplemented (including any documents incorporated by reference
therein), whichever is most recent, if the Company has previously furnished
copies thereof to such underwriter. Such indemnity shall remain in full force
and
8
<PAGE>
effect regardless of any investigation made by or on behalf of such seller or
any Indemnified Party and shall survive the transfer of such securities by such
seller.
(b) Indemnification by the Seller. The Company may require, as a
-----------------------------
condition to including any Registrable Securities in any registration statement
filed in accordance with Section 5 herein, that the Company shall have received
an undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 6) the Company and all other prospective sellers or any underwriter, as
the case may be, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information with respect to such
seller or underwriter furnished to the Company by such seller or underwriter for
use in the preparation of such registration statement, preliminary, final or
summary prospectus or amendment or supplement, or a document incorporated by
reference into any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any of the prospective sellers, or any of their respective affiliates,
directors, officers or controlling Persons and shall survive the transfer of
such securities by such seller.
(c) Notices of Claims, Etc. Promptly after receipt by an
----------------------
Indemnified Party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 6, such Indemnified Party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of the
Indemnified Party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnified Party, unless in such Indemnified Party's reasonable
judgment a conflict of interest between such Indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the indemnifying party to such Indemnified Party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof, the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided
------------
for in the preceding clauses (a) and (b) is unavailable to an indemnified party
or insufficient to
9
<PAGE>
hold it harmless as contemplated by the preceding clauses (a) and (b), then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnified party and the indemnifying party, but also the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations, provided that no selling Holder shall be
required to contribute in an amount greater than the dollar amount of the
proceeds received by such selling Holder with respect to the sale of any
securities. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding subdivisions of this Section 6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this
---------------
Section 6 shall be in addition to any liability which any party may otherwise
have to any other party.
7. Rule 144. The Company covenants that it will file the reports
--------
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 7, the Company may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
8. Miscellaneous.
-------------
(a) Holdback Agreement. If any such registration shall be in
------------------
connection with an underwritten public offering, each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or 180 days (or such lesser
period as the managing underwriters may permit) after the
10
<PAGE>
effective date of such registration, and the Company hereby also so agrees and
agrees to cause each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company (at any time other than in a public offering)
to so agree.
(b) Amendments and Waivers. This Agreement may be amended and the
----------------------
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 8(b), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(c) Successors, Assigns and Transferees. This Agreement shall be
-----------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions contained herein; provided that such
subsequent Holder shall not be entitled to such benefits if the Partnership, in
connection with a transfer of Registrable Securities, provides the Company with
written notice that such transferred Registrable Securities are no longer deemed
to be Registrable Securities.
(d) Notices. All notices and other communications provided for
-------
hereunder shall be in writing and shall be sent by first class mail, telecopier
or hand delivery:
(i) if to the Company, to:
Red Lion Hotels, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: President
Telecopy No. (360) 693-1739
with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Peter F. Kerman, Esq.
Telecopy No. (415) 395-8095
11
<PAGE>
(ii) if to the Partnership, to:
RLA-GP, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: President
Telecopy No. (360) 693-1739
with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Peter F. Kerman, Esq.
Telecopy No. (415) 395-8095
(iii) if to any other Holder of Registrable Securities, to the
address of such other Holder as shown in the books and records
of the Company, or to such other address as any of the above
shall have designated in writing to all of the other above.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, or (3) when telecopied, receipt acknowledged.
(e) Descriptive Headings. The headings in this Agreement are for
--------------------
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(f) Severability. In the event that any one or more of the
------------
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
12
<PAGE>
(h) Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of New York
applicable to contracts made and to be performed therein. The parties to this
Agreement hereby agree to submit to the jurisdiction of the courts of the State
of New York in any action or proceeding arising out of or relating to this
Agreement.
(i) Specific Performance. The parties hereto acknowledge and
--------------------
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, it is agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States or
any state thereof, in addition to any other remedy to which they may be entitled
at law or equity.
13
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
RED LION HOTELS, INC.
By: /s/ David J. Johnson
-----------------------------------------------------
David J. Johnson
President and Chief Executive Officer
RED LION, A CALIFORNIA LIMITED PARTNERSHIP
By: RLA-GP, Inc.
Its General Partner
By: /s/ David J. Johnson
-----------------------------------------------------
David J. Johnson
Executive Vice President
14
<PAGE>
EXHIBIT 10.1
- - - --------------------------------------------------------------------------------
LEASE
BETWEEN
RLH PARTNERSHIP, L.P.,
A DELAWARE LIMITED PARTNERSHIP
("LANDLORD")
AND
RED LION HOTELS, INC.,
A DELAWARE CORPORATION
("TENANT")
- - - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
LEASE
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - LEASE OF PREMISES............................................... 1
1.1 "As-Is" Letting................................................... 1
1.2 Tenant's Right of Possession...................................... 2
1.3 Landlord's Cooperation............................................ 2
ARTICLE II - DEFINITION OF TERMS............................................ 3
ARTICLE III - TERM.......................................................... 10
3.1 Term.............................................................. 10
3.2 Extended Term..................................................... 10
3.3 Notice of Termination............................................. 11
3.4 Obligations of Parties at Termination............................. 11
ARTICLE IV - ABSOLUTELY NET LEASE........................................... 12
4.1 Net Lease......................................................... 12
4.2 Non-Terminability................................................. 12
ARTICLE V - RENT............................................................ 13
5.1 Base Rent and Percentage Rent..................................... 13
5.2 Payment of Rent................................................... 13
5.3 Records; Audit by Landlord........................................ 15
5.4 Subleases, Licenses, and Concessions.............................. 16
5.5 Rent Upon Certain Expansions...................................... 17
ARTICLE VI - OPERATION AND MAINTENANCE OF PREMISES.......................... 17
6.1 Operation and Maintenance of Premises............................. 17
6.2 Taxes............................................................. 18
6.3 Compliance with Requirements, Covenants and Restrictions.......... 19
6.4 Landlord's Right to Perform Tenant Obligations.................... 19
6.5 Compliance with Laws and Agreements............................... 19
6.6 Tenant's Right to Contest......................................... 19
6.7 Liens............................................................. 20
ARTICLE VII - USE........................................................... 21
ARTICLE VIII - INDEMNIFICATION.............................................. 21
8.1 General Indemnification by Tenant................................. 21
8.2 Environmental Indemnification..................................... 22
8.3 Defense of Indemnified Parties.................................... 22
8.4 Payment by Tenant................................................. 23
8.5 Survival.......................................................... 23
8.6 Continuing Obligations............................................ 23
</TABLE>
i
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<TABLE>
<S> <C>
ARTICLE IX - ALTERATIONS AND EXPANSIONS..................................... 23
9.1 Alterations and Expansions........................................ 23
9.2 Alterations and Expansions During Last Five Years of Term......... 24
ARTICLE X - FF&E, FIXED ASSET SUPPLIES AND INVENTORIES...................... 24
10.1 FF&E Upon Commencement Date...................................... 24
10.2 Replacement of FF&E.............................................. 25
10.3 FF&E Upon Termination............................................ 25
10.4 Landlord's Security Interest in Tenant's FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories................ 26
ARTICLE XI - TRADEMARKS, TRADE NAMES AND SERVICE MARKS...................... 26
11.2 Use of Trademarks, Trade Names and Service Marks................. 26
11.3 Proprietary Software............................................. 26
ARTICLE XII - ENVIRONMENTAL HAZARDS......................................... 27
12.1 Compliance with Environmental Law................................ 27
12.2 Site Assessments................................................. 28
ARTICLE XIII - INSURANCE.................................................... 30
13.1 Property & Business Interruption Insurance....................... 30
13.2 Application of Proceeds.......................................... 31
13.3 Waiver of Rights of Subrogation.................................. 32
13.4 Operational Insurance............................................ 32
13.5 Blanket and Self-Insurance....................................... 33
13.6 Costs of Insurance............................................... 33
13.7 Defense of Claims after Termination.............................. 33
13.8 Coverage and Certificates........................................ 33
13.9 Alternative Insurance Coverage................................... 34
ARTICLE XIV - DAMAGE BY FIRE OR OTHER CASUALTY.............................. 34
14.1 Damage by Fire or Other Casualty................................. 34
14.2 Partial Damage by Fire or Other Casualty......................... 34
14.3 Damage Occurring After the 10th Anniversary of Commencement
Date......................................................... 34
14.4 No Abatement of Rent Due to Casualty............................. 35
14.5 Early Termination................................................ 35
ARTICLE XV - CONDEMNATION................................................... 36
15.1 Notice of Condemnation and Assignment of Rights.................. 36
15.2 Tenant's Right to Pursue a Claim................................. 36
15.3 Temporary Taking................................................. 36
15.4 Total Taking..................................................... 37
15.5 Substantial Taking............................................... 38
15.6 Partial Taking................................................... 38
ARTICLE XVI - ASSIGNMENT, SALE AND SUBLETTING............................... 39
16.1 Sale or Assignment by Landlord, Subject to Lease................. 39
16.2 Assignment by Tenant............................................. 40
16.3 Tenant's Right to Sublease....................................... 40
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE XVII - HOLDING OVER................................................. 40
ARTICLE XVIII - ESTOPPEL CERTIFICATES....................................... 41
ARTICLE XIX - LANDLORD/TENANT FINANCING..................................... 41
19.1 Right to Finance................................................. 41
19.2 Priority......................................................... 41
19.3 Mortgagee Amendments............................................. 42
ARTICLE XX - DEFAULT BY TENANT.............................................. 42
20.1 Events of Default................................................ 42
20.2 Landlord's Rights Upon an Event of Default....................... 44
20.3 Implied Waiver................................................... 45
20.4 Injunctive Relief................................................ 46
ARTICLE XXI - PROVISIONS APPLICABLE TO PURCHASE BY TENANT
OF THE PREMISES........................................... 46
21.1 Purchase "As Is"................................................. 46
21.2 Timing of Closing................................................ 46
21.3 Deliveries at Closing........................................... 46
21.4 TENANT'S FAILURE TO CLOSE........................................ 47
21.5 LANDLORD'S FAILURE TO CLOSE...................................... 47
21.6 Payment of Costs................................................. 48
21.7 Prorations....................................................... 48
ARTICLE XXII - MISCELLANEOUS................................................ 48
22.1 Notices.......................................................... 48
22.2 Memorandum of Lease.............................................. 49
22.3 Determination of Fair Market Value............................... 49
22.4 Partial Invalidity............................................... 51
22.5 Headings......................................................... 51
22.6 Binding Effect................................................... 51
22.7 Representations.................................................. 51
22.8 Amendments....................................................... 51
22.9 Brokers.......................................................... 51
22.10 Authority to Execute............................................ 51
22.11 Applicable Law.................................................. 51
22.12 Construction.................................................... 51
22.13 Impossibility of Performance.................................... 52
22.14 Time of Essence................................................. 52
22.15 Attorney's Fees................................................. 52
22.16 No Merger....................................................... 52
22.17 Landlord's Right to Enter....................................... 52
22.18 Corporate Reorganization of Tenant.............................. 52
22.19 No Waiver....................................................... 52
22.20 Confidentiality................................................. 53
22.21 Gender and Number............................................... 53
22.22 Survival........................................................ 53
22.23 Acceptance of Surrender......................................... 53
</TABLE>
iii
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<TABLE>
<S> <C>
22.24 Non-Recourse as to Landlord..................................... 53
22.25 Entire Agreement; Integration................................... 54
22.26 Waiver of Trial by Jury......................................... 54
22.27 Tenant's Remedies............................................... 54
22.28 Landlord and Tenant Relationship................................ 54
22.29 Relationship with Groundlessors................................. 54
22.30 Limited Liability............................................... 55
EXHIBITS
- - - --------
A Descriptions of Land
B Schedule of Rent
</TABLE>
iv
<PAGE>
LEASE
-----
THIS LEASE is made as of the 1st day of August, 1995 ("Commencement Date"),
by and between RLH PARTNERSHIP, L.P., a Delaware limited partnership
("Landlord"), with a mailing address in care of KKR Associates, 2800 Sand Hill
Road, Suite 2000, Menlo Park, California 94025, and RED LION HOTELS, INC.
("Tenant"), a Delaware corporation, with a mailing address at 4001 Main Street,
Vancouver, Washington 98663.
R E C I T A L S:
WHEREAS, Landlord currently holds an interest in certain parcels of real
property either in fee or as ground lessee, which parcels are more specifically
described in Exhibits A-1 through A-17 hereto, and each of which has been
developed, improved, and is currently being utilized for, the operation of a Red
Lion hotel (individually, a "Hotel," and, collectively, the "Hotel(s)");
WHEREAS, the lease transaction described herein is a portion of a larger
transaction involving, among other things, an initial public offering of the
common stock of Tenant, and wherein, among other matters, Tenant will succeed to
certain of the assets of the Red Lion hotel business, including the operation of
"Red Lion" hotels on other properties not the subject of this Lease, and wherein
both Tenant and Landlord shall borrow funds from certain lenders and each of
their respective interests under this Lease shall be pledged as collateral for
such loans (collectively, such larger series of transactions shall be referred
to herein as the "Restructuring"); and
WHEREAS, prior to the Restructuring, Tenant or Tenant's predecessor's in
interest have possessed and operated each Hotel leased hereunder.
ARTICLE I
LEASE OF PREMISES
-----------------
Section 1.1 "As-Is" Letting
---------------
(a) In consideration of the Rents, covenants and agreements to be
paid, kept and performed hereunder, Landlord, for the term and upon the
conditions hereinafter set forth, leases to Tenant and Tenant leases and
takes from Landlord, the Premises (including, without limitation, all FF&E,
Fixed Asset Supplies, Operating Equipment and Inventories located at the
Hotels on the Commencement Date), together with all privileges, easements
and appurtenances beneficial thereto.
(b) The Premises are leased to Tenant "as-is" and Landlord makes no
representation or warranty, express or implied, with respect to the
condition of the Premises, or as to the compliance of the Premises with any
Legal Requirements. Tenant has examined the Premises and title to the
Premises and has found all of the same satisfactory for its purposes.
Tenant accepts the Premises subject to the existing state of title. During
the term of this Lease, Tenant shall have the exclusive right to use,
enforce and obtain the benefits of (i) all guaranties, representations, and
warranties relating to the construction, improvement, alteration and repair
of the Premises and all architectural and engineering plans, drawings and
specifications related thereto, and (ii) all of Landlord's transferable
licenses, permits, franchises, approvals,
1
<PAGE>
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person
related to any Hotel which is required to be held by Tenant in connection
with the operation of the Hotels and/or the transactions contemplated
hereby. During the term of this Lease, Landlord shall execute such
assignments or other transfer instruments as are necessary to transfer the
benefits of all such items to Tenant, and shall not waive, surrender or
modify any of Landlord's rights with respect thereto without obtaining
Tenant's prior written consent.
Section 1.2 Tenant's Right of Possession. Subject to the provisions of
----------------------------
Sections 6.4 and 12.2, and any other provision of applicable law affording any
inspection rights to Landlord and/or any Mortgagee, Tenant shall have exclusive
possession and control of the Premises during the term of this Lease.
Section 1.3 Landlord's Cooperation
----------------------
(a) Landlord agrees upon request by Tenant to provide all information
relevant to Landlord, its general partners, officers and directors, and to
execute, and to cause its general partners, officers and directors to sign,
promptly, and without charge, all applications (including all documents
related thereto) for licenses, permits, instruments or other general
approvals required to be submitted to any governmental authority that are
necessary for the proper and successful conduct of Tenant's lawful business
operations at any of the Hotels if and to the extent such execution and/or
information by or from Landlord and/or any of its officers and directors is
required by law, regulation or governmental practice in order for Tenant to
obtain any such license, permit, instrument or other governmental approval;
provided, however, that all costs and expenses associated therewith shall
be the sole obligation of Tenant, and Tenant shall promptly pay and
discharge the same, and provided further, that the proper execution of any
such application shall not expose Landlord or any of its constituent
partners to any personal liability. In all cases, Landlord shall have a
reasonable amount of time to comply with Tenant's requests pursuant to this
Section 1.3(a), Landlord and Tenant shall, in good faith, cooperate with
each other in determining and complying with relevant governmental
requirements, and Tenant shall afford Landlord every reasonable opportunity
to question and challenge by appropriate administrative and/or judicial
process any relevant governmental requirement so long as such challenge
does not materially and adversely affect any material license, permit or
governmental approval of Tenant. Tenant hereby agrees that it will fully
indemnify, defend and save Landlord harmless from and against any and all
costs, losses and expenses, including, without limitation, any and all
legal fees and court costs incurred or suffered by Landlord as a result of
its compliance with the obligations imposed upon Landlord under this
Section 1.3 or as a result of Tenant's contest of the results of any such
application to any governmental entity, except in the case of Landlord's
fraud, willful misconduct or gross negligence.
(b) If Landlord should fail to comply with the requirements of Section
1.3(a) above, and such failure should continue for more than thirty (30)
days after Notice from Tenant to Landlord and the Senior Landlord's
Mortgagee specifying the required cooperation and informing the recipients
of such Notice that Tenant intends to act pursuant to this Section 1.3(b)
if such cooperation is not provided (whether by action of Landlord or by
action of the Senior Landlord's Mortgagee) within said thirty (30) day
period and such failure results, or with reasonable certainty will result,
in the denial, non-renewal or withdrawal of a material license, permit or
governmental approval that will materially and adversely affect Tenant's
business at such Hotel, then, in addition and not as a substitution for any
remedies available to Tenant under Section
2
<PAGE>
22.27 of this Lease, if such failure is not cured within such thirty (30)
day period, Tenant shall have the right to terminate this Lease with
respect to the affected Hotel by so notifying Landlord not later than the
date which is sixty (60) days after the date of the aforesaid Notice. If
Tenant elects to exercise the right described in the preceding sentence, it
shall, simultaneously with its delivery of its Notice of termination,
deliver to Landlord its irrevocable offer to purchase such Hotel, but only
such Hotel, for an amount equal to the Leasehold Purchase Price. Tenant
shall not, by reason of exercising said right to terminate, be excluded
from exercising any other right or remedy afforded to Tenant under Section
22.27 as a result of Landlord's breach of this Section 1.3.
(c) Landlord may accept or reject Tenant's irrevocable offer to
purchase such Hotel by sending Tenant a Notice of rejection or acceptance
within thirty (30) days from the date upon which Landlord received Tenant's
Notice of termination. If Landlord fails to send Tenant a Notice of
rejection or acceptance within thirty (30) days of its receipt of Tenant's
irrevocable offer to purchase such Hotel, Landlord shall be deemed to have
rejected such offer. If Landlord accepts Tenant's offer to purchase, this
Lease shall terminate with respect to such Hotel and closing of such
purchase shall occur in accordance with the provisions of Article XXI.
Upon such termination, Tenant shall pay to Landlord all Rent due through
such date of termination, in addition to the Leasehold Purchase Price.
Landlord shall convey such Hotel to Tenant in accordance with the
provisions of Article XXI.
(d) If Landlord rejects or is deemed to have rejected Tenant's
irrevocable offer to purchase pursuant to Section 1.3(b), this Lease shall
terminate with respect to such Hotel on a Base Rent payment date specified
by Tenant in its Notice of termination which occurs not earlier than ninety
(90) days nor later than one hundred twenty (120) days after delivery to
Landlord of Tenant's irrevocable offer to purchase, provided that this
Lease shall not terminate with respect to such Hotel unless and until
Tenant shall have paid all sums due hereunder (including, without
limitation, all taxes and insurance premiums) as of the actual date of
termination. Upon such termination, Tenant shall vacate such Hotel in
accordance with the provisions of Section 3.4.
(e) Landlord shall have the right at all times prior to either a
closing date for any purchase under Section 1.3(c) or the termination date
under Section 1.3(d), to cancel the right of Tenant to so purchase or
terminate pursuant to said sections, by complying with the requirements of
Section 1.3(a) in sufficient time and manner so that the subject license,
permit or approval is obtained or reinstated by a date that is prior to the
aforesaid closing date or termination date as the case may be.
ARTICLE II
DEFINITION OF TERMS
-------------------
The following terms when used in this Lease shall have the meanings
indicated:
"Accounting Period" shall mean a calendar month.
-----------------
"Additional Rent" shall mean any obligation of Tenant to pay money to
---------------
Landlord under this Lease, other than Base Rent, Percentage Rent, and any
Leasehold Purchase Price.
3
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"Affiliate" shall mean, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a second
Person if such first Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise.
"Base Rent" shall have the meaning set forth in Section 5.1.
---------
"Base Revenues" shall have the meaning set forth in Section 5.1(b).
-------------
"Business Day(s)" means Monday through Friday (except holidays); "normal
---------------
business hours" means 8:00 a.m. to 6:00 p.m. on Business Days; and "holidays"
means New Year's Day, President's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
"Change in Control" shall mean that Kohlberg Kravis Roberts & Co., L.P., a
-----------------
Delaware limited partnership, its general partners and its Affiliates
(determined without giving effect to the second sentence of the definition
thereof) (x) shall cease to possess, directly or indirectly, the power to direct
or cause the direction of the management policies of Landlord, whether through
the ownership of voting securities, by contract or otherwise or (y) shall cease
to own, directly or indirectly, at least 50% of the direct or indirect economic
interest owned by them in Landlord on the Commencement Date.
"Commencement Date" shall have the meaning set forth in the Preamble.
-----------------
"Concurrent Tenant Credit Facility" shall mean that certain Credit
---------------------------------
Agreement of even date herewith by and among Tenant, as Borrower, various
lending institutions, as the Banks, and Credit Lyonnais, New York Branch, as
Administrative Agent, as the same may from time to time be amended, modified
and/or supplemented.
"Effective Extended Term" means any Extended Term that has become effective
-----------------------
by reason of the occurrence of the first day of such Extended Term or because
Tenant has irrevocably exercised its option to extend the Term through such
Extended Term.
"Environmental Laws" shall mean any applicable federal, state, foreign, or
------------------
local law, statute, ordinance, rule, regulation, or rule of common law (now or
hereafter in effect), or any binding and enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree, or judgment, relating to (1) the use, generation, treatment, management,
storage, transportation or other handling of Hazardous Materials, (2)
occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, and (3) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery, losses or injuries resulting from the
release, threatened release, discharge, disposal or other handling of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Clean Water Act (29 U.S.C.
Section 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide, Rodenticide Act (7 U.S.C. Section
136 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), any analogous present or future federal, state, foreign, or local law,
4
<PAGE>
statute or ordinance, and any regulation or rule promulgated thereunder, each as
amended or supplemented.
"Environmental Violation" shall mean any violation of any Environmental Law
-----------------------
at or relating to any Premises.
"Event of Default" shall have the meaning set forth in Section 20.1.
----------------
"Expansion" shall have the meaning set forth in Section 9.1.
---------
"Expansion Rent" shall have the meaning set forth in Section 5.5.
--------------
"Extended Term(s)" shall have the meaning set forth in Section 3.2.
----------------
"Fair Market Value" shall mean the fair market value of any affected Hotel
-----------------
determined in accordance with the appraisal procedures set forth in
Section 22.3. Fair Market Value shall be determined without regard to any
condition such as casualty or condemnation which might have given rise to the
need to determine the Fair Market Value, and by assuming the Hotel is
unencumbered by this Lease or by any encumbrance securing funded indebtedness;
provided, however, that if any such encumbrance may not be removed without
penalty, the positive or negative effect on Fair Market Value attributable to
the interest rate, amortization schedule, maturity date, prepayment penalty and
other terms and conditions of such encumbrance shall be taken into account. The
Hotel shall be valued at its highest and best use which shall be presumed to be
as a hotel operated in accordance with the provisions of this Lease. Fair Market
Value of the Hotel shall not include "going concern" or "business enterprise"
value attributable to factors other than the highest and best use of the Hotel.
"FF&E" shall mean the Furnishings, Fixtures, machinery and equipment
----
installed and used in any Hotel, including, without limitation, floor and window
coverings, decorative light fixtures and equipment.
"FF&E Reserve Account" shall have the meaning set forth in Section 10.2.
--------------------
"Fiscal Year" shall mean Tenant's Fiscal Year which ends at midnight on
-----------
December 31 in each calendar year. If Tenant's Fiscal Year is changed in the
future, appropriate adjustment to this Lease's reporting and accounting
procedures shall be made; provided, however, that no such change or adjustment
shall alter the Term of this Lease or in any way reduce the payment of
Percentage Rent or other payments due Landlord hereunder.
"Fixed Asset Supplies" shall mean supply items included within "Property
--------------------
and Equipment" under the Uniform System of Accounts including linen, china,
glassware, silver, uniforms, and similar items.
"Fixtures" shall mean all permanently affixed equipment, machinery,
--------
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection with
and permanently affixed to or incorporated into any Hotel, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto.
5
<PAGE>
"Furnishings" shall mean all furniture and furnishings (including art work
-----------
and other items of decor) for guest rooms, public areas and non-public areas,
and movable equipment (but not Fixtures), inventory and linens.
"GDP Deflator" shall mean the "Gross Domestic Product Implicit Price
------------
Deflator" issued from time to time by the United Sates Bureau of Economic
Analysis of the Department of Commerce, or if the aforesaid GDP Deflator is not
at such time so prepared and published, any comparable index selected by
Landlord and reasonably satisfactory to Tenant (a "Substitute Index") then
prepared and published by an agency of the Government of the United States,
appropriately adjusted for changes in the manner in which such index is prepared
and/or year upon which such index is based. Except as otherwise expressly
stated herein, whenever a number or amount is required to be "adjusted by the
GDP Deflator", or similar terminology, such adjustment shall be equal to the
percentage increase in the GDP Deflator which is issued for the month which is
two months earlier than the month in which such adjustment is to be made as
compared to the GDP Deflator which was issued for the month which is two months
earlier than the month in which the Commencement Date occurred, it being agreed
that for purposes of this Lease, no GDP Deflator adjustment shall operate to
decrease any sum or number specified in this Lease.
"Hazardous Materials" shall mean (1) any substance or material defined as
-------------------
or included in the definition of one or more of any of the following:
"hazardous material," "hazardous waste," "hazardous substance," "regulated
substance," "toxic substance," "pollutant," "contaminant," "radioactive
material," or any other similar designation in, or otherwise subject to
regulation under an Environmental Law, (2) any oil, petroleum, petroleum
fraction or petroleum derived substance, (3) any flammable substance or
explosive, (4) asbestos in any form, (5) polychlorinated biphenyls, (6) urea
formaldehyde foam insulation, (7) pesticides, and (8) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated
under any Environmental Law.
"Hotel" shall have the meaning specified in the Recitals.
-----
"Improvements" shall mean the buildings and structures, together with the
------------
electrical, mechanical, plumbing and HVAC systems installed therein, parking
lots and all other improvements and FF&E (other than personalty owned by Tenant)
now or hereafter located on the Land.
"Indemnified Parties" shall have the meaning set forth in Section 8.1.
-------------------
"Initial Term" shall have the meaning set forth in Section 3.1.
------------
"Insubstantial Taking" shall mean a condemnation of a portion of any Hotel
--------------------
that is less than all or substantially all of, or less than a material portion
of, such Hotel if: (i) the Improvements can be restored to substantially the
same physical condition which prevailed therein and thereon prior to such
condemnation at a cost not exceeding the condemnation award payable with respect
thereto, (ii) the condemnation does not cause a material reduction in the size
or useability of any such Hotel or any material disruption to Tenant's use and
occupancy of such Hotel, and (iii) such condemnation will not materially reduce
the operating profitability of Tenant's business at the Hotel after any
restoration when compared to such profitability before the condemnation.
"Insurance Requirements" shall mean the requirements of any and all
----------------------
insurance policies procured in accordance with the terms hereof or required to
be carried hereunder.
6
<PAGE>
"Insurance Trustee" shall mean a bank, insurance company, pension fund,
-----------------
real estate investment trust or commercial lending institution, with financial
statements audited by an independent public accounting firm and a net worth of
at least One Hundred Million Dollars ($100,000,000). The Senior Landlord's
Mortgagee for a Hotel shall be the Insurance Trustee for such Hotel if the
Senior Landlord's Mortgagee fulfills the requirements of the first sentence of
this paragraph. If there is no Senior Landlord's Mortgagee for such Hotel that
fulfills the requirements of the first sentence of this paragraph, the Insurance
Trustee shall be such qualifying institution as is selected by Tenant and
approved by Landlord, such approval not to be unreasonably withheld, conditioned
or delayed.
"Inventories" shall mean "Inventories" as defined in the Uniform System of
-----------
Accounts, such as provisions in storerooms, refrigerators, pantries and
kitchens; beverages in wine cellars and bars; other merchandise intended for
sale; fuel; mechanical supplies; stationery; and other expensed supplies and
similar items.
"Land" shall mean all of the real property owned or leased by Landlord
----
underlying the Hotels as described in Exhibits A-1 through A-17 hereto, or such
lesser area for any such Hotel that from time to time may be leased by Tenant
hereunder as set forth in this Lease.
"Landlord" shall have the meaning set forth in the Preamble and shall
--------
include its successors and assigns.
"Landlord's Audit" shall have the meaning set forth in Section 5.3.
----------------
"Landlord's Mortgagee" shall mean the holder of, or beneficiary under, any
--------------------
Mortgage of Landlord's interest in any of the Hotels and/or this Lease,
including without limitation all members of any syndicate and the trustee or any
other agent thereof, if Landlord's Mortgagee consists of more than one entity or
person.
"Landlord's Temporary Taking Award" shall have the meaning set forth in
---------------------------------
Section 15.3.
"Lease" shall mean this Lease between Landlord and Tenant dated as of the
-----
Commencement Date as the same may be from time to time amended, modified and/or
supplemented.
"Lease Interest Rate" shall mean the Prime Rate plus two (2) percentage
-------------------
points per annum; provided, however, that the Lease Interest Rate shall not
exceed the maximum rate of interest from time to time permitted to be charged
under applicable law with respect to the indebtedness of any party for which and
against whom such interest is charged under this Lease.
"Lease Memorandum" shall have the meaning set forth in Section 22.2.
----------------
"Lease Year" shall refer to the first four full fiscal quarters (based on
----------
Tenant's Fiscal Year) after the Commencement Date and to each successive four
fiscal quarter period that occurs during the Term.
"Leasehold Purchase Price" shall be at any particular time during the Term,
------------------------
the dollar amount equal to the present value as of the date of such purchase of
the payments of Base Rent applicable to such Hotel (as determined in accordance
with the Schedule of Rent shown on Exhibit B), that would have been payable
during the period commencing on the date of such purchase and ending on the date
of expiration of the then current term of this Lease (including any Effective
Extended Term) for such Hotel, discounted to the date of purchase at an interest
rate equal to the effective interest rate on United States Treasury
7
<PAGE>
obligations as of the month preceding the date of such purchase and having a
maturity most nearly equal to the number of months remaining in the current term
of this Lease (including any Effective Extended Term) as of the date of such
purchase.
"Legal Requirement(s)" shall have the meaning set forth in Section 6.5.
--------------------
"Major Casualty" shall mean any damage to or destruction of all or any
--------------
portion of any Hotel when such casualty is likely to result in a reduction of
40% or more of the then operating profitability of Tenant's business at such
Hotel for a period exceeding twelve (12) months based upon the assumption that
the casualty will be repaired with reasonable diligence.
"Mortgage" shall mean any security instrument to which Landlord or Tenant
--------
is a party and which encumbers any interest in any of the Hotels and/or this
Lease, including, without limitation, mortgages, deeds of trust, security deeds
and similar instruments.
"Mortgagee" shall refer to each and every Landlord's Mortgagee and Tenant's
---------
Mortgagee.
"Notice" shall have the meaning set forth in Section 22.1.
------
"Operating Equipment" shall mean equipment which is capital in nature, but
-------------------
is removable and therefore not affixed to or installed permanently in a Hotel,
such as shuttle vans, cleaning equipment and other personalty utilized by Tenant
specifically for the operation of the business of the Hotel.
"Operating Revenues" shall mean in accordance with the Uniform System of
------------------
Accounts all revenues received or receivable for the use, occupancy or enjoyment
of the Hotels, or any part thereof, or received or receivable by Tenant for the
sale of any goods, services or other items sold on or provided from the Premises
in the ordinary course of each Hotel's operation, including without limitation:
(a) all income and proceeds received from rental of rooms and other space within
the Hotels including net parking revenue; (b) all income and proceeds received
from food and beverage operations and from catering services conducted from any
Hotel even though rendered outside of such Hotel; (c) all income and proceeds
(amortized over the period for which it relates) from business interruption,
rental interruption and use and occupancy insurance with respect to the
operation of each Hotel (after deducting therefrom all necessary costs and
expenses incurred in the adjustment or collection thereof); (d) all awards
allocated to Tenant for condemnation for temporary use (allocated over the
period for which it relates) (after deducting therefrom all costs incurred in
the adjustment or collection thereof); and (e) all income and proceeds from
judgments, settlements and other resolutions of disputes (allocated over the
period for which it relates) with respect to matters which would be included in
"Operating Revenues" if received in the ordinary course of any Hotel's operation
(after deducting therefrom all necessary costs and expenses incurred in the
adjustment or collection thereof). Such term shall not include: (1) gross
receipts received by lessees, licensees or concessionaires of any Hotel to the
extent not expressly included in Operating Revenues; (2) consideration received
at the Hotel for hotel accommodations, goods and services to be provided at
other hotels, although arranged by, for or on behalf of Tenant; (3) income and
proceeds from the sale or other disposition of goods, capital assets and other
items not in the ordinary course of any Hotel's operation; (4) federal, state
and municipal excise sales and use taxes collected directly from patrons or
guests of any Hotel as part of or based on the sales receipts, room admission,
cabaret or equivalent taxes; (5) condemnation awards (except to the extent
provided in clause (d) of the first sentence of this definition); (6) reasonable
bad debt reserves taken in the ordinary course of business, subject to
adjustment; (7) gratuities paid to Hotel employees; (8) the proceeds of any
financing or sale of any Hotel, (9) insurance proceeds other than from business
interruption, rental interruption and use and occupancy
8
<PAGE>
insurance with respect to operation of any Hotel; (10) other income or proceeds
resulting other than from the use or occupancy of any Hotel, or any part
thereof, or other than from goods, services or other items sold on or provided
from the Premises in the ordinary course of business; or (11) interest and
income on any funds standing from time to time in any Hotel's agency or reserve
accounts.
"Partial Condemnation Reduction Percentage" shall mean that percentage
-----------------------------------------
applicable upon a condemnation equal to the fraction whose numerator is the Fair
Market Value of the condemned Hotel immediately prior to the effective date of
such condemnation less the Fair Market Value of the portion of such Hotel
remaining immediately after such condemnation has become effective, and whose
denominator is the Fair Market Value of such Hotel immediately prior to the
effective date of such condemnation. Thus, for example, if the Fair Market
Value of the affected Hotel immediately prior to such condemnation was $20
million and the Fair Market Value of the portion of the affected Hotel remaining
immediately after such condemnation was $15 million, the Partial Condemnation
Reduction Percentage would be 25%.
"Partial Lease Year" shall mean the period between the end of the last full
------------------
Lease Year and the termination of this Lease.
"Percentage Rent" shall have the meaning set forth in Section 5.1.
---------------
"Premises" shall mean all of the Land and the Improvements associated with
--------
the Hotels, or such lesser area or portion of each such Hotel that from time to
time may be leased by Tenant hereunder as set forth in this Lease.
"Prime Rate" shall mean the prime commercial lending rate as announced
----------
from time to time by Credit Lyonnais at its branch in New York City (or such
other financial institution as Landlord and Tenant may mutually agree in
writing), each change in said rate to be effective as of the date of such
change.
"Prospectus" shall have the meaning set forth in Section 22.20.
----------
"Renovations" shall have the meaning set forth in Section 10.2.
-----------
"Rent(s)" shall mean Base Rent, Percentage Rent, Additional Rent and
-------
Expansion Rent either collectively or any one or more of same as the context may
indicate.
"Sale of a Hotel" shall mean any sale, assignment, transfer or other
---------------
disposition, for value or otherwise, voluntary or involuntary, of Landlord's
title to a Hotel, including, if applicable, the Land or Landlord's leasehold
interest in the underlying ground lease for the Land or an assignment or
sublease of Landlord's leasehold interest in the underlying lease of the Hotel
but excluding any Mortgage on Landlord's interest in any Hotel and/or this
Lease. For purposes of this Lease, a Sale of a Hotel shall also include a lease
(subject to this Lease) of all or substantially all of any Hotel or the Land
located at any such Hotel and any Change in Control of Landlord.
"Senior Landlord's Mortgagee" for any Hotel shall mean the holder of, or
---------------------------
beneficiary under, from time to time the most senior Mortgage against Landlord's
interest in such Hotel and/or this Lease.
"Site Assessment" shall have the meaning ascribed to it in Section 12.2.
---------------
9
<PAGE>
"Site Reviewer" shall have the meaning ascribed to it in Section 12.2.
-------------
"Substantial Taking" shall mean a condemnation of a portion of any Hotel
------------------
which is not an Insubstantial Taking.
"Surviving Obligations" shall mean any obligations of Tenant under this
---------------------
Lease, actual or contingent, which arise on or prior to the expiration or prior
termination of this Lease and which survive such expiration or termination by
their own terms.
"Tenant" shall have the meaning set forth in the Preamble and shall include
------
its successors and assigns.
"Tenant's Mortgagee" shall mean the holder of, or beneficiary under any
------------------
Mortgage of Tenant's interest in any of the Hotels and/or this Lease, including
without limitation all members of any syndicate and the trustee or any other
agent thereof, if Tenant's Mortgagee consists of more than one entity or person.
"Term" shall have the meaning set forth in Section 3.1.
----
"Uniform System of Accounts" shall mean the Uniform System of Accounts for
--------------------------
Hotels, as adopted and published from time to time by the American Hotel and
Motel Association. [Eighth Revised Edition, 1986, as published by the Hotel
Association of New York City, Inc.]
"Use Award" shall have the meaning set forth in Section 15.3.
---------
"Year" shall mean a calendar year commencing on January 1 and ending on
----
December 31. A "Partial Year" shall mean that portion of a Year that occurs
during the Term in the case of the Year in which the Commencement Date occurs
and the Year in which the expiration or termination of this Lease occurs.
ARTICLE III
TERM
----
Section 3.1 Term. The "Term" shall consist of the Initial Term and the
----
Extended Term(s), if any. The Initial Term of this Lease shall commence on the
Commencement Date, and, unless sooner terminated as otherwise provided herein,
shall expire on December 31, 2010.
Section 3.2 Extended Term. If Tenant has not given Notice of its
-------------
intention to terminate this Lease with respect to any Hotel pursuant to
Section 3.3 and the Initial Term or any then current Extended Term with respect
to such Hotel has not been sooner terminated, the Term of this Lease with
respect to each such Hotel shall automatically be extended on the same terms and
conditions as set forth herein for an Extended Term of five (5) years (the
"Extended Term"); provided, however, that there shall not be more than five such
Extended Terms and, if the Land for such Hotel is leased by Landlord, no such
Term shall extend in excess of one month less than the remaining term of
Landlord's leasehold interest in such Land. Notwithstanding the foregoing,
Tenant may elect at any time throughout the Term to exercise, by Notice to
Landlord, its option to extend the Term with respect to any or all Hotels
through any or all Extended Terms. If and to the extent Tenant elects by written
notice to Landlord to exercise its option to extend the Term for any such Hotel
through any Extended Term, Tenant's option to terminate this
10
<PAGE>
Lease pursuant to Section 3.3 with respect to such Extended Term for which
Tenant has exercised its extension option shall no longer be applicable, but
such option to terminate pursuant to Section 3.3 shall continue to apply to any
Extended Term with respect to which such option to extend was not exercised
pursuant to this Section 3.2. All elections to extend the Term shall be
irrevocable after exercise.
Section 3.3 Notice of Termination. Tenant may terminate this Lease with
---------------------
respect to any Hotel at the end of the Initial Term or at the end of any
Extended Term upon Notice to Landlord not less than twelve (12) calendar months
prior to the expiration of the Initial Term or the then current Extended Term,
as the case may be. In addition, Tenant may terminate this Lease with respect
to any Hotel if Tenant gives a Notice of termination to Landlord after the date
which is twelve (12) months prior to the expiration of the Initial Term or the
then current Extended Term, as the case may be (but prior to the last day of the
Initial Term or the then current Extended Term and prior to the expiration of
the thirty (30) day period referenced below), and in such event this Lease shall
terminate with respect to such Hotel on the date which is twelve (12) months
after the date upon which Tenant delivers such Notice; except that if, after the
beginning of the twelve (12) month period prior to the expiration of the Initial
Term or the then current Extended Term, as the case may be, Tenant does not give
a Notice of termination within thirty (30) days after Landlord requests Tenant
to notify Landlord whether Tenant intends to terminate this Lease with respect
to all or any portion of the Premises, the Term of this Lease shall be
automatically extended with respect to the portion of the Premises that was the
subject of Landlord's request for the next Extended Term, and Tenant's right to
terminate this Lease with respect to such portion of the Premises prior to the
expiration of the next Extended Term shall cease to have any further force or
effect.
Section 3.4 Obligations of Parties at Termination
-------------------------------------
(a) Promptly upon the effective date of any termination of this Lease
with respect to any Hotel or Hotels: (i) Tenant shall peaceably surrender
all of such Hotel or Hotels to Landlord in the same condition as existed as
of the Commencement Date, subject only to such additions or alterations as
have been permitted pursuant to Article IX hereof and subject to reasonable
wear and tear; (ii) Tenant shall assign and deliver to Landlord Tenant's
entire interest in any and all service contracts, guaranties and warranties
relating to the construction, improvement, alteration and repair of such
Hotels and all architectural and engineering plans, drawings and
specifications related thereto; (iii) if Landlord exercises its option
described in subsection 10.3(a) to purchase certain equipment relating to
such Hotel or Hotels from Tenant, Tenant shall assign and deliver
appropriate title documentation and possession of such equipment; and (iv)
if Landlord so requests, Tenant shall cause any person or entity occupying
the Premises by, through or under Tenant to be evicted and removed from the
Premises.
(b) Rent relating to such Hotel or Hotels shall be paid through the
date of termination. Within one hundred twenty (120) days after this Lease
terminates, Tenant shall deliver to Landlord a complete and final
accounting, prepared in accordance with the provisions of Section 5.3
hereof, of Operating Revenues relating to such Hotel or Hotels together
with all payments of Rent relating to such Hotel or Hotels due hereunder
and, if Landlord opted to purchase the equipment described in Subsection
10.3(a), the purchase price therefor. Landlord's right to audit Tenant's
books and records as described in Section 5.3 and to receive Percentage
Rent and Additional Rent relating to such Hotel or Hotels, if any, together
with interest at the Lease Interest Rate shall survive the termination of
this Lease.
(c) If Landlord, directly or indirectly, intends to conduct upon
termination of this Lease a business or use at any of the Hotels similar to
Tenant's business or use at such Hotel, Tenant,
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at Landlord's request, shall: (i) make available to Landlord such books and
records as are appropriate to such business and/or use (but not including
employee records that must remain confidential either under Legal
Requirements or reasonable policies of Tenant, or any proprietary
information or property of Tenant), and (ii) assign or transfer to Landlord
or its designee, to the extent permitted by Legal Requirements, all
licenses, permits, permissions and approvals pertinent to the conduct of
such business or use at such Hotel; provided that if Tenant has expended
any of its own funds within the five (5) year period preceding the
termination date in the acquisition or maintenance of any such license,
permit, permission or approval (other than annual license fees whether
prepaid or paid currently), or if there are any deposits or escrow funds
relevant thereto that Tenant assigns and transfers to Landlord, Landlord
shall, as a condition of receiving an assignment or transfer of such
license, permit, deposit, escrow fund, permission or approval (if requested
by Landlord), reimburse Tenant therefor. The cost of effectuating any such
transfer of any licenses, permits, permissions or approvals shall be borne
by Landlord except when termination is due to Tenant's default.
(d) The provisions of Section 10.3 shall apply upon termination of
this Lease with respect to all or any portion of the Premises, and Tenant
shall take all other appropriate actions as required under all other
applicable provisions of this Lease. The provisions of this Section 3.4,
as well as all Surviving Obligations, Landlord's right to receive the late
charges described in Section 5.2(b), interest on sums outstanding at the
Lease Interest Rate and legal fees (but if termination was not due to an
Event of Default such Legal Fees shall be reasonable legal fees) and court
costs, shall survive termination of this Lease with respect to all or any
portion of the Premises.
ARTICLE IV
ABSOLUTELY NET LEASE
--------------------
Section 4.1 Net Lease. Subject to any express obligation of Landlord to
---------
the contrary under this Lease, it is expressly understood and agreed by and
between the parties that this Lease is an absolutely net lease, and that Tenant
shall pay the Rents and all other sums payable hereunder to or on behalf of
Landlord without Notice or demand and without set-off, counterclaim, abatement,
suspension, deduction, or defense, and Landlord is not obligated to expend any
of its funds in connection with the Hotels, Premises or this Lease.
Section 4.2 Non-Terminability of Lease
--------------------------
(a) Except as otherwise expressly provided herein, this Lease shall
not terminate, nor shall Tenant have any right to terminate this Lease, nor
shall the obligations hereunder of Tenant be otherwise affected, for any
reason whatsoever, including without limitation by reason of any damage to
or destruction of all or any part of the Premises from whatever cause, the
taking of the Premises or any portion thereof by condemnation, the
prohibition, limitation or restriction of Tenant's use of the Premises, or
interference with such use by any private person or corporation or by
reason of any eviction or otherwise, or Tenant's acquisition of ownership
of the Premises otherwise than pursuant to an express provision of this
Lease, or for any other cause whether similar or dissimilar to the
foregoing, any present or future Legal Requirement to the contrary
notwithstanding, it being the intention of the parties hereto that the Rent
and all other charges payable hereunder to or on behalf of Landlord, shall
continue to be payable in all events
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and the obligations of Tenant hereunder shall continue unaffected, unless
the requirement to pay or perform the same shall be terminated pursuant to
an express provision of this Lease.
(b) Tenant covenants and agrees that it will remain obligated under
this Lease in accordance with its terms, and that Tenant will not take any
action to terminate, rescind, reject or avoid this Lease or any term, part,
or provision hereof, notwithstanding the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other proceeding affecting Landlord or any assignee of
Landlord in any such proceeding and notwithstanding any action with respect
to this Lease which may be taken by any trustee or receiver of Landlord or
of any assignee of Landlord in any such proceeding or by any court in any
such proceeding.
(c) Except as otherwise expressly provided in this Lease, Tenant
waives all rights now or hereafter conferred by law or obtainable in equity
(i) to quit, terminate or surrender this Lease or the Premises, or any part
thereof, or (ii) to any abatement, suspension, deferment or reduction of
any Rents or charges payable hereunder to or on behalf of Landlord,
regardless of whether such rights shall arise from any present or future
constitution, statute or rule of law.
ARTICLE V
RENT
----
Section 5.1 Base Rent and Percentage Rent. Tenant covenants to pay
-----------------------------
Landlord Rent for the Premises as follows:
(a) Commencing with the Commencement Date and continuing to the end
of the Term (including all Extended Terms), "Base Rent" in an amount equal
to Fifteen Million Dollars ($15,000,000) per Year for each Year; plus
(b) Commencing with the Second Lease Year and continuing for each
succeeding Lease Year until the end of the Term (including during all
Extended Terms), "Percentage Rent" equal to seven and one half percent
(7.5%) of that portion of the Operating Revenues for all Hotels for such
Lease Year that exceed the total Operating Revenues for the first Lease
Year ("Base Revenues"); provided, however, that in the case of a Partial
Lease Year, Percentage Rent shall be calculated by comparing Operating
Revenues for the Partial Lease Year against Base Revenues for the
comparable period of the first Lease Year. Once Base Revenues are
calculated and such figures are certified by Tenant's auditors and chief
financial officer, and Landlord has concurred in such calculation, the Base
Revenues with respect to each Hotel shall be inserted on Exhibit B and the
so revised Exhibit B shall become and remain a part of this Lease to be
utilized for reference purposes if a future recalculation of Base Revenues
becomes necessary due to the termination of this Lease with respect to any
one or more, but not all, Hotels.
Section 5.2 Payment of Rent
---------------
(a) Base Rent shall be paid (i) with respect to each calendar month
in each of the first two (2) fiscal quarters (based on Tenant's Fiscal
Year) after the Commencement Date, monthly in arrears, in six equal
payments of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) on
or before the last business day of each such calendar month, and (ii) with
respect to all periods thereafter during the Term, quarterly in arrears, in
four equal payments of Three
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Million Seven Hundred Fifty Thousand Dollars ($3,750,000), on or before the
last business day of each March, June, September and December during each
Year of the Term. Base Rent for any partial quarter shall be prorated and
computed by multiplying the quarterly Base Rent by a fraction, the
numerator of which is the number of days in such partial quarter and the
denominator of which is ninety. In the event this Lease terminates
pursuant to the specific terms hereof with respect to one or more Hotels
(but not all Hotels), Base Rent shall be recalculated in accordance with
the Schedule contained on Exhibit B, and Percentage Rent shall be
recalculated by deleting the Base Revenues of the so terminated Hotel or
Hotels from the Base Revenues utilized to calculate Percentage Rent.
Percentage Rent shall be calculated on an annual basis beginning at the end
of the second Lease Year and then for each succeeding Lease Year. The
calculation of Operating Revenues for the then ended Lease Year shall be
made by Tenant and provided to Landlord within one hundred and twenty (120)
days after the end of such Lease Year in accordance with Section 5.3(a).
Tenant shall pay the Percentage Rent annually in arrears on or before one
hundred twenty (120) days after the end of the applicable Lease Year. All
installments of Rent not paid by Tenant when the same become due shall bear
interest from the date due until paid at the Lease Interest Rate. Time is
of the essence with respect to this obligation, and installments of Rent
shall become due and payable without Notice or demand. All Rent payments
shall be made in lawful money of the United States of America and shall be
paid to Landlord at Landlord's address for receipt of Notices or to such
other party and/or to such other address as Landlord may from time to time
designate by Notice to Tenant in accordance with this Lease.
(b) Tenant acknowledges that late payment of Rent by Tenant to
Landlord will cause Landlord to incur costs not contemplated in this Lease,
the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges
and late charges that may be imposed upon Landlord by the terms of any
Mortgage on any or all of the Hotels. Accordingly, in addition to the
interest payable by Tenant pursuant to Section 5.2(a), after a period of
five (5) days following the date all or any portion of Rent is due and
unpaid Tenant shall pay to Landlord an amount equal to five percent (5%) of
the amount of such unpaid installment or portion thereof. The parties agree
such late charges represent a fair and reasonable estimate of the cost
Landlord will incur by reason of the late payment by Tenant.
(c) If any of the Hotels are damaged by fire or other casualty and
Tenant must discontinue all or substantially all business operations
therein for a period of time in excess of the period covered by business
interruption insurance required to be carried hereunder, Tenant's
obligation to pay Percentage Rent for the Lease Year in which Tenant has so
discontinued its business operations shall be computed as if such Lease
Year were a Partial Lease Year and as if the number of days in such Partial
Lease Year excluded the number of days during which Tenant discontinued all
or substantially all of its business operations at such Hotel and which are
not covered by business interruption insurance required to be carried by
Tenant hereunder. In no event shall Tenant's obligation to pay Base Rent
be abated for any reason whatsoever, including without limitation, any fire
or other casualty.
(d) If, at any time during the Term, there is a good faith dispute
between Landlord and Tenant with respect to the amount of Percentage Rent
properly due hereunder, Tenant's failure to pay the disputed amount shall
not be deemed an Event of Default with respect to the provisions of
Sections 20.1 and/or 20.2 until such time as the dispute is resolved;
provided, that Tenant shall promptly pay any such disputed amount of
Percentage Rent claimed by Landlord into an escrow
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account specifically created for such purpose, to be held and invested by
the Insurance Trustee or such other escrow agent as may be mutually
approved by Landlord and Tenant. Any amount finally determined to be due
Landlord shall bear interest at the Lease Interest Rate from the date which
is one hundred twenty (120) days after the end of the Lease Year or Partial
Lease Year as to which such disputed Percentage Rent arose until paid. Any
amounts in such escrow account, including any interest earned thereon, not
required to be paid to Landlord shall be returned to Tenant. Tenant shall
have no right of offset as against any Base Rent for any overpayments of
Percentage Rent.
Section 5.3 Records; Audit by Landlord
--------------------------
(a) Tenant shall keep, in appropriate detail and in accordance with
standard accounting practices, at its principal business office, records of
all sums constituting and/or specifically excluded from Operating Revenues
with respect to each Fiscal Year for a period of not less than four (4)
Fiscal Years after the expiration of the Fiscal Year to which such records
relate. Within one hundred twenty (120) days after the end of the first
Lease Year, Tenant shall deliver to Landlord a statement from an
appropriate corporate officer of Tenant and, within two hundred ten (210)
days after the end of the First Lease Year, from Tenant's independent
certified public accountants, certifying the calculation of Base Revenues
required by Section 5.1(b) hereof. Within one hundred twenty (120) days
after the end of each subsequent Lease Year, Tenant shall deliver to
Landlord a statement from an appropriate corporate officer of Tenant
certifying the annual Operating Revenues for such Lease Year. If there is
any overpayment of Percentage Rent, the excess shall be credited against
any future Percentage Rent when next due. If Landlord delivers its written
request to Tenant for copies of records and data to support such statement,
then Tenant shall provide same to Landlord within thirty (30) days after
receipt of such written request. Landlord shall be entitled to rely
directly on Tenant's independent outside certified auditors or, at
Landlord's option and at its own expense, to audit such statement and
supporting records and data, provided Landlord shall cause such audit to
commence within ninety (90) days after receipt of said statement and to be
completed within one hundred twenty (120) days after receipt of all
information requested by Landlord reasonably related to such audit. In
order to provide finality, absent fraud and, except as otherwise provided
below in this Section, Tenant shall be entitled to treat such statement as
being correct if Landlord does not so audit or otherwise challenge said
statement within the time period above provided, and Landlord shall have no
right thereafter to question or examine the same. If the audit or any
audit hereinafter referred to in this Section (collectively a "Landlord's
Audit") discloses an understatement of annual Operating Revenues, Tenant
shall immediately pay Landlord the additional Percentage Rent found to be
due plus interest thereon at the Lease Interest Rate from the date such
additional Percentage Rent was otherwise due until the date actually paid.
However, if Landlord's Audit discloses that Percentage Rent has been
overpaid by Tenant, the excess shall be credited against any future
Percentage Rent when next due hereunder. Tenant shall have the right to be
informed as to any final results of any such audit. In addition, if
Landlord's Audit discloses any underreporting of the total Operating
Revenues for any Lease Year, which underreporting is in excess of three
percent (3%) of the Operating Revenue for such Lease Year, Tenant shall,
upon demand and receipt of evidence of payment, pay Landlord as Additional
Rent the reasonable cost of Landlord's Audit; and Landlord shall have the
option, at Tenant's expense, to audit the certified statements and
supporting records and data for the two (2) immediately preceding Lease
Years, with such audit to be commenced by Landlord within sixty (60) days
after Landlord's receipt of the initial audit showing an underpayment of
Percentage Rent, and to be completed within one
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hundred twenty (120) days after receipt of all information requested by
Landlord reasonably related to such audit.
(b) In addition to the deliveries required under Section 5.3(a),
Tenant shall, within one hundred twenty (120) days after the end of each
Fiscal Year that ends during the Term, deliver to Landlord a statement from
an appropriate corporate officer of Tenant and from Tenant's independent
certified public accountants, certifying the annual Operating Revenues for
such Fiscal Year.
(c) Landlord shall keep all information regarding annual Operating
Revenues and Base Revenues with respect to the Premises in strict
confidence and shall not divulge such information to third parties except:
(i) to Landlord's accountants and attorneys, (ii) to existing or
prospective purchasers, Mortgagees, partners, lenders, or trustees of
Landlord, (iii) in connection with any claim relating to Percentage Rent
payable under this Lease, (iv) as may be required by law, or (v) to the
holders of direct and indirect beneficial ownership interests in Landlord
and its Affiliates.
Section 5.4 Subleases, Licenses, and Concessions
------------------------------------
(a) If Tenant should sublease all or substantially all of any Hotel,
then notwithstanding any other provision of this Lease to the contrary,
Operating Revenues shall not include any rent or other consideration paid
by such sublessee to Tenant but Operating Revenues shall include all gross
receipts of such sublessee that would be included in Operating Revenues if
realized by Tenant.
(b) If Tenant should ever contract with a third party sublessee,
licensee, or concessionaire to deliver goods or services to the customers
at any of the Hotels, which goods and services had previously been provided
by Tenant to Tenant's customers at such Hotel (and exclusive of any such
service businesses which individually do not utilize space exceeding 500
square feet of rentable area), then notwithstanding any other provision of
this Lease to the contrary, the gross receipts of such sublessee(s),
licensee(s), and concessionaire(s) that would be included in Operating
Revenues if realized by Tenant shall be included in Operating Revenues; and
in any case in which the gross receipts of any sublessee, licensee, or
concessionaire are included in Operating Revenues hereunder, the rental,
license, or concession fees, if any, paid by such sublessee, licensee, or
concessionaire to Tenant shall not be included in Operating Revenues;
provided, however, that the provisions of this Section 5.4(b) shall not
apply to the gross receipts of any one or more sublessees, licensees, or
concessionaires if the gross receipts of all such sublessees, licensees, or
concessionaires in the applicable Lease Year do not exceed Fifty Thousand
Dollars ($50,000), which $50,000 amount shall be increased on the fifth
(5th) anniversary of the Commencement Date and every fifth (5th)
anniversary thereafter by an amount proportionate to the percentage
increase in the GDP Deflator over the preceding five (5) year period.
(c) If any sublessee, licensee, or concessionaire that delivers goods
or services to Tenant's customers at any Hotel is an Affiliate of Tenant,
the gross receipts of such sublessee, licensee, or concessionaire that
would be included in Operating Revenues if realized by Tenant shall be
included in Operating Revenues, and the rental, license, or concession
fees, if any, paid by such sublessee, licensee, or concessionaire to Tenant
shall not be included in Operating Revenues.
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(d) Tenant shall not enter into any sublease, license, or concession
agreement or amendment thereto in which the determination of the amount of
rent, license, or concession fee depends in whole or in part on, or is
expressed in whole or in part as, a percentage of the income or profits
derived by such sublessee, licensee, or concessionaire or any other person
or entity. In any lease, license, or concession agreement or amendment
thereto executed by Tenant in which the amount of rent, license, or
concession fee is determined in whole or in part by reference to the gross
sales or gross receipts of the sublessee, licensee, or concessionaire or
any other person or entity, such sublease, license, or concession agreement
shall contain a provision stating that the gross receipts or gross sales of
the sublessee, licensee, or concessionaire or any other person or entity
shall not be determined in whole or in part by reference to the income or
profits derived by the sublessee, licensee, or concessionaire or any other
person or entity from the Premises or the subject matter or such lease,
license, or concession agreement (other than an amount based on a fixed
percentage or percentages of gross receipts or gross sales). If Tenant
violates the provisions of this paragraph with respect to any sublease,
license, or concession agreement, then in addition to any other rights and
remedies that Landlord may have under this Lease or applicable law, the
gross receipts of such sublessee, licensee, or concessionaire under such
sublease, license, or concession agreement that would be included in
Operating Revenues if realized by Tenant shall be included in Operating
Revenues and the rental, license, or concession fee, if any, paid by such
sublessee, licensee, or concessionaire shall not be included in Operating
Revenues.
Section 5.5 Rent Upon Certain Expansions. If Tenant completes any
----------------------------
Expansion at any Hotel with respect to which: (i) the cost of such Expansion
exceeds One Million Dollars ($1,000,000), and (ii) such Expansion results,
either by itself or aggregated with any and all prior Expansions, in an increase
greater than five percent (5%) in the capacity (measured either in terms of net
useable building square footage, or the aggregate number of rooms) of such Hotel
then, from the first day of the first month following the date of completion of
such Expansion throughout the remaining Term of this Lease, Tenant shall pay in
lieu of Percentage Rent with respect to such Hotel the lesser of either (x)
Percentage Rent for such Hotel calculated pursuant to Section 5.1 hereof, or
(y) Expansion Rent for such Hotel for each Lease Year or portion thereof during
the remainder of the Term hereof in an amount equal to the average amount of
Percentage Rent payable by Tenant with respect to such Hotel (without regard to
the Gross Income from any other Hotels included in the Premises) for the two (2)
full Lease Years immediately preceding the commencement of construction of such
Expansion; provided, however, that the amount of Expansion Rent shall be
increased on each anniversary of the date such Expansion Rent first became
effective by an amount proportionate to the percentage increase in the GDP
Deflator over the preceding twelve (12) month period.
ARTICLE VI
OPERATION AND MAINTENANCE OF PREMISES
-------------------------------------
Section 6.1 Operation and Maintenance of Premises.
-------------------------------------
(a) Tenant shall not alter its operational and/or management
practices with respect to any of the Hotels so as to cause the standard at
which the Hotels are operated and managed to deviate significantly from the
standard of operation and management existing on the Commencement Date,
without obtaining Landlord's prior written consent.
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(b) Throughout the Term, Tenant, at its own expense, shall keep and
maintain each of the Hotels in condition and repair at least as good as the
condition and repair of each Hotel on the Commencement Date, reasonable
wear and tear excepted, and in conformity with all applicable Legal
Requirements and shall make or cause to be made all ordinary and
extraordinary, foreseen and unforeseen items of maintenance, repair,
replacement and alteration to the Premises as necessary for such purpose.
Landlord shall not be required to maintain, repair, or rebuild all or any
part of the Premises. Tenant shall provide all services required and
perform all obligations incurred in connection with the use, operation and
maintenance of the Premises, and Tenant shall be responsible for the
payment of all costs and expenses incurred in the use, operation, or
maintenance of the Premises, including, but not limited to, rents and other
amounts owed under any ground lease, management fees, real estate taxes,
insurance, supplies and materials used in the operation and maintenance of
the Premises, the cost of all maintenance, janitorial, security and service
agreements for the Premises and the equipment therein and thereon, and the
cost of electricity, water and any and all other utilities, supplied to the
Premises, but not including any costs or expenses affirmatively incurred by
Landlord that are not attributable to a default by Tenant in the
performance of Tenant's obligations under this Lease.
Section 6.2 Taxes
-----
(a) Tenant shall pay, prior to delinquency: (i) all taxes, including
sales, excise, value added, use, real estate and personal property taxes,
assessments, levies and fees, water and sewer rents and charges, vault
charges, and all other taxes, levies, assessments, and other similar
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every kind and nature whatsoever, which are imposed or
levied upon or assessed against or which arise with respect to the
Premises, any Rent or other sums payable hereunder, this Lease or the
leasehold estate hereby created or which arise in respect of the ownership
of the Premises by Landlord, the operation, possession or use of the
Premises by Tenant or the leasing, operation, possession or use of the
Premises; (ii) all gross receipts, sales, excise or similar taxes (i.e.,
taxes based upon gross income which fail to take into account deductions
with respect to the Premises, such as depreciation, interest, taxes or
ordinary and necessary business expenses) imposed or levied upon, assessed
against or measured by any Rent, or other issues or profits derived from
the Premises or other sums payable hereunder; and (iii) all charges of
utilities, communications and other services serving the Premises, together
with any and all interest costs or penalties with respect to any of the
foregoing.
(b) Notwithstanding the foregoing provisions of Section 6.2(a) but
subject to the provisions of Section 6.2(c), Tenant shall not be required
to pay any franchise, estate, inheritance, transfer, income or similar tax
assessed or imposed against Landlord, any Rent or other sums payable
hereunder, this Lease, the Land or Improvements (other than any tax
referred to in clause (ii) of Section 6.2(a)). Tenant will furnish to
Landlord, within ten (10) days after demand therefor, proof of payment of
all items referred to above which are payable by Tenant.
(c) If, at any time, any federal, state or local governmental entity
shall impose upon the Rent payable to Landlord any tax or other imposition
in lieu of any existing real estate or other tax payable by Tenant as of
the Commencement Date, then notwithstanding the provisions of
Section 6.2(b), Tenant, at its sole cost and expense, shall pay such tax or
imposition on Landlord's behalf the same as if such tax or imposition had
been levied against Tenant or Tenant's interest in the Premises, as well as
any additional income taxes assessed against Landlord with respect to such
payment.
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Section 6.3 Compliance with Requirements, Covenants and Restrictions.
--------------------------------------------------------
Tenant shall comply with and cause each of the Hotels to comply with all
obligations and liabilities with respect to all Insurance Requirements
(including, without limitation, to the extent necessary to prevent cancellation
thereof and to insure full payment of any claims made under such policies).
Tenant shall comply with, cause each of the Hotels to comply with, and shall
assume all easements, agreements, covenants, conditions and restrictions
applicable to each such Hotel or the ownership, operation, use or possession
thereof that are of record on the Commencement Date or are hereafter executed by
Tenant or are hereafter consented to by Tenant in writing, including, without
limitation, (i) any superior ground lease currently in effect with respect to
any portion of the Premises, and (ii) any Mortgage or other agreement executed
directly in connection therewith. During the Term, Tenant will not enter into
or consent to any easements, covenants, conditions or restrictions which would
materially affect any Hotel beyond the Term or any termination of this Lease
without the prior consent of Landlord, which consent will not be unreasonably
withheld, conditioned, or delayed.
Section 6.4 Landlord's Right to Perform Tenant Obligations. If Tenant
----------------------------------------------
fails promptly to make any repairs, payments or otherwise take any actions that
are Tenant's obligation to make or do under this Lease, Landlord, at its option,
may make or perform same at the expiration of any applicable Notice and grace
period provided for herein (except that upon any emergency presenting immediate
danger to person or property, such Notice and grace period shall only be what is
reasonable under the circumstances), and Tenant shall pay Landlord, upon demand
and receipt of evidence of payment, as Additional Rent, Landlord's actual costs
plus interest thereon from the date of expenditure until paid at the Lease
Interest Rate. The provisions of this Section 6.4 shall be for the sole and
exclusive benefit of Landlord. Nothing contained herein shall be construed so
as to require Landlord to exercise any of its rights under this Section 6.4.
Section 6.5 Compliance with Laws and Agreements. Subject to the
-----------------------------------
provisions of Section 6.6, Tenant, at its sole expense, shall comply with and
cause each Hotel to comply with, and assume all obligations and liabilities with
respect to all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting each Hotel or the construction, use or alteration thereof,
whether now or hereafter enacted and in force, including any which may (i)
require repairs, modifications or alterations in or to any Hotel; (ii) in any
way adversely affect the use and enjoyment thereof, and all permits, licenses
and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant (other than encumbrances created by Landlord
without the consent of Tenant), at any time in force affecting any Hotel,
including without limitation, all superior ground leasehold agreements and any
Mortgage or other agreement executed directly in connection therewith; or (iii)
require the cleanup or other treatment of any Hazardous Material (such laws,
orders, ordinances, agreements and regulations being herein referred to as
"Legal Requirements").
Section 6.6 Tenant's Right to Contest. Notwithstanding any other
-------------------------
provision of this Lease, Tenant shall have the right to contest (a) the payment
of any tax or other imposition, (b) compliance with any Legal Requirement or (c)
any lien referred to in Section 6.7 so long as (i) at the time of any such
contest, no Event of Default exists, (ii) no such contest shall subject Landlord
to the risk of criminal liability, (iii) any such taxes or impositions are paid
prior to the assessment of penalties or interest thereon unless such payment
would deprive Tenant of the right to contest the validity or amount of such
taxes or impositions, and (iv) Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused thereby,
or the extent of its or Landlord's liability therefor by appropriate proceedings
which shall operate during the pendency thereof to prevent or stay (1) the
collection of, or other realization upon, the matter contested, (2) the sale,
forfeiture or loss of any of the Hotels or any
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portion thereof or any Rent to satisfy or to pay any damages caused by any of
the matters described in clauses (a), (b), and (c), (3) any interference with
the use or occupancy of any of the Hotels, (4) any interference with the payment
of any Rent, (5) the cancellation of any insurance policy, and (6) the
enforcement or execution of any injunction, order or Legal Requirement with
respect to such matter. Tenant further agrees that any such contest shall be
prosecuted to a final conclusion or settled as expeditiously as is reasonably
possible under the circumstances. Any rebate made on account of any taxes or
other impositions shall be repaid to the party who made such payment, or if such
payment relates to a period prior to the Commencement Date, such payment shall
be made to Tenant. If and to the extent required by applicable law or
regulation, Landlord shall render to Tenant, at no cost to Landlord, any and all
reasonable assistance in contesting the validity or amount of any impositions,
including (if requested by Tenant) joining in the signing of any protests or
pleading which Tenant may reasonably deem advisable to file. Tenant shall pay
any and all losses, judgments, decrees and costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. Upon termination of this Lease for any reason
other than an Event of Default, Landlord shall promptly reimburse Tenant for any
such payment made by Tenant for taxes and impositions described in
Section 6.2(a) attributable to the Premises applicable to any period subsequent
to the termination of this Lease.
Section 6.7 Liens. Tenant shall keep the Premises free from any liens
-----
arising from any work performed, materials furnished, or obligations incurred by
or at the request of Tenant or any sublessee, licensee, or concessionaire of
Tenant or arising from any breach by Tenant of its obligations under this Lease,
and any liens with respect to any taxes Tenant is obligated to pay under this
Lease or Legal Requirements. If any lien is filed against any Hotel or Tenant's
leasehold interest therein, or if any lien is filed against any Hotel which
arises out of any purported act or agreement of Tenant, or any sublessee,
licensee, or concessionaire of Tenant, Tenant shall discharge the same within
thirty (30) days after Tenant receives Notice of its filing by payment, filing
of the bond required by law, or endorsement over by a title company reasonably
satisfactory to Landlord (it being understood that any title company with a
national presence and a sound financial condition and reputation shall be
acceptable to Landlord). If Tenant fails to discharge such lien within such
period, then, in addition to any other right or remedy of Landlord, Landlord
may, at its election, discharge the lien by paying the amount claimed to be due,
by obtaining the discharge by deposit with a court or a title company, or by
bonding. Tenant shall pay on demand, as Additional Rent, any amount paid by
Landlord for the discharge or satisfaction of any such lien, together with
interest thereon from the date of such expenditure until paid at the Lease
Interest Rate, and all reasonable attorneys' fees and other costs and expenses
of Landlord incurred in defending any such action or in obtaining the discharge
of such lien, together with all necessary disbursements in connection therewith.
Nothing contained in this Lease shall be construed as constituting the consent
or request of Landlord, express or implied, to or for the performance by any
contractor, laborer, materialman, or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to any of the Hotels or any part thereof, or as making
Tenant the agent of Landlord with respect to any such matter, and no such agency
relationship shall exist unless Tenant and Landlord so agree in writing. Notice
is hereby given that Landlord will not be liable for any labor, services or
materials furnished or to be furnished to Tenant, or to anyone holding an
interest in the Premises or any part thereof through or under Tenant, and that
no mechanic's, materialmen's or other liens for any such labor, services or
materials shall attach to or affect the interest of Landlord in and to the
Premises; and appropriate notice to this effect will be included in the Lease
Memorandum and all construction contracts entered into by Tenant, and Tenant
shall take all steps
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reasonably necessary under the laws of the jurisdiction(s) in which the relevant
portion of the Premises is located to protect Landlord against such liability
(including, if required, the posting of notices of nonresponsibility on
Landlord's behalf).
ARTICLE VII
USE
---
Subject to the provisions of Section 6.5, Tenant shall have the right to
use the Premises for hotel and related purposes, including, without limitation,
restaurants, bars, gift shops, car rental agencies, airline reservations desks,
golf, tennis and other recreational activities, and other ancillary services.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1 General Indemnification by Tenant. In addition to the
---------------------------------
provisions of any indemnity provided elsewhere in this Lease, Tenant shall pay,
protect, indemnify, defend, save and hold harmless, Landlord, Landlord's
constituent partners, any ground lessor, and any Affiliate, partner, trustee,
officer, director, employee, agent or shareholder or other holder of any
beneficial interest in any of them (collectively, the "Indemnified Parties" and,
individually, an "Indemnified Party"), from and against all liabilities
(including, without limitation, liabilities expressly retained by Landlord in
connection with a sale of all or any portion of the Premises), obligations,
claims, damages (including, without limitation, punitive damages), penalties and
causes of action or judgments of any nature whatsoever, whether foreseen or
unforeseen, howsoever and whensoever caused including, without limitation, if
caused prior to the Commencement Date, without regard to the form of action and
whether based on strict or statutory liability, gross negligence, negligence
(including the negligence of any Indemnified Party) or any other theory of
recovery at law or in equity, and all reasonable and documented costs and
expenses (including reasonable attorneys' fees, costs of experts, and other
legal costs and expenses), imposed upon or incurred by or asserted against any
of the Indemnified Parties by reason of or in connection with:
(a) Any matter pertaining to the leasing, use, non-use, occupancy,
operation, management, condition, design, construction, maintenance, repair
or restoration of any of the Hotels or Premises, or the employment of any
persons at the Hotels or on the Premises, in each case whether by Tenant or
otherwise;
(b) Any casualty in any matter arising from or in connection with any
of the Premises or any operations or activities thereon, whether or not
Landlord or any Indemnified Party has or should have knowledge or notice of
any default or condition causing or contributing to the casualty;
(c) Any violation by Tenant (or any employees, agents, invitees,
guests, sublessees, concessionaires, or licensees of Tenant) of any
provision of this Lease, any contract or agreement to which Tenant (or any
sublessee, concessionaire, or licensee of Tenant) is a party, any violation
or alleged violation of any Legal Requirement (including anti-
discrimination laws) or any Insurance Requirement; and
(d) Any contest undertaken by or on behalf of Tenant with respect to
any Legal Requirement, Insurance Requirement, tax imposition or otherwise,
regardless of whether the same
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is permitted pursuant to the terms hereof; except in each case to the
extent the same directly result from the gross negligence or willful
misconduct by an Indemnified Party.
Section 8.2 Environmental Indemnification. Tenant shall pay, protect,
-----------------------------
indemnify, defend, save and hold harmless the Indemnified Parties and each of
them, from and against all liabilities (including, without limitation,
liabilities expressly retained by Landlord in connection with a sale of all or
any portion of the Premises), obligations, claims (including, without
limitation, claims by third parties alleging violation of or liability under any
Environmental Law), damages (including, without limitation, punitive damages and
damages to natural resources), penalties and causes of action or judgments of
any nature whatsoever, both foreseen and unforeseen, howsoever and whensoever
caused including, without limitation, if caused prior to the Commencement Date,
without regard to the form of action and whether based on strict or statutory
liability, gross negligence, negligence (including the negligence of any
Indemnified Party or their agents), or any other theory of recovery at law or in
equity, and all reasonable and documented costs and expenses (including
reasonable attorneys' fees, costs of experts, and other legal costs and
expenses), imposed upon or incurred by or asserted against any of the
Indemnified Parties by reason of or in connection with:
(a) Tenant's failure to perform its duties and obligations as set
forth in Article XII;
(b) All claims asserted during or after the Term by any third party
for personal or bodily injury or death where such claims allege injury or
damages as a result of exposure, that occurred prior to or during the Term,
to Hazardous Material that existed at or were located in, on, or under, or
were released from, any of the Hotels and/or any portion of the Premises at
any time prior to or during the Term; provided, however, that this
indemnity shall not cover claims arising by reason of the gross negligence
or willful misconduct of Landlord and its agents, or of an Indemnified
Party and its agents; and
(c) The violation of any Environmental Law occurring at any time
prior to the Commencement Date at or in connection with the leasing, use,
non-use, occupancy, management or operation of any of the Hotels and/or any
portion of the Premises; the discharge, disposal or release of any
Hazardous Material at any time prior to the Commencement Date in, on,
under, at or from, or in connection with the leasing, use, non-use,
occupancy, management or operation of, any of the Hotels and/or any portion
of the Premises; or the presence of any Hazardous Material at any time
prior to the Commencement Date in, on, under or at any of the Hotels and/or
any portion of the Premises, including without limitation any off-site
migration onto any of the Hotels and/or any portion of the Premises.
Section 8.3 Defense of Indemnified Parties. Promptly after receipt by an
------------------------------
Indemnified Party of notice of the commencement or assertion against it of any
claim, action or proceeding, such Indemnified Party shall, if a claim in respect
thereof is to be made against Tenant under this Article VIII, notify Tenant
thereof; but the omission so to notify Tenant shall not relieve Tenant from any
liability which it may have to such Indemnified Party under this Article VIII
except to the extent that Tenant shall have been prejudiced by such failure. As
long as no Event of Default exists and provided that representation by counsel
selected by Tenant will not, in Indemnified Party's reasonable judgment (which
judgment may be based on, without limitation, due consideration of any
obligation such Indemnified Party may have to indemnify other parties in
connection with the same matter, including requirements as to right of contest,
time of indemnification and undertaking of defense of such other parties),
prejudice Indemnified Party in any manner, Tenant, at its sole cost and expense,
shall have the right by counsel reasonably satisfactory to the Indemnified
Party, to contest, resist and defend any claim, action or proceeding with
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respect to which it shall have received the Notice described in the preceding
sentence; provided, however, that Tenant may not compromise or otherwise dispose
of the same without the prior written approval of the Indemnified Party, such
approval not to be unreasonably withheld, conditioned, or delayed so long as the
Indemnified Party receives a full release with respect to the claim, action or
proceeding. If an Event of Default exists, or, in Indemnified Party's judgment,
representation by counsel selected by Tenant will prejudice Indemnified Party in
any manner, such Indemnified Party shall have the right to retain its own
counsel and defend such action. If Tenant shall have assumed responsibility for
such contest and defense, Tenant shall not be obligated to pay any attorneys'
fees or other legal costs incurred by or on behalf of the Indemnified Party
unless an Event of Default exists. Notwithstanding the foregoing, each
Indemnified Party shall, at Tenant's request and expense, cooperate with Tenant,
at no cost or expense to the Indemnified Party, in the defense of any such
claim, action or proceeding.
Section 8.4 Payment by Tenant. Any amounts which become payable by Tenant
-----------------
under this Article VIII shall be paid as Additional Rent no later than ten (10)
days after demand by the Indemnified Party entitled thereto (which demand shall
not be made more than ten (10) days prior to the proposed date of actual payment
by the Indemnified Party to a third party) and, if such payment is not timely
paid, shall bear interest at the Lease Interest Rate form the date when due to
the date of payment.
Section 8.5 Survival. Tenant's liability under this Article VIII shall
--------
survive the expiration or earlier termination of this Lease. The failure or
inability on the part of Tenant to carry insurance required to be maintained
under Article XIII shall not affect in any way its indemnification obligations
hereunder.
Section 8.6 Continuing Obligations. The indemnities set forth herein
----------------------
shall in no way affect or impact any other obligations on the part of Tenant or
any of its Affiliates that may exist under law or under any other agreement in
favor of any Indemnified Party.
ARTICLE IX
ALTERATIONS AND EXPANSIONS
--------------------------
Section 9.1 Alterations and Expansions
--------------------------
(a) Tenant may at its expense and without Landlord's prior written
consent, make any replacements or aesthetic alterations to any of the
Hotels. Tenant may expand the existing Improvements or construct
additional Improvements on the Land located at a Hotel (the expansion of
existing Improvements or the construction of additional Improvements being
referred to collectively herein as an "Expansion"), provided, that: (i)
such Expansion does not (A) increase the rooms available for occupancy at
the subject Hotel by greater than 10% of those existing as of the
Commencement Date; or (B) increase the net area of other revenue producing
square footage at the subject Hotel by more than 10% of that existing as of
the Commencement Date, (ii) no structural elements of the improvements
shall be demolished without obtaining Landlord's prior written consent,
which consent shall not be unreasonably withheld, conditioned, or delayed,
and (iii) such replacements, alterations and/or Expansions will not
adversely affect the structure or the safety of the Improvements, or
adversely affect the electrical, heating, ventilating, air-conditioning,
plumbing or mechanical systems or the functioning thereof. Landlord has
the right to require from Tenant assurances, reasonably acceptable to
Landlord, to be delivered to Landlord prior to the commencement of any
work, that Tenant will fully perform and complete its Expansion, free and
clear of any mechanics' and materialmen's liens. Tenant shall procure
23
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at its own expense such governmental approvals and permits as may be
required for any alterations made by Tenant. At Tenant's expense, Landlord
shall join in submitting Tenant's plans for any necessary governmental
approval, if required by Legal Requirements. All such construction,
alterations, and maintenance work done by, or for, Tenant, shall comply
with all Legal Requirements and Insurance Requirements, and shall be
completed in a good and workmanlike manner and with reasonable diligence,
and will be completed in all material respects in accordance with plans
prepared by a licensed architect. If any Expansion will cost more than One
Million Dollars ($1,000,000), adjusted by the GDP Deflator, (w) Tenant
shall furnish Landlord with the plans and specifications therefor prior to
commencing work, (x) the contractor selected by Tenant to perform the work
shall be subject to Landlord's approval, which approval shall not be
unreasonably withheld, conditioned or delayed, (y) Tenant shall carry
builder's risk insurance in amounts reasonably sufficient to cover the cost
of replacement of the work during the course of such construction, and (z)
upon the request of Landlord or any Mortgagee, Tenant will provide
appropriate securities, completion bonds, guarantees, or like reasonable
assurances that construction will be completed. Tenant shall also furnish
Landlord with copies of any and all final plans and specifications
(including all changes and modifications thereto) and all necessary
governmental permits prepared or issued for all alterations (whether or not
Landlord's consent was required in connection with such alterations). With
respect to any Expansion or other alteration for which Tenant must obtain
Landlord's consent, Landlord shall not unreasonably withhold, condition or
delay such consent.
(b) All replacements, alterations and substitutions of Improvements
and Expansions made to the Premises pursuant to this Article 9.1 (but not
the replacement FF&E, Fixed Asset Supplies, Operating Equipment or
Inventories described in Article 10.1) shall be and remain part of the
realty and the property of Landlord and shall be subject to this Lease.
Section 9.2 Alterations and Expansions During Last Five Years of Term.
---------------------------------------------------------
Landlord's prior written consent, which may be withheld in Landlord's sole,
absolute, and subjective discretion, shall be required for any Expansions of or
to the Premises to be constructed during the last five (5) years of the Term
(including any Effective Extended Term); provided, however, that if Tenant shall
then exercise its rights under Section 3.2 to extend the Term hereof so that at
least five (5) years will remain in the Term once the construction is completed,
the provisions of Section 9.1(a) shall apply.
ARTICLE X
FF&E, FIXED ASSET SUPPLIES AND INVENTORIES
------------------------------------------
Section 10.1 FF&E Upon Commencement Date. On the Commencement Date,
---------------------------
Landlord shall make available to Tenant all of the FF&E, Fixed Asset Supplies,
Operating Equipment and Inventories located at the Premises and to be used and
consumed at the Premises during the Term at no further cost to Tenant and the
FF&E shall be owned by Landlord and leased to Tenant hereunder as part of the
Premises. Landlord shall have no further obligations to provide any additional
FF&E, Fixed Asset Supplies, Operating Equipment or Inventories. Thereafter
during the Term, Tenant shall, at its own cost, replace FF&E as hereinafter
provided, and shall provide such Fixed Asset Supplies, Operating Equipment and
Inventories as it deems necessary and all such replacement FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories shall be and remain the property
of Tenant. Tenant shall also repair and replace, as necessary, all Fixtures
which, as such may be repaired or replaced, shall be and remain property of
Tenant. Tenant shall be obligated to maintain all such Fixtures which are
necessary for the operation of the Hotel in good operating condition.
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Section 10.2 Replacement of FF&E. On or before one hundred twenty (120)
-------------------
days after the end of each Fiscal Year that ends during the Term (for purposes
of this Section 10.2, the "Subject Fiscal Year"), Tenant shall deposit, into a
reserve account to be maintained as a separate interest bearing account with a
bank or banks reasonably acceptable to Landlord (the "FF&E Reserve Account"), an
amount equal to (A) the positive result, if any, of (I) three percent (3%) of
the Operating Revenues for the subject Fiscal Year minus (II) the amount
actually expended by Tenant during the Subject Fiscal Year to repair and/or
replace FF&E, Fixtures, Fixed Asset Supplies and/or Operating Equipment at any
one or more of the Hotels (individually or collectively, the "Renovations"),
minus (B) with respect to each Fiscal Year prior to the Subject Fiscal Year, if
any, the aggregate amount, if any, by which Tenant's expenditures for
Renovations in each such prior Fiscal Year exceeded three percent (3%) of the
Operating Revenues for that Fiscal Year, less the portion of such amount which
has previously been taken into account in determining the amount to be deposited
into the FF&E Reserve Account in and with respect to Fiscal Years prior to the
Subject Fiscal Year, if any. Tenant shall be entitled to withdraw funds from
such FF&E Reserve Account without Landlord's prior written approval; provided
that Tenant shall deliver to Landlord an annual auditor's statement, with
reasonable supporting detail, within one hundred twenty (120) days of the end of
each Fiscal Year, of all amounts expended for Renovations during such Fiscal
Year, including all amounts withdrawn from the FF&E Reserve Account.
Section 10.3 FF&E Upon Termination
---------------------
(a) Landlord shall have the option, to be exercised by sending Notice
to Tenant on or before the date that is either (i) six (6) months prior to
the date of expiration of the Term of this Lease or (ii) the date of
termination of the Term of this Lease, if this Lease terminates prior to
the expiration of the Term, to purchase from Tenant upon the date of
termination of this Lease any or all of the items of FF&E, Furnishings,
Fixed Asset Supplies, Operating Equipment and Inventories then located at
the Premises and owned by Tenant at their then fair market value. If the
parties are unable to agree upon such fair market value within thirty (30)
days following such expiration or termination, the parties shall appoint an
independent appraiser mutually agreeable to them to determine such fair
market value, which determination shall be net of the cost to Tenant to
remove such items from the Premises, and which shall be binding on the
parties. The costs of such appraiser shall be shared equally by the
parties. If Landlord exercises its option to purchase, Landlord shall have
the right to use, after the date of expiration or termination of this
Lease, the items of FF&E, Furnishings, Fixed Asset Supplies, Operating
Equipment and Inventories so elected to be purchased by Landlord and
Landlord shall pay such fair market value to Tenant within thirty (30) days
after agreement by the parties or determination by the appraiser; and this
provision shall survive such expiration or termination. Landlord shall not
have the option of purchasing from Tenant any computer software that is
proprietary to Tenant, any Affiliate, or the licensor of any of them
(including without limitation applications used by Tenant as part of
Tenant's accounting, centralized or local sales, business management
systems and otherwise), or any leased equipment. The option granted to
Landlord under this Section 10.3 shall be in addition to, and shall not
prevent, delay or otherwise restrict Landlord from exercising, any and all
rights and remedies as against Tenant in the event of a default under this
Lease, including without limitation, foreclosure of its security interest
described in Section 10.4.
(b) Subject to the provisions of Section 10.3(a), Tenant shall
remove, at Tenant's expense, all of its Furnishings, Fixed Asset Supplies
and Inventories from the Premises on or before the date of expiration or
termination of this Lease and repair any damage caused to the Premises by
such removal. If Tenant fails to remove such items by such date and/or
fails to
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repair such damage, Landlord shall have the right to do so and charge
Tenant the cost therefor together with interest thereon from the date of
such expenditure until paid at the Lease Interest Rate. The provisions of
this Section 10.3 shall survive the expiration or termination of this
Lease.
Section 10.4 Landlord's Security Interest in Tenant's FF&E, Fixed Asset
----------------------------------------------------------
Supplies, Operating Equipment and Inventories. As security for payment by
- - - ---------------------------------------------
Tenant of the Rents payable hereunder and the performance of all of Tenant's
obligations under this Lease, Tenant hereby grants to Landlord a security
interest under the Uniform Commercial Code of each of the States in which a
Hotel is located, in the FF&E Reserve Account and in all FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories now or hereafter owned by Tenant
and now or hereafter ordinarily used on or in the Premises. Tenant shall
execute and deliver to Landlord such documentation as is reasonably necessary to
evidence or perfect said security interest, including without limitation, such
Uniform Commercial Code financing statements and continuation statements as
Landlord determines to be necessary from time to time to perfect and continue
the perfection of Landlord's security interest in such collateral. Provided no
Event of Default shall exist, Tenant shall have the right to replace any such
collateral, to remove any such collateral from the Premises and dispose of any
such collateral, in the ordinary course of Tenant's business.
ARTICLE XI
TRADEMARKS, TRADE NAMES AND SERVICE MARKS
-----------------------------------------
Section 11.1 Tenant's Trademarks, Trade Names and Service Marks. All
--------------------------------------------------
Tenant's trademarks, service marks, trade names, logos, symbols and designs
shall in all events remain the exclusive property of Tenant and its Affiliates,
and nothing contained herein shall confer on Landlord the right to use such
names, trademarks, service marks, trade names, logos, symbols or designs other
than in strict accordance with the terms of this Lease. Except as provided in
Section 11.2, upon the expiration or termination of this Lease, any use of or
right to use said names, trademarks, service marks, trade names, logos, symbols
or designs by Landlord shall cease forthwith and Tenant shall (at Tenant's sole
cost and expense) promptly remove from the Premises any signs or similar items
which contain any of Tenant's names, trademarks, trade names, service marks,
logos, symbols or designs; provided, however, that Tenant shall be responsible
for the cost of any resulting repairs that may be necessary as a result of such
removal. Included under the terms of this Section are all trademarks, service
marks, trade names, symbols, logos or designs used in conjunction with the
Premises, including but not limited to restaurant names, lounge names, etc.,
whether or not the marks contain the "Red Lion" name. The right to use such
trademarks, service marks, trade names, symbols, logos or designs belongs
exclusively to Tenant, and the use thereof inures to the benefit of Tenant
whether or not the same are registered and regardless of the source of the same.
Section 11.2 Use of Trademarks, Trade Names and Service Marks. Landlord
------------------------------------------------
covenants that any items of FF&E, Furnishings, Operating Equipment, Inventories
or Fixed Asset Supplies which are purchased by Landlord upon the expiration or
termination of this Lease, and which are marked with Tenant's name or any Tenant
trademark, trade name, logo, symbol or design, shall be used exclusively in
connection with the Premises until they are consumed; but in no event for more
than sixty (60) days after any such termination of this Lease, unless such
trademark, trade name, logo, symbol or design is thereafter removed from such
items.
Section 11.3 Proprietary Software. Any computer software (including
--------------------
upgrades and replacements) at the Premises owned by Tenant, an Affiliate, or the
licensor of any of them which is
26
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proprietary to Tenant, such Affiliate, or the licensor of any of them and shall
remain proprietary to Tenant and shall in all events remain the exclusive
property of Tenant, the Affiliate, or the licensor of any of them, as the case
may be, and nothing contained in this Lease shall confer on Landlord the right
to use any of such software. Upon expiration or termination of this Lease,
Tenant shall have the right to remove from the Premises without compensation to
Landlord any computer software (including upgrades and replacements) owned by
Tenant, any Affiliate, or the licensor of any of them, provided Tenant repairs
any damage caused by removing such computer software.
ARTICLE XII
ENVIRONMENTAL HAZARDS
---------------------
Section 12.1 Compliance with Environmental Law
---------------------------------
(a) During the Term, Tenant at its cost shall cause the Premises to
be in compliance with all Environmental Laws, whether or not such
noncompliance is the result of a breach of Tenant's obligations under
Sections 12.1(c) or 12.2(b).
(b) Tenant shall never during the Term permit Hazardous Materials to
be (i) generated, used, treated, stored, discharged, released, or otherwise
disposed of in, on, under, or at, or (ii) transported to or from any of the
Hotels, in each case other than in the ordinary course of Tenant's
operation of the Hotels. If, with or without Tenant's knowledge or
permission, there is any generation, use, treatment, storage, discharge,
release, or other disposal of Hazardous Materials in, on, under, or at any
of the Hotels during the Term other than as permitted in the preceding
sentence, Tenant shall, subject to the provisions of this Article XII,
diligently clean up and remove such Hazardous Materials in compliance with
all applicable Environmental Laws.
(c) During the Term and for a period of five (5) years commencing
after the expiration of the Term, if any Hazardous Materials are discovered
in, on or under any of the Hotels and result from, are introduced by, or
arise out of, or the damage from which is materially expanded as a result
of Tenant's acts or failure to act, its negligence, or the acts or
negligence of its employees or agents, or the acts or negligence of any
sublessees, licensees, concessionaires, contractors or entities acting on
behalf of Tenant or any of their employees or agents, the cost incurred in
complying with Environmental Laws with respect to such Hazardous Materials
shall be borne by Tenant. Tenant's obligation under this Section 12.1(c)
shall continue after expiration of the Term until no further compliance is
required with respect to such Hazardous Materials.
(d) If during the Term any Hazardous Materials are discovered in, on
or under any of the Hotels and are the result of migration from a source
other than any of the Hotels and are not a result of Tenant's acts, its
negligence, or the acts or negligence of its employees or agents, or the
acts or negligence of any sublessees, licensees, concessionaires,
contractors or entities acting on behalf of Tenant or any of their
employees or agents, the cost incurred in complying with Environmental Laws
for such Hazardous Materials shall be borne by Tenant.
(e) If Tenant is required to implement a plan to investigate,
monitor, abate or remove Hazardous Materials pursuant to the requirements
of any Environmental Law, Tenant shall notify Landlord of its planned
method, time and procedure for such implementation and Landlord shall have
the right to require reasonable changes in such method, time or procedure.
Nothing
27
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contained herein shall be deemed to vest any control whatsoever in Landlord
with respect to Tenant's use, management, or disposal of Hazardous
Materials on any of the Hotels.
(f) During the Term, Landlord may not enter into any agreement,
settlement or consent order with any third party or governmental entity
concerning the payment or possible payment of funds, or the investigation,
monitoring, abatement or removal of Hazardous Materials located in, on, or
near any of the Hotels without the written consent of Tenant which consent
shall not be unreasonably withheld, conditioned or delayed. If Landlord
fails to obtain Tenant's written consent prior to entering into any such
agreement, settlement or consent order, any terms, conditions, obligations
or liabilities contained therein shall be non-binding on Tenant, Tenant
shall have no responsibility to Landlord under this Article XII, and
Landlord shall indemnify Tenant for any costs or losses incurred by Tenant
as a result of such agreement, settlement or consent order.
(g) During the Term, Tenant may not enter into any agreement,
settlement or consent order with any third party or governmental entity
concerning the payment or possible payment of funds, or the investigation,
monitoring, abatement or removal of Hazardous Materials located in, on, or
near any of the Hotels without the written consent of Landlord if such
agreement, settlement or consent order will impose any financial
obligations on (1) Landlord which are to be paid, in whole or in part, at
any time during the Term or after expiration thereof, or (2) on Tenant
which are to be paid, in whole or in part, after the expiration of the
Term. Landlord's consent shall not be unreasonably withheld, conditioned
or delayed. Failure by Tenant to obtain Landlord's written consent shall
be an Event of Default.
(h) During the Term and so long as no Event of Default exists, Tenant
may elect to defend any imposition, order, demand, decree, lawsuit or
governmental action that seeks to impose liability on Tenant or Landlord
due to the existence of Hazardous Materials in, on, or near any of the
Hotels. If Tenant elects to take such action, Tenant shall not be deemed
to be in violation of any provision of this Article XII so long as such
action or contest by Tenant does not result in a risk of the imposition of
any criminal sanctions against Landlord or any of its directors, officers
or employees; provided, however, if Landlord or Tenant is ultimately held
liable for the costs associated with the existence of such Hazardous
Materials, Tenant's liability shall not be reduced by reason of any delay
in such remediation.
Section 12.2 Site Assessments
----------------
(a) If Landlord has reasonable cause to believe that an Environmental
Violation may exist on the Premises, or if Landlord desires to sell or
finance any of the Premises, or if any Mortgagee desires to sell or
participate its interest in any of the Hotels, or if an Event of Default
exists, or if there is less than one (1) year remaining prior to the
expiration of the Term, then, upon written direction by Landlord to Tenant,
Tenant shall engage such persons as Tenant shall select ("Site Reviewers"),
such selection subject to the reasonable approval of Landlord, to visit any
of the Hotels and perform such environmental site investigations and
assessments ("Site Assessments") as may be necessary to determine whether
any Environmental Violation exists, and, if any Environmental Violation
exists, to estimate the cost of remediating any such Environmental
Violation; provided, however, if an Event of Default exists or if there is
less than one year remaining prior to the expiration of the Term, Tenant
shall select the Site Reviewer from a list of no less than five (5)
nationally recognized Site Reviewers, such list to be provided by Landlord,
and Landlord and Landlord's Mortgagee, if any, shall have the right to
approve the
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Site Reviewer, such approval to be exercised in a reasonable manner
recognizing Landlord's significant interest in the adequacy of the report
and the scope of work to be performed by such Site Reviewer. Landlord
shall have the right to approve any guidance or instruction requested by
such Site Reviewer during the Site Assessment, and Landlord shall have the
right to confirm that any draft or final reports furnished by such Site
Reviewers conform to approved scope of work, guidance and instructions,
provided that such approvals or confirmation shall not be unreasonably
withheld. If Tenant fails or refuses to engage Site Reviewers within
thirty (30) days after such direction, Landlord may engage the Site
Reviewers. If an Event of Default or a material Environmental Violation
exists that was caused by Tenant, its employees or agents, or by any
sublessee, licensee, concessionaire, contractor or entity acting on behalf
of Tenant, or any of their employees or agents, the cost of any Site
Assessment shall be paid by Tenant. In all other cases, the costs of a
Site Assessment shall be paid by Landlord or by the Mortgagee requesting
such Site Assessment, and Tenant may demand adequate assurances that such
costs will be paid before engaging the Site Reviewers. Such Site
Assessments may, at the option of Landlord, include both above and below
the ground testing and such other tests as may be necessary, in the
reasonable opinion of the Site Reviewers, to verify the existence of an
Environmental Violation or to estimate the cost of remediating any such
Environmental Violation. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The Site Reviewers
shall include in their report a statement estimating the cost of any
remediation, monitoring and other compliance program, if any, necessary to
cure or remediate such Environmental Violation. All of the Site Reviewers'
work shall be made available to Landlord and Tenant.
(b) If Tenant fails diligently to pursue any of its obligations under
this Section 12.2 and such failure continues for a period of thirty (30)
days after Notice from Landlord, Landlord shall have the right (but no
obligation), in addition to any other rights or remedies it may have
pursuant to this Lease or under applicable law, to take any and all
reasonable actions as Landlord shall deem necessary or advisable in order
to effect such compliance, for and on behalf of Tenant and at the cost and
expense of Tenant, including to enter the Premises for the purpose of
making tests, obtaining samples and surveys and performing any other acts
as may be reasonably necessary or desirable, in the reasonable discretion
of Landlord, and reimbursement to Landlord of the cost thereof shall be due
and payable by Tenant as Additional Rent on demand with interest thereon at
the Lease Interest Rate from the date such cost is incurred.
(c) If, during the Term, an Environmental Violation occurs or is
found to exist at the Premises which shall impose a liability to Tenant
after the expiration of the Term pursuant to this Article XII, and in the
judgment of the Site Reviewers, remediation, monitoring or other compliance
program relating to any such Environmental Violation has not or will not be
completed as required by any applicable Environmental Laws by the
expiration or earlier termination of the Term, then Tenant shall provide to
Landlord, no later than thirty (30) days prior to the expiration or earlier
termination of the Term, a bond, letter of credit or other security
reasonably satisfactory to Landlord for 110% of the amount determined by
the Site Reviewers to be necessary to complete such remediation, monitoring
or other compliance program. Upon completion of such remediation,
monitoring or other action in accordance with the applicable Environmental
Law, Landlord shall release the security provided by Tenant. If an
Environmental Violation occurs because of the existence of Hazardous
Material in, on or under any of the Hotels in excess of any reportable
quantity established under any Environmental Law, and Tenant makes
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all notifications and undertakes and diligently prosecutes to completion
all regulatory, remedial or other actions which are required by any
applicable Environmental Law by any federal, state or local governmental
agency having jurisdiction over such affected Premises, then Tenant shall
not be in default under this Lease so long as Tenant diligently pursues any
and all such actions toward completion, and any action or non-action by
Tenant does not result in a risk of the imposition of any criminal
sanctions against Landlord or any of its directors, officers or employees.
ARTICLE XIII
INSURANCE
---------
Section 13.1 Property & Business Interruption Insurance. Tenant shall, at
------------------------------------------
its own expense, commencing with the Commencement Date and continuing throughout
the Term, procure and maintain with insurance companies of recognized
responsibility (with a rating of no less than A-VI by A.M. Best, except that
such rating shall not be applicable to those insurers providing flood and
earthquake insurance under this Section), in a manner consistent with prudent
industry practice, property insurance with the following minimum coverages:
(a) insurance on the Hotels and Premises (including contents) against
loss or damage by fire, lightning and all other risks covered by the usual
standard extended coverage endorsement, and with coverage in the amount of
not less than one hundred percent (100%) of the replacement cost thereof,
exclusive of footings and foundations;
(b) insurance against loss or damage from explosion of boilers,
pressure vessels, pressure pipes and sprinklers installed in the Hotels;
(c) business interruption insurance covering loss of profits and
necessary continuing expenses (including Rents payable under this Lease)
for interruptions caused by any occurrences covered by the insurance
referred to in Sections 13.1(a) and 13.1(b), for a period of at least
eighteen (18) months and of a type and in amounts generally carried by
prudent owners of similar properties;
(d) for each Hotel which is located in a zone identified by the
Federal Emergency management Agency as flood hazard area, flood insurance
in an amount not less than the maximum limit available under the National
Flood Insurance Program;
(e) if and to the extent such insurance is then carried by prudent
owners of similar properties: (i) earthquake insurance and, (ii) for the
Hotels which are not located in a zone identified by the Federal Emergency
Management Agency as a flood hazard area, flood insurance; and
(f) such other property risk insurance, as may from time to time be
generally carried by prudent owners of similar properties, in such amounts
and against such risks as are then customary for property similar in use to
the Premises.
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Section 13.2 Application of Proceeds
-----------------------
(a) All proceeds of any insurance payable on account of any casualty
other than proceeds attributable to Tenant's personal property and other
than the proceeds of insurance referred to in Section 13.1(c) shall be paid
to the Insurance Trustee, who shall hold said proceeds in trust for the
parties in accordance with the provisions of this Section 13.2; provided,
however, that if the aggregate amount of such proceeds with respect to any
such casualty is less than Five Hundred Thousand Dollars ($500,000), such
proceeds shall be paid to Tenant who shall use such proceeds for the
purpose of restoration of the Premises. Insurance proceeds attributable to
Tenant's personal property shall be paid directly to Tenant and shall not
be considered when making calculations pursuant to the preceding sentence.
The proceeds of the insurance referred to in Section 13.1 shall be paid to
Tenant except that any such proceeds attributable to the Rents payable
under this Lease shall be paid to Landlord (as a credit against such Rents)
to the extent that such Rents have not been previously paid by Tenant to
Landlord.
(b) Provided that no Tenant default hereunder has occurred and is
continuing, and provided that Tenant complies with all of the terms and
conditions of this Section 13.2, all insurance proceeds received with
respect to a casualty shall be applied to the restoration of the Premises.
(c) Tenant shall commence the restoration of the Premises not later
than the date which is one hundred eighty (180) days after the date upon
which the casualty occurred and thereafter prosecute the restoration with
diligence and continuity without regard to whether insurance proceeds
available to Tenant at any particular time are sufficient to fund the costs
of such restoration.
(d) Prior to commencing any restoration work that will cost more than
One Million Dollars ($1,000,000) to repair, as adjusted by the GDP
Deflator, Tenant, at its sole cost shall (i) obtain the services of a
licensed architect to prepare any required plans and specifications for
such restoration to the extent that such restoration work cannot be
performed based upon previously existing plans and specifications for the
Improvements; and (ii) submit a set of final plans and specifications to
Landlord and the Senior Landlord's Mortgagee for approval to the extent
that such restoration work involves a departure from or addition to
previously existing plans and specifications for the Premises (which
approval may not be unreasonably withheld, conditioned, or delayed); and
(iii) the contractor selected by Tenant to perform the work shall be
subject to Landlord's approval, which approval shall not be unreasonably
withheld, conditioned or delayed, and (iv) Tenant shall carry builder's
risk insurance in amounts reasonably sufficient to cover the cost of
replacement of the work during the course of such construction.
(e) In proceeding with such restoration work, Tenant shall first
expend an amount, if any, equal to the excess of the projected cost of the
restoration work over the amount of all proceeds paid to the Insurance
Trustee. Thereafter, Tenant shall be entitled to submit to the Insurance
Trustee, not more frequently than once every thirty (30) days, an invoice
together with such other documentation (including an architect's
certificate as to the status of work completion, mechanics lien waivers and
title insurance policy endorsements, all obtained at Tenant's sole cost and
expense) as is customarily required by lenders at such time making
construction loans. Upon receipt of an invoice in proper form, the
Insurance Trustee shall make a disbursement within ten (10) business days
equal to the amount shown on the invoice; provided, however, that the
Insurance Trustee shall not be required to disburse more than 90% of the
total projected cost of
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the work, unless and until it has received all of the following: (i) final
mechanics lien waivers from all parties having rights to mechanics liens
against the Premises on account of such restoration work, (ii) appropriate
endorsements or policies of title insurance protecting Landlord and
Mortgagee against mechanics liens arising out of the restoration work, or a
mechanic's lien bond, and (iii) final certification from the architect that
the restoration work has been completed in accordance with the plans and
specifications therefor and all applicable building codes.
(f) If (i) the amount disbursed upon final completion of the
restoration work in accordance with Section 13.2(e) is less than the total
insurance proceeds then held by the Insurance Trustee, and (ii) no Event of
Default is existing, such excess shall be paid to Tenant.
(g) If Tenant shall fail to prosecute the restoration work with
diligence and continuity until completion, regardless of whether an Event
of Default has occurred, Landlord shall have the right to use any proceeds
held by Insurance Trustee to complete such renovation work. Tenant shall
be liable for any sums incurred by Landlord to complete such restoration
work in excess of the amount held and disbursed by the Insurance Trustee.
(h) If an Event of Default has occurred, Tenant shall not have access
to any insurance proceeds unless and until Tenant shall have cured such
Event of Default, and until such time, Tenant shall use its own funds to
prosecute the restoration work.
(i) Upon the expiration or termination of this Lease, all insurance
proceeds received by the Insurance Trustee or Tenant and not applied to the
costs of restoration shall be paid to Landlord except as otherwise provided
in Article XXI.
Section 13.3 Waiver of Rights of Subrogation. Landlord and Tenant hereby
-------------------------------
waive their rights of recovery against each other, their respective officers,
directors, agents and employees for loss or damage to the Premises and any
resultant business interruption to the extent covered by the insurance
maintained under Section 13.1. Should any such policies of insurance require an
endorsement to effect such a waiver, Tenant shall cause them to be so endorsed.
Section 13.4 Operational Insurance. Tenant shall, at its own expense,
---------------------
commencing with the Commencement Date and continuing throughout the Term,
procure and maintain operational insurance with reputable insurance companies of
recognized responsibility; provided, however, that with respect to the first One
Million Dollars ($1,000,000) of coverage required by this Section such coverage
shall be obtained from insurance companies authorized to do business in the
United States with a rating of no less than A-VII by A.M. Best. All other
coverage shall be obtained from one or more insurance companies with an A.M.
Best rating of no less than B+V with respect to domestic insurance companies or
of at least comparable standing if a foreign-based insurer. Operational
insurance required herein shall have the following minimum coverage:
(a) comprehensive or commercial general liability insurance against
claims for death, bodily injury, or property damage occurring on, in or
about the Premises, and automobile liability insurance on vehicles operated
in conjunction with the Premises with a combined single limit of not less
than One Hundred Million Dollars ($100,000,000) per occurrence or such
other amounts, with Landlord's consent, that may from time to time be more
prudent in light of then current practices with respect to insurance costs
and premiums.
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(b) such other insurance as Tenant in its reasonable judgment deems
advisable for protection against claims, liabilities and losses arising out
of or connected with its operation of the Premises.
Section 13.5 Blanket and Self-Insurance. All insurance described in
--------------------------
Sections 13.1 and 13.4 may be obtained by Tenant by endorsement or equivalent
means under its blanket insurance policies, provided that such blanket policies
fulfill the requirements specified herein. With respect to the insurance
described in Section 13.4, the deductible or self-insured retention limits shall
not exceed Two Hundred Fifty Thousand Dollars ($250,000) (to be increased on the
fifth (5th) anniversary of the Commencement Date and every subsequent fifth
(5th) anniversary thereof by an amount proportionate to the percentage increase
in the GDP Deflator over the preceding five (5) year period) or such other
amounts, with Landlord's consent, that Tenant may reasonably deem from time to
time be more prudent in light of the then current practices with respect to
insurance costs and premiums; provided that, with respect to earthquake
insurance, the deductible shall be no higher than 10% of the building cost. As
to all insurance described in Section 13.1, deductible limits or self-insured
retentions shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) (to be
increased on the fifth (5th) anniversary of the Commencement Date and every
subsequent fifth (5th) anniversary thereof by an amount proportionate to the
percentage increase in the GDP Deflator over the preceding five (5) year period)
or, with respect to "high hazard classification" (as such term is customarily
understood in the insurance industry), such other amount as may then be required
by responsible insurance companies for similar properties and risks.
Section 13.6 Costs of Insurance. Insurance premiums and any costs or
------------------
expenses with respect to the insurance described in this Article XIII shall be
borne by Tenant. Any losses, costs, damages or expenses which fall within the
deductible limits or are included within an allowed self-insurance program
pursuant to Section 13.5 above shall be borne by Tenant. If Tenant shall fail to
pay any premium for any such insurance, or if an Event of Default with respect
to any of the provisions of this Article XIII shall occur, Landlord may pay such
premium or procure the insurance coverages required by this Article XIII and all
amounts paid by Landlord in accordance herewith shall become Additional Rent
which is due and payable within five (5) Business Days after such expenditures
are made.
Section 13.7 Defense of Claims after Termination. With respect to any
-----------------------------------
claim relating to an accident or other occurrence within a given Year for which
Tenant is obligated to indemnify Landlord under Article VIII which is not
finally resolved either through litigation or settlement prior to the expiration
or termination of this Lease, Tenant shall be obligated to continue to defend
such accrued claims regardless of such expiration or termination.
Section 13.8 Coverage and Certificates. All insurance policies provided
-------------------------
for under Section 13.1 or Section 13.4 above shall be carried in the name of
Tenant, with Landlord and any Mortgagee on the Premises as additional insureds,
and with loss payable, in the case of any policies procured under Section 13.1,
in accordance with the provisions of Section 13.2. Tenant shall deliver to
Landlord original certificates of insurance with respect to all policies so
procured under Section 13.1 or Section 13.4, including existing, additional and
renewal policy certificates and, in the case of insurance about to expire, shall
deliver certificates of insurance with respect to the renewal policies prior to
the respective dates of expiration. All insurance policies provided for under
Section 13.1 or Section 13.4 above shall, to the extent obtainable, have
attached thereto an endorsement that such policy shall not be cancelled or
materially changed without at least thirty (30) days' prior written Notice to
Landlord, Tenant, and the holder of any Mortgage. Upon request by Landlord or
any Mortgagee, the requesting party or its representatives shall be entitled to
examine at Tenant's corporate headquarters all insurance policies maintained by
Tenant with respect to the Premises.
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Section 13.9 Alternative Insurance Coverage. Notwithstanding any other
------------------------------
provision of this Lease to the contrary, if at any time during the Term hereof
Tenant is not able to obtain any one or more of the insurance coverages required
pursuant to this Article XIII because the subject insurance coverage(s) are not
then reasonably available in the insurance marketplace, then Tenant's failure to
so obtain such insurance coverage(s) shall not constitute an Event of Default so
long as Tenant does obtain coverage as similar to that required under this Lease
as is reasonably available. For purposes of this Section 13.9 the term
"reasonably available" means that type of coverage then obtainable from
reputable insurance companies for properties similar to the Premises and
purchased by prudent owners of businesses similar to that operated by Tenant at
the Premises.
ARTICLE XIV
DAMAGE BY FIRE OR OTHER CASUALTY
--------------------------------
Section 14.1 Damage by Fire or Other Casualty. If during the Term any of
--------------------------------
the Hotels shall be damaged or destroyed by fire, or any other casualty or cause
whatsoever, Tenant shall forthwith proceed to repair and/or rebuild the same,
free of all liens, claims and encumbrances, to the same general design and
specification as existed immediately before such damage or destruction occurred,
subject to such delays as may be reasonably attributable to governmental
restrictions or failure to obtain materials or labor, or other causes (other
than financial), whether similar or dissimilar, beyond the control of Tenant.
Materials used in repair shall be as nearly like or superior in quality to
original materials as may then be reasonably procured in regular channels of
supply. All proceeds of insurance carried on the Premises pursuant to Article
XIII hereof and payable as a result of such damage or destruction, other than
proceeds attributable to Tenant's personal property and other than the proceeds
of insurance referred to in Section 13.1(c), shall be used for the purpose of
such repair or rebuilding in accordance with the provisions of Article XIII,
and, if either Landlord or the Insurance Trustee shall fail to make such
insurance proceeds available in violation of the provisions of Article XIII, and
such failure shall continue for a period of 90 days after Notice of such failure
is delivered by Tenant to Landlord, Tenant's obligation to repair and rebuild
hereunder shall be suspended until such time as such insurance proceeds are so
made available. If such insurance proceeds are not so made available within one
(1) year thereafter as a result of a continued violation of the provisions of
Article XIII by the Insurance Trustee or Landlord then, but only then, may
Tenant at its option, terminate this Lease upon ninety (90) days prior Notice to
Landlord. Upon any such termination, Landlord shall have all rights to any
insurance proceeds. If Tenant is not required to repair or rebuild by the terms
or conditions of this Lease, all such insurance proceeds (whether paid to the
Insurance Trustee or Tenant) shall be paid to Landlord. If Tenant is required
to, and does repair or rebuild, any excess insurance proceeds shall be paid to
Tenant.
Section 14.2 Partial Damage by Fire or Other Casualty. Upon any partial
----------------------------------------
damage or destruction, Tenant shall continue to occupy and use the Premises to
the extent that it may be practicable to do so, and Tenant shall proceed to
repair and/or rebuild the Premises in the manner and at the time described in
Sections 13.2 and 14.1.
Section 14.3 Damage Occurring After the 10th Anniversary of Commencement
-----------------------------------------------------------
Date
- - - ----
(a) Upon a Major Casualty occurring after the tenth (10th)
anniversary of the Commencement Date, Tenant shall have the right to
terminate this Lease with respect to the affected Hotel by so notifying
Landlord not later than the date which is sixty (60) days after the
occurrence of such Major Casualty. If Tenant elects to exercise the right
described in the preceding sentence, it shall, simultaneously with its
delivery of its Notice of termination, deliver
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to Landlord its irrevocable offer to purchase the applicable portion of the
Premises for an amount equal to the Fair Market Value thereof.
(b) Landlord may accept or reject Tenant's irrevocable offer to
purchase the applicable portion of the Premises by sending Tenant a Notice
of rejection or acceptance within thirty (30) days from the date upon which
Landlord received Tenant's Notice of termination. If Landlord fails to
send Tenant a Notice of rejection or acceptance within thirty (30) days of
its receipt of Tenant's irrevocable offer to purchase the applicable
portion of the Premises, Landlord shall be deemed to have rejected such
offer. If Landlord accepts Tenant's offer to purchase, this Lease shall
terminate with respect to such portion of the Premises upon the closing of
such purchase, which shall occur in accordance with the provisions of
Article XXI. Upon such termination, Tenant shall pay to Landlord all Rent
due with respect to such portion of the Premises through such date of
termination, in addition to the Fair Market Value thereof, and Landlord and
the Insurance Trustee shall assign to Tenant all their right, title and
interest in insurance proceeds payable and shall deliver to Tenant any
insurance proceeds previously paid to, or then held by, either Landlord or
the Insurance Trustee with respect to such Major Casualty, and Landlord
shall convey the Premises to Tenant in accordance with the provisions of
Article XXI.
(c) If Landlord rejects or is deemed to reject Tenant's irrevocable
offer to purchase pursuant to Section 14.3(a), this Lease shall terminate
with respect to the applicable portion of the Premises on a Base Rent
payment date specified by Tenant in its Notice of termination which occurs
not earlier than ninety (90) days nor later than one hundred twenty (120)
days after Landlord's receipt of Tenant's irrevocable offer to purchase,
provided that this Lease shall not so terminate unless and until Tenant
shall have paid all sums due hereunder (including, without limitation, all
taxes and insurance premiums) with respect to the applicable portion of the
Premises as of the actual date of termination. Upon such termination,
Tenant shall vacate the applicable portion of the Premises in accordance
with the provisions of Section 3.4, and Tenant shall have no right to
receive any insurance proceeds payable, previously paid to, or then held
by, either Landlord or the Insurance Trustee with respect to such Major
Casualty, other than insurance proceeds attributable to Tenant's personal
property, if any such proceeds have not been paid directly to Tenant in
accordance with Section 13.2(a).
Section 14.4 No Abatement of Rent Due to Casualty. No damages,
------------------------------------
compensation, or claim shall be payable by Landlord for inconvenience, loss of
business, or annoyance arising from any repair or restoration of any portion of
the Premises or the Improvements. If this Lease is not terminated as a result of
a casualty pursuant to Section 14.3, all proceeds of insurance carried pursuant
to Section 13.1 shall be paid to Tenant (except as otherwise provided in
Section 13.2). Except with respect to Percentage Rent as set forth in
Section 5.2(c), there shall be no abatement of Rents following any casualty and
during any period of repair or reconstruction contemplated in this Article 14.
Section 14.5 Early Termination. Upon the termination of this Lease
-----------------
pursuant to the provisions of Sections 14.3 or 15.4 of this Lease, the Term and
the estate hereby granted shall expire as of the date of such termination in the
same manner and with the same effect as if it were the date set for the normal
expiration of the Term, and Rent shall be apportioned as of the date of
termination.
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ARTICLE XV
CONDEMNATION
------------
Section 15.1 Notice of Condemnation and Assignment of Rights
-----------------------------------------------
(a) The party receiving any notice of the kinds specified below with
respect to any one or more Hotels shall promptly give the other party
Notice of the receipt, contents and date of the Notice received:
(i) Notice of intended condemnation;
(ii) Service of any legal process relating to condemnation of
any portion of any of the Hotels or Improvements;
(iii) Notice in connection with any proceedings or negotiations
with respect to such a condemnation; or
(iv) Notice of intent or willingness to make or negotiate a
private purchase, sale or transfer in lieu of condemnation.
(b) Subject to the rights of each party as set forth in this
Article XV, each party hereby irrevocably assigns to Insurance Trustee any
award or payment to which they may be or become entitled by reason of any
taking of any Hotel or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any law, general or special.
Insurance Trustee shall distribute all such condemnation proceeds to the
benefit of Landlord and/or Tenant in accordance with the provisions of this
Article XV. Each party shall be entitled to participate at its own expense
in any such proceedings.
Section 15.2 Tenant's Right to Pursue a Claim. Notwithstanding anything
--------------------------------
herein to the contrary, provided that no Tenant default hereunder has occurred
and is continuing, Tenant shall have the right to pursue a claim with and retain
any award from the condemning authority or entity for damage to or loss of
Tenant's leasehold estate in any Hotel or any portion thereof as well as for any
other separate damages that Tenant may suffer; provided, however, that such
award or payment to Tenant is completely separate from and shall in no manner
reduce the award or payment to Landlord for the value of any such Hotel
unencumbered by this Lease. If the foregoing contingency is not met, any
Tenant's award or payment shall be deemed assigned to the Insurance Trustee
pursuant to Section 15.1.
Section 15.3 Temporary Taking. If the use of any Hotel or any part
----------------
thereof is taken in condemnation by any governmental authority under the power
of eminent domain for a period of time, whether definite or indefinite (but less
than the acquisition of a fee simple interest in perpetuity), or whether less
than, equal to or greater than the unexpired portion of the Term of this Lease,
this Lease shall nevertheless continue in full force and effect and Tenant shall
have the right (except as hereinafter provided) to receive the entire award
("Use Award") attributable to the unexpired portion of the Term of this Lease
(including any Effective Extended Term), and Landlord shall have the right to
receive the entire award ("Landlord's Temporary Taking Award") attributable to
the period after the expiration of the Term of this Lease (including any
Effective Extended Term), such allocation between periods to be determined
either (i) by the court in which the complaint in eminent domain was filed (a
request for which determination Tenant shall make to such court) or (ii) absent
a decision by such court, by Landlord using a formula reasonably calculated to
arrive at a fair and equitable allocation, and no claim or demand
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of any kind shall be made by Tenant against Landlord by reason of such taking,
no claim for abatement of Base Rent or Percentage Rent and other amounts which
may become due under this Lease shall be made by reason of such taking and the
rights and liabilities of the parties hereto shall be the same as if there had
been no such taking.
(a) The Use Award, in such amount as may be eventually determined,
shall be paid to and held in trust by the Insurance Trustee and shall be
administered as hereinafter set forth. There shall first be deducted
therefrom and paid out all legal and other expenses, reasonable in amount,
which were incurred in obtaining such Use Award, except that Landlord shall
pay that portion of such expenses (but not to exceed the amount of
Landlord's Temporary Taking Award) that Landlord's Temporary Taking Award
bears to the sum of Landlord's Temporary Taking Award and the Use Award.
The Use Award shall be administered as follows:
(i) If any such Use Award shall be in the form of rent
recoverable for such taking and shall be payable in quarterly (or more
frequent) installments, the Insurance Trustee shall pay to Landlord
quarterly such installments of the Use Award on account of and to the
extent of Tenant's obligations to pay Base Rent and Percentage Rent
under this Lease; any balance remaining from each such quarterly (or
more frequent) installment shall be paid by the Insurance Trustee to
Tenant. The entire amount of such quarterly (or more frequent)
installments of the Use Award received by the Insurance Trustee
(whether paid to Landlord or Tenant) shall be included in the cash
receipts of Tenant during the quarter when received by the Insurance
Trustee for purposes of determining Operating Revenues.
(ii) If any such Use Award is made in a lump sum or in the form
of rent recoverable for such taking and is payable in installments
less frequently than quarterly, the lump sum or other installment
shall be divided by the number of calendar quarters included in the
period for which such award has been paid, and the Insurance Trustee
shall pay to Landlord such quotient quarterly on account of and to the
extent of Tenant's obligation to pay Base Rent and Percentage Rent
under this Lease; any balance remaining from each such quarterly
quotient shall be paid by the Insurance Trustee to Tenant. The entire
amount of such quarterly installments of the Use Award received by the
Insurance Trustee (whether paid to Landlord or Tenant) shall be
included in the cash receipts of Tenant during the quarter in which
such quarterly quotient is distributed by the Insurance Trustee to
Landlord and Tenant for purposes of determining Operating Revenues.
(iii) If any such Use Award shall be made for the cost of
repairs and restoration following termination of such temporary
taking, then the Insurance Trustee shall apply the same to Tenant's
obligation hereunder to repair and restore as herein provided.
(b) Any Use Award deposited with the Insurance Trustee shall be
invested by the Insurance Trustee in an interest-bearing account, with
interest to be added to the amount of the Use Award and distributed as part
of the Use Award in accordance with the provisions of this Section 15.3.
All such interest shall be included in Operating Revenues for the month in
which such interest is distributed by the Insurance Trustee.
Section 15.4 Total Taking. If, during the Term, all or substantially all
------------
of any Hotel shall be taken in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, then this Lease shall
terminate with respect to such Hotel on the date such taking becomes
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effective. Tenant shall pay all Rent and all other sums due hereunder
(including, without limitation, all taxes and insurance premiums) through such
date with respect to such Hotel. All condemnation proceeds shall belong to and
be paid to Landlord, except that, to the extent such proceeds exceed the Fair
Market Value thereof as of such termination date, such excess shall be paid to
Tenant up to an amount equal to any unamortized investments made by Tenant in
Expansions, with any remaining portion of such excess being payable to Landlord.
Section 15.5 Substantial Taking
------------------
(a) Upon a Substantial Taking of any Hotel, Tenant shall have the
right to terminate this Lease with respect to such Hotel by so notifying
Landlord not later than the date which is sixty (60) days after the
occurrence of such Substantial Taking. If Tenant elects to exercise the
right described in the preceding sentence, it shall, simultaneously with
its delivery of its Notice of termination, deliver to Landlord its
irrevocable offer to purchase such Hotel for an amount equal to the Fair
Market Value thereof.
(b) Landlord may reject or accept Tenant's irrevocable offer to
purchase such Hotel by sending Tenant a Notice of such rejection or
acceptance within thirty (30) days from the date upon which Landlord
received Tenant's Notice of termination. If Landlord fails to send Tenant
a Notice of rejection or acceptance within thirty (30) days of its receipt
of Tenant's irrevocable offer to Purchase such Hotel, Landlord shall be
deemed to have rejected such offer. If Landlord accepts Tenant's offer to
purchase, this Lease shall terminate with respect to such Hotel on a Base
Rent payment date specified by Tenant in its Notice of termination which
occurs not earlier than ninety (90) days nor later than one hundred twenty
(120) days after Landlord's receipt of Tenant's irrevocable offer to
purchase. Upon such termination, Tenant shall pay Landlord all Rent due
with respect to such Hotel through such date in addition to the Fair Market
Value thereof, and Landlord and the Insurance Trustee shall assign to
Tenant all their right, title and interest in condemnation proceeds payable
and shall deliver to Tenant any condemnation proceeds previously paid to,
or then held by, either Landlord or the Insurance Trustee with respect to
such Substantial Taking, and Landlord shall convey such Hotel to Tenant in
accordance with the provisions of Article XXI.
(c) If Landlord rejects or is deemed to reject Tenant's irrevocable
offer to purchase pursuant to Section 15.5(a), this Lease shall terminate
with respect to the affected Hotel on a Base Rent payment date specified by
Tenant in its Notice of termination which occurs not earlier than ninety
(90) days nor later than one hundred twenty (120) days after Landlord's
receipt of Tenant's irrevocable offer to purchase, provided that this Lease
shall not terminate with respect to such Hotel unless and until Tenant
shall have paid all sums due hereunder (including, without limitation, all
taxes and insurance premiums) as of the actual date of termination. Upon
such termination, all condemnation proceeds shall be delivered to Landlord
and Tenant shall vacate such Hotel in accordance with the provisions of
Section 3.4.
Section 15.6 Partial Taking
--------------
(a) Upon a Substantial Taking of any Hotel pursuant to which Tenant
has not given an irrevocable offer to purchase pursuant to the provisions
of Section 15.5, Tenant shall be obligated to restore the portion of such
Hotel not taken by the governmental authority to a condition as good as or
better than the condition which prevailed thereon and therein prior to such
condemnation as nearly as is practicable under the circumstances,
regardless of whether the
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condemnation proceeds are sufficient to complete such restoration. Upon an
Insubstantial Taking, Tenant shall not be obligated to replace any
landscaping or facilities taken by the governmental authority but shall
only be obligated to repair any damage to the portion of the affected Hotel
not taken by the governmental authority. Materials used in repair and
restoration shall be as nearly like or superior in quality to the original
materials as may then be reasonably procured in regular channels of supply,
and construction shall be completed in a workmanlike manner free of all
liens and encumbrances. All condemnation proceeds payable on account of
such condemnation other than proceeds attributable to Tenant's personal
property shall be paid to the Insurance Trustee who shall hold said
proceeds in trust for the parties in accordance with the provisions of this
Section 15.6.
(b) Tenant shall commence the restoration of any affected Hotel as
soon as practicable, but in no event later than the date which is one
hundred eighty (180) days after the date upon which the condemnation
occurred, and thereafter shall prosecute the restoration with diligence and
continuity. The provisions of Section 13.2(d) and 13.2(e) shall apply to
any such restoration.
(c) If the amount disbursed in accordance with Section 13.2(e) shall
be less than the total condemnation proceeds, such excess shall be
distributed to Landlord.
(d) Any award attributable to personal property owned by Tenant that
is not attributable to FF&E owned by Landlord shall be paid to Tenant. Any
award attributable to FF&E owned by Tenant shall be paid to Tenant and
applied by Tenant for the purpose of replacing such FF&E if and to the
extent that the Hotel requires such replacement FF&E to be fully
operational.
(e) Upon a condemnation that is an Insubstantial Taking, there shall
be no reduction in or abatement of the Base Rent or Percentage Rent
thereafter payable by Tenant. Upon a condemnation that is a Substantial
Taking and if this Lease is not terminated pursuant to Section 15.5, there
shall be a reduction in the Base Rent payable by Tenant effective as of the
date of the Substantial Taking in an amount equal to the lesser of:
(i) 7 1/2% of the condemnation award received by Landlord with respect to
such affected Hotel; or (ii) an amount equal to the Base Rent shown for
such Hotel on Exhibit B, multiplied by the Partial Condemnation Reduction
Percentage.
(f) If Tenant shall fail to prosecute the restoration work with
diligence and continuity until completion, regardless of whether an Event
of Default has occurred, Landlord shall have the right to use any proceeds
held by Insurance Trustee to complete such restoration work. Tenant shall
be liable for any sums incurred by Landlord to complete such restoration
work in excess of the amount held and disbursed by the Insurance Trustee.
(g) If an Event of Default has occurred, Tenant shall not have access
to any condemnation proceeds unless and until Tenant shall have cured such
Event of Default, and until such time, Tenant shall use its own funds to
prosecute the restoration work.
ARTICLE XVI
ASSIGNMENT, SALE AND SUBLETTING
-------------------------------
Section 16.1 Sale or Assignment by Landlord, Subject to Lease. Landlord
------------------------------------------------
shall have the right to assign or transfer its interest in this Lease in
connection with a Sale of a Hotel subject to this Lease
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which shall remain in full force and effect, but may be evidenced by a separate
lease agreement on the same terms and conditions, except that Base Rent shall be
calculated in accordance with the amounts shown on Exhibit B and Percentage Rent
shall be calculated based solely on the Operating Revenues of such Hotel (or
Hotels) alone. For purposes of calculating Percentage Rent under this Lease,
the Base Revenues attributed to such Hotel shall be deducted from total Base
Revenues for purposes of the next Percentage Rent due to Landlord hereunder. In
the event such sale or assignment takes place at any time other than the end of
a Lease Year, Percentage Rent for both the Hotel or Hotels so assigned and the
then remaining Hotels shall be calculated based on a proration computed in
accordance with the number of days in the Partial Lease Year. Furthermore,
Landlord shall have right to assign or transfer without restriction its interest
in this Lease as collateral security with respect to any financing secured by an
interest in the Premises. Upon any Sale of a Hotel, Landlord shall assign this
Lease to the purchaser and, concurrently with the finalization thereof, the
purchaser shall, by an appropriate written instrument, assume (subject to the
provisions of Section 22.24) all of Landlord's obligations hereunder. Any
attempted sale or assignment in violation of the provisions of this Section 16.1
shall be void and without effect. Within thirty (30) days after Landlord sends
Notice to Tenant advising Tenant of the name, identity and address of any
proposed assignee or transferee and requesting a determination as to whether the
proposed assignment or transfer would violate the requirements of the first
sentence of this Section 16.1, Tenant shall advise Landlord by Notice to
Landlord whether or not such proposed assignment or transfer would violate such
requirements and, if so, setting forth in reasonable detail the basis for such
violation (which Notice shall be binding upon Tenant), and if Tenant fails to
send such Notice to Landlord prior to the expiration of such thirty (30) day
period, such assignment or transfer shall be deemed to comply with the
requirements of the first sentence of this Section 16.1.
Section 16.2 Assignment by Tenant. Tenant shall have the right to
--------------------
transfer or assign its interest in any Hotel demised hereunder without
Landlord's consent provided that (w) the transferee or assignee is a corporation
organized under the laws of any state in the United States and in good standing
and authorized to do business in each state in which any of the Hotels is
located, (x) such transferee or assignee assumes this Lease by an appropriate
writing, (y) Tenant shall continue to remain liable under all of the provisions
of this Lease and (z) Tenant first obtains the consent of any and all applicable
ground lessors, if such consent is required.
Section 16.3 Tenant's Right to Sublease. Tenant may sublease space or
--------------------------
grant concessions or licenses at any of the Hotels so long as the terms of any
such subleases, concessions or licenses do not exceed the Term and shall expire
upon any termination of this Lease.
ARTICLE XVII
HOLDING OVER
------------
Should Tenant continue to hold any Hotel after the termination of this
Lease, whether the termination occurs by lapse of time or otherwise, such
holding over, unless otherwise agreed to by Landlord in writing, shall
constitute and be construed as a tenancy at sufferance at a daily Rent equal to
1/30th of an amount equal to two hundred percent (200%) of the monthly Base Rent
last in effect and subject to all of the other obligations imposed on Tenant
hereunder, but the foregoing shall not constitute a consent by Landlord to such
holding over and shall not prevent Landlord from exercising any of its remedies
under this Lease or applicable law by reason of such holding over.
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ARTICLE XVIII
ESTOPPEL CERTIFICATES
---------------------
Tenant agrees to furnish periodically, within ten (10) days after
written request therefor by Landlord, or any actual or prospective Mortgagee for
any Hotel, or any interest of Landlord therein or any actual or prospective
purchaser of Landlord's interest, a certificate signed by Tenant (which may
require a true and correct copy of this Lease and any and all amendments hereto
to be attached) certifying (to the extent same is true) to the then current Rent
due hereunder; that Tenant is not in default hereunder; that this Lease is in
full force and effect and unmodified; that the Term has commenced and the full
rental is then accruing hereunder; that no Rent under this Lease has been paid
more than ninety (90) days in advance of its due date; that the address for
Notices to be sent to Tenant is as set forth in this Lease (or has been changed
by Notice duly given and is as set forth in the certificate); that Tenant has no
knowledge of any default by Landlord then existing under this Lease; and such
other matters as may be reasonably requested by Landlord or any Mortgagee,
prospective Mortgagee or prospective purchaser. If Tenant is unable to so
certify as to one or more of the foregoing items, Tenant shall specify its
reason therefor in writing. Any such certificate may be relied upon by any
prospective purchaser, ground lessor, Mortgagee, or any beneficiary under any
deed of trust on the Improvements or the Land or any part thereof. Landlord
agrees to furnish periodically, within ten (10) days after written request
therefor by Tenant or any actual or prospective Mortgagee, a certificate signed
by Landlord containing substantially the same information as described above.
ARTICLE XIX
LANDLORD/TENANT FINANCING
-------------------------
Section 19.1 Right to Finance
----------------
Landlord shall have the right, at any time, and from time to time, to
subject its interest in any of the Hotels to one or more Mortgages without
Tenant's consent. Landlord also acknowledges that, concurrently with the
Commencement Date, Tenant's interests under this Lease shall be collaterally
assigned to Tenant's Mortgagee and that Tenant from time to time may secure
additional financings and/or refinancings with all or some portion of its
interests hereunder. Landlord agrees to cooperate with Tenant with respect to
any such financings; provided, however, that Landlord shall have no obligation
to amend the terms of this Lease, expend any sums in connection therewith, or
subordinate or waive any of its rights hereunder.
Section 19.2 Priority
--------
(a) Landlord agrees that this Lease and any extensions, renewals,
replacements or modifications thereto and all right and interest of Tenant
in and to the Hotels shall be superior to any and all Mortgages now or
hereafter granted by Landlord.
(b) As more particularly described herein, Tenant has no right to
cancel, rescind or terminate this Lease except as expressly provided in the
particular provisions specified herein. If Tenant exercises any such right
to cancel or terminate this Lease with respect to a specific Hotel or
Hotels, this Lease shall remain in full force and effect with respect to
all other Hotels leased hereunder.
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(c) If at any time there shall occur a foreclosure action with
respect to the interest of Landlord under this Lease, or a deed in lieu of
foreclosure, or any similar action or proceeding, then (i) this Lease shall
not terminate, and (ii) Tenant shall attorn to and recognize the purchaser
at such foreclosure sale (whether such person is the Mortgagee or another
person or entity) or the grantee of a deed in lieu of foreclosure as
Tenant's Landlord under this Lease, except that neither such purchaser or
grantee, nor anyone claiming by, through or under any such person or
grantee, shall be:
(i) liable for any action or omission of Landlord (or its
predecessors in interest);
(ii) subject to any offsets or defenses which Tenant may have
against Landlord (or its predecessors in interest); or
(iii) bound by any payment of Rent which Tenant might have made
to Landlord (or its predecessors in interest) for more than one month
in advance of the date the same was due under this Lease; but the
foregoing shall not relieve any such purchaser or grantee, or anyone
claiming by, through or under any such purchaser or grantee from
performing all obligations of Landlord under this Lease with respect
to each Hotel so owned after it acquires title to such Hotels.
Section 19.3 Mortgagee Amendments. If at any time, any prospective
--------------------
Mortgagee requests any change or modification to this Lease as a condition of
granting a Mortgage to either Landlord or Tenant, the other party shall consent
to such change or modification provided that (i) the requesting party bears the
cost of preparing all documentation required to effect such change or
modification; (ii) such change or modification does not materially and adversely
increase the other party's cost of operating any of the Hotels or performing its
obligations under this Lease; and (iii) such change does not materially and
adversely affect the rights of the other party and/or its Mortgagees hereunder.
Examples of modifications to which each party shall consent include, without
limitation, obligations to give copies of notices and other documents to
Mortgagees where one party has previously agreed to give same to the other, to
obtain a Mortgagee's consent or approval where one party has previously agreed
to obtain the other's consent or approval, to allow a Mortgagee to act for the
requesting party if such party fails to exercise a right granted to it
hereunder, and provisions which govern the relationship between the other party
and Mortgagee.
ARTICLE XX
DEFAULT BY TENANT
-----------------
Section 20.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default" by Tenant under this
Lease:
(a) if Tenant shall fail to make any payment of Base Rent payable by
it under this Lease when the same becomes due and payable and such failure
continues for five or more days;
(b) if Tenant shall fail to make any payment of Percentage Rent or
Additional Rent payable by it under this Lease when the same becomes due
and payable and such failure is not cured by Tenant within a period of 10
days after receipt by Tenant of notice thereof from Landlord; provided,
however, that such notice shall, to the full extent permitted by applicable
law, be in lieu of and not in addition to any notice required under
applicable law; and provided,
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further, that such notice requirement shall not prevent the imposition of
the required payment of interest and/or late charges on such overdue
amounts;
(c) if Tenant shall fail to observe or perform any material term,
covenant or condition of this Lease and such failure is not cured by Tenant
within a period of 30 days after receipt by Tenant of notice thereof from
Landlord, unless such failure cannot with diligence be cured within a
period of 30 days, in which case such failure shall not be deemed to
continue if Tenant proceeds promptly and with diligence to cure the failure
and diligently completes the curing thereof in no event later than 180 days
after receipt of such notice; provided, however, that such 180-day
limitation shall not apply with respect to the cure by Tenant of defaults
in its obligations under Article XII, so long as Tenant has promptly
commence to cure said default within the initial 30-day period, and
thereafter diligently prosecutes the cure to completion; and provided,
further, that such notice described above shall, to the full extent
permitted by applicable law, be in lieu of and not in addition to any
notice required under applicable law;
(d) if Tenant shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state thereof;
(e) if Tenant shall, on a petition in bankruptcy filed against it, be
adjudicated as bankrupt or a court of competent jurisdiction shall enter an
order or decree appointing, without the consent of Tenant, a receiver of
Tenant or of the whole or substantially all of its property, or approving a
petition filed against it seeking reorganization or arrangement of Tenant
under the federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof, and such judgment, order
or decree shall not be vacated or set aside or stayed within 60 days from
the date of the entry thereof;
(f) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution;
(g) if the estate or interest of Tenant in any Hotel or any part
thereof shall be levied upon or attached in any proceeding and the same
shall not be vacated or discharged within the later of 90 days after
commencement thereof or 30 days after receipt by Tenant of notice thereof
from Landlord (unless Tenant shall be contesting such lien or attachment in
accordance with the terms of this Lease); provided, however, that such
notice shall, to the full extent permitted by applicable law, be in lieu of
and not in addition to any notice required under applicable law;
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(h) if, except as a result of damage, destruction or a partial or
complete Condemnation, Tenant voluntarily ceases operations at any Hotel
for a period in excess of 30 consecutive days;
(i) if, with respect to the Concurrent Tenant Credit Facility, any
written notice is sent to Tenant by the Administrative Agent or the
Required Banks (as such terms are defined in the Concurrent Tenant Credit
Facility) notifying Tenant in its capacity as Borrower thereunder that it
is in default under the Concurrent Tenant Credit Facility, and such default
shall not be cured within the cure period applicable therefor, if any; or
(j) if Tenant shall make, or purport to make, any assignment or
subletting of its interest under this Lease for which Landlord's consent is
required without first obtaining such consent.
Section 20.2 Landlord's Rights Upon an Event of Default
------------------------------------------
(a) If an Event of Default occurs, then Landlord may commence doing
any one or more of the following provided that such commencement is prior
to the date that Tenant cures such default:
(i) Terminate this Lease upon ten (10) days Notice to Tenant, in
which event Tenant shall immediately surrender the Premises to
Landlord and Tenant shall be liable to Landlord for all Surviving
Obligations and to the extent provided in Article XVII and to the
extent hereinafter provided in this Section 20.2(a). If Tenant fails
to do so, Landlord may, without Notice and without prejudice to any
other remedy Landlord may have, enter upon and take possession of any
or all of the Premises and expel or remove Tenant and its effects
without being liable to prosecution or any claim for damages therefor.
Tenant shall indemnify Landlord for all loss and damage which Landlord
may suffer by reason of such Termination, whether through inability to
relet any or all of the Premises or otherwise, including any loss of
Rent for the remainder of the Term. In connection with Landlord's
exercise of the remedy described in this Subparagraph, Landlord shall
have the right to seize and take possession of all of Tenant's FF&E
located at the Hotels and either use same in connection with operating
the property or dispose of same as Landlord sees fit to do. To the
greatest extent permitted by law, Tenant hereby fully, finally and
forever waives any and all protections provided by applicable law
against Landlord's right of distraint.
(ii) Enter upon and take possession of any or all of the
Premises as Tenant's agent, with the right but not the obligation of
terminating this Lease and without being liable to prosecution or any
claim for damages therefor, and Landlord may relet any or all of the
Premises either in its own name or as Tenant's agent and in either
event receive the rent therefor, in any of which events Tenant shall
pay to Landlord on demand (i) any and all costs of re-leasing,
renovating, repairing, and altering any or all of the Premises and/or
the Hotels (including but not limited to advertising costs,
commissions, finders fees, legal fees and other costs) for a new
Tenant or Tenants and (ii) any deficiency that may arise by reason of
such reletting from the net income from the Hotels that Landlord would
have received if there had not been a default by Tenant. In addition,
to the extent any of the Hotels are not relet, Tenant shall continue
to be obligated to satisfy all of its obligations under this Lease.
In connection with Landlord's exercise of the remedy described in this
Subparagraph, Landlord shall have the right to seize and take
possession of all of Tenant's FF&E located in the Hotels and either
use same in connection with
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operating the property or dispose of same as Landlord sees fit to do.
To the greatest extent permitted by law, Tenant hereby fully, finally
and forever waives any and all protections provided by applicable law
against Landlord's right of distraint.
(iii) Do whatever Tenant is obligated to do under this Lease and
enter any or all of the Hotels without being liable to prosecution or
any claim for damages therefor to accomplish this purpose. Tenant
shall reimburse Landlord, as Additional Rent, immediately upon demand
for any expenses which Landlord incurs in thus effecting compliance
with this Lease on Tenant's behalf, together with interest thereon
from the date of such expenditure until paid at the Lease Interest
Rate.
(iv) Bring a summary proceeding/action for ejectment in order to
recover possession of any or all of the Hotels.
(v) Landlord hereby reserves the right to institute successive
legal actions to collect any damages payable to Landlord hereunder, it
being intended that a suit for damages shall not bar any subsequent
suit for damages that have subsequently accrued.
(vi) Accelerate the Base Rents due under this Lease. Upon any
termination pursuant to subsection 20.2(a)(i) hereunder, in addition
to all other rights and remedies it may have under this Lease,
Landlord may recover from Tenant: (A) the worth at the time of award
of any unpaid Rent which has been earned at the time of such
termination, plus (B) the worth at the time of award of any unpaid
Rent which would have been earned after termination until the time of
award (less any rental loss which applicable law requires Landlord to
mitigate and which is proved by Tenant that Landlord could reasonably
have avoided), plus (C) the worth at the time of award of the amount
of the unpaid Rent for the balance of the term of this Lease after the
time of award (less any rental loss that Tenant proves reasonably
could be avoided if applicable law requires such to be deducted), plus
(D) any other amount in addition to or in lieu of the foregoing as may
be permitted from time to time under applicable law. The discount
rate to be used in computing the amount of Base Rent due hereunder
shall be equal to the effective annual yield prevailing on the date
the Event of Default occurred with respect to United States treasury
obligations having a maturity date that is the same or nearest to the
date on which this Lease would have expired if no Event of Default
occurred.
(b) If an Event of Default has occurred under Section 20.1(b), then,
notwithstanding anything in applicable law to the contrary, Landlord shall
have no obligation whatsoever to mitigate any of its damages. If any other
Event of Default shall have occurred, Landlord shall be obligated to
mitigate its damages only to the extent it is required to do so under
applicable law.
Section 20.3 Implied Waiver
--------------
(a) No act or thing done by Landlord or its agents during the Term
shall constitute an acceptance of an attempted surrender of the premises,
and no agreement to accept a surrender of the Premises shall be valid
unless made in writing and signed by Landlord. No re-entry or taking
possession of the Premises by Landlord pursuant to Section 20.2(a)(ii) or
otherwise shall constitute an election by Landlord to terminate this Lease,
unless a written Notice of such
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intention is given to Tenant. No waiver by Landlord of any breach of this
Lease shall constitute a waiver of any other violation or breach of any of
the terms hereof.
(b) No provision of this Lease shall be deemed to have been waived by
Landlord or Tenant unless such waiver is in writing and signed by such
party. The rights granted to Landlord and Tenant in this Lease shall be
cumulative of every other right or remedy which Landlord or Tenant may
otherwise have at law or in equity or by statute, and the exercise of one
or more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
Section 20.4 Injunctive Relief. Landlord shall be entitled to obtain
-----------------
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the provisions hereof, or to a decree compelling
performance of any of the provisions hereof, to the extent that any such relief
is provided by a court of equity.
ARTICLE XXI
PROVISIONS APPLICABLE TO
------------------------
PURCHASE BY TENANT OF THE PREMISES
----------------------------------
Section 21.1 Purchase "As Is". If Tenant is to acquire any Hotel pursuant
----------------
to Sections 1.3, 14.3 or 15.5 of this Lease, such Hotel shall be transferred
"As Is" on the date of transfer and otherwise as provided in Section 1.1 hereof.
Landlord shall convey title to such Hotel to Tenant in the same condition of
title (including all restrictions, limitations, covenants and easements of
record and all encroachments) that existed as of the Commencement Date, subject,
however, to (i) the lien of real estate taxes, water and sewer charges and other
governmental charges that are not then due and payable, (ii) all restrictions,
limitations, covenants, easements and encroachments that were created after the
Commencement Date other than those created by Landlord without the written
consent of Tenant, and (iii) all Legal Requirements, but free of the following
items ("Landlord Obligations"): (x) the lien of any security interest created by
any Mortgage on Landlord's interest, (y) the lien of any judgment, tax
assessment or other obligation incurred by Landlord that is not the
responsibility of Tenant under this Lease, and (z) any liens created on and
after the Commencement Date which have been created by or resulted solely from
acts of Landlord undertaken without the written consent of Tenant. Landlord
shall pay off and discharge all Landlord Obligations at closing of Tenant's
purchase of such Hotel, but Landlord shall have the right to apply the purchase
price proceeds for the purpose of discharging such Landlord Obligations.
Section 21.2 Timing of Closing. If Landlord accepts Tenant's irrevocable
-----------------
offer pursuant to Sections 1.3, 14.3 or 15.5 to purchase any Hotel, closing of
such purchase shall be held on the date (the "Purchase Closing Date") specified
by Tenant in its notice of Termination pursuant to Sections 1.3, 14.3 or 15.5
which occurs not earlier than ninety (90) days nor later than one hundred twenty
(120) days after Landlord's receipt of Tenant's irrevocable offer to purchase.
Closing of such purchase shall be conducted by an escrow agent (the "Closing
Escrow Agent") which shall be a national title insurance company designated by
Tenant that meets with the reasonable satisfaction of Landlord.
Section 21.3 Deliveries at Closing. On the Purchase Closing Date,
----------------------
Landlord shall deliver to the Closing Escrow Agent:
(a) a deed ("Landlord's Deed") conveying such Hotel to Tenant or
Tenant's designee and containing no warranties other than a warranty that
any of the Hotels are not subject to: (i)
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the lien of any security interest created by an Mortgage executed by
Landlord on Landlord's interest, (ii) the lien of any judgment, tax
assessment or other obligation incurred by Landlord that is not the
responsibility of Tenant under this Lease and (iii) any liens created on or
after the Commencement Date which have been created by or resulted solely
from acts of Landlord undertaken without the consent of Tenant.
(b) a written instrument (the "Assignment"), without warranty of
title, assigning and transferring to Tenant or Tenant's designee (i)
Landlord's interest in any FF&E leased by Landlord to Tenant hereunder and
any licenses or permits relating to such Hotel and (ii) Landlord's interest
in any insurance proceeds payable with respect to any casualty that has
previously occurred to such Hotel (if any) (which assignment of insurance
proceeds shall be consented to by the Insurance Trustee). If and to the
extent that there are any insurance proceeds previously paid to Landlord or
the Insurance Trustee which have not been applied for the purpose of repair
or restoration and are then held by Landlord or the Insurance Trustee,
Landlord and the Insurance Trustee, as the case may be, shall deliver such
insurance proceeds (the "Escrowed Insurance Proceeds") to the Closing
Escrow Agent. Tenant shall deliver to the closing Escrow Agent current
immediately available funds in the amount of the purchase price and any
costs payable by Tenant hereunder that are set forth in Section 21.7
("Tenant's Funds"). Closing Agent shall then proceed to consummate the
Closing in accordance with local custom and practice.
SECTION 21.4 TENANT'S FAILURE TO CLOSE. IF TENANT FAILS TO PERFORM ITS
-------------------------
OBLIGATIONS UNDER THIS ARTICLE XXI ON THE PURCHASE CLOSING DATE FOR ANY REASON
OTHER THAN THE DEFAULT OF LANDLORD, AND SUBJECT TO ANY CURE RIGHTS EXPRESSLY
GRANTED TO TENANT'S MORTGAGEE, TENANT'S NOTICE OF TERMINATION PURSUANT TO
SECTIONS 1.3, 14.3 OR 15.5 SHALL BE RESCINDED AND DEEMED NULL AND VOID, THIS
LEASE SHALL CONTINUE IN FULL FORCE AND EFFECT AND NEITHER TENANT NOR LANDLORD
SHALL HAVE ANY LIABILITY OR OBLIGATION TO THE OTHER BY REASON OF SUCH FAILURE TO
CONSUMMATE SETTLEMENT OF SUCH PURCHASE EXCEPT THAT, IN RECOGNITION OF THE FACT
THAT SUCH FAILURE OF PERFORMANCE WILL CAUSE LANDLORD TO INCUR COSTS NOT
CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY
DIFFICULT TO ASCERTAIN, TENANT SHALL PAY TO LANDLORD, AS FIXED, AGREED AND
LIQUIDATED DAMAGES FOR TENANT'S DEFAULT, THE SUM OF FIFTY THOUSAND DOLLARS
($50,000), WHICH AMOUNT THE PARTIES AGREE REPRESENTS A FAIR AND REASONABLE
ESTIMATE OF SUCH COSTS.
------------------------- --------------------------
Tenant's Initials Landlord's Initials
SECTION 21.5 LANDLORD'S FAILURE TO CLOSE. IF LANDLORD FAILS TO PERFORM
---------------------------
ITS OBLIGATIONS UNDER THIS ARTICLE XXI ON THE PURCHASE CLOSING DATE FOR ANY
REASON OTHER THAN THE DEFAULT OF TENANT AND SUBJECT TO ANY CURE RIGHTS EXPRESSLY
GRANTED TO LANDLORD'S MORTGAGEE, AND AN ORDER OF SPECIFIC PERFORMANCE IS NOT
OBTAINED BY TENANT AND COMPLIED WITH, THIS LEASE SHALL TERMINATE AS OF THE
PURCHASE CLOSING DATE AND NEITHER TENANT NOR LANDLORD SHALL HAVE ANY LIABILITY
OR OBLIGATION TO THE OTHER BY REASON OF SUCH FAILURE TO CONSUMMATE SETTLEMENT OF
SUCH PURCHASE EXCEPT
47
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THAT, IN RECOGNITION OF THE FACT THAT SUCH FAILURE OF PERFORMANCE WILL CAUSE
TENANT TO INCUR COSTS NOT CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH
WILL BE EXTREMELY DIFFICULT TO ASCERTAIN, LANDLORD SHALL PAY TO TENANT, AS
FIXED, AGREED AND LIQUIDATED DAMAGES FOR LANDLORD'S DEFAULT, THE SUM OF FIFTY
THOUSAND DOLLARS ($50,000), WHICH AMOUNT THE PARTIES AGREE REPRESENTS A FAIR AND
REASONABLE ESTIMATE OF SUCH COSTS.
------------------------- --------------------------
Tenant's Initials Landlord's Initials
Section 21.6 Payment of Costs. All costs and expenses in connection with
----------------
any such purchase, including title insurance, transfer taxes, recording costs
and the reasonable attorney's fees of Landlord and any Mortgagee, shall be paid
by Tenant.
Section 21.7 Prorations. Percentage Rent shall be prorated as of the date
----------
of such purchase, calculated in accordance with Section 5.1(b) and Exhibit B, so
that such dollar figure is multiplied by a fraction whose numerator is the
number of days in such Lease Year that precede the date of such purchase and
whose denominator is three hundred sixty-five (365).
ARTICLE XXII
MISCELLANEOUS
-------------
Section 22.1 Notices
-------
(a) Any Notice or demand, consent, approval or disapproval, or
statement (collectively called "Notice" or "Notices") required or permitted
to be given by the terms and provisions of this Lease, or by any law or
governmental regulation, shall be in writing (unless otherwise specified
herein) and unless otherwise required by such law or regulation, shall be
personally delivered with receipt acknowledged in writing or sent by United
States mail postage prepaid as registered or certified mail, return receipt
requested or by courier service guarantying overnight delivery. Any Notice
shall be addressed to Landlord or Tenant, as applicable, at its address
specified below as said address may be changed from time to time as
hereinafter provided. By giving the other party at least ten (10) days'
prior written Notice, either party may designate a different address or
addresses for Notices. Landlord may elect to require Tenant to send a copy
of any Notice of Landlord's default to Landlord's Mortgagee(s)
simultaneously with the sending of Notice to Landlord, provided that
Landlord shall have supplied to Tenant the name and address of such
Mortgagee(s).
(b) Any Notice shall be deemed given as of the date of delivery as
indicated by affidavit in case of personal delivery or by the return
receipt in the case of mailing or by the confirmation of the courier
service making delivery; and upon any failure to deliver by reason of
changed address of which no Notice was given or refusal to accept delivery,
as of the date of such failure as indicated by affidavit or on the return
receipt or by Notice of the postal service or by the confirmation of the
courier service making delivery, as the case may be.
(c) A copy of each Notice given pursuant to Section 22.1(a) above
shall also be sent to the addressee by FAX.
48
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(d) Notices shall be sent as follows:
To Tenant: Red Lion Hotels, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: Mr. Anupam Narayan
FAX No: (360) 750-4165
with a Beth A. Ugoretz, Esq.
copy to: 4001 Main Street
Vancouver, WA 98663
FAX No: (360) 693-1739
To Landlord: RLH Partnership, L.P.
in care of Mr. Todd A. Fisher
2800 Sand Hill Rd., Suite 2000
Menlo Park, CA 94025
FAX No.: (415) 233-6564
with a Beth A. Ugoretz, Esq.
copy to: 4001 Main Street
Vancouver, WA 98663
FAX No: (360) 693-1739
Section 22.2 Memorandum of Lease
-------------------
(a) Landlord and Tenant shall execute, acknowledge and deliver a
memorandum of this Lease (a "Lease Memorandum") in recordable form setting
forth the date and general description of this Lease, the names of the
parties hereto, the Commencement Date, the Expiration Date, a description
of the Land and the Hotels, Tenant's rights to renew this Lease, Landlord's
disclaimer of liability for mechanic's liens attributable to Tenant's use,
occupancy and possession of the Hotels, and such other provisions of this
Lease (including, if necessary or advisable under applicable law, the
incorporation by reference of all of the terms of this Lease) as either
party may designate. Said Lease Memorandum shall not in any circumstances
be deemed to modify or to change any of the provisions of this Lease.
(b) Tenant shall after the expiration or termination of the Term, at
the request of Landlord, execute, acknowledge and deliver to Landlord a
memorandum in recordable form evidencing the expiration or Termination of
this Lease.
Section 22.3 Determination of Fair Market Value
----------------------------------
(a) If it becomes necessary to determine the Fair Market Value of any
Hotel for any purpose of this Lease, the party required or permitted to
give notice of such required determination shall give the other party
Notice that such determination is required and shall set forth such party's
estimate of the Fair Market Value of the Hotel to be valued. The parties
shall thereupon attempt, in good faith, to agree upon the Fair Market Value
of such Hotel within 10 days of such Notice. Failing any agreement within
such 10 day period, the party who gave such
49
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Notice shall send a second notice of such required determination and shall
include in such Notice the name of a Person selected to act as appraiser on
its behalf. Within 10 days after receipt of any such notice, Landlord or
Tenant, as the case may be, shall by notice to Tenant or Landlord, as the
case may be, appoint a second Person as appraiser on its behalf. Each
appraiser must be licensed as an appraiser in the State and be a member of
the Appraisal Institute (or any successor organization thereto).
(b) After appointment, the appraisers shall, within 45 days after the
date of the notice appointing the first appraiser, determine the Fair
Market Value of the Hotel as of the date it becomes necessary to determine
the Fair Market Value (giving effect to the impact, if any, of inflation
from that date to the date the appraisers determine such Fair Market
Value); provided, however, that if only one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one
such appraiser shall have made such determination within the required 45
days, then the determination of such appraiser shall be final and binding
upon the parties.
(c) Unless the parties otherwise jointly instruct the appraisers in
writing to the contrary, the appraisers shall value the Hotel at Fair
Market Value pursuant to the Uniform Standards of Professional Appraisal
Practice and, to the extent not inconsistent therewith, the Appraisal
Institute's Standards of Professional Practice, and in accordance with
generally accepted appraisal methodology.
(d) Subject to Sections 22.3(d)(i) and 22.3(d)(ii), if two
appraisers shall have been appointed and shall have made their
determinations of the Fair Market Value of the Hotel within the required
45-day period, then the Fair Market Value of that property shall be an
amount equal to the sum of fifty percent (50%) of each appraiser's
determination.
(i) If the difference between the appraisals made pursuant to
Section 22.3(b) shall exceed ten percent (10%) of the lesser of such
amounts, then the appraisers shall have 20 days to appoint a third
appraiser. If such appraisers fail to appoint such third appraiser,
then either party may request the American Arbitration Association (or
any successor organization) or a court (having jurisdiction over such
appointment) to appoint the third appraiser. The third appraiser
shall be licensed as an appraiser in the State and be a member of the
Appraisal Institute. If a third appraiser is not appointed under this
Section 22.3(d)(i), then the Fair Market Value of the Hotel shall be
determined as provided for in Section 22.3(d) notwithstanding this
Section 22.3(d)(i).
(ii) Any appraiser appointed by the original appraisers, by the
American Arbitration Association or by an appropriate court shall be
instructed to determine the Fair Market Value within 30 days after
appointment of such appraiser. The determination of the appraiser
which differs most in terms of dollar amount from the determinations
of the other two appraisers shall be excluded, and fifty percent (50%)
of the sum of the remaining two determinations shall be final and
binding upon Landlord and Tenant as the Fair Market Value for the
Hotel.
(e) This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under
applicable law, and any determination hereunder shall be final and binding
upon the parties except as otherwise provided by applicable law. Landlord
and Tenant shall each pay the fees and expenses of the appraiser appointed
by it and each shall pay
50
<PAGE>
one-half of the fees and expenses of the third appraiser and one-half of
all other costs and expenses incurred in connection with each appraisal.
Section 22.4 Partial Invalidity. If any portion of this Lease shall be
------------------
declared invalid by order, decree or judgment of a court, or governmental agency
having jurisdiction, this Lease shall be construed as if such portion had not
been inserted herein, except when such construction would operate as an undue
hardship on Tenant or Landlord, constitute a substantial deviation from the
general intent and purpose of said parties as reflected in this Lease, or deny
either Tenant or Landlord to a material extent a right or benefit pursuant to
this Lease as originally written, in which event this Lease in pertinent part
shall be reformed so as to place both Landlord and Tenant to the greatest extent
permitted by law in the same relative positions as they would have enjoyed under
this Lease as originally written.
Section 22.5 Headings. The article and section headings and the Table of
--------
Contents contained in this Lease are for convenience only and shall not enlarge
or limit the scope or meaning of the various and several provisions hereof.
Section 22.6 Binding Effect. All agreements and covenants herein
--------------
contained shall be binding upon the respective heirs, personal representatives,
successors, and, to the extent permitted under this Lease, assigns of the
parties hereto.
Section 22.7 Representations. Neither Landlord nor Landlord's agents have
---------------
made any representations or promises with respect to the Premises except as
herein expressly set forth and all reliance with respect to any representations
or promises is based solely on those contained herein.
Section 22.8 Amendments. No amendment or modification of this Lease shall
----------
be binding or valid unless expressed in a writing executed by both parties
hereto or their respective successors and assigns.
Section 22.9 Brokers. Neither party has engaged any agents or brokers
-------
with respect to the negotiation and execution of this Lease and each party shall
indemnify and defend the other with respect to any claim by an agent or broker
claiming through the indemnifying party against the indemnified party.
Section 22.10 Authority to Execute
--------------------
(a) Tenant represents and warrants that Tenant has the full right and
authority to enter into this Lease, and that all persons signing on behalf
of Tenant were authorized to do so by any and all necessary or appropriate
corporate actions.
(b) Landlord represents and warrants that Landlord has the full right
and authority to enter into this Lease, and that all persons signing on
behalf of Landlord were authorized to do so by any and all necessary or
appropriate corporate or Landlord actions.
Section 22.11 Applicable Law. This Lease shall be governed by and
--------------
construed under the laws of the state within which the Land is located.
Section 22.12 Construction. All exhibits referred to in this Lease are by
------------
this reference incorporated fully herein. The term "this Lease" shall be
considered to include all such exhibits.
51
<PAGE>
Section 22.13 Impossibility of Performance. If any covenant or obligation
----------------------------
of Tenant under this Lease (other than a covenant or obligation to pay Rent or
other sums payable by Tenant hereunder) as applied to a particular circumstance
would be incapable of being fully performed by any person or entity
notwithstanding the fact that such person or entity had sufficient funds
available to enable it to perform such covenants or obligations under this
Lease, then Tenant shall only be obligated to perform such covenant or
obligation as applied to such circumstance to the extent that such covenant or
obligation can be so performed.
Section 22.14 Time of Essence. Time is of the essence with respect to the
---------------
rights and obligations of Landlord and Tenant under this Lease.
Section 22.15 Attorney's Fees. Except as otherwise provided herein, in
---------------
any action or proceeding (including without limitation appellate proceedings)
brought by either party against the other under this Lease, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees,
investigation costs, and other reasonable legal expenses and court costs
incurred by such party in such action or proceeding.
Section 22.16 No Merger. There shall be no merger of the leasehold estate
---------
created by this Lease with respect to each of the Hotel sites, with the fee
estate or any superior ground leasehold estate, by reason of the fact that the
same legal entity or person may own or hold the leasehold estate created by this
Lease or any interest in such leasehold estate, and any interest in either or
both of the fee estate or any superior ground leasehold estate. No merger of
any leasehold estate and fee estate shall occur unless and until all persons or
entities, having any interest in: (i) the leasehold estate created by this
Lease, (ii) the leasehold estate created by any applicable superior ground
leasehold estate, and (iii) the fee estate in the site of the affected Hotel,
shall join in a written instrument effecting such merger and shall duly record
the same.
Section 22.17 Landlord's Right to Enter. Landlord and its agents and
-------------------------
designees may enter upon and examine any Hotel at reasonable times, accompanied
by a representative of Tenant that Tenant shall make available to Landlord, and
show any Hotel to prospective purchasers, partners, investors, mortgagees or
lessees as long as such examination or showing shall not unreasonably interfere
with the business operations of Tenant at the Hotel.
Section 22.18 Corporate Reorganization of Tenant. Upon the merger of
----------------------------------
Tenant into another corporation where Tenant is not the surviving corporation or
the consolidation of Tenant with one or more other corporations where Tenant is
not the surviving corporation, or the sale or other disposition of all or
substantially all of the assets of Tenant to one or more other entities, the
surviving entity or transferee of assets, as the case may be, shall be deemed to
have assumed all obligations, covenants and responsibilities of Tenant under
this Lease. Promptly after such corporate reorganization, such entity shall
deliver to Landlord an instrument in recordable form reasonably acceptable to
counsel for both parties, evidencing such assumption.
Section 22.19 No Waiver. The failure of either party to insist upon a
---------
strict performance of any of the terms or provisions of this Lease or to
exercise any option, right or remedy herein contained shall not be construed as
a waiver or as a relinquishment for the future of such term, provision, option,
right or remedy, but the same shall continue and remain in full force and
effect. No waiver by either party of any term or provision hereof shall be
deemed to have been made unless expressed in writing and signed by such party.
52
<PAGE>
Section 22.20 Confidentiality. The parties hereby agree that the matters
---------------
set forth in this Lease (except to the extent such matters are expressly
disclosed in any Memorandum of Lease recorded pursuant to Section 22.2(a)) are
strictly confidential and each party will make every effort to ensure that such
information is not disclosed to any outside persons or entities (including the
press) without the consent of the other party, except as required by ERISA or
any other Legal Requirement reporting and disclosure rules or otherwise
specifically provided herein. For purposes of the preceding sentence, the words
"outside persons or entities" do not include the parties' attorneys,
accountants, consultants, shareholders, lenders, partners, investors, or any
prospective lenders, partners and investors. No references to Tenant or to any
Affiliate will be made in any prospectus, private placement memorandum, offering
circular or offering documentation related thereto (collectively referred to as
the "Prospectus"), issued by Landlord or one of its affiliates, which is
designated to interest potential investors in any Hotel, unless Tenant has
previously received a copy of all such references. However, regardless of
whether Tenant does or does not so receive a copy of all such references,
neither Tenant nor any Affiliate will be deemed a sponsor of the offering
described in the Prospectus, nor will it have any responsibility for the
Prospectus, and the Prospectus will so state. Landlord shall indemnify, defend
and hold Tenant harmless from and against all loss, costs, liability and damage
(including reasonable attorneys' fees and expenses, and the cost of litigation)
arising out of any Prospectus or the offering described therein; and this
obligation of Landlord shall survive Termination of this Lease.
Section 22.21 Gender and Number. Words of any gender used in this Lease
-----------------
shall be held to include any other gender, and words in the singular shall be
held to include the plural and vice versa, when the sense requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "the
Premises" shall mean "the Premises or any part thereof or interest therein";
(vi) "Hotel" shall mean "Hotel or any part thereof or interest therein"; (vii)
"any of the Land" shall mean "the Land or any part thereof or interest therein";
(viii) "any of the Improvements" shall mean "the Improvements or any part
thereof or interest therein"; and (ix) "any of the personal property" shall mean
"the personal property or any part thereof or interest therein."
Section 22.22 Survival. All claims and liabilities of either party
--------
existing or arising prior to the expiration or earlier termination of this
Lease, unless otherwise specifically provided herein, and all Surviving
Obligations shall survive such expiration or earlier Termination.
Section 22.23 Acceptance of Surrender. No surrender to Landlord of this
-----------------------
Lease or of any of the Hotels or of any part thereof or of any interest therein
shall be valid or effective unless agreed to and accepted in writing by Landlord
and the Senior Mortgagee if any, and no act by Landlord or any representative or
agent of Landlord, other than a written acceptance, shall constitute an
acceptance of any such surrender.
Section 22.24 Non-Recourse as to Landlord. Anything contained herein to
---------------------------
the contrary notwithstanding, any claim based on or in respect of any liability
of Landlord under this Lease shall be enforced only against the Premises and not
against any other tangible or intangible assets, properties or funds of (i)
Landlord, (ii) any shareholder of Landlord or any director, officer, general
partner, limited partner, employee or agent of Landlord, (or any legal
representative, heir, estate, successor or assign of any thereof), (iii) any
predecessor or successor partnership or corporation (or other entity) of
Landlord, or any of its shareholders, either directly or through Landlord or its
shareholders or any predecessor or
53
<PAGE>
successor partnership or corporation or their shareholders, officers, directors,
employees or agents (or other entity), or (iv) any other Affiliate of any of the
foregoing, or any director, officer, employee or agent of any thereof; provided,
however, that if, as a result of a judicial foreclosure of any Mortgage, the
interest of Landlord in any Hotel is transferred to a Mortgagee or any other
person or entity and at the date of such foreclosure, Tenant has a legal
proceeding against Landlord, which is determined adversely to Landlord after the
exhaustion of all appeal periods, Tenant shall have the right to enforce any
judgment from any assets or other properties of Landlord but not against any
Mortgagee or any other person or any of the parties listed at (ii) through (iv)
above.
Section 22.25 Entire Agreement; Integration
-----------------------------
(a) This Lease contains all the agreements and conditions made
between the parties hereto with respect to the matters contained herein and
may not be modified orally or in any manner other than as provided in
Section 22.8. All prior written and oral understandings and agreements
shall be deemed to have merged into this Lease and have no further force
and effect.
(b) Landlord and Tenant are business entities having substantial
experience with the subject matter of this Lease and have each fully
participated in the negotiation and drafting of this Lease. Accordingly,
this Lease shall be construed without regard to the rule that ambiguities
in a document are to be construed against the drafter.
(c) No inferences shall be drawn from the fact that the final, duly
executed Lease differs in any respect from any previous draft hereof.
(d) If there is more than one Tenant, the obligations of each shall
be joint and several.
Section 22.26 Waiver of Trial by Jury. The parties hereto each waive, to
-----------------------
the full extent permitted by applicable law, all right to elect a trial by jury
in any litigation relative to this Lease.
Section 22.27 Tenant's Remedies. Tenant shall have the right to seek all
-----------------
remedies at law and/or in equity, including an order for specific performance,
to obtain full performance of all Landlord's obligations under this Lease,
and/or to recover damages for any breach by Landlord hereunder; provided,
however, that Tenant shall not have the right (i) to terminate this Lease
(except as otherwise specifically provided in this Lease) by reason of any
breach of Landlord's obligations hereunder; (ii) to set-off against Rents
hereunder any amounts owing to Tenant by Landlord; or (iii) to assert by way of
defense, cross-claim or counterclaim in any action by Landlord to recover Rent
or other sums due from Tenant any right to withhold Rent or to pay less than the
amount due hereunder. Any exercise of Tenant's rights hereunder shall be
through a separate and independent action unrelated to any claim Landlord has
against Tenant for Rent due hereunder.
Section 22.28 Landlord and Tenant Relationship. The parties hereto
--------------------------------
specifically acknowledge and agree that, notwithstanding any other provision
contained in this Lease (including the provisions for payment of Percentage
Rent), it is the intent of the parties that their relationship hereunder is and
shall at all times be that of Landlord and Tenant and not that of partners,
joint venturers, lender and borrower, agent, or any other relationship other
than that of Landlord and Tenant.
Section 22.29 Relationship with Groundlessors. With respect to any ground
-------------------------------
lease concerning any portion of the Premises which terminates by its terms prior
to the end of the Term of this Lease, Landlord shall cooperate with Tenant in
negotiating with the subject ground lessor (i) to extend the term
54
<PAGE>
of said ground lease so as to have its term terminate no earlier than the last
day of the Term, or (ii) to persuade the ground lessor to enter into a separate
ground lease directly with Tenant following the termination of said ground
lease.
Section 22.30 Limited Liability of Landlord. Notwithstanding any
-----------------------------
provisions hereof, none of the obligations of Landlord under or contemplated by
this Lease shall be an obligation of any officer, director, shareholder, limited
partner, general partner, or owner of Landlord, or any of their respective
officers, directors, shareholders, limited partners, general partners, or
owners, or successors or assigns. Landlord shall be the only person or entity
liable with respect to such obligations. Tenant hereby irrevocably waives any
right it may have against any such officer, director, shareholder, general
partner or limited partner, owner, successor or assign identified above as a
result of the performance of the provisions under or contemplated by this Lease.
This provision shall survive any termination of this Lease.
EXECUTED as of the date first written above.
TENANT: LANDLORD:
RED LION HOTELS, INC., RLH PARTNERSHIP, L.P.,
a Delaware corporation a Delaware limited partnership
By: /s/ Anupam Narayan By: /s/ David J. Johnson
------------------- ---------------------
Its: Vice President & Treasurer Its: Executive Vice President
--------------------------- -------------------------
ATTEST:
By:
----------------------------
[Assistant] Secretary
55
<PAGE>
STATE OF _______________ )
) ss.
COUNTY OF _______________ )
On this ____ day of ______________, 1995, before me personally
appeared _________________________, to me personally known to be the
______________________ of RED LION HOTELS, INC., the Delaware corporation that
executed the within and foregoing instrument, and acknowledged said instrument
to be the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath stated that (s)he was authorized to
execute said instrument and that the seal affixed, if any, is the corporate seal
of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal
the day and year first above written.
--------------------------------------------
[Seal or Stamp] Notary Public in and for the State of
, residing at
--------------- ---------------
Printed Name:
-------------------------------
My appointment expires:
---------------------
56
<PAGE>
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On this ____ day of ______________, 1995, before me personally
appeared _________________________, the ______________________ of Red Lion G.P.,
Inc., a Delaware corporation and the Managing General Partner in RLH
PARTNERSHIP, L.P., the Delaware limited partnership that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation and partnership, for the uses and
purposes therein mentioned, and on oath stated that (s)he was authorized to
execute said instrument on behalf of said corporation and that said corporation
was authorized to do so on behalf of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
--------------------------------------------
[Seal or Stamp] Notary Public in and for the State of
, residing at
--------------- ---------------
Printed Name:
-------------------------------
My appointment expires:
---------------------
57
<PAGE>
EXHIBIT A
LEGAL DESCRIPTIONS OF PROPERTIES
See Attached
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sonoma/Rohnert Park, CA)
-----------------------
The land is located in the State of California, County of Sonoma,
City of Rohnert Park, and is described as follows:
Beginning at the most Easterly corner of Lot 137, as shown upon the Map of
Mountain Shadows Subdivision, Unit No. 1, filed in Book 257 of Maps, pages
16, 17, 18, 19 and 20, Sonoma County Records; thence from said point of
beginning South 62 degrees 28' 00" East 86.00 feet to a 3/4" iron pipe
set, tagged LS 2757; thence North 34 degrees 09' 17" East 295.09 feet to a
3/4" iron pipe set, tagged LS 2757; thence North 38 degrees 42' 59" East
497.31 feet to a 3/4" iron pipe set tagged LS 2757; thence North 20
degrees 53' 59" West 455.44 feet to a 3/4" iron pipe set, tagged LS 2757;
thence North 38 degrees 49' 36" West 70.75 feet to a 3/4" iron pipe set,
tagged LS 2757; thence South 86 degrees 31' 13" West 418.79 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 76 degrees 36' 01" West 12.44
feet to a 3/4" iron pipe set, tagged LS 2757; thence South 3 degrees 05'
00" West 412.47 feet to a 3/4" iron pipe set tagged LS 2757; thence North
86 degrees 55' 00" West 5.00 feet to a 3/4" iron pipe set, tagged LS 2757;
thence South 3 degrees 05' 00" West 100.00 feet to a 3/4" iron pipe set,
tagged LS 2757; thence North 86 degrees 55' 00" West 6.00 feet to a 3/4"
iron pipe set tagged LS 2757; thence South 3 degrees 05' 00" West 42.00
feet to a 3/4" iron pipe set, tagged LS 2757; thence South 86 degrees 55'
00" East 6.00 feet to a 3/4" iron pipe set, tagged LS 2757; thence South 3
degrees 05' 00" West 61.00 feet to a 3/4" iron pipe set, tagged LS 2757;
thence South 86 degrees 55' 00" East 5.00 feet to a 3/4" iron pipe set,
tagged LS 2757; thence South 3 degrees 05' 00" West 265.20 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 6 degrees 35' 00" West 92.00
feet to a 3/4" iron pipe set, tagged LS 2757, said point being the
Northeast corner of the aforementioned Lot 137, Mountain Shadows
Subdivision, Unit No. 1, thence along the Northeasterly lot line of said
Lot 137, South 62 degrees 28' 00" East 160.00 feet to the point of
beginning of the herein above described tract of land.
A.P. No.: 160-010-23
1
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sacramento Inn, CA)
------------------
THAT CERTAIN REAL PROPERTY SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SACRAMENTO, CITY OF SACRAMENTO, DESCRIBED AS FOLLOWS:
PARCEL 1:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF
SURVEYS, MAP NO. 94, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY BOUNDARY OF THAT CERTAIN 7.32 ACRE
TRACT OF LAND DESCRIBED IN THE DEED DATED JULY 8, 1952, EXECUTED BY ROBERT
SWANSTON, JR. AND LILLIAN SWANSTON, HIS WIFE, TO STATE OF CALIFORNIA, RECORDED
IN BOOK 2280 OF OFFICIAL RECORDS AT PAGE 331, RECORDS OF SAID COUNTY, FROM WHICH
SAID POINT OF BEGINNING, THE SOUTHEAST CORNER OF SAID SECTION 15 BEARS SOUTH 11
degrees 19'10" EAST 285.00 FEET, SOUTH 25 degrees 12' EAST 167.93 FEET, SOUTH 47
degrees 28' EAST 102.09 FEET, SOUTH 55 degrees 51'10" EAST 454.55 FEET, SOUTH 30
degrees 19'50" WEST 50 FEET TO A POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC
ROAD 60.00 FEET IN WIDTH, SAID POINT BEING ON THE NORTHEASTERLY LINE OF PROPERTY
ACQUIRED BY STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF
CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET
AL, A CERTIFIED COPY THEREOF, RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 1769 OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH
59 degrees 40'10" EAST 3653.94 FEET ALONG SAID CENTER LINE AND THE NORTHEASTERLY
LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE CENTER LINE OF ETHAN
WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH, AND NORTH 01 degrees 46'30" WEST 18.54
FEET ALONG THE CENTER LINE TO THE SOUTHEAST CORNER OF SAID SECTION 15; THENCE
FROM SAID POINT OF BEGINNING ALONG THE NORTHEASTERLY AND EASTERLY BOUNDARY OF
SAID 7.32 ACRE TRACT THE FOLLOWING THREE COURSES AND DISTANCES: NORTH 11 degrees
19'10" WEST 234.97 FEET; THENCE CURVING TO THE RIGHT ON AN ARC OF 550.00 FOOT
RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING NORTH 10 degrees 41'50" EAST
412.36 FEET; AND THENCE NORTH 31 degrees 39'40" EAST 268.77 FEET; THENCE SOUTH
34 degrees 01'30" EAST 740.62 FEET; THENCE SOUTH 41 degrees 46'30" WEST 355.20
FEET; THENCE NORTH 87 degrees 38'40" WEST 349.58 FEET TO THE POINT OF BEGINNING.
2
<PAGE>
EXCEPTING THEREFROM ANY PORTION THEREOF WHICH MAY BE WITHIN THE FOLLOWING:
BEGINNING AT A POINT IN SECTION 15 FROM WHICH THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS THE FOLLOWING EIGHT (8) COURSES AND DISTANCES: NORTH 89
degrees09' WEST 323.88 FEET; SOUTH 11 degrees 19'10" EAST 345.57 FEET; SOUTH 25
degrees 12'00" EAST 167.93 FEET; SOUTH 47 degrees 28'00" EAST 102.09 FEET; AND
SOUTH 55 degrees 51'10" EAST 454.55 FEET; SOUTH 30 degrees 19'50" WEST 50.00
FEET TO A POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET IN
WIDTH, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THAT CERTAIN PROPERTY
ACQUIRED BY THE STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF
CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET
AL, A CERTIFIED COPY THEREOF, RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 1769 OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH
59 degrees 40'10" EAST 3652.94 FEET ALONG SAID CENTER LINE AND THE NORTHEASTERLY
LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE CENTER LINE OF ETHAN
WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH AND NORTH 01 degrees 46'30" WEST 18.54
FEET ALONG SAID CENTER LINE TO THE SAID SOUTHEAST CORNER OF SAID SECTION 15;
THENCE FROM SAID POINT OF BEGINNING SOUTH 89 degrees 09'00" EAST 81.28 FEET;
THENCE NORTH 02 degrees 07'40" WEST 87.21 FEET; THENCE NORTH 39 degrees 35'00"
EAST 233.43 FEET; THENCE SOUTH 34 degrees 01'30" EAST 248.78 FEET; THENCE SOUTH
50 degrees 42'00" WEST 321.00 FEET; THENCE NORTH 39 degrees 18'00" WEST 185.64
FEET TO THE POINT OF BEGINNING.
ALSO EXCEPTING THEREFROM THAT PORTION WHICH LIES WEST AND NORTH OF THE LINE
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT THAT BEARS SOUTH 89 degrees 30'32" EAST 211.29 FEET FROM
THE SOUTHWEST CORNER OF LOT 7, SAID BLOCK F, SAID POINT IS ALSO 113.00 FEET
SOUTHEASTERLY, MEASURED AT RIGHT ANGLES FROM THE "B 3" LINE AT ENGINEER'S
STATION "B 3" 180+70.59 OF THE DEPARTMENT OF PUBLIC WORKS' 1959 SURVEY BETWEEN
800 FEET SOUTHWEST OF ARDEN WAY AND 0.3 MILE NORTHEAST OF EL CAMINO AVENUE, ROAD
III-SAC-3-B (THE CALIFORNIA STATE ZONE II COORDINATES FOR SAID POINT ARE X=2,
163,073.395 AND Y=343,140.590); THENCE FROM SAID POINT OF BEGINNING PARALLEL TO
SAID "B 3" LINE SOUTH 40 degrees 45'28" WEST 730.59 FEET; THENCE SOUTH 30
degrees 16'27" WEST 258.31 FEET; THENCE ALONG A CURVE TO THE LEFT WITH A RADIUS
OF 500 FEET, THROUGH AN ANGLE OF 40 degrees 01'46", AN ARC LENGTH OF 349.32 FEET
THE CHORD OF WHICH CURVE BEARS SOUTH 10 degrees 37'23" WEST 342.26 FEET TO A
POINT IN THE EXISTING STATE HIGHWAY RIGHT OF WAY AS ACQUIRED BY DEED RECORDED
JUNE 28, 1943, IN BOOK 1009, AT PAGE 357 OF OFFICIAL RECORDS, SACRAMENTO COUNTY.
3
<PAGE>
PARCEL 1-A:
- - - -----------
A NON-EXCLUSIVE EASEMENT FOR PRIVATE STREET PURPOSES, TO BE APPURTENANT TO
PARCEL NO. 1, ABOVE DESCRIBED, ON, OVER AND ACROSS A STRIP OF LAND OF THE
UNIFORM WIDTH OF 50.00 FEET, THE WESTERN LINE OF SAID STRIP OF LAND BEING
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE ABOVE DESCRIBED PARCEL NO. 1; THENCE
FROM SAID POINT OF BEGINNING ALONG THE EASTERN LINE OF THE ABOVE REFERRED TO
7.32 ACRE TRACT OF LAND DESCRIBED IN THE DEED RECORDED IN BOOK 2280 OF OFFICIAL
RECORDS AT PAGE 331, SOUTH 11 degrees 19'10" EAST 285.00 FEET; THENCE ALONG THE
ARC OF A CURVE TO THE LEFT WITH A RADIUS OF 350.00 FEET, THE CHORD OF WHICH
BEARS SOUTH 25 degrees 12' EAST 167.93 FEET TO THE WESTERN LINE OF THE PROPERTY
DESCRIBED IN THE DEED FROM HERATY & GANNON TO SEARS, ROEBUCK & CO., RECORDED MAY
5, 1955, IN BOOK 2825 OF OFFICIAL RECORDS AT PAGE 200, THE EASTERN LINE OF SAID
50 FOOT STRIP TO BE EXTENDED OR SHORTENED SO AS TO EXTEND, FROM THE SOUTHERN
LINE OF PARCEL NO. 1, ABOVE DESCRIBED IN DEED TO SEARS, ROEBUCK & CO., RECORDED
IN BOOK 2825 OF OFFICIAL RECORDS AT PAGE 200.
PARCEL 1-B:
- - - -----------
NON-EXCLUSIVE EASEMENTS FOR VEHICULAR ACCESS AS DESCRIBED IN EXHIBIT "B" AS
ATTACHED TO THAT CERTAIN INSTRUMENT ENTITLED "EASEMENT AGREEMENT", RECORDED
APRIL 26, 1989, IN BOOK 8904-26, PAGE 2537, OFFICIAL RECORDS, DESCRIBED AS
FOLLOWS:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE SACRAMENTO COUNTY RECORDER IN BOOK A OF SURVEYS, MAP NO. 94, DESCRIBED AS
FOLLOWS:
A STRIP OF LAND 40.00 FEET WIDE, THE CENTERLINE OF SAID STRIP BEGINNING AT A
POINT ON THE NORTHERLY LINE OF ARDEN WAY, A PUBLIC ROAD, AS SAID ROAD IS SHOWN
ON THE PLAT OF SURVEY ENTITLED "A PORTION OF SECTIONS 15, 64 AND 65 OF RANCHO
DEL PASO", RECORDED IN THE OFFICE OF THE SACRAMENTO COUNTY RECORDER IN BOOK 9 OF
SURVEYS, MAP NO. 22, FROM WHICH POINT OF BEGINNING THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS SOUTH 30 degrees 19'50" WEST 30.00 FEET TO A POINT ON THE
CENTERLINE OF ARDEN WAY, AND ALONG SAID CENTERLINE SOUTH 59 degrees 40'10" WEST
3,583.93 FEET TO A POINT ON THE CENTERLINE OF ETHAN WAY, A PUBLIC ROAD 60.00
FEET IN WIDTH, AND NORTH 01 degrees 46'30" WEST 18.54 FEET ALONG SAID CENTERLINE
TO SAID SOUTHEAST CORNER; THENCE FROM SAID POINT OF BEGINNING NORTH
4
<PAGE>
30 degrees 19'50" EAST 103.00 FEET; THENCE NORTH 59 degrees 40'10" WEST 616.57
FEET MORE OR LESS TO A POINT ON THE WESTERLY BOUNDARY OF PARCEL I AS SAID PARCEL
IS SHOWN ON "RECORD OF SURVEY, PORTION OF SECTIONS 15 AND 66, RANCHO DEL PASO",
RECORDED IN THE OFFICE OF THE SACRAMENTO COUNTY RECORDER IN BOOK 21 OF SURVEYS,
MAP NO. 13.
PARCEL 2:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK A OF SURVEYS, MAP NO. 94,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN SAID SECTION 15 FROM WHICH THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS THE FOLLOWING EIGHT (8) COURSES AND DISTANCES: NORTH 89 degrees
09' WEST 323.88 FEET; SOUTH 11 degrees 19'10" EAST 345.57 FEET; SOUTH 25 degrees
12'00" EAST 167.93 FEET; SOUTH 47 degrees 28'00" EAST 102.09 FEET; AND SOUTH 55
degrees 51'10" EAST 454.55 FEET; SOUTH 30 degrees 19'50" WEST 50.00 FEET TO A
POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH, SAID
POINT BEING ON THE NORTHEASTERLY LINE OF THAT CERTAIN PROPERTY ACQUIRED BY THE
STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF CONDEMNATION IN THE
MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET AL, A CERTIFIED COPY
THEREOF RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY IN BOOK 1780
OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH 59 degrees 40'10" EAST 3653.94
FEET ALONG SAID CENTER LINE AND THE NORTHEASTERLY LINE OF SAID STATE OF
CALIFORNIA PROPERTY TO A POINT ON THE CENTER LINE OF ETHAN WAY, A PUBLIC ROAD
60.00 FEET IN WIDTH AND NORTH 01 degrees 46'30" WEST 18.54 FEET ALONG SAID
CENTER LINE TO SAID SOUTHEAST CORNER OF SAID SECTION 15; THENCE FROM SAID POINT
OF BEGINNING SOUTH 89 degrees 09'00" EAST 81.28 FEET; THENCE NORTH 02 degrees
07'40" WEST 87.21 FEET; THENCE NORTH 39 degrees 35'00" EAST 233.43 FEET; THENCE
SOUTH 34 degrees 01'30" EAST 248.78 FEET; THENCE SOUTH 50 degrees 42'00" WEST
321.00 FEET; THENCE NORTH 39 degrees 18'00" WEST 185.64 FEET TO THE POINT OF
BEGINNING.
EXCEPTING THEREFROM ALL THAT PORTION OF "PARCEL H", AS SAID PARCEL IS SHOWN ON
THAT CERTAIN RECORD OF SURVEY ENTITLED "PORTION OF SECTIONS 15 AND 66, RANCHO
DEL PASO", RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK
21 OF SURVEYS, MAP NO. 13, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID "PARCEL H"; THENCE FROM SAID POINT
OF BEGINNING ALONG THE NORTHEASTERLY LINE OF SAID "PARCEL H" NORTH 34 degrees
01'30" WEST 166.69 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THAT CERTAIN
50.00 FOOT ROAD
5
<PAGE>
EASEMENT DESCRIBED IN THAT CERTAIN DEED RECORDED IN THE OFFICE OF THE SAID
RECORDER IN BOOK 2825 OF OFFICIAL RECORDS, PAGE 202, SAID EASEMENT BEING
DESIGNATED (EASEMENT NO. 5) ON SAID RECORD OF SURVEY; THENCE ALONG THE
SOUTHEASTERLY AND EASTERLY LINE OF SAID 50.00 FOOT ROAD EASEMENT THE FOLLOWING
THREE (3) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST 33.71 FEET;
(2) CURVING TO THE LEFT ON AN ARC OF 68.33 FOOT RADIUS, SAID ARC BEING SUBTENDED
BY A CHORD BEARING SOUTH 04 degrees 29'00" EAST 112.20 FEET AND (3) SOUTH 59
degrees 40'10" EAST 78.79 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF SAID
"PARCEL H"; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID "PARCEL H" NORTH 50
degrees 42'00" EAST 55.02 FEET TO THE POINT OF BEGINNING.
PARCEL 3:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE "MAP OF SURVEYS AND SUBDIVISION
OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF
SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED IN
THE DEED DATED JANUARY 30, 1959, EXECUTED BY WILLIAM G. GANNON AND CLARA D.
GANNON TO PHILIP G. HERATY, RECORDED FEBRUARY 24, 1959, IN THE OFFICE OF SAID
RECORDER IN BOOK 3708 OF OFFICIAL RECORDS AT PAGE 35; THENCE FROM SAID POINT OF
BEGINNING ALONG THE BOUNDARY LINE OF SAID HERATY PROPERTY THE FOLLOWING TWO
COURSES AND DISTANCES: NORTH 50 degrees 42'00" EAST 220.00 FEET AND SOUTH 34
degrees 01'30" EAST 81.33 FEET; THENCE NORTH 55 degrees 58'30" EAST 74.00 FEET;
THENCE NORTH 34 degrees 01'30" WEST 226.71 FEET; THENCE SOUTH 50 degrees 42'00"
WEST 294.31 FEET TO A POINT ON THE EASTERLY LINE OF THAT CERTAIN 11.893 ACRE
TRACT OF LAND DESCRIBED IN THE DOCUMENT RECORDED IN THE OFFICE OF SAID RECORDER
IN BOOK 3294 OF OFFICIAL RECORDS, AT PAGE 91; THENCE ALONG SAID EASTERLY LINE
SOUTH 34 degrees 01'30" EAST 138.55 FEET TO THE POINT OF BEGINNING.
PARCEL 4:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE OFFICIAL "MAP OF SURVEY AND
SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP NO. 94,
RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHWESTERN LINE OF PROPERTY DESCRIBED IN THE DEED
FROM PHILIP F. HERATY, ET UX, TO WILLIAM G. GANNON, ET UX, DATED JULY 17, 1958
AND RECORDED JULY 18, 1958, IN BOOK 3550 OF OFFICIAL RECORDS AT PAGE 255, SAID
POINT BEING
6
<PAGE>
LOCATED SOUTH 50 degrees 42' WEST 323.47 FEET FROM THE MOST WESTERN CORNER OF
LOT 548, AS SHOWN ON THE OFFICIAL "PLAT OF SWANSTON ESTATES UNIT NO. 5",
RECORDED MAY 29, 1958, IN BOOK 49 OF MAPS, MAP NO. 13; THENCE FROM SAID POINT OF
BEGINNING SOUTH 50 degrees 42' WEST 220.00 FEET TO A POINT ON THE NORTHEASTERN
LINE OF PROPERTY DESCRIBED IN THE LEASE EXECUTED BY HERATY & GANNON, A CO-
PARTNERSHIP, AS LESSOR, AND SACRAMENTO, INN, INC., A CORPORATION, AS LESSEE,
DATED JANUARY 10, 1957, AND RECORDED MAY 3, 1957, IN BOOK 3294 OF OFFICIAL
RECORDS AT PAGE 30; THENCE ALONG THE NORTHEASTERN LINE OF SAID SACRAMENTO INN,
INC., A PROPERTY NORTH 34 degrees 01'30" WEST 200.00 FEET; THENCE NORTH 50
degrees 42' EAST 220.00 FEET; THENCE SOUTH 34 degrees 01'30" EAST 200.00 FEET TO
THE POINT OF BEGINNING.
PARCEL 5:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE OFFICIAL "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN
BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF LOT 540, AS SHOWN ON THE "PLAT OF SWANSTON
ESTATES UNIT NO. 5", RECORDED MAY 29, 1958, IN BOOK 49 OF MAPS, MAP NO. 13;
THENCE FROM SAID POINT OF BEGINNING ALONG THE WESTERLY BOUNDARY OF SAID SWANSTON
ESTATES UNIT NO. 5, THE FOLLOWING THREE COURSES AND DISTANCES; SOUTH 00 degrees
57'30" EAST 144.50 FEET, SOUTH 21 degrees 00'02" WEST 99.05 FEET AND SOUTH 50
degrees 42'00" WEST 234.00 FEET; THENCE CONTINUING SOUTH 50 degrees 42'00" WEST
323.47 FEET; THENCE NORTH 34 degrees 01'30" WEST 200.00 FEET; THENCE SOUTH 50
degrees 43'00" WEST 220.00 FEET; THENCE NORTH 34 degrees 01'30" WEST 275.85 FEET
TO A POINT ON THE SOUTHEASTERLY LINE OF A ROADWAY; THENCE NORTH 31 degrees
38'20" EAST 93.47 FEET AND NORTH 39 degrees 17'30" EAST 512.87 FEET; THENCE
NORTH 89 degrees 02'30" EAST 43.20 FEET; THENCE CURVING TO THE RIGHT ON AN ARC
OF 143.42 FEET RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62
degrees 51'35" EAST 135.10 FEET; THENCE CURVING TO THE LEFT ON AN ARC OF 195.42
FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62 degrees 51'35"
EAST 184.08 FEET AND THENCE NORTH 89 degrees 02'30" EAST 200.00 FEET TO THE
POINT OF BEGINNING.
EXCEPTING THEREFROM ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE "MAP OF
SURVEYS AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP
NO. 94, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED IN
THE DEED DATED JANUARY 30, 1959, EXECUTED BY WILLIAM G. GANNON AND CLARA D.
GANNON TO PHILIP F. HERATY,
7
<PAGE>
RECORDED FEBRUARY 24, 1959, IN THE OFFICE OF THE SAID RECORDER IN BOOK 3708 OF
OFFICIAL RECORDS, AT PAGE 35; THENCE FROM SAID POINT OF BEGINNING ALONG THE
BOUNDARY LINE OF SAID HERATY PROPERTY THE FOLLOWING TWO COURSES AND DISTANCES;
NORTH 50 degrees 42'00" EAST 220.00 FEET AND SOUTH 34 degrees 01'30" EAST 81.33
FEET; THENCE NORTH 55 degrees 58'30" EAST 74.00 FEET; THENCE NORTH 34 degrees
01'30" WEST 226.71 FEET; THENCE SOUTH 50 degrees 42'00" WEST 294.31 FEET TO A
POINT ON THE EASTERLY LINE OF THAT CERTAIN 11.893 ACRE TRACT OF LAND DESCRIBED
IN THE DOCUMENTS RECORDED IN THE OFFICE OF THE SAID RECORDER IN BOOK 3294 OF
OFFICIAL RECORDS AT PAGE 91; THENCE ALONG SAID EASTERLY LINE SOUTH 34 degrees
01'30" EAST 138.55 FEET TO THE POINT OF BEGINNING.
FURTHER EXCEPTING THEREFROM ALL THAT PORTION OF "PARCEL A" AND "PARCEL B" AS
SAID PARCELS ARE SHOWN ON THAT CERTAIN RECORD OF SURVEY ENTITLED "PORTION OF
SECTION 15 & 66 RANCHO DEL PASO", RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 21 OF SURVEYS, MAP NO. 13, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID "PARCEL A" SAID CORNER ALSO BEING THE
NORTHWEST CORNER OF LOT 540 AS SAID LOT IS SHOWN ON THE OFFICIAL "PLAT OF
SWANSTON ESTATES UNIT NO. 5", RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 49
OF MAPS, MAP NO. 13; THENCE FROM SAID POINT OF BEGINNING ALONG THE EAST BOUNDARY
OF SAID "PARCEL A" AND THE WEST BOUNDARY OF SAID SWANSTON ESTATES UNIT NO. 5,
THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 00 degrees 57'30" EAST
144.50 FEET AND (2) SOUTH 21 degrees 02'00" WEST 55.00 FEET; THENCE SOUTH 89
degrees 02'30" WEST 347.04 FEET; THENCE NORTH 50 degrees 42'30" WEST 360.41 FEET
TO A POINT ON THE NORTHWESTERLY BOUNDARY OF SAID "PARCEL B"; THENCE ALONG THE
NORTHWESTERLY BOUNDARY OF SAID "PARCEL B" NORTH 39 degrees 17'30" EAST 148.00
FEET TO THE NORTHWEST CORNER OF SAID "PARCEL B"; THENCE ALONG THE NORTH BOUNDARY
OF SAID "PARCEL A" AND "PARCEL B" THE FOLLOWING FOUR (4) COURSES AND DISTANCES:
(1) NORTH 89 degrees 02'30" EAST 65.52 FEET; (2) CURVING TO THE RIGHT ON AN ARC
OF 143.42 FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62
degrees 51'35" EAST 135.10 FEET; (3) CURVING TO THE LEFT ON AN ARC OF 195.42
FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62 degrees 51'35"
EAST 184.08 FEET AND (4) NORTH 89 degrees 02'30" EAST 200.00 FEET TO THE POINT
OF BEGINNING.
ALSO EXCEPTING THEREFROM ALL THAT PORTION OF THE ABOVE DESCRIBED PROPERTY LYING
WITHIN ANY PUBLIC ROAD.
8
<PAGE>
PARCEL 6:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE OFFICIAL "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN
BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT FROM WHICH THE MOST SOUTHERLY CORNER OF LOT 548, AS SAID
LOT IS SHOWN AND SO DESIGNATED ON THE OFFICIAL "PLAT OF SWANSTON ESTATES UNIT
NO. 5", RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK 49
OF MAPS, MAP NO. 13, SAID CORNER BEING A POINT ON THE NORTHWESTERLY LINE OF
ROYALE ROAD, AS SHOWN ON SAID SWANSTON ESTATES UNIT NO. 5, BEARS NORTH 50
degrees 42' EAST 311.47 FEET; THENCE FROM SAID POINT OF BEGINNING SOUTH 50
degrees 42' WEST 250.00 FEET; THENCE NORTH 34 degrees 01'30" WEST 195.83 FEET;
THENCE NORTH 50 degrees 42' EAST 232.00 FEET; THENCE SOUTH 39 degrees 18' EAST
195.00 FEET TO THE POINT OF BEGINNING.
PARCEL 7:
- - - ---------
ALL THAT PORTION OF PARCEL H AS SAID PARCEL IS SHOWN ON THE RECORD OF SURVEY
ENTITLED "PORTION OF SECTIONS 15 & 66 RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE RECORDER OF SACRAMENTO COUNTY IN BOOK 21 OF SURVEYS, MAP NO. 13,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID PARCEL H; THENCE FROM SAID POINT
OF BEGINNING ALONG THE SOUTHEASTERLY BOUNDARY OF SAID PARCEL H NORTH 30 degrees
19'50" EAST 96.82 FEET; THENCE CONTINUING ALONG THE SOUTHEASTERLY BOUNDARY OF
SAID PARCEL H NORTH 50 degrees 42'00" EAST 677.21 FEET TO THE MOST EASTERLY
CORNER OF SAID PARCEL H; THENCE ALONG THE BOUNDARY OF SAID PARCEL H NORTH 34
degrees 01'30" WEST 166.69 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THAT
CERTAIN 50.00 FOOT ROAD EASEMENT DESCRIBED IN THE DOCUMENT RECORDED IN THE
OFFICE OF SAID RECORDER IN BOOK 3497 OF OFFICIAL RECORDS, AT PAGE 131; THENCE
ALONG THE SOUTHEASTERLY AND EASTERLY LINE OF SAID 50.00 FOOT ROAD EASEMENT THE
FOLLOWING THREE (3) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST
33.71 FEET; (2) CURVING TO THE LEFT ON AN ARC OF 68.33 FOOT RADIUS, SAID ARC
BEING SUBTENDED BY A CHORD BEARING SOUTH 04 degrees 09'00" EAST 112.20 FEET AND
(3) SOUTH 59 degrees 40'10" EAST 36.12 FEET TO A POINT ON THE SOUTHEASTERLY LINE
OF THAT CERTAIN 1.549 ACRE TRACT OF LAND DESCRIBED AS PARCEL NO. 2 IN THE DEED
RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 7608-31 OF OFFICIAL RECORDS, AT
PAGE 1333; THENCE ALONG THE BOUNDARY OF SAID 1.589 ACRE TRACT OF LAND THE
FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST 247.43
FEET TO THE MOST SOUTHERLY CORNER OF SAID
9
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1.549 ACRE TRACT OF LAND AND (2) NORTH 39 degrees 13'00" WEST 110.85 FEET TO A
POINT ON THE SOUTHEASTERLY LINE OF THAT CERTAIN 8.001 ACRE TRACT OF LAND
DESCRIBED AS PARCEL NO. 1 IN THE DEED RECORDED IN THE OFFICE OF SAID RECORDER IN
BOOK 7608-31 OF OFFICIAL RECORDS AT PAGE 1333; THENCE ALONG THE BOUNDARY OF SAID
8.001 ACRE TRACT OF LAND THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH
41 degrees 46'30" WEST 15.04 FEET TO THE MOST SOUTHERLY CORNER OF SAID 8.001
ACRE TRACT OF LAND AND (2) NORTH 87 degrees 38'40" WEST 350.40 FEET TO A POINT
ON THE NORTHEASTERLY BOUNDARY OF THAT CERTAIN 7.32 ACRE TRACT OF LAND DESCRIBED
IN THE DEED RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 2280 OF OFFICIAL
RECORDS AT PAGE 331; SAID POINT ALSO BEING LOCATED ON THE WESTERLY LINE OF SAID
PARCEL H; THENCE ALONG SAID NORTH-EASTERLY BOUNDARY AND SAID WESTERLY LINE THE
FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 11 degrees 19'00" EAST 286.27
FEET AND (2) CURVING TO THE LEFT ON AN ARC OF 350.00 FOOT RADIUS, SAID ARC BEING
SUBTENDED BY A CHORD BEARING SOUTH 25 degrees 33'54" EAST 167.10 FEET TO THE
POINT OF BEGINNING.
NON-EXCLUSIVE EASEMENTS FOR RIGHT-OF-WAY FOR INGRESS AND EGRESS AND MUTUAL
PARKING AS DESCRIBED IN "ARTICLE I" OF THAT CERTAIN INSTRUMENT ENTITLED "GRANTS
OF EASEMENTS, COVENANTS AND AGREEMENT FOR MAINTENANCE OF PARKING AREA", RECORDED
JULY 28, 1967, IN BOOK 6707-28, PAGE 645, OFFICIAL RECORDS.
10
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EXHIBIT A
PROPERTY DESCRIPTION
(Property: San Diego, CA)
-------------
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL 1:
- - - ---------
PARCEL 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP NO. 15912, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
DIEGO COUNTY, ON DECEMBER 19, 1989
PARCEL 2:
- - - ---------
A NON-EXCLUSIVE AND EXCLUSIVE UTILITY, FIRE AND SERVICE CORRIDOR, AND HOTEL
COURTYARD EASEMENTS WHICH ARE ALL PERPETUAL AND IRREVOCABLE, ENCUMBERING LOTS 2
THROUGH 4 OF HAZARD CENTER, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE
OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11949, FILED IN THE OFFICE OF THE
COUNTY RECORDER OF SAN DIEGO COUNTY ON NOVEMBER 10, 1987, ALL AS MORE
PARTICULARLY DESCRIBED IN ARTICLE 2, PARAGRAPHS 2.6, 2.7 AND 2.8 OF THE
CONSTRUCTION OPERATION AND RECIPROCAL EASEMENT AGREEMENT, EXECUTED BY AND
BETWEEN R. E. HAZARD CONTRACTING CO., A CALIFORNIA CORPORATION, CROW-HAZARD
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND RL ACQUISITION COMPANY, A
CALIFORNIA LIMITED PARTNERSHIP, RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF
OFFICIAL RECORDS.
THE EASEMENT HEREIN DESCRIBED ARE HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREINDESCRIBED.
PARCEL 3:
- - - ---------
AN EXCLUSIVE PARKING EASEMENT, TEMPORARY ADDITIONAL EXCLUSIVE PARKING, A NON-
EXCLUSIVE PARKING EASEMENT, AND NON-EXCLUSIVE ACCESS EASEMENT, WHICH ARE ALL
PERPETUAL AND IRREVOCABLE, ENCUMBERING LOTS 2 THROUGH 4 OF HAZARD CENTER, IN THE
CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF NO. 11949, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY ON NOVEMBER 10, 1987, ALL AS MORE PARTICULARLY DESCRIBED IN ARTICLE 2,
PARAGRAPHS 2.2, 2.3, 2.4 AND 2.5 OF THE CONSTRUCTION, OPERATION AND RECIPROCAL
EASEMENT AGREEMENT, EXECUTED BY AND BETWEEN R. E. HAZARD CONTRACTING
11
<PAGE>
CO., A CALIFORNIA CORPORATION; CROW-HAZARD ASSOCIATES, A CALIFORNIA GENERAL
PARTNERSHIP AND RL ACQUISITION COMPANY, A CALIFORNIA LIMITED PARTNERSHIP,
RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF OFFICIAL RECORDS.
THE EASEMENTS HEREIN DESCRIBED ARE HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREINDESCRIBED.
PARCEL 4:
- - - ---------
AN EXCLUSIVE PARKING GARAGE CONNECTION EASEMENT ENCUMBERING LOT 2 OF HAZARD
CENTER, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 11949, FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY, ON NOVEMBER 10, 1987, AS MORE PARTICULARLY DESCRIBED IN THE
CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT AGREEMENT EXECUTED BY AND
BETWEEN R. E. HAZARD CONTRACTING CO., A CALIFORNIA CORPORATION; CROW-HAZARD
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND RED LION, A CALIFORNIA LIMITED
PARTNERSHIP (FORMERLY KNOWN AS RL ACQUISITION COMPANY, A CALIFORNIA LIMITED
PARTNERSHIP), RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF OFFICIAL RECORDS.
THE EASEMENT HEREIN DESCRIBED IS HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREIN DESCRIBED.
12
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EXHIBIT A
PROPERTY DESCRIPTION
(Property: Durango, CO)
-----------
Situated in the County of La Plata, State of Colorado, to-wit:
Lot 1A in RED LION INN RESUBDIVISION, according to the plat thereof filed for
record July 1, 1993 under Reception No. 649036.
Tax Parcel Numbers: 5665-301-00048
5665-301-00120
5665-301-00129
13
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EXHIBIT A
PROPERTY DESCRIPTION
(Property: Boise Downtowner, ID)
--------------------
The land is situated in the State of Idaho, County of Ada, and is described as
follows:
PARCEL A:
PARCEL I:
All of Lots 1 and 2 in Block 40 and all of Block 41 of FAIRVIEW ADDITION,
according to the official plat thereof, filed in Book 2 of Plats at Page 73,
Official Records of Ada County, Idaho, and all of Block 40-A CITIZENS RIGHT-OF-
WAY, according to the official plat thereof, filed in Block 7 of Plats at Page
341, and a portion of Lots 1 and 2 in Block 10 and all of Lots 11, 12, 13 and 14
in Block 9 of McCARTY'S SECOND ADDITION, according to the official plat thereof,
filed in Book 2 of Plats at Page 85, Official Records, and the vacated streets
and alley included within the boundaries thereof, more particularly described as
follows:
Beginning at the intersection of the Easterly boundary of 22nd Street and
Northerly boundary of Fairview Avenue, being the Southwest corner of Block
41 of FAIRVIEW ADDITION, said point being THE TRUE POINT OF BEGINNING;
thence
North 0 degrees 00'00" East 350.16 feet along the Easterly boundary of said 22nd
street to a point on the Southerly boundary of Main Street; thence
North 89 degrees 59'20" East 157.99(8) feet along the said Southerly boundary of
Main Street to a point; thence
South 89 degrees 50'40" East 157.98(151.50) feet along the said Southerly
boundary of Main Street to a point; thence
South 54 degrees 50'40" East 57.50 feet along the said Southerly boundary of
Main Street to a point; thence
South 1 degrees 57'20" West 192.00 feet to a point, said point being the
Southeast corner of said Lot 14 in Block 9 of said McCARTY'S SECOND
ADDITION; thence
North 88 degrees 02'40" West 230.08 feet to a point; thence
South 2 degrees 53'20" West 136.32 feet to a point on the Northerly boundary of
said Fairview Avenue; thence
North 88 degrees 13'50" West 113.20 feet along the said Northerly boundary of
said Fairview Avenue to the POINT OF BEGINNING.
PARCEL II:
Lots 9 and 10 in Block 9 of McCARTY'S SECOND ADDITION, according to the official
plat thereof, filed in Book 2 of Plats at Page 85, Official Records.
EXCEPT THEREFROM that portion of said Lot 10, more particularly described as
follows:
14
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Commencing at the Northwest corner of said Lot 10, said point being the TRUE
POINT OF BEGINNING; thence
South 88 degrees 02'40" East 20.00 feet along the Northerly boundary of said Lot
10 to a point; thence
South 46 degrees 57'20" West 28.28 feet to a point on the Westerly boundary of
said Lot 10; thence
North 1 degrees 57'20" East 20.00 feet along the said Westerly boundary of said
Lot 10 to the POINT OF BEGINNING.
ALSO EXCEPT a parcel of land for public right-of-way being a portion of Lots 9
and 10 of Block 9 of McCARTY'S SECOND ADDITION, a subdivision according to the
official plat thereof, filed in Book 2 of Plats at Page 85, lying in the
Southeast quarter of Section 4, Township 3 North, Range 2 East, Boise Meridian,
Ada County Idaho, and more particularly described as follows:
Beginning at a lead plug and tack marking the Northwest corner of Lot 2 of Block
40 of FAIRVIEW ADDITION, a subdivision, according to the official plat
thereof, filed in Book 2 of Plats at Page 73, Official Records; thence
South 0 degrees 00'00" West 350.16 feet along the Westerly boundaries of said
Lot 2 of Block 40 of FAIRVIEW ADDITION, Block 40-A CITIZEN'S RIGHT-OF-WAY,
a subdivision, according to the official plat thereof, filed in Book 7 of
Plats at Page 341, and Block 41 of said FAIRVIEW ADDITION, which is also
the Easterly right-of-way line 22nd Street, to a point marking the
Southwest corner of the said Block 41 of FAIRVIEW ADDITION; thence
South 88 degrees 13'50" East 190.58 feet along the Southerly boundary of the
said Block 41 of FAIRVIEW ADDITION, Block 40-A of Citizens Right-of-Way,
the adjacent alley to the said Lot 10 of Block 9, McCARTY'S SECOND
ADDITION, all of Lot 10 and a portion of Lot 9 of Block 9 of McCARTY'S
SECOND ADDITION, which is also the Northerly right-of-way line of Fairview
Avenue, to a point, also said point being the REAL POINT OF BEGINNING;
thence continuing
South 88 degrees 13'50" East 30.0 feet along the said Southerly boundaries of
Lots 10 and 9 of Block 9 of McCARTY'S SECOND ADDITION to a point; thence
North 1 degrees 57'20" East 99.95 feet along a line 25.00 feet Westerly of and
parallel with the Easterly boundary of the said Lot 9 of Block 9 of
McCARTY'S SECOND ADDITION to a iron pin; thence
North 46 degrees 57'20" East 28.28 feet to an iron pin on the Northerly boundary
line of the said Lot 9 of Block 9 of McCARTY'S SECOND ADDITION; thence
North 88 degrees 02'40" West 50.00 feet along the said Northerly boundary of Lot
9 and the Northerly boundary of the said Lot 10 of Block 9 of McCARTY'S
SECOND ADDITION to a iron pin; thence
South 1 degrees 57'20" West 120.05 feet along line 5.00 feet Westerly of and
parallel with Easterly boundary of the said Lot 10 of Block 9 of McCARTY'S
SECOND ADDITION to THE REAL POINT OF BEGINNING.
15
<PAGE>
PARCEL III:
The East 150 feet of Lot 1 in Block 38 and all of Block 39 of FAIRVIEW ADDITION,
according to the official plat thereof, filed in Book 2 of Plats at Page 73 and
the East 150 feet of Block 38-A of CITIZEN'S RIGHT-OF-WAY, according to the
official plat thereof, filed in Book 7 of Plats at Page 341, Official Records,
of Ada County, Idaho.
PARCEL IV:
Lots 15 and 16 of Block 9 of McCARTY'S SECOND ADDITION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho and that portion of 18th Street, now vacated, described as
follows: Beginning at the Northeast corner of said Lot 16; thence West 100 feet;
thence
North 69.88 feet; thence
Southeast 119.28 feet; thence
South 4.86 feet to THE POINT OF BEGINNING.
PARCEL V:
A parcel of land being all of the alley lying Westerly of and adjacent with the
Westerly boundary of Lot 10 of Block 9 and a portion of the 16.00 foot alley
lying Northerly of and adjacent with said Lot 10 of Block 9 of McCARTY'S SECOND
ADDITION, a subdivision according to the official plat thereof, filed in Book 2
of Plats at Page 85, lying in the Southeast quarter of Section 4, Township 3
North, Range 2 East, Boise Meridian, Ada County Idaho, more particularly
described as follows:
Beginning at a lead plug and tack marking the Northwest corner of Lot 2 of Block
40 of FAIRVIEW ADDITION, a subdivision, according to the official plat
thereof, filed in Book 2 of Plats at Page 73, Official Records; thence
South 0 degrees 00'00" West 350.16 feet along the Westerly boundaries of said
Lot 2 of Block 40 of FAIRVIEW ADDITION, Block 40-A CITIZEN'S RIGHT-OF-WAY,
a subdivision, according to the official plat thereof, filed in Book 7 of
Plats at Page 341, and Block 41 of said FAIRVIEW ADDITION, which is also
the Easterly right-of-way line 22nd Street, to a point marking the
Southwest corner of the said Block 41 of FAIRVIEW ADDITION; thence
South 88 degrees 13'50" East 145.58 feet along the Southerly boundaries of said
Block 41 of FAIRVIEW ADDITION and Block 40-A of CITIZENS RIGHT-OF-WAY and
adjacent alley to said Lot 10 of Block 9 OF McCARTY'S SECOND ADDITION
which is also the Northerly right-of-way line of FAIRVIEW AVENUE, to a
point marking the Southwest corner of the said Lot 10 of Block 9 of
McCARTY'S SECOND ADDITION, also said point being the REAL POINT OF
BEGINNING; thence
North 1 degrees 57'20" East 100.20 feet along the Westerly boundary of the said
Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to an iron pin; thence
North 46 degrees 57'20" East 26.28 feet to an iron pin on the Northerly boundary
of the said Lot 10 of Block 9 of McCARTY'S SECOND ADDITION; thence
16
<PAGE>
South 88 degrees 02'40" East 25.00 feet along the said Northerly boundary of the
said Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to an iron pin; thence
North 1 degrees 57'20" East 16.0 feet along a line Westerly of and parallel with
the Westerly boundary extended of the said Lot 9 in Block 9 of McCARTY'S
SECOND ADDITION to an iron pin on the Northerly boundary of the said 16-
foot alley; thence
North 88 degrees 02'40" West 75.16 feet along the said Northerly boundary of the
said 16-foot alley to an iron pin on the Westerly boundary of the said
McCARTY'S SECOND ADDITION; thence
South 2 degrees 53'20" West 136.32 feet along the said Westerly boundary of
McCARTY'S SECOND ADDITION, which is also the Westerly boundary of the said
adjacent alley to Lot 10 of Block 9 of McCARTY'S SECOND ADDITION, to a
point marking the Southwest corner of the said adjacent alley to Lot 10 of
Block 9 of McCARTY'S SECOND ADDITION; thence
South 88 degrees 13'50" East 32.38 feet along the said Southerly boundary of the
adjacent alley to Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to the
REAL POINT OF BEGINNING.
PARCEL VI:
Lots 7 and 8 in Block 9 of McCARTY's SECOND ADDITION, according to the official
plat thereof, filed in Book 2 of Plats at Page 85, Official Records of Ada
County, Idaho.
As to leasehold estate in:
PARCEL B:
Lots 3, 4, 5, 6 and 17 in BLock 9 of McCARTY'S SECOND ADDITION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho, and Lots 18 and 19 in Block 9, EXCEPT the hereinafter
described:
A parcel of land being on the Westerly side of the center line of Boise One-Way
Couplet, Project No. U-3021 (21) Highway Survey, as shown on the plans thereof
now on file in the office of the Department of Highways of the State of Idaho,
and being a portion of Lot 18 in Block 9 of McCARTY'S SECOND ADDITION, according
to the official plat thereof, filed in Book 2 of Plats at Page 85, Official
Records of Ada County, Idaho, described as follows:
Beginning at the Northeast corner of Lot 18 in Block 9 of said McCARTY'S SECOND
ADDITION; thence
Southerly along the Easterly boundary line of said Lot 18 a distance of 12.2
feet to a point that bears
North 87 degrees 54'04" West, 58.74 feet from Station 80456.72 of Boise, One Way
Couplet, Project No. U-3021 (21) Highway Survey; thence Northwesterly
along a 140.50 foot radius curve left 35.94 feet to a point that bears
17
<PAGE>
South 35 degrees 10'41" West 42.38 feet from Station 79462.58 of said Highway
Survey; thence Northerly 3.0 feet, more or less, to a point in the
Northeasterly line of said Lot 18 that bears
South 35 degrees 10'41" West 40.00 feet from Station 79460.90 of said Highway
Survey; thence Southeasterly along the Northeasterly line of said Lot 18
to the PLACE OF BEGINNING.
AND
All of Lot 19, Block 9 of McCARTY'S SECOND SUBDIVISION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho.
EXCEPTING THEREFROM a parcel of land being on both sides of the centerline of
Boise One-Way Couplet, Project No. U-3021 (21) Highway Survey as shown on the
plans thereof now on file in the office of the Department of Highways of the
State of Idaho and being a portion of Lot 19 in Block 9 of MCCARTY'S SECOND
SUBDIVISION, according to the official plat thereof, filed in Book 2 of Plats at
Page 85, Official Records of Ada County, Idaho, described as follows:
Beginning at the East corner of Lot 19 in Block 9 of said MCCARTY'S SECOND
ADDITION; thence
Westerly along the South boundary line of said Lot 19, a distance of 95.44 feet
to the Southwest corner thereof; thence
North 62 degrees 17'36" East 23.12 feet to a point that bears North 87 degrees
54'04" West 38.67 feet from Station 80194.74 of Boise, One-Way Couplet,
Project No. U-3021 (21) Highway Survey; thence
Northwesterly along a 140.50 foot radius curve left 55.10 feet to a point in the
Westerly line of said Lot 19 that bears
North 87 degrees 54'04" West, 58.74 feet from Station 80+56.73 of said Highway
Survey; thence
Northerly along said Westerly line 12.7 feet, to the Northwesterly corner of
said Lot 19; thence
Southeasterly along the Northeasterly boundary line of said Lot 19 to the REAL
POINT OF BEGINNING.
Tax Parcel Numbers: R2734252191
R2734252200
R2734252210
R5538940984
R5538940940
R5538941120
Also described as follows pursuant to Survey dated May 13, 1994 and revised July
17, 1995:
18
<PAGE>
Parcel 1:
The east 150.00 feet of Lot 1 Block 38 and all of Block 39 of the FAIRVIEW
ADDITION according to the official plat thereof filed in the office of the Ada
County Recorder in Book 2 of Plats at Page 73, and the east 150.00 feet of Block
38-A of CITIZEN'S RIGHT OF WAY, according to the official plat thereof, filed in
Book 7 of Plats at Page 341, being more particularly described as follows:
BEGINNING at a 5/8 inch iron pin at the northeasterly corner of said Block 39,
being the point of intersection of the southerly sideline of West Main Street
with the westerly sideline of North 22nd Street; thence,
1.) S.00 degrees 00'00"E., 165.60 feet along the westerly sideline of
said 22nd Street to a 5/8 inch iron pin; thence,
2.) N.89 degrees 00'42"W., 150.02 feet along the southerly line of said
Lot 1 Block 38 to a 5/8 inch iron pin; thence,
3.) N.00 degrees 00'00"W., 162.98 feet along a line parallel with and
150.00 feet west of the westerly sideline of 22nd Street to a 5/8
inch iron pin; thence,
4.) N.89 degrees 59'20"E., 150.00 feet along the southerly sideline of
said West Main Street to the POINT OF BEGINNING;
said Parcel 1 containing 0.5657 acres of land, and being the same parcel as
described as Parcel III in Instrument No. 8564000, Deed of Trust and Assignment
of Leases and Rents.
Parcel 2:
All of Lots 1 and 2 of Block 40 and all of Block 41 of the FAIRVIEW ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 73; all of Block 40-A of CITIZEN'S RIGHT OF
WAY according to the official plat thereof filed in Book 7 of Plats at Page 341;
portions of Lots 1 and 2 of Block 10 and a portion of Lot 10 and all of Lots 11,
12, 13, 14, 15 and 16 of Block 9 of McCARTY'S 2ND ADDITION, according to the
official plat thereof filed in Book 2 of Plats at Page 85; and certain vacated
portions of streets and alleys shown on said plat and included within the
following more particularly described Parcel 2: BEGINNING at the point of
intersection of the easterly sideline of North 22nd with the northerly sideline
of Fairview Avenue, said point being the southwesterly corner of said Block 41
of the FAIRVIEW ADDITION; thence,
1.) N.00 degrees 00'00"W., 350.18 feet along the easterly sideline of
said North 22nd Street, being along the westerly lines of said Block
41, Block 40-A of said CITIZEN'S RIGHT OF WAY and Block 40 of said
FAIRVIEW
19
<PAGE>
ADDITION to the point of intersection of said easterly sideline of
North 22nd Street with the southerly sideline of West Main Street;
thence,
2.) N.89 degrees 59'20"E., 157.98 feet along the southerly sideline of
West Main Street, being along the northerly line of Lots 1 and 2 of
Block 40 FAIRVIEW ADDITION and along the northerly terminus of a
vacated portion of 19th Street to a point in the westerly line of Lot
2 Block 10 of said McCARTY'S 2ND ADDITION; thence,
3.) S.89 degrees 50'40"E., 151.50 feet along said sideline of West Main
Street to a point in the northeasterly line of Lot 1 of said Block
10; thence,
4.) S.54 degrees 50'40"E., 185.34 feet along said sideline, being along
the northeasterly line of said Lot 1, and along the easterly terminus
of vacated 18th Street to a point in the northerly line of Lot 17
Block 9 of said McCARTY'S 2ND ADDITION; thence,
5.) N.88 degrees 02'40"W., 6.97 feet along the northerly line of said Lot
17 to the northwesterly corner thereof; thence,
6.) S.01 degrees 57'20"W., 122.00 feet along the westerly line of said
Lot 17 to the southwesterly corner of said Lot 17 Block 9; thence,
7.) N.88 degrees 02'40"W., 255.00 feet along the southerly lines of Lots
16, 15, 14, 13, 12 and 11 to a point; thence,
8.) S.01 degrees 57'20"W., 136.05 feet along the easterly terminus of the
vacated portion of a 16 foot wide alley and along a line parallel
with and 5.00 feet westerly of the easterly line of Lot 10 Block 9 to
a point in the southerly line of said Lot 10, being the northerly
sideline of West Fairview Avenue; thence,
9.) N.88 degrees 13'50"W., 190.48 feet along the southerly lines of said
Lot 10 Block 9, the vacated portion of 19th Street, Lot 40-A of
CITIZEN'S RIGHT OF WAY and Block 41 of the FAIRVIEW ADDITION, being
along the northerly sideline of West Fairview Avenue, to the POINT OF
BEGINNING,
said Parcel 2 containing 2.7328 acres, more or less and being the same land as
contained in Parcel No.s I, II, IV and V as described in Instrument No.8564000,
Deed of Trust and Assignment of Leases and Rents.
20
<PAGE>
Parcel 3:
All of Lots 7 and 8 and a portion of Lot 9, of Block 9, McCARTY'S 2ND ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 85, and being more particularly described as
follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
A.) S.88 degrees 13'50"E., 220.48 feet along the southerly lines of said Block
41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the vacated
portion of 19th Street, and Lots 10 and 9 of Block 9 of said McCARTY'S 2ND
ADDITION to a point 25 feet easterly of the westerly line of said Lot 9,
being the POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 99.95 feet along a line parallel with and
25.00 feet easterly of the westerly line of said Lot 9; thence,
2.) N.46 degrees 57'20"E., 28.28 feet to a point in the northerly line of
said Lot 9; thence,
3) S.88 degrees 02'40"E., 105.00 feet along the northerly lines of Lots
9, 8 and 7 to the northeasterly corner of said Lot 7; thence,
4.) S.01 degrees 57'20"W., 119.55 feet along the easterly line of said
Lot 7 to a point in the northerly sideline of West Fairview Avenue;
thence,
5.) N.88 degrees 13'50"W., 125.00 feet along said sideline to the POINT
OF BEGINNING,
said Parcel 3 containing 0.5474 acres, more or less, and being the same land as
contained in Parcel VI and a portion of Parcel II as described in Instrument No.
8564000, Deed of Trust and Assignment of Leases and Rents.
Parcel 4:
All of Lot 17 and portions of Lots 18 and 19, Block 9, McCARTY'S 2ND ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 85, and being more particularly described as
follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
21
<PAGE>
A.) S.88 degrees 13'50"E., 190.48 feet along the southerly lines of said Block
41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the vacated
portion of 19th Street, and Lot 10, Block 9 of said McCARTY'S 2ND ADDITION
to a point 5.00 feet west of the easterly line of said Lot 10; thence,
B.) N.01 degrees 57'20"E., 136.05 feet along a line parallel with and 5.00
feet westerly of the easterly line of said Lot 10 to a point in the
southerly line of Lot 11 Block 9; thence,
C.) S.88 degrees 02'40"E., 255.00 feet along the southerly lines of Lots 11,
12, 13, 14, 15 and 16 to the southwesterly corner of said Lot 17 and the
POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 122.00 feet along the westerly line of said
Lot 17 to the northwesterly corner of same; thence,
2.) S.88 degrees 02'40"E., 6.97 feet along the northerly line of said Lot
17 to the point of intersection of same with the southerly sideline
of West Main Street; thence,
3.) S.54 degrees 50'40"E., 81.62 feet along said sideline of West Main
Street to a point in the westerly sideline of West Grove Street, also
known as the Boise One-Way Couplet, according to the plans of Project
No. U-3021 (21) on file with the Idaho Department of Transportation,
District 3; thence,
4.) S.01 degrees 01'48"W., 2.88 feet (formerly 3.0 feet more or less)
along said westerly sideline of West Grove Street to a point on a
non-tangent curve; thence,
5.) southeasterly along said sideline along a curve to the right having a
radius of 140.50 feet, an arc length of 79.12 feet, a central angle
of 32 degrees 16'38", a chord bearing of S.32 degrees 44'09"E., and a
chord distance of 78.07 feet, crossing through Lots 18 and 19 of said
Block 9 to an angle point in said sideline; thence,
6.) S.64 degrees 33'28"W., 22.25 feet (formerly S.62 degrees 17'36"W.,
23.12) along said sideline to the southeasterly corner of said Lot 18
Block 9; thence,
7.) N.88 degrees 02'40"W., 100.00 feet along the southerly lines of Lots
18 and 17 of Block 9 to the POINT OF BEGINNING,
said Parcel 4 containing 0.2233 acres, more or less, and being the same land as
contained in a portion of Parcel B as described in Instrument No. 8564000, Deed
of Trust and and Assignment of Leases and Rents.
22
<PAGE>
Parcel 5:
All of Lots 3, 4, 5 and 6 of Block 9, McCARTY'S 2ND ADDITION, according to the
official plat thereof filed in the office of the Ada County Recorder in Book 2
of Plats at Page 85, and being more particularly described as follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
A.) S.88 degrees 13'50"E., 345.48 feet along the southerly lines of said Block
41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the vacated
portion of 19th Street, and Lots 10, 9, 8 and 7 of Block 9 of said
McCARTY'S 2ND ADDITION to the southwesterly corner of Lot 6 Block 9 and
the POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 119.55 feet along the westerly line of said
Lot 6 to the northwesterly corner of same; thence,
3.) S.88 degrees 02'40"E., 200.00 feet along the northerly lines of Lots
6, 5, 4 and 3 to the northeasterly corner of Lot 3 Block 9; thence,
4.) S.01 degrees 57'20"W., 118.90 feet along the easterly line of said
Lot 3 to a point in the northerly sideline of West Fairview Avenue;
thence,
5.) N.88 degrees 13'50"W., 200.00 feet along said sideline to the POINT
OF BEGINNING,
said Parcel 5 containing 0.5487 acres of land, and being the same land as
contained in a portion of Parcel B as described in Instrument No. 8564000, Deed
of Trust and Assignment of Leases and Rents.
23
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Missoula, MT)
Situated in the City of Missoula, Missoula County, Montana, to-wit:
Lots 3, 4 and the East 10 feet of Lot 17, all of Lots 18, 19 and 20, in Block 49
of W.J. McCormick's Addition, in the City of Missoula, Missoula County, Montana,
according to the official recorded plat thereof, together with the vacated
alley.
Lots 1, 2, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and the West 20 feet of Lot
17 in Block 49 of W.J. McCormick's Addition, in the City of Missoula, Missoula
County, Montana, according to the official recorded plat thereof, together with
the vacated alley and the East one-half of vacated Blanche Street lying between
Pine Street and Broadway Street.
Recording reference: Book 271 of Micro Records at page 1613.
Tax Parcel Number: 1864500
24
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Astoria, OR)
PARCEL NO. 1:
- - - ------------
A parcel of land situated in the Northwest quarter of the Southwest
quarter of Section 7, Township 8 North, Range 9 West, Willamette Meridian, City
of Astoria, Clatsop County, Oregon, more particularly described as follows:
Beginning at a point which bears North 56 degrees 53' East a distance of
24 feet from the Southeasterly corner of that certain tract of land conveyed to
Henry J. Barbey et ux by deed recorded in Book 198, page 240, Deed Records,
Clatsop County, Oregon;
thence North 56 degrees 53' East 385.0 feet;
thence North 24 degrees 30' West 132.0 feet;
thence South 56 degrees 53' West 385.0 feet;
thence South 24 degrees 36' East 132.0 feet to the point of beginning;
Together with the following non-exclusive easement for ingress and egress
over the following described property;
A parcel of land in the Northwest quarter of the Southwest quarter of
Section 7, Township 8 North, Range 9 West, Willamette Meridian in Clatsop
County, Oregon described as follows:
Beginning at the Southeasterly corner of that certain tract of land
conveyed by Henry J. Barbey and Ethel G. Barbey to Barbey Packing Corp. as
recorded in Book 198, page 240, Clatsop County Records of Deeds, said point
being also on the Northerly right of way line of Spokane, Portland and Seattle
Railroad;
thence North 56 degrees 53' East along said Northerly right of way a
distance of 710.93 feet to the Westerly line of Industry Street;
thence North 24 degrees 30' West a distance of 15.0 feet;
thence South 56 degrees 53' West a distance of 710.93 feet to a point of
intersection with the Easterly line of said Barbey tract;
thence South 24 degrees 30' East along the Easterly line of the Barbey
tract a distance of 15.0 feet to the point of beginning.
PARCEL NO. 2:
- - - ------------
A tract of land being part of Parcel No. 1 as described in Volume 198,
page 240 of the Clatsop County Deeds and Records, and bounds as follows:
Beginning at a one-half inch iron pipe, said iron pipe being North
24 degrees 30' West 238.35 feet from the Southwest corner of said Parcel No. 1;
thence North 24 degrees 30' West 246.10 feet to a one-half inch iron pipe;
thence North 65 degrees 30' East 200.00 feet to a one-half inch iron pipe;
thence South 24 degrees 30' East 373.52 feet to a one-half inch iron pipe;
thence South 67 degrees 44' West 45.66 feet to a one-half inch iron pipe;
thence North 82 degrees 07' West 80.56 feet to a one-half inch iron pipe;
thence North 70 degrees 30' West 119.85 feet to the point of beginning;
Situated in the City of Astoria, County of Clatsop, State of Oregon;
Together with the right to connect to the extension of Port Road for the
purposes of ingress and/or egress as set forth in that certain easement granted
by the Port of
<PAGE>
Astoria, a municipal corporation, to Barbey Packing Corporation dated September
27, 1971, recorded September 27, 1971 in Book 353, page 565, Film Records.
PARCEL NO. 3:
- - - ------------
Beginning at an iron pipe which bears North 56 degrees 53' East a distance
of 202.26 feet from the Southwest corner of Parcel No. 1 as described in deed
recorded in Volume 198, page 240, Deed Records, Clatsop County, Oregon;
thence North 24 degrees 30' West 380.0 feet to a point on the East line of
the Barbey Tract as described in Volume 198, page 240, Deed Records, Clatsop
County, Oregon;
thence North 65 degrees 30' East 46.0 feet;
thence South 24 degrees 30' East 248.0 feet to a point;
thence South 56 degrees 53' West 22.0 feet;
thence South 24 degrees 30' East 132.0 feet;
thence South 56 degrees 53' West 24.0 feet to the point of beginning.
PARCEL NO. 4:
- - - ------------
Beginning at a point on the West line of Parcel No. 1 as described by deed
recorded in Book 198, page 240, Clatsop County Deed Records, said point being
North 24 degrees 30' West, a distance of 464 feet from the Southwest corner of
said Parcel No. 1;
thence North 24 degrees 30' West a distance of 72.5 feet;
thence North 65 degrees 30' East a distance of 253 feet;
thence South 24 degrees 30' East a distance of 145.25 feet;
thence South 65 degrees 30' West a distance of 72.5 feet;
thence North 24 degrees 30' West a distance of 72.75 feet:
thence South 65 degrees 30' West a distance of 180.5 feet to the point of
beginning, all situated in the City of Astoria, County of Clatsop, State of
Oregon. NOTE: Parcel No. 4 overlaps with Parcels No. 2 and No. 3.
PARCEL NO. 5:
- - - ------------
All that portion of the following tract of land and uplands lying
Northerly of the North line of the right of way of the S. P. & S. Railway
Company described as follows:
Beginning at a point on the South bank of the Columbia River on the
meander line of the Samuel C. Smith D.L.C. in Clatsop County, Oregon, 30.23
chains Westerly according to said meander line of the Northeast corner of said
claim; and running
thence North 65 degrees 30' East 300 feet;
thence North 24 degrees 30' West to the ordinary low tide line;
thence Westerly along the line of ordinary low tide to the East line of
the Henry J. Barbey tract, that is, a tract of land accordingly as described in
that certain deed recorded at page 353, Volume 123 of Records of Deeds in the
Office of the County Clerk of Clatsop County, Oregon;
thence South 24 degrees 30' East to a point on the meander line of the
Samuel C. Smith D.L.C. which point is South 47' 00' West a distance of 400 feet
from the point of beginning;
thence North 47 degrees 00' East a distance of 400 feet to the point of
beginning, all being situate in Section 7, Township 8 North, Range 9 West,
Willamette Meridian, Clatsop County, Oregon.
<PAGE>
EXCEPTING THEREFROM the following:
A parcel of land situated in the Northwest quarter of the Southwest
quarter of Section 7, Township 8 North, Range 9 West, Willamette Meridian, City
of Astoria, Clatsop County, Oregon, more particularly described as follows:
Beginning at a point which bears North 56 degrees 53' East a distance of
24 feet from the Southeasterly corner of that certain tract of land conveyed to
Henry J. Barbey, et ux, by deed recorded in Book 198, page 240, Deed Records,
Clatsop County, Oregon;
thence North 56 degrees 53' East 385.0 feet;
thence North 24 degrees 30' West 132.0 feet;
thence South 56 degrees 53' West 385.0 feet;
thence South 24 degrees 36' East 132.0 feet to the point of beginning;
Together with the following non-exclusive easement for ingress and egress
over the following described property;
A parcel of land in the Northwest quarter of the Southwest quarter of
Section 7, Township 8 North, Range 9 West, Willamette Meridian, Clatsop County,
Oregon, described as follows:
Beginning at the Southeasterly corner of that certain tract of land
conveyed by Henry J. Barbey and Ethel G. Barbey to Barbey Packing Corp. as
recorded in Book 198, page 240, Clatsop County Records of Deeds, said point
being also on the Northerly right of way line of Spokane, Portland and Seattle
Railroad;
thence North 56 degrees 53' East along said Northerly right of way a
distance of 710.93 feet to the Westerly line of Industry Street;
thence North 24 degrees 30' West a distance of 15.0 feet;
thence South 56 degrees 53' West a distance of 710.93 feet to a point of
intersection with the Easterly line of said Barbey tract;
thence South 24 degrees 30' East along the Easterly line of the Barbey
tract a distance of 15.0 feet to the point of beginning.
ALSO EXCEPTING THEREFROM:
Beginning at an iron pipe which bears North 58 degrees 53' East a distance
of 202.26 feet from the Southwest corner of Parcel No. 1 as described in deed
recorded in Volume 198, Page 240, Deed Records, Clatsop County, Oregon;
thence North 24 degrees 30' West 380.0 feet to a point on the East line of
the Barbey tract as described in Volume 198, Page 240, Deed Records, Clatsop
County, Oregon;
thence North 65 degrees 30' East 46.0 feet;
thence South 24 degrees 30' East 248.0 feet to a point;
thence South 56 degrees 53' West 22.0 feet;
thence South 24 degrees 30' East 132.0 feet;
thence South 56 degrees 53' West 24.0 feet to the point of beginning.
ALSO EXCEPTING THEREFROM:
Beginning at a point on the West line of Parcel No. 1 as described by deed
recorded in Book 198, Page 240, Clatsop County Deed Records, said point being
North 24 degrees 30' West, a distance of 464 feet from the Southwest corner of
said Parcel No. 1; thence North 24 degrees30' West a distance of 72.5 feet;
thence North 65 degrees 30' East a distance of 253 feet;
thence South 24 degrees 30' East a distance of 145.25 feet;
thence South 65 degrees 30' West a distance of 72.5 feet;
<PAGE>
thence North 24 degrees 30' West a distance of 72.75 feet;
thence South 65 degrees 30' West a distance of 180.5 feet to the point of
beginning, all situated in the City of Astoria, County of Clatsop, State of
Oregon.
PARCEL NO. 6:
- - - ------------
That parcel of land bounded on the North by the South line of Industry
Street, on the East by the West line of Basin Street, on the South by the North
right-of-way line of the Spokane, Portland & Seattle (now Burlington Northern)
Railway, and on the West by a line 200 feet, more or less, distant from the West
line of Basin Street and running parallel thereto. All being situate in the City
of Astoria, County of Clatsop, State of Oregon.
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Bend-North, OR)
Lots 1 through 12 in Block 3 of WIESTORIA, City of Bend, Deschutes County,
Oregon, TOGETHER WITH that portion of a vacated alley which inured thereto upon
the vacation thereof, by ORDINANCE NO. 850, recorded July 8, 1971 in Book 176 at
page 956 of Deschutes County Deed Records.
Tax Parcel Number: 1-001 17 12 33 BB 02101 and 1-001 17 12 33 BB 02100
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Coos Bay, OR)
Being a portion of Blocks 35 and 36, of Nasburg's Addition along with a portion
of Blocks 36, 32, 63 and 62, of Bennett's Addition to Coos Bay. Including that
portion of vacated 4th, 5th and 6th Street and 7th Court.
More particularly described as follows:
Beginning at the Southwest corner of Block 35, Nasburg's Addition to Coos Bay;
thence 00 degrees 00' 20" West a distance of 171.17 feet; thence North 60
degrees 30' 00" East a distance of 591.96 feet to a point located on the
Westerly line of U.S. Highway 101; thence along said Westerly line along a curve
to the left having a radius of 1949.86 feet and a central angle of 1 degree 36'
18" a distance of 54.62 feet (whose long chord bears South 40 degrees 18' 48"
East 54.62 feet); thence along a spiral curve to the left having a centerline
length of 300.00 feet and an S value of 4 degrees 30' (whose long chord bears
South 42 degrees 24' 10" East 303.05 feet); thence South 43 degrees 54' 35" East
a distance of 241.83 feet to the beginning of a curve; thence along a curve to
the right having a radius of 13.50 feet and a central angle of 133 degrees 54'
00" a distance of 31.54 feet (whose long chord bears South 23 degrees 02' 25"
West 24.84 feet); thence South 89 degrees 59' 25" West a distance of 471.94
feet; thence North 00 degrees 04' 35" East a distance of 99.97 feet; thence
South 89 degrees 59' 25" West a distance of 242.89 feet, thence South 00 degrees
04' 35" West a distance of 99.97 feet; thence South 89 degrees 59' 25" West a
distance of 197.97 feet, to the point of beginning.
Tax Parcel Number: 251326BB500
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Eugene, OR)
PARCEL 1:
- - - --------
A parcel of land lying within Section 29, Township 17 South, Range 3 West of the
Willamette Meridian, in Lane County, Oregon: Beginning at the concrete monument
designated as Station "A" in County Survey Number 1781, said survey being filed
in Volume 5, Page 41 of County Surveys for Lane County, Oregon, said Station "A"
being East 13.34 chains of the Southeast corner of the Charles W. Young Donation
Land Claim No. 53, Township 17 South, Range 3 West of the Willamette Meridian,
according to said survey; thence South 0 degrees 10'20" East, 957.88 feet along
the West line of said survey to a point, said point being the TRUE POINT OF
BEGINNING; running thence South 0 degrees 10'20" East 382.89 feet along the West
line of said survey to the North line of the Eugene-Springfield Highway; thence
North 77 degrees 37'30" West, 620.02 feet along the North line of said highway;
thence North 1 degrees 31' West 68.07 feet along the North line of said highway
to a point on the Southeasterly line of Coburg Road; thence North 55 degrees
29'21" East 340.90 feet along the Southeasterly line of Coburg Road to a point;
thence South 35 degrees 03'40" East 206.36 feet; thence North 54 degrees 56'20"
East 210.00 feet; thence North 35 degrees 03'40" West 4.31 feet; thence North 48
degrees 03'20" East 50.29 feet to the TRUE POINT OF BEGINNING, all in the City
of Eugene, Lane County, Oregon.
PARCEL 2:
- - - --------
Beginning at a point on the Easterly right of way line of County Road No. 431,
said point being 1142.75 feet North and 181.36 feet West of the Southwest corner
of County Survey No. 1781 in Section 29, Township 17 South, Range 3 West of the
Willamette Meridian; running thence South 34 degrees 32' East 204.46 feet to the
true point of beginning; thence South 55 degrees 28' West 180 feet; thence South
34 degrees 32' East 30 feet; thence North 55 degrees 28' East 180 feet; thence
North 34 degrees 32' West 30 feet to the true point of beginning, in Lane
County, Oregon.
Tax Parcel Number: 170329/000500
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Medford, OR)
The land is situated in the State of Oregon, County of Jackson and is described
as follows:
PARCEL 1:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 28 degrees 43'00" West
273.83 feet, along the Easterly line of North Riverside Avenue, to the center
line of the Northerly wall of the Denison Building for the true point of
beginning; thence continue North 27 degrees 43'00" West 100.00 feet, along said
Easterly line of North Riverside Avenue; thence North 66 degrees 08'20" East
106.08 feet (Record North 66 degrees 08'30" East); thence South 27 degrees
43'00" East 100.00 feet to an intersection of the outside line of the Easterly
wall of the Denison Building with the projection of center line of the Northerly
wall of said Denison Building; thence South 60 degrees 08'30" West 106.08 feet
along the center line and the projection thereof, of the Northerly wall of said
Denison Building, to the true point of beginning. EXCEPTING THEREFROM all that
portion of the Northerly wall of the Denison Building lying Northerly of the
centerline of said wall, including all footings and foundations thereof,
together with the land upon which or underneath which said wall and footings
stand, the centerline of said Northerly wall of the Denison Building being
situated as follows: Beginning at a point on the Easterly line of Riverside
Avenue in the City of Medford, Jackson County, Oregon, said point being North 27
degrees 43' West 224.06 feet from the intersection of said Easterly line of
Riverside Avenue with the Northerly line of East Main Street (said intersection
being also North 34 degrees 12' East 68.0 feet from the intersection of the
Westerly line of Riverside Avenue with the center line of East Main Street);
thence along said Easterly line of Riverside Avenue, North 27 degrees 43' West
49.42 feet to the centerline of Northerly wall of the Denison Building.
PARCEL 2:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 43'00" West
273.83 feet along the Easterly line of North Riverside Avenue to the center line
of the Northerly wall of the Denison Building; thence North 66 degrees 08'30"
East 106.08 feet along the center line and the projection thereof the Northerly
wall of said Denison Building, to an intersection with the outside line of the
Easterly wall of said Denison Building, for the true point of beginning; thence
North 27 degrees 43'00" West 100.00 feet; thence South 66 degrees 08'20" West
(Record South 66 degrees 08'30" West) 106.08 feet to the Easterly line of North
Riverside Avenue; thence North 27 degrees 43'00" West 50.00 feet along the
Easterly line of North Riverside Avenue; thence North 61 degrees 49'00" East
105.84 feet; thence North 27 degrees 43'00" West 111.09 feet; thence North 67
degrees 45'00" East 23.68 feet to a 1 inch galvanized iron pipe; thence North 68
degrees 45'00" East 100.30 feet to a 1 inch galvanized iron pipe; thence North
60"58'42" East 144.73 feet (Record North 61 degrees 00'00" East 144.75 feet);
thence North 14 degrees 30'00" West 60.15 feet (Record 60.13 feet); thence North
80 degrees 00'00" East 83.08 feet to intersect the Westerly right
<PAGE>
of way line of Interstate Highway No. 5; thence along said Westerly right of way
line as follows: South 13 degrees 49'50" East 401.71 feet to intersect the
center line of channel of Bear Creek, and South 4 degrees 22'00" East 177.04
feet along center line of channel of said Bear Creek, to the Northerly line of
East Main Street in the City of Medford, Oregon; thence South 76 degrees 27'23"
West 51.38 feet (Record South 76 degrees 32'35" West 51.41 feet) along said
Northerly line of East Main Street; thence North 17 degrees 28'00" West 138.30
feet; thence South 66 degrees 17'00" West 171.30 feet to the Southeast corner of
the Niedermeyer Building; thence North 23 degrees 29'30" West 49.98 feet along
the outside line of the Easterly wall of said Niedermeyer Building, to the
center line of the Northerly wall of said Niedermeyer Building; thence South 66
degrees 10'00" West 1.92 feet along the center line of said Northerly wall of
said Niedermeyer Building, to a point of intersection with the projected outside
line of the Easterly wall of the Denison Building; thence North 27 degrees
37'10" West 49.81 feet along the outside line of the Easterly wall of said
Denison Building, to the center line of the Northerly wall of said Denison
Building, the true point of beginning. EXCEPTING THEREFROM all that part of said
wall between the Niedermeyer and Denison Buildings extending Easterly from the
said Denison Building.
PARCEL 3:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 43'00" West
273.83 feet along the Easterly line of north Riverside Avenue to the center line
of the Northerly wall of the Denison Building; thence continue North 27 degrees
43'00" West 150.00 feet, along said Easterly line of North Riverside Avenue, to
the true point of beginning; thence continue North 27 degrees 43'00" West 122.08
feet, along said Easterly line of North Riverside Avenue, to a 1 inch iron pipe
at the Northwest corner of "Adkins Tract"; thence North 67 degrees 45'00" East
106.32 feet; thence South 27 degrees 43'00" East 111.09 feet; thence South 61
degrees 49'00" West 105.84 feet to the true point of beginning.
PARCEL 4:
Commencing at a concrete monument with bronze disk located at the intersection
of the center line of North Riverside Avenue with the center line of East Fourth
Street in the City of Medford, Jackson County, Oregon; thence along said East
Fourth Street center line North 71 degrees 03'20" East 30.00 feet; thence
parallel with the monumented center line of North Riverside Avenue, South 18
degrees 40'45" East 298.27 feet to a 5/8 inch iron pin for the true point of
beginning; thence continue South 18 degrees 40'45" East 78.32 feet; thence South
16 degrees 02'20" East 165.00 feet to the Northwest corner of the "Adkins
Tract"; thence to and along the Northwesterly boundary of that parcel described
in Volume 537, Page 13, Jackson County, Oregon, Deed Records, North 67 degrees
50'30" East (record North 67 degrees 45'00" East) 130.05 feet; thence along said
parcel boundary North 68 degrees 51'40" East (record North 68 degrees 45'00"
East) 100.27 feet; thence along said parcel boundary North 61 degrees 05'30"
East (Record North 61 degrees 00'00" East) 144.75 feet; thence along the
Southwesterly boundary of said parcel, North 14 degrees 24'30" West 60.13 feet
(Record North 14 degrees 30'00" West 60.15 feet); thence along the Northwesterly
boundary of said parcel, North 80 degrees 05'30" East, 83.11 feet (record North
80 degrees 00'00" East 83.08 feet) to intersect the Southwesterly right of way
line of Interstate Highway No. 5; thence along said highway line North 13
degrees 44' West 110.98 feet; thence along the Southwesterly boundary of the
tract described in Final Judgment rendered November 2,
<PAGE>
1953, in the Circuit Court of Oregon for Jackson County, under Case No. 53-188-E
and recorded in Volume 115, Page 347, of the Circuit Court Journal, North
27 degrees 42' West 312.02 feet to the Southeasterly boundary of East Fourth
Street; thence along said street boundary, South 71 degrees 03'20" West 213.37
feet to the most Northerly corner of that tract described in Volume 579, Page
429, said Deed Records; thence along the Northeasterly boundary of said tract,
South 18 degrees 56'40" East 154.75 feet to the most Easterly corner thereof;
thence along the Southeasterly boundary of said tract, South 77 degrees 58' West
57.86 feet; thence along the Southeasterly boundary of said tract South
76 degrees 53'50" West 17.03 feet; thence South 18 degrees 40'45" East 112.80
feet; thence South 71 degrees 19'15" West 125 feet to the true point of
beginning.
PARCEL 5:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 36'40" West
(record North 27 degrees 33'00" West) 545.91 feet along the easterly line of
North Riverside Avenue to a 1 inch pipe at the Northwest corner of "Adkins
Tract"; thence North 16 degrees 40'45" West along said Easterly line 165.59
feet; thence North 18 degrees 40'45" West along said Easterly line 203.25 feet
to the true point of beginning; thence South 18 degrees 40'45" East along said
Easterly line 125.00 feet; thence North 71 degrees 19'15" East, at right angles
to the said Easterly line of North Riverside Avenue, 125.00 feet; thence North
18 degrees 40'45" West parallel with the said Easterly line to a point on the
South line of tract described in Volume 579, Page 427, Jackson County, Oregon,
Deed Records; thence South 76 degrees 53'50" West along said line to the true
point of beginning.
Tax Parcel Numbers: 371W30BB 9900, 371W30BB 10000, 371W30BB 10100,
371W30BB 10300, and 371W30BB 10301
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Pendleton, OR)
TRACT I:
- - - -------
Lot 2, Block 5, REES ADDITION to City of Pendleton, Umatilla County, Oregon;
ALSO Block 3, REES ADDITION to City of Pendleton, Umatilla County, Oregon,
EXCEPTING THEREFROM that portion thereof under lease to Atlantic Richfield
Corporation and described as following:
Beginning at the Southeast corner of said Block 3, located in the South half
of Section 11, Township 2 North, Range 32 East of the Willamette Meridian,
Umatilla County, Oregon; thence South 78 degrees 28'20" West a distance of 250
feet to a point; thence Northerly a distance of 130 feet, more or less, to a
point on the North line of said Block 3, which bears South 87 degrees 18'10"
West a distance of 216 feet from the Northeast corner of said Block 3; thence
North 87 degrees 18'10" East a distance of 216 feet to the Northeast corner of
said Block 3; thence Southerly along the Easterly line of said Block 3 a
distance of 90.36 feet to the point of beginning.
TRACT II:
- - - --------
Lot 1, Block 5, REES ADDITION to City of Pendleton, Umatilla County, Oregon.
Tax Parcel Numbers: 112270-00600
112271-00700
112274-00800
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Salt Lake City, Utah)
BEGINNING at a point which is North 200.00 feet from the Southwest corner of
Block 58, Plat "A", Salt Lake City Survey, and running thence North 302.83 feet;
thence East 244.55 feet; thence South 302.83 feet; thence West 244.55 feet to
the point of BEGINNING.
TOGETHER WITH the rights contained in that certain Revocable Permit executed by
Salt Lake City Corporation, recorded August 9, 1983 as Entry No. 3829041 in Book
5481 at page 1600 of Official Records, as modified and superseded by that
certain Lease Agreement to Occupy Public Property by and between Salt Lake City
Corporation, a municipal corporation, as lessor, and Red Lion, a California
Limited Partnership, as lessee, dated May 17, 1988. The Lease Agreement was
renewed for an additional five years through May 16, 1998, pursuant to Notice of
Renewal of Lease Agreement to Occupy Public Property dated November 6, 1992.
ALSO TOGETHER WITH all rights, privileges, conditions, etc., as set forth in
that certain Reciprocal Easement and Maintenance Agreement with Conditions,
Covenants and Restrictions recorded March 20, 1981 as Entry No. 3566733 in Book
5250 at pages 640 through 737 of Official Records; as amended by that certain
Amendment to Reciprocal Easement and Maintenance Agreement with Conditions,
Covenants and Restrictions recorded February 19, 1988 as Entry No. 4587998, in
Book 6005, at Page 591 of Official Records.
ALSO TOGETHER WITH all rights, privileges, conditions, etc., as set forth in
that certain Cross Easement recorded December 31, 1987 as Entry No. 456856 in
Book 5993 at page 448 of Official Records.
Tax Parcel Number: 1501 280 050
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Kelso, WA)
IN THE COUNTY OF COWLITZ, STATE OF WASHINGTON
PARCEL A:
A tract of land in Sections 26 and 35, Township 8 North, Range 2 West of the
Willamette Meridian, lying Easterly of the Easterly right of way line of
Frontage Road No. 1, as proposed, and lying Westerly of the center line of the
existing drainage slough, being more particularly described as follows:
BEGINNING at a point on the line between Sections 26 and 35, where the same
intersects the center line of said drainage slough, said point being North
88 degrees 57' West a distance of 1,889.02 feet from the Southeast corner of
Section 26; thence South 37 degrees 38' East along the center line of said
drainage slough a distance of 415.51 feet;
thence North 88 degrees 57' West parallel with the section line between Sections
26 and 35, a distance of 645.63 feet, more or less, to the Easterly right of way
line of proposed Frontage Road No. 1;
thence North 8 degrees 16' East along the Easterly right of way of said proposed
Frontage Road a distance of 280.31 feet to a point that is North 88 degrees 04'
East a distance of 127.60 feet from a concrete post set to mark the Easterly
right of way of existing Interstate Highway No. 5 at Engineer's Station 510+00;
thence continuing North 8 degrees 16' East along the Easterly line of the
proposed Frontage Road a distance of 360.19 feet to the point of curvature of a
curve to the right;
thence along said curve having a radius of 400.00 feet, through a central angle
of 3 degrees 36' 54", an arc distance of 25.24 feet to a point that is a
distance of 216.55 feet North 88 degrees 04' East from the Easterly right of way
line of present Interstate Highway No. 5;
thence North 88 degrees 04' East a distance of 208.98 feet to the center line of
the aforementioned slough;
thence along the center line of said slough South 18 degrees 45' West a distance
of 78.60 feet;
thence South 17 degrees 39' East a distance of 230.80 feet;
thence South 37 degrees 38' East along the center line of said slough a distance
of 68.37 feet to the point of beginning.
TOGETHER WITH an easement for ingress and egress, 25 feet in width, lying South
of and abutting the Westerly extension of the North line of the above described
tract, and extending from the Easterly right of way line of Primary State
Highway No. 1 to the Westerly line of said premises.
TOGETHER WITH a non-exclusive right of way and easement over the following:
A tract of land in Section 26, Township 8 North, Range 2 West of the Willamette
Meridian, described as follows:
<PAGE>
BEGINNING at a point on the Easterly right of way line of Primary State Highway
No. 1 North 1 degrees 56' West a distance of 314.1 feet and West 2389.6 feet
from the Southeast corner of Section 26;
thence along said right of way North 1 degrees 56' West a distance of 28.7 feet
to a point at right angles to center line Station 514+07.5 of said highway;
thence along said right of way North 3 degrees 51' 30" West a distance of 195.8
feet to a point on a radial line from center line station 516+00 and marked by a
concrete post;
thence along said right of way on a curve to the right having a radius of 381.26
feet for 75.5 feet to the center line of the box culvert under said highway and
also the center line of a ditch that bears North 76 degrees 00' East;
thence along said right of way on a curve to the right having a radius of 381.26
feet for 110.0 feet;
thence Southerly to a point which is Easterly of said highway right of way line
25 feet on the center line of said ditch that bears North 76 degrees 00' East;
thence Southerly on a line that is parallel to and 25 feet Easterly of said
highway right of way line to the point of intersection with a line that bears
North 88 degrees 04' East from the point of beginning;
thence Westerly along said line to the point of beginning.
EXCEPTING THEREFROM those portions conveyed to the Department of Highways by
deed recorded under Auditor's File Nos. 787154 and 787155.
PARCEL B:
BEGINNING 1476.4 feet North 1 degrees 38' East and 1882.7 feet North 88 degrees
22' West from the Southeast corner of said Section 26, Township 8 North, Range 2
West, Willamette Meridian, Cowlitz County, Washington, said point being the
Northeast corner of a 5.5 acre tract of land described in Volume 620, Page 571,
Cowlitz County, Washington, deed records;
thence along the center of a ditch South 4 degrees 00' East 369.2 feet;
thence South 28 degrees 55' West 262.06 feet to a point 50.00 feet distant at
right angles to State Highway centerline FR RD NO. (1) 29+32.79 P.C.;
thence continuing parallel to the FR RD NO. (1) centerline South 30 degrees 15'
59" West 278.17 feet to a point 50.00 feet distant at right angles to centerline
station FR RD NO. (1) 26+54.62 P.T.;
thence continuing parallel to the FR RD NO. (1) centerline along a curve left
having a radius of 950.00 feet (the long chord of which bears South 24 degrees
34' 58" West 188.17 feet) 188.48 feet to the true point of beginning;
thence continuing parallel to the FR RD NO. (1) centerline along a curve having
a radius of 950.00 feet (the long chord of which bears South 15 degrees 43' 57"
West 104.95 feet) 105.00 feet;
thence North 89 degrees 42' East 224.88 feet to the center of an old river
channel;
thence North 20 degrees 32' East along the center of said channel 105.00 feet;
thence North 89 degrees 38' 21" West 233.27 feet to the true point of beginning.
Tax Parcel Numbers:2-4021-1 and 2-4023-01
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sea-Tac, WA )
---------------
THE LAND IS SITUATED IN THE STATE OF WASHINGTON, COUNTY OF KING
AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT OF INTERSECTION OF THE EAST LINE OF THE NORTHEAST QUARTER
OF THE SOUTHEAST QUARTER OF SAID SECTION 33, WITH THE NORTH LINE OF SOUTH 188TH
STREET, AS ESTABLISHED BY DEEDS RECORDED UNDER RECORDING NOS. 2522597 AND
5350935;
THENCE ALONG THE EAST LINE OF SAID NORTHEAST QUARTER, NORTH 3 DEGREES 04'29"
EAST 230.00 FEET TO THE TRUE POINT OF BEGINNING.
THENCE PARALLEL WITH SAID NORTH LINE, NORTH 88 DEGREES 10'06" WEST 177.36 FEET;
THENCE SOUTH 12 DEGREES 54'07" WEST 234.31 FEET TO SAID NORTH LINE;
THENCE ALONG THE NORTH LINE OF SAID SOUTH 188TH STREET, NORTH 88 DEGREES 10'06"
WEST 495.05 FEET TO THE EASTERLY LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY 99) AS
ESTABLISHED IN KING COUNTY SUPERIOR COURT CAUSE NO. 181371;
THENCE ALONG SAID EASTERLY LINE, NORTH 1 DEGREES 42'50" WEST 1,252.79 FEET TO
THE NORTH LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID NORTH LINE, SOUTH 88 DEGREES 37'38" EAST 817.18 FEET TO THE
EAST LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID EAST LINE, SOUTH 3 DEGREES 04'29" WEST 1,027.23 FEET TO THE
TRUE POINT OF BEGINNING;
EXCEPT THOSE PORTIONS CONVEYED TO KING COUNTY FOR ROAD PURPOSES BY DEEDS
RECORDED JUNE 8, 1982 UNDER RECORDING NOS. 8206080659 AND 8206080664;
ALSO EXCEPT THE FOLLOWING DESCRIBED PARCEL OF LAND;
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY
NO. 99) AS ESTABLISHED IN KING COUNTY SUPERIOR COURT NO. 181371; WITH THE NORTH
LINE OF SOUTH 188TH STREET AS ESTABLISHED BY DEEDS RECORDED UNDER RECORDING NOS.
2522597 AND 5350935;
<PAGE>
THENCE NORTH 01 DEGREES 42'50" WEST ALONG SAID EAST LINE OF STATE ROAD NO. 1, A
DISTANCE OF 1,053.40 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING NORTH 01 DEGREES 42'50" WEST, ALONG SAID EAST LINE OF STATE
ROAD NO. 1, A DISTANCE OF 199.39 FEET TO THE NORTH LINE OF SAID NORTHEAST
QUARTER;
THENCE SOUTH 88 DEGREES 37'38" EAST, ALONG SAID NORTH LINE, A DISTANCE OF 220.00
FEET;
THENCE SOUTH 17 DEGREES 50'30" WEST, A DISTANCE OF 208.17 FEET;
THENCE NORTH 88 DEGREES 25'22" WEST, A DISTANCE OF 150.25 FEET TO THE TRUE POINT
OF BEGINNING;
ALSO EXCEPT THE FOLLOWING DESCRIBED PARCEL OF LAND:
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY
NO. 99) AS ESTABLISHED IN KING COUNTY SUPERIOR COURT CAUSE NO. 181371, WITH THE
NORTH LINE OF SOUTH 188TH STREET, AS ESTABLISHED BY DEEDS RECORDED UNDER
RECORDING NOS. 2522597 AND 5350935;
THENCE NORTH 01 DEGREES 55'06" WEST ALONG SAID EAST LINE OF STATE ROAD NO. 1, A
DISTANCE OF 818.40 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING NORTH 01 DEGREES 55'06" WEST ALONG SAID EAST LINE OF STATE
ROAD NO. 1, A DISTANCE OF 235.00 FEET;
THENCE SOUTH 88 DEGREES 37'38" EAST, A DISTANCE OF 150.25 FEET;
THENCE SOUTH 01 DEGREES 55'06" EAST A DISTANCE OF 171.04 FEET;
THENCE SOUTH 67 DEGREES 49'54" WEST, A DISTANCE OF 159.88 FEET TO THE TRUE POINT
OF BEGINNING.
PARCEL B:
LOT 1, KING COUNTY SHORT PLAT NO. 477027, AS RECORDED UNDER KING COUNTY
RECORDING NO. 7802270909.
PARCEL C:
THAT PORTION OF LOT 7, BLOCK 1, BOW VISTA NO. 4, ACCORDING TO THE PLAT THEREOF
RECORDED IN VOLUME 57 OF PLATS, PAGE 1, RECORDS OF KING COUNTY, WASHINGTON, AND
THAT PORTION OF LOT 1, BLOCK 3, BOW VISTA NO. 2, ACCORDING TO THE PLAT THEREOF
RECORDED IN VOLUME 53 OF PLATS, PAGES 46 AND 47, RECORDS OF KING COUNTY,
WASHINGTON, LYING NORTHWESTERLY OF A LINE DRAWN BETWEEN THE SOUTHWEST CORNER OF
SAID LOT 7 AND THE NORTHEAST CORNER OF SAID LOT 1, THE BEARING AND DISTANCE OF
SAID LINE BEING NORTH 42 DEGREES 53'49" EAST FOR 210.04 FEET.
<PAGE>
ALL SITUATE IN THE COUNTY OF KING, STATE OF WASHINGTON.
TAX PARCEL NUMBERS: 332304-9207-00 AND 342304-9234-09
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Vancouver/Inn at the Quay, WA)
-----------------------------
PARCEL A
- - - --------
THAT CERTAIN PORTION OF THE AMOS SHORT DONATION LAND CLAIM, AND ABUTTING TIDE
LAND LOCATED IN SECTION 27, TOWNSHIP 2 NORTH, RANGE 1 EAST OF THE WILLAMETTE
MERIDIAN, IN THE COUNTY OF CLARK, STATE OF WASHINGTON, BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WEST LINE OF COLUMBIA STREET THAT IS SOUTH 0 DEGREES
44'45" WEST 43.00 FEET FROM THE INTERSECTION OF THE NORTHERLY LINE OF THE PUBLIC
LEVEE WITH THE WEST LINE OF SAID STREET RUNNING THENCE SOUTH 0 DEGREES 44'45"
WEST 396.81 FEET TO THE INNER HARBOR LINE; THENCE NORTH 64 DEGREES 25'39" WEST,
ALONG SAID LINE 508.35 FEET; THENCE NORTH 25 DEGREES 34'21" EAST 77.37 FEET;
THENCE SOUTH 68 DEGREES 52'14" EAST 91.22 FEET; THENCE NORTH 29 DEGREES 11' EAST
229.00 FEET; THENCE SOUTH 75 DEGREES 44'12" EAST 241.01 FEET TO THE POINT OF
BEGINNING. EXCEPTING, HOWEVER, A STRIP OF LAND 30 FEET WIDE TO BE USED AS ACCESS
ROAD PURPOSES, BEING 15 FEET ON EITHER SIDE OF THE FOLLOWING DESCRIBED CENTER
LINE: BEGINNING AT A POINT ON THE WEST LINE OF SAID COLUMBIA STREET THAT IS
SOUTH 0 DEGREES 44'45" WEST 92.53 FEET FROM THE NORTHERLY LINE OF THE
AFOREMENTIONED LEVEE; THENCE SOUTHWESTERLY ALONG THE ARC OF A CURVE TO THE
RIGHT, HAVING A RADIUS OF 165.02 FEET; THROUGH A CENTRAL ANGLE OF 41 DEGREES
57'58" AN ARC DISTANCE OF 120.87 FEET; THENCE SOUTH 78 DEGREES 32'58" WEST
104.05 FEET; THENCE ALONG THE ARC OF A CURVE TO THE RIGHT, HAVING A RADIUS OF
288.43 FEET THROUGH A CENTRAL ANGLE OF 27 DEGREES 13'22," AN ARC LENGTH OF
137.46 FEET TO THE WESTERLY LINE OF THE ABOVE DESCRIBED PROPERTY, AND THE
TERMINUS OF SAID LINE.
PARCEL B
- - - --------
BEGINNING AT THE POINT OF INTERSECTION OF THE EAST LINE OF COLUMBIA STREET AND
THE INNER HARBOR LINE, SAID POINT BEING NORTH 93.05 FEET AND WEST 510.8 FEET
FROM THE SOUTHEAST CORNER OF THE AMOS SHORT DONATION LAND CLAIM; THENCE NORTH
64 DEGREES 25'39" WEST 170.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH
25 DEGREES 34'21" WEST 150.00 FEET TO THE OUTER HARBOR LINE; THENCE NORTH
64 DEGREES 25'39" WEST ALONG SAID OUTER HARBOR LINE 426.50 FEET; THENCE NORTH
25 DEGREES 34'21" EAST 150.00 FEET TO THE AFOREMENTIONED INNER HARBOR LINE;
THENCE SOUTH 64 DEGREES 25'39" EAST 426.50 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL C
- - - --------
<PAGE>
BEGINNING AT A POINT ON THE WEST LINE OF COLUMBIA STREET THAT IS SOUTH 0 DEGREES
44'45" WEST 43.00 FEET FROM THE INTERSECTION OF SAID WEST LINE WITH THE
NORTHERLY LINE OF THE PUBLIC LEVEE SHOWN ON THE PLAT OF THE TOWN OF VANCOUVER,
RECORDED IN VOLUME "B" OF PLATS, PAGE 40, IN CLARK COUNTY, WASHINGTON; THENCE
CONTINUING SOUTH 0 DEGREES 44'45" WEST 396.81 FEET TO THE INNER HARBOR LINE;
THENCE NORTH 64 DEGREES 25'39" WEST ALONG SAID LINE 508.35 FEET; THENCE NORTH
25 DEGREES 34'21" EAST 77.37 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH
68 DEGREES 52'14" EAST 91.22 FEET; THENCE NORTH 29 DEGREES 11'00" EAST 229.00
FEET; THENCE NORTH 75 DEGREES 44'12" WEST 107.46 FEET; THENCE SOUTH 25 DEGREES
34'21" WEST 214.54 FEET TO THE AFORESAID TRUE POINT OF BEGINNING.
PARCEL D
- - - --------
THE SOUTH HALF OF LOTS 1, 2, 3 AND 4 AND THE WEST 25 FEET OF THE NORTH HALF OF
LOT 4, ALL OF LOTS 5, 6, 7 AND 8 IN BLOCK 17, PLAT OF THE CITY OF VANCOUVER
(COMMONLY KNOWN AS WEST VANCOUVER) ACCORDING TO THE PLAT THEREOF APPEARING IN
BOOK "A" OF GENERAL RECORDS, AT PAGE 84.
TOGETHER WITH TRACTS 27 AND 28 OF VANCOUVER TIDELANDS AS SHOWN ON THE PLAT OF
STATE LAND COMMISSION APPROVED MAY 8, 1906.
EXCEPTING FROM THE ABOVE DESCRIBED PROPERTY THAT PORTION TAKEN BY THE UNITED
STATES OF AMERICA FOR THE SHIPYARD ACCESS ROAD, PURSUANT TO SUPERIOR COURT CAUSE
NO. 24115, AND EXCEPTING THAT PORTION TAKEN BY THE STATE OF WASHINGTON FOR THE
INTERSTATE BRIDGE APPROACHES, PURSUANT TO SUPERIOR COURT CAUSE NO. 32160.
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Wenatchee, WA)
Situated in the County of Chelan, State of Washington, described as follows:
Lots 1, 2, 3 and 4, Block 11, SUBURBAN HOME ADDITION TO WENATCHEE, Chelan
County, Washington, according to the plat thereof recorded in Volume 1 of Plats,
Page 22, EXCEPT the Southerly 76.9 feet of said Lots 3 and 4.
Tax Parcel Number: 23-20-34-860080
<PAGE>
EXHIBIT B
LEASE ALLOCATION
<TABLE>
<CAPTION>
================================================================================
ALLOCATED PERCENTAGE OF
PROPERTY AMOUNT OF TOTAL BASE BASE REVENUE
BASE RENT RENT
- - - --------------------------------------------------------------------------------
<S> <C> <C>
Astoria 181,115 1.21%
- - - --------------------------------------------------------------------------------
Bend North 144,820 0.97%
- - - --------------------------------------------------------------------------------
Boise 404,423 2.70%
- - - --------------------------------------------------------------------------------
Coos Bay 118,450 0.79%
- - - --------------------------------------------------------------------------------
Durango 860,668 5.74%
- - - --------------------------------------------------------------------------------
Eugene 417,660 2.78%
- - - --------------------------------------------------------------------------------
Kelso 360,342 2.40%
- - - --------------------------------------------------------------------------------
Medford 578,378 3.86%
- - - --------------------------------------------------------------------------------
Missoula 145,220 0.97%
- - - --------------------------------------------------------------------------------
Pendleton 434,170 2.89%
- - - --------------------------------------------------------------------------------
Rohnert Park/Sonoma 733,106 4.89%
- - - --------------------------------------------------------------------------------
Sacramento 1,352,228 9.01%
- - - --------------------------------------------------------------------------------
Salt Lake 2,687,691 17.92%
- - - --------------------------------------------------------------------------------
San Diego 1,122,198 7.48%
- - - --------------------------------------------------------------------------------
Seatac 4,503,580 30.02%
- - - --------------------------------------------------------------------------------
Vancouver 586,220 3.91%
- - - --------------------------------------------------------------------------------
Wenatchee 369,731 2.46%
- - - --------------------------------------------------------------------------------
TOTALS 15,000,000 100.00%
================================================================================
</TABLE>
<PAGE>
Exhibit 10.4
================================================================================
CREDIT AGREEMENT
among
RED LION HOTELS, INC.,
VARIOUS LENDING INSTITUTIONS
and
CREDIT LYONNAIS NEW YORK BRANCH
as
ADMINISTRATIVE AGENT
____________________________________
Dated as of July 31, 1995
____________________________________
$265,000,000
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit................................. 1
1.01 Commitments................................................ 1
1.02 Minimum Borrowing Amounts, etc. ........................... 4
1.03 Notice of Borrowing........................................ 4
1.04 Disbursement of Funds...................................... 5
1.05 Notes...................................................... 6
1.06 Conversions................................................ 7
1.07 Pro Rata Borrowings........................................ 7
1.08 Interest................................................... 7
1.09 Interest Periods........................................... 8
1.10 Increased Costs, Illegality, etc. ......................... 10
1.11 Compensation............................................... 12
1.12 Change of Lending Office................................... 12
1.13 Replacement of Banks....................................... 13
SECTION 2. Letters of Credit.......................................... 14
2.01 Letters of Credit.......................................... 14
2.02 Existing Letters of Credit................................. 14
2.03 Letter of Credit Requests; Notices of Issuance............. 15
2.04 Agreement to Repay Letter of Credit Drawings............... 15
2.05 Letter of Credit Participations............................ 16
2.06 Increased Costs............................................ 18
SECTION 3. Fees; Commitments.......................................... 19
3.01 Fees....................................................... 19
3.02 Voluntary Reduction of Commitments......................... 20
3.03 Mandatory Adjustments of Commitments, etc. ................ 20
SECTION 4. Payments................................................... 20
4.01 Voluntary Prepayments...................................... 21
4.02 Mandatory Prepayments...................................... 21
4.03 Method and Place of Payment................................ 25
4.04 Net Payments............................................... 25
SECTION 5. Conditions Precedent....................................... 28
5.01 Conditions Precedent to Initial Borrowing Date............. 28
5.02 Conditions Precedent to All Credit Events.................. 35
SECTION 6. Representations, Warranties and Agreements................. 36
6.01 Corporate Status........................................... 36
6.02 Corporate Power and Authority.............................. 36
6.03 No Violation............................................... 37
(i)
<PAGE>
Page
----
6.04 Litigation................................................. 37
6.05 Use of Proceeds; Margin Regulations........................ 37
6.06 Governmental Approvals..................................... 38
6.07 True and Complete Disclosure............................... 38
6.08 Financial Condition; Financial Statements.................. 38
6.09 Security Interests......................................... 39
6.10 Representations and Warranties in Transaction Documents.... 40
6.11 Tax Returns and Payments................................... 40
6.12 Compliance with ERISA...................................... 40
6.13 Subsidiaries............................................... 41
6.14 Intellectual Property, etc. ............................... 41
6.15 Environmental Matters...................................... 41
6.16 Properties................................................. 42
6.17 Labor Relations; Collective Bargaining Agreements.......... 43
6.18 Indebtedness............................................... 43
6.19 Transaction................................................ 43
6.20 Certain Material Agreements................................ 43
6.21 Third-Party Rights......................................... 44
SECTION 7. Affirmative Covenants...................................... 44
7.01 Reporting Requirements..................................... 44
7.02 Books, Records and Inspections............................. 47
7.03 Insurance.................................................. 47
7.04 Payment of Taxes........................................... 48
7.05 Corporate Franchises....................................... 48
7.06 Compliance with Statutes, etc. ............................ 48
7.07 Good Repair................................................ 48
7.08 Compliance with Environmental Laws......................... 49
7.09 End of Fiscal Years; Fiscal Quarters....................... 50
7.10 Interest Rate Hedging...................................... 50
7.11 Additional Security; Further Assurances.................... 50
7.12 ERISA...................................................... 51
SECTION 8. Negative Covenants......................................... 52
8.01 Changes in Business........................................ 52
8.02 Consolidation, Merger or Sale of Assets, etc. ............. 52
8.03 Liens...................................................... 55
8.04 Indebtedness............................................... 57
8.05 Additional Limitations on Indebtedness for Borrowed Money.. 58
8.06 Advances, Investments and Loans............................ 60
8.07 Capital Expenditures; Leases............................... 62
8.08 Prepayments of Indebtedness, Modifications of
Agreements,etc. ........................................... 62
8.09 Dividends, etc. ........................................... 62
8.10 Transactions with Affiliates............................... 63
(ii)
<PAGE>
Page
----
8.11 Construction Activities.................................... 63
8.12 Leverage Ratio............................................. 63
8.13 Debt Service Coverage...................................... 64
8.14 Interest Coverage.......................................... 64
8.15 Net Worth.................................................. 64
8.16 Capitalization............................................. 64
8.17 Creation of Subsidiaries................................... 64
SECTION 9. Events of Default.......................................... 64
9.01 Payments................................................... 64
9.02 Representations, etc....................................... 65
9.03 Covenants.................................................. 65
9.04 Default Under Other Agreements............................. 65
9.05 Bankruptcy, etc............................................ 65
9.06 ERISA...................................................... 66
9.07 Security Documents......................................... 66
9.08 Judgments.................................................. 66
9.09 Master Lease............................................... 67
9.10 Change of Control.......................................... 67
SECTION 10. Definitions................................................ 67
SECTION 11. The Administrative Agent................................... 93
11.01 Appointment................................................ 93
11.02 Delegation of Duties....................................... 93
11.03 Exculpatory Provisions..................................... 93
11.04 Reliance by Administrative Agent........................... 94
11.05 Notice of Default.......................................... 94
11.06 Non-Reliance............................................... 95
11.07 Indemnification............................................ 95
11.08 The Administrative Agent in Individual Capacity............ 96
11.09 Successor Administrative Agent............................. 96
SECTION 12. Miscellaneous.............................................. 96
12.01 Payment of Expenses, etc................................... 96
12.02 Right of Setoff............................................ 97
12.03 Notices.................................................... 98
12.04 Benefit of Agreement....................................... 98
12.05 No Waiver; Remedies Cumulative............................. 101
12.06 Payments Pro Rata.......................................... 101
12.07 Calculations; Computations................................. 102
12.08 Governing Law; Submission to Jurisdiction;
Venue; Waiver of Jury Trial................................ 102
12.09 Counterparts............................................... 103
12.10 Effectiveness.............................................. 103
(iii)
<PAGE>
Page
----
12.11 Headings Descriptive....................................... 103
12.12 Amendment or Waiver........................................ 103
12.13 Survival................................................... 104
12.14 Domicile of Loans.......................................... 104
12.15 Confidentiality............................................ 104
12.16 Bank Register.............................................. 105
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Subsidiaries/Consolidated Joint Ventures
ANNEX IV -- Real Properties
ANNEX V -- Existing Indebtedness
ANNEX VI -- Existing Liens
ANNEX VII -- Existing Advances, Loans and Investments
ANNEX VIII -- Government and Third-Party Approvals
ANNEX IX -- Existing Letters of Credit
ANNEX X -- Transactions with Affiliates
ANNEX XI -- Environmental Matters
ANNEX XII -- Test Period Financial Information
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of Term Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT B-3 -- Form of Swingline Note
EXHIBIT C-1 -- Form of Opinion of Latham & Watkins
Special Counsel to the Borrower
EXHIBIT C-2 -- Form of Opinion of General Counsel to Borrower
EXHIBIT C-3 -- Form of Opinion of White & Case,
Special Counsel to the Banks
EXHIBIT D -- Form of Officers' Certificate
EXHIBIT E -- Form of Pledge Agreement
EXHIBIT F -- Form of Security Agreement
EXHIBIT G -- Form of Solvency Certificate
EXHIBIT H -- Form of Consent Letter
EXHIBIT I -- Form of Assignment Agreement
(iv)
<PAGE>
CREDIT AGREEMENT, dated as of July 31, 1995, among RED LION HOTELS,
INC. (the "Borrower"), a Delaware corporation, the lending institutions listed
from time to time on Annex I hereto (each a "Bank" and, collectively, the
"Banks") and CREDIT LYONNAIS NEW YORK BRANCH as Administrative Agent. Unless
otherwise defined herein, all capitalized terms used herein and defined in
Section 10 are used herein as so defined.
W I T N E S S E T H :
-------------------
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (A) Subject to and upon the terms and conditions
-----------
herein set forth, each Bank severally agrees to make a loan or loans (each a
"Loan" and, collectively, the "Loans") to the Borrower, which Loans shall be
drawn, to the extent such Bank has a commitment under such Facility, under the
Term Facility or the Revolving Facility, as set forth below:
(a) Loans under the Term Facility (each a "Term Loan" and,
collectively, the "Term Loans"): (i) shall be made pursuant to a single
borrowing on the Initial Borrowing Date; (ii) except as hereinafter
provided, may, at the option of the Borrower, be incurred and maintained
as, and/or converted into, Base Rate Loans or Eurodollar Loans, provided
--------
that all Term Loans made by all Banks pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Term
Loans of the same Type; and (iii) shall not exceed in aggregate principal
amount for any Bank at the time of incurrence thereof the Term Commitment,
if any, of such Bank as in effect on such date. Once repaid, Term Loans
borrowed hereunder may not be reborrowed.
(b) Loans under the Revolving Facility (each a "Revolving Loan" and,
collectively, the "Revolving Loans"): (i) shall be made at any time and
from time to time on and after the Initial Borrowing Date and prior to the
RF Maturity Date; (ii) except as hereinafter provided, may, at the option
of the Borrower, be incurred and
<PAGE>
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (x) prior to the Syndication Date, Revolving Loans may only
--------
be incurred as Eurodollar Loans on the first day of a PSD Interest Period
and (y) all Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of Revolving Loans
of the same Type; (iii) may be repaid and reborrowed in accordance with the
provisions hereof; and (iv) shall not exceed for any Bank at any time
outstanding that aggregate principal amount which, when added to the
product of (x) such Bank's RF Percentage and (y) the sum of the Letters of
Credit Outstandings and the outstanding principal amount of Swingline
Loans, in each case at such time, equals the Revolving Commitment of such
Bank at such time. In addition (x) the aggregate outstanding principal
amount of all Acquisition Loans for all Banks at any time shall not exceed
the Acquisition Sublimit at such time and (y) the sum of (i) the aggregate
outstanding principal amount of all Working Capital Loans for all Banks at
any time plus (ii) the aggregate outstanding principal amount of all
Swingline Loans at such time plus (iii) the Letter of Credit Outstandings
at such time shall not exceed the Working Capital Sublimit at such time.
(B) Subject to and upon the terms and conditions herein set forth,
the Swingline Lender severally agrees, at any time and from time to time on and
after the Initial Borrowing Date and prior to the Swingline Maturity Date, to
make a loan or loans (each a "Swingline Loan" and, collectively, the "Swingline
Loans") to the Borrower, which Swingline Loans:
(i) shall be Base Rate Loans;
(ii) shall have the benefit of the provisions of Section 1.01(C);
(iii) shall not exceed in the aggregate at any one time
outstanding the Swingline Commitment at such time;
(iv) shall not exceed in the aggregate for all Swingline Loans at
any one time outstanding, when combined with the aggregate principal amount
of all Revolving Loans then outstanding and all Letter of Credit
Outstandings at such time, the Total Revolving Commitment then in effect;
and
(v) may be repaid and reborrowed in accordance with the provisions
hereof.
On (x) the Swingline Maturity Date, all Swingline Loans shall be repaid in full
and (y) the last Business Day of each calendar quarter, all Swingline Loans
shall be repaid in full and may not be reborrowed until the next succeeding
Business Day, provided that repayment
--------
-2-
<PAGE>
of the Swingline Loans pursuant to this clause (y) shall not be required on any
such last Business Day to the extent that (x) the Swingline Lender has notified
the Borrower that it has waived such payment or (y) there were no Swingline
Loans outstanding at the end of at least one Business Day occurring during such
calendar quarter. The Swingline Lender will not make a Swingline Loan after it
has received written notice from the Required Banks that one or more of the
applicable conditions to Credit Events specified in Section 5 are not then
satisfied. In addition, the Swingline Lender shall not be required to make a
Swingline Loan while a Bank Default exists unless the Swingline Lender has
entered into arrangements satisfactory to it and the Borrower to eliminate the
Swingline Lender's risk with respect to the participation in Mandatory
Borrowings by the Defaulting Bank or Banks, including by cash collateralizing
same.
(C) On any Business Day, the Swingline Lender may, in its sole
discretion, give notice to the Administrative Agent that all then outstanding
Swingline Loans shall be funded with a Borrowing of Revolving Loans (provided
--------
that such notice shall be deemed to have been automatically given by the
Swingline Lender upon the occurrence of an Event of Default under Section 9.05),
in which case a Borrowing of Revolving Loans constituting Base Rate Loans (each
such Borrowing, a "Mandatory Borrowing") shall be made on the immediately
succeeding Business Day by all Banks with Revolving Commitments pro rata based
--- ----
on each Bank's RF Percentage, and the proceeds thereof shall be applied directly
to repay the Swingline Lender for all outstanding Swingline Loans. Each Bank
hereby irrevocably agrees to make Base Rate Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the date specified in writing by the Swingline
Lender notwithstanding:
(i) whether any conditions specified in Section 5 are then
satisfied;
(ii) whether a Default or an Event of Default has occurred and is
continuing;
(iii) the date of such Mandatory Borrowing; and
(iv) any reduction in the Total Revolving Commitment after any such
Swingline Loans were made.
In the event that any Mandatory Borrowing cannot for any reason be made on the
date otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each Bank with a Revolving Commitment (other than the Swingline
Lender) hereby agrees that it shall forthwith purchase from the Swingline Lender
(without recourse or warranty) such assignment of its outstanding Swingline
Loans as shall be necessary to cause the Banks with Revolving Commitments to
share in such Swingline Loans ratably based upon their re-
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<PAGE>
spective RF Percentages, provided that all interest payable on such Swingline
--------
Loans shall be for the account of the Swingline Lender until the date the
respective assignment is purchased and, to the extent attributable to the
purchased assignment, shall be payable to the Bank purchasing same from and
after such date of purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
------------------------------
of each Borrowing (other than any Mandatory Borrowing) shall not be less than
the Minimum Borrowing Amount for such Borrowing. More than one Borrowing may be
incurred on any day, provided that at no time shall there be outstanding more
--------
than five Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
incur Term Loans or Revolving Loans, it shall give the Administrative Agent at
its Notice Office, prior to 1:00 P.M. (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of each Borrowing of Eurodollar Loans and at least one Business Day's prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Base Rate Loans to be made hereunder. Each such notice (each such
notice, together with each notice of the incurrence of Swingline Loans pursuant
to Section 1.03(b), a "Notice of Borrowing") shall be in the form of Exhibit A-1
and shall be irrevocable and shall specify: (i) the Facility pursuant to which
such Borrowing is being made; (ii) the aggregate principal amount of the Loans
to be made pursuant to such Borrowing; (iii) the date of Borrowing (which shall
be a Business Day); and (iv) whether the respective Borrowing shall consist of
Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Administrative Agent shall
promptly give each Bank written notice (or telephonic notice promptly confirmed
in writing) of each proposed Borrowing, of such Bank's proportionate share
thereof and of the other matters covered by the Notice of Borrowing.
(b) Whenever the Borrower desires to incur Swingline Loans hereunder,
it shall give the Administrative Agent at its Notice Office written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Swingline
Loans prior to 1:00 P.M. (New York time) on the date of such Borrowing. Each
such notice shall be irrevocable and shall specify (i) the aggregate principal
amount of the Swingline Loans to be made pursuant to such Borrowing and (ii) the
date of Borrowing (which shall be a Business Day). The Administrative Agent
shall promptly give the Swingline Lender written notice (or telephonic notice
promptly confirmed in writing) of each proposed Borrowing of Swingline Loans and
of the other matters covered by the Notice of Borrowing.
(c) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(C), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
-4-
<PAGE>
(d) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the
Borrower entitled to give telephonic notices under this Agreement on behalf of
the Borrower. In each such case, the Administrative Agent's record of the terms
of such telephonic notice shall be conclusive absent manifest error.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
---------------------
time) (3:00 P.M. (New York time) in the case of Swingline Loans) on the date
specified in each Notice of Borrowing (or pursuant to Section 1.01(C)), each
Bank will make available its pro rata share, if any, of each Borrowing requested
--- ----
to be made on such date in the manner provided below. All amounts shall be made
available to the Administrative Agent in U.S. dollars and immediately available
funds at the Payment Office and the Administrative Agent promptly will make
available to the Borrower by depositing to its account at the Payment Office the
aggregate of the amounts so made available in the type of funds received.
Unless the Administrative Agent shall have been notified by any Bank prior to
the date of Borrowing that such Bank does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Bank has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank and the Administrative Agent
has made available same to the Borrower, the Administrative Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to
recover from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (x) if paid by such Bank, the overnight Federal Funds
Effective Rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Section 1.08, for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
-5-
<PAGE>
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
-----
and interest on, the Loans made to it by each Bank shall be evidenced: (i) if
Term Loans, by a promissory note substantially in the form of Exhibit B-1 with
blanks appropriately completed in conformity herewith (each a "Term Note" and,
collectively, the "Term Notes"); (ii) if Revolving Loans, by a promissory note
substantially in the form of Exhibit B-2 with blanks appropriately completed in
conformity herewith (each a "Revolving Note" and, collectively, the "Revolving
Notes"); and (iii) if Swingline Loans, by a promissory note substantially in the
form of Exhibit B-3 with blanks appropriately completed in conformity herewith
(the "Swingline Note").
(b) The Term Note issued to a Bank shall: (i) be executed by the
Borrower; (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date; (iii) be in a stated principal amount equal to the Term
Commitment of such Bank (or in the case of a new Note issued pursuant to Section
1.13 or 12.04, the Term Loans evidenced thereby at the time of issuance) and be
payable in the principal amount of Term Loans evidenced thereby; (iv) mature on
the TF Maturity Date; (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby; (vi) be subject to mandatory repayment as provided in
Section 4.02; and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) The Revolving Note issued to a Bank shall: (i) be executed by
the Borrower; (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date; (iii) be in a stated principal amount equal to the Revolving
Commitment of such Bank and be payable in the principal amount of Revolving
Loans evidenced thereby; (iv) mature on the RF Maturity Date; (v) bear interest
as provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby; (vi) be
subject to mandatory repayment as provided in Section 4.02; and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(d) The Swingline Note issued to the Swingline Lender shall: (i) be
executed by the Borrower; (ii) be payable to the order of the Swingline Lender
and be dated the Initial Borrowing Date; (iii) be in a stated principal amount
equal to the Swingline Commitment and be payable in the principal amount of
Swingline Loans evidenced thereby; (iv) mature on the Swingline Maturity Date;
(v) bear interest as provided in Section 1.08(a); (vi) be subject to mandatory
prepayment as provided in Section 4.02; and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of its Note, endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced
-6-
<PAGE>
thereby. Failure to make any such notation or any error in any such notation
shall not affect the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert on
-----------
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans (other than
Swingline Loans) owing pursuant to a single Facility into a Borrowing or
Borrowings pursuant to such Facility of the other Type of Loan, provided that
--------
(i) no conversion of Base Rate Loans into Eurodollar Loans may be made prior to
the Syndication Date except for a conversion made on the first day of a PSD
Interest Period, (ii) no conversions of Eurodollar Loans may be made other than
on the last day of an Interest Period applicable thereto and no partial
conversion of a Borrowing of Eurodollar Loans shall reduce the outstanding
principal amount of the Eurodollar Loans made pursuant to such Borrowing to less
than the Minimum Borrowing Amount applicable thereto, (iii) Base Rate Loans may
only be converted into Eurodollar Loans if no Default under Section 9.01 or
Event of Default is in existence on the date of the conversion unless the
Required Banks otherwise agree and (iv) Borrowings of Eurodollar Loans resulting
from this Section 1.06 shall be limited in numbers as provided in Section 1.02.
Each such conversion shall be effected by the Borrower giving the Administrative
Agent at its Notice Office, prior to 1:00 P.M. (New York time), at least three
Business Days' (or one Business Day's, in the case of a conversion into Base
Rate Loans) prior written notice (or telephonic notice promptly confirmed in
writing) (each a "Notice of Conversion") specifying the Loans to be so
converted, the Type of Loans to be converted into and, if to be converted into a
Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent shall give each Bank prompt notice of any
such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans or Revolving
-------------------
Loans shall be made by the Banks pro rata on the basis of their Term Commitments
--- ----
or Revolving Commitments, as the case may be. It is understood that no Bank
shall be responsible for any default by any other Bank in its obligation to make
Loans hereunder and that each Bank shall be obligated to make the Loans provided
to be made by it hereunder, regardless of the failure of any other Bank to
fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
--------
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Percentage plus the Base Rate in effect from time to
time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Percentage plus the relevant Eurodollar Rate.
-7-
<PAGE>
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan shall bear interest at a rate per annum
equal to the Base Rate in effect from time to time plus the sum of (i) 2% and
(ii) the Applicable Percentage then in effect for Base Rate Loans, provided that
--------
each Eurodollar Loan shall bear interest after maturity (whether by acceleration
or otherwise) until the end of the Interest Period then applicable thereto at a
rate per annum equal to 2% in excess of the rate of interest applicable thereto
at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on the dates
which are successively three months after the commencement of such Interest
Period and (iii) in respect of each Loan, on any prepayment or conversion (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Banks thereof.
1.09 Interest Periods. (a) At the time the Borrower gives a Notice
----------------
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 1:00 P.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be a one, two, three or six month
(or to the extent available to all the Banks at the time requested, a nine or
twelve month) period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
-8-
<PAGE>
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) subject to the foregoing clauses (i) through (iii), only a one
month Interest Period shall be available to be selected prior to the
Syndication Date, with all Term Loans constituting Eurodollar Loans during
said period to be outstanding pursuant to a single Borrowing and all
Revolving Loans constituting Eurodollar Loans during such period to be
outstanding pursuant to a single Borrowing, with both such Borrowings to
commence and end on the same day;
(v) no Interest Period with respect to any Borrowing of Revolving
Loans may (x) extend beyond any date upon which a Scheduled RF Reduction is
required to be made if after giving affect to the selection of such
Interest Period, the sum of (I) the aggregate principal amount of Revolving
Loans maintained as Eurodollar Loans with Interest Periods ending after
such date plus (II) Letter of Credit Outstandings under Letters of Credit
with expiry dates beyond such date would exceed the Total Revolving
Commitment after giving effect to such reduction or (y) extend beyond the
RF Maturity Date;
(vi) no Interest Period with respect to any Borrowing of Term Loans
may (x) extend beyond any date upon which a Scheduled Repayment is required
to be made if, after giving effect to the selection of such Interest
Period, the aggregate principal amount of Term Loans maintained as
Eurodollar Loans with Interest Periods ending after such date would exceed
the aggregate principal amount of Term Loans permitted to be outstanding
after such Scheduled Repayment or (y) extend beyond the TF Maturity Date;
and
(vii) no Interest Period may be elected at any time when a Default
under Section 9.01 or an Event of Default is then in existence unless the
Required Banks otherwise agree.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to con-
-9-
<PAGE>
vert such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in
---------------------------------
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Bank shall have determined on a reasonable
basis (which determination shall, absent manifest error, be final and conclusive
and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Effective Date
affecting the interbank Eurodollar market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder in an amount
which such Bank deems material with respect to any Eurodollar Loans (other
than any increased cost or reduction in the amount received or receivable
resulting from the imposition of or a change in the rate of taxes or
similar charges) because of (x) any change since the Effective Date in any
applicable law, governmental rule, regulation, guideline, order or request
(whether or not having the force of law), or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline, order or request (such as, for
example, but not limited to, a change in official reserve requirements,
but, in all events, excluding reserves includable in the Eurodollar Rate
pursuant to the definition thereof) and/or (y) other circumstances
adversely affecting the interbank Eurodollar market or the position of such
Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
change since the Effective Date in any law, governmental rule, regulation,
guideline or order, or the interpretation or application thereof, or would
conflict with any thereof not having the force of law but with which such
Bank customarily complies or has become impracticable as a result of a
contingency occurring after the Effective Date which materially adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within 10 Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Banks). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the Administra-
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<PAGE>
tive Agent notifies the Borrower and the Banks that the circumstances giving
rise to such notice by the Administrative Agent no longer exist, and any Notice
of Borrowing or Notice of Conversion given by the Borrower with respect to
Eurodollar Loans which have not yet been incurred shall be deemed rescinded by
the Borrower or, in the case of a Notice of Borrowing, shall, at the option of
the Borrower, be deemed converted into a Notice of Borrowing for Base Rate Loans
to be made on the date of Borrowing contained in such Notice of Borrowing, (y)
in the case of clause (ii) above, the Borrower shall pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank shall determine) as shall be required to compensate such Bank for such
increased costs or reductions in amounts receivable hereunder (a written notice
as to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, which basis must be reasonable, submitted to the Borrower
by such Bank shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, by giving the Administrative Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), cancel said
Borrowing, convert the related Notice of Borrowing into one requesting a
Borrowing of Base Rate Loans or require the affected Bank to make its requested
Loan as a Base Rate Loan, or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least one Business Day's notice to the Administrative
Agent, require the affected Bank to convert each such Eurodollar Loan into a
Base Rate Loan, provided that if more than one Bank is affected at any time,
--------
then all affected Banks must be treated the same pursuant to this
Section 1.10(b).
(c) If any Bank shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Bank or its parent corporation with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case made subsequent to
the Effective Date, has or would have the effect of reducing by an amount
reasonably deemed by such Bank to be material the rate of return on such Bank's
or its parent corporation's capital or assets as a consequence of such Bank's
commitments or obligations hereunder to a level below that which such Bank or
its parent corporation could have achieved but for such adoption, effectiveness,
change or compliance (taking into considera-
-11-
<PAGE>
tion such Bank's or its parent corporation's policies with respect to capital
adequacy), then from time to time, within 15 days after demand by such Bank
(with a copy to the Administrative Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank or its parent
corporation for such reduction. Each Bank, upon determining in good faith that
any additional amounts will be payable pursuant to this Section 1.10(c), will
give prompt written notice thereof to the Borrower, which notice shall set forth
the basis of the calculation of such additional amounts, which basis must be
reasonable, although the failure to give any such notice shall not release or
diminish any of the Borrower's obligations to pay additional amounts pursuant to
this Section 1.10(c) upon the subsequent receipt of such notice. No Bank shall
demand compensation for any reduction referred to in this Section 1.10(c) if it
shall not at the time be the general policy or practice of such Bank to demand
such compensation in similar circumstances under comparable provisions of other
credit agreements.
(d) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrower.
1.11 Compensation. The Borrower shall compensate each Bank, upon its
------------
written request (which request shall set forth the detailed basis for requesting
and the method of calculating such compensation), for all reasonable losses,
expenses and liabilities (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or reemployment of deposits or
other funds required by such Bank to fund its Eurodollar Loans) which such Bank
may sustain: (i) if for any reason (other than a default by such Bank or the
Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of Conversion (whether or
not withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment or conversion of any of its Eurodollar Loans occurs on a
date which is not the last day of an Interest Period applicable thereto; (iii)
if any prepayment of any of its Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurodollar
Loans when required by the terms of this Agreement or (y) an election made
pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans or Commitments
affected by such event, provided that such designa-
--------
-12-
<PAGE>
tion is made on such terms that such Bank and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such Section.
Nothing in this Section 1.12 shall affect or postpone any of the obligations of
the Borrower or the right of any Bank provided in Section 1.10, 2.06 or 4.04.
1.13 Replacement of Banks. If (x) the Borrower receives notice from
--------------------
any Bank requesting increased costs or additional amounts under Section 1.10,
2.06 or 4.04 or (y) a Bank becomes a Defaulting Bank, the Borrower shall have
the right, unless in the case of clause (x) such Bank has removed or cured the
conditions which resulted in the obligation to pay such increased costs or
additional amounts or agreed to waive and otherwise forego any right it may have
to any payments provided for under Sections 1.10, 2.06 and 4.04 in respect of
such conditions, to replace in its entirety such Bank (the "Replaced Bank"),
upon prior written notice to the Administrative Agent and such Replaced Bank,
with one or more other Eligible Transferee or Transferees (collectively, the
"Replacement Bank") acceptable to the Administrative Agent (which acceptance
shall not be unreasonably withheld), provided that at the time of any
--------
replacement pursuant to this Section 1.13, the Replaced Bank and the Replacement
Bank shall enter into one or more Assignment Agreements (appropriately
completed), pursuant to which: (i) the Replacement Bank shall acquire all of
the Commitment and outstanding Revolving Loans and Term Loans of, and Swingline
Loans and/or Letter of Credit participations of, the Replaced Bank and, in
connection therewith, shall pay (x) to the Replaced Bank in respect thereof an
amount equal to the sum of (a) an amount equal to the principal of, and all
accrued but unpaid interest on, all outstanding Loans of the Replaced Bank and
(b) an amount equal to all accrued, but theretofore unpaid, Fees owing to the
Replaced Bank pursuant to Section 3.01 and (y) to the Swingline Lender or Letter
of Credit Issuer, as the case may be, any portion of a Mandatory Borrowing or
the funding of an Unpaid Drawing, respectively, as to which the Replaced Bank is
then in default; and (ii) the Borrower shall pay to the Replaced Bank any other
amounts payable to the Replaced Bank under this Agreement (including, without
limitation, amounts payable under Section 1.10 and/or 1.11 which have accrued to
the date of such replacement). Upon the execution of the respective assignment
documentation, the payment of amounts referred to in the preceding sentence and,
if so requested by the Replacement Bank, delivery to the Replacement Bank of a
Note executed by the Borrower, the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this Agreement, which
shall survive as to such Replaced Bank.
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<PAGE>
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the RF Maturity Date to issue, for the account of the Borrower and in
support of (x) trade obligations, workmen's compensation and other obligations
of the Borrower incurred in the ordinary course of its business and/or (y) such
other obligations of the Borrower to any other Person that are acceptable to the
Administrative Agent and such Letter of Credit Issuer, and subject to and upon
the terms and conditions herein set forth such Letter of Credit Issuer agrees to
issue from time to time, irrevocable letters of credit in such form as may be
approved by such Letter of Credit Issuer and the Administrative Agent (each such
letter of credit, and each Existing Letter of Credit described in Section 2.07,
a "Letter of Credit" and collectively, the "Letters of Credit").
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (x) $25,000,000, (y) when added
to the aggregate principal amount of all Revolving Loans and Swingline Loans
then outstanding, an amount equal to the Total Revolving Commitment at such time
or (z) when added to the aggregate principal amount of all Working Capital Loans
and Swingline Loans then outstanding, an amount equal to the Working Capital
Sublimit at such time and (ii) each Letter of Credit shall have an expiry date
occurring not later than one year after such Letter of Credit's date of issuance
although any Letter of Credit may be renewable for successive periods of up to
12 months, but not beyond the Business Day next preceding the RF Maturity Date,
on terms acceptable to the Administrative Agent and the relevant Letter of
Credit Issuer.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless such Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate such Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Bank or Banks, including by cash collateralizing such Defaulting Bank's or
Banks' RF Percentage of the Letter of Credit Outstandings.
2.02 Existing Letters of Credit. Annex IX hereto contains a
--------------------------
description of all letters of credit outstanding on, and to continue in effect
after, the Initial Borrowing Date. Each such letter of credit issued by a bank
that becomes a Bank under this Agreement prior to the Syndication Date (each, an
"Existing Letter of Credit") shall constitute a "Letter of Credit" for all
purposes of this Agreement, issued, for purposes of Section 2.05(a), on the date
such bank so becomes a Bank, and the Borrower, the Administrative Agent and the
Banks hereby agree that, from and after such date, the terms
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<PAGE>
of this Agreement shall apply to such Letters of Credit, superseding any other
agreement theretofore applicable to them.
2.03 Letter of Credit Requests; Notices of Issuance. (a) Whenever
----------------------------------------------
it desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written notice (including
by way of telecopier) in the form of Exhibit A-2 thereof prior to 1:00 P.M. (New
York time) at least five Business Days (or such shorter period as may be
acceptable to the relevant Letter of Credit Issuer) prior to the proposed date
of issuance (which shall be a Business Day) (each a "Letter of Credit Request"),
which Letter of Credit Request shall include an application for such Letter of
Credit and any other documents that such Letter of Credit Issuer customarily
requires in connection therewith. The Administrative Agent shall promptly
notify each Bank of each Letter of Credit Request.
(b) Each Letter of Credit Issuer shall, on the date of each issuance
of a Letter of Credit by it, give the Administrative Agent, each Bank and the
Borrower written notice of the issuance of such Letter of Credit, accompanied by
a copy to the Administrative Agent of the Letter of Credit or Letters of Credit
issued by it. Each Letter of Credit Issuer shall provide to the Administrative
Agent a monthly summary describing each Letter of Credit issued by such Letter
of Credit Issuer and then outstanding.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
--------------------------------------------
hereby agrees to reimburse each Letter of Credit Issuer, by making payment to
the Administrative Agent in immediately available funds at the Payment Office,
for any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit (each such amount so paid or disbursed until reimbursed, an
"Unpaid Drawing") immediately after, and in any event on the date on which, such
Letter of Credit Issuer notifies the Administrative Agent and the Borrower of
such payment or disbursement (which notice to the Borrower shall be delivered
reasonably promptly after any such payment or disbursement), with interest on
the amount so paid or disbursed by such Letter of Credit Issuer, to the extent
not reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but not including
the date such Letter of Credit Issuer is reimbursed therefor at a rate per annum
which shall be the rate then applicable to Base Rate Loans (plus an additional
2% per annum if not reimbursed by the third Business Day after the date of such
payment or disbursement), such interest also to be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to reimburse
each Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or
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<PAGE>
have had against such Letter of Credit Issuer, the Administrative Agent, any
other Letter of Credit Issuer or any Bank, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing, provided,
--------
however, that the Borrower shall not be obligated to reimburse a Letter of
- - - -------
Credit Issuer for any wrongful payment made by such Letter of Credit Issuer
under a Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Letter of Credit Issuer.
2.05 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit (which date shall
be the Initial Borrowing Date in the case of Existing Letters of Credit), such
Letter of Credit Issuer shall be deemed to have sold and transferred to each
Bank, and each Bank (each a "Participant") shall be deemed irrevocably and
unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Bank's RF Percentage, in such Letter of Credit, each
substitute letter of credit, each drawing made thereunder and the obligations of
the Borrower under this Agreement with respect thereto (although Letter of
Credit Fees shall be payable directly to the Administrative Agent for the
account of the Banks as provided in Section 3.01(b) and the Participants shall
have no right to receive any portion of any Facing Fees) and any security
therefor or guaranty pertaining thereto. Upon any change in the Revolving
Commitments of the Banks pursuant to Section 1.13 and/or 12.04(b), it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings, there shall be an automatic adjustment to the participations pursuant
to this Section 2.05 to reflect the new RF Percentages of the assigning and
assignee Bank.
(b) In determining whether to pay under any Letter of Credit, a
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they appear to comply
on their face with the requirements of such Letter of Credit. Any action taken
or omitted to be taken by a Letter of Credit Issuer under or in connection with
any Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Letter of Credit Issuer any
resulting liability.
(c) In the event that a Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to such Letter of Credit Issuer pursuant to Section 2.04(a), such
Letter of Credit Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the Administrative
Agent for the account of such Letter of Credit Issuer, the amount of such
Participant's RF Percentage of such payment in U.S. dollars and in same
-16-
<PAGE>
day funds, provided, however, that no Participant shall be obligated to pay to
-------- -------
the Administrative Agent its RF Percentage of such unreimbursed amount for any
wrongful payment made by such Letter of Credit Issuer under a Letter of Credit
as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of such Letter of Credit Issuer. If the Administrative
Agent so notifies any Participant required to fund a payment under a Letter of
Credit prior to 11:00 A.M. (New York time) on any Business Day, such Participant
shall make available to the Administrative Agent for the account of the relevant
Letter of Credit Issuer such RF's Revolving Percentage of the amount of such
payment on such Business Day in same day funds. If and to the extent such
Participant shall not have so made its RF Percentage of the amount of such
payment available to the Administrative Agent for the account of the relevant
Letter of Credit Issuer, such Participant agrees to pay to the Administrative
Agent for the account of such Letter of Credit Issuer, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent for the account of such
Letter of Credit Issuer at the Federal Funds Effective Rate. The failure of any
Participant to make available to the Administrative Agent for the account of the
relevant Letter of Credit Issuer its RF Percentage of any payment under any
Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to the Administrative Agent for the account of such
Letter of Credit Issuer its RF Percentage of any payment under any Letter of
Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Agent for the account of such Letter of Credit Issuer such other Participant's
RF Percentage of any such payment.
(d) Whenever a Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to clause (c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its RF Percentage thereof, in U.S. dollars and in
same day funds, an amount equal to such Participant's RF Percentage of the
principal amount thereof and interest thereon accruing after the purchase of the
respective participations.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of each Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
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<PAGE>
(ii) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Administrative Agent, any Letter of
Credit Issuer, any Bank, or other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transaction between
the Borrower and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.06 Increased Costs. If after the Effective Date, the adoption of
---------------
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Letter of Credit Issuer or any Bank
with any request or directive (whether or not having the force of law) by any
such authority, central bank or comparable agency (in each case made subsequent
to the Effective Date) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by such Letter of Credit Issuer or such Bank's participation
therein, or (ii) shall impose on such Letter of Credit Issuer or any Bank any
other conditions affecting this Agreement, any Letter of Credit or such Bank's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Bank of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Bank hereunder
(other than any increased cost or reduction in the amount received or receivable
resulting from the imposition of or a change in the rate of taxes or similar
charges), then, upon demand to the Borrower by such Letter of Credit Issuer or
such Bank (a copy of which notice shall be sent by such Letter of Credit Issuer
or such Bank to the Administrative Agent), the Borrower shall pay to such Letter
of Credit Issuer or such Bank such additional amount or amounts as will
compensate any such Letter of Credit Issuer or such Bank for such increased cost
or reduction. A certificate submitted to the Borrower by any Letter of Credit
Issuer or any Bank, as the case may be (a copy of which certificate shall be
sent by such Letter of Credit Issuer or such Bank to the Administrative Agent),
setting forth the basis for the determination of such additional amount or
amounts necessary to compensate any Letter of Credit Issuer or
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<PAGE>
such Bank as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.06.
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The Borrower agrees to pay to the Administrative
----
Agent a Commitment commission ("Commitment Commission") for the account of each
Non-Defaulting Bank for the period from and including the Effective Date to but
not including the date the Total Revolving Commitment has been terminated,
computed at a rate equal to 3/8 of 1% per annum on the average daily Unutilized
Commitment of such Bank. Such Commitment Commission shall be due and payable
quarterly in arrears on the last Business Day of each January, April, July and
October of each year and on the date upon which the Total Revolving Commitment
is terminated.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of each Non-Defaulting Bank, pro rata on the basis of its RF Percentage,
--- ----
a fee in respect of each Letter of Credit (the "Letter of Credit Fee") computed
at the rate of 2% per annum on the average daily Stated Amount of such Letter of
Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on the last Business Day of each January, April, July and October of
each year and on the date upon which the Total Revolving Commitment is
terminated.
(c) The Borrower agrees to pay to the Administrative Agent for the
account of each Letter of Credit Issuer a fee in respect of each Letter of
Credit issued by it (the "Facing Fee") computed at the rate of 1/4 of 1% per
annum on the average daily Stated Amount of such Letter of Credit. Accrued
Facing Fees shall be due and payable quarterly in arrears on the last Business
Day of each January, April, July and October of each year and on the date upon
which the Total Revolving Commitment is terminated.
(d) The Borrower agrees to pay directly to each Letter of Credit
Issuer upon each issuance of, drawing under, and/or amendment of, a Letter of
Credit issued by it such amount as shall at the time of such issuance, drawing
or amendment be the administrative charge which such Letter of Credit Issuer is
customarily charging for issuances of, drawings under or amendments of, letters
of credit issued by it.
(e) The Borrower shall pay to the Administrative Agent on the Initial
Borrowing Date and thereafter for its own account and/or for distribution to the
Banks such fees as heretofore agreed by the Borrower and the Administrative
Agent.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
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<PAGE>
3.02 Voluntary Reduction of Commitments. Upon at least three
----------------------------------
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), the Borrower
shall have the right, without premium or penalty, to terminate or partially
reduce the Unutilized Total Revolving Commitment, provided that (i) any such
--------
termination shall apply to proportionately and permanently reduce the Revolving
Commitment, if any, of each of the Banks, (ii) any partial reduction pursuant to
this Section 3.02 shall be in the amount of at least $500,000 (or, if greater,
in integral multiples of $100,000) and (iii) each such reduction shall reduce
the then remaining Scheduled RF Reductions on a pro rata basis (based on the
--- ----
then remaining amount of each such Scheduled RF Reduction).
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
------------------------------------------
Commitment (and the Term Commitment and Revolving Commitment of each Bank and
the Swingline Commitment) shall terminate on the Expiration Date unless the
Initial Borrowing Date has occurred on or before such date.
(b) The Total Term Commitment shall terminate in its entirety on the
Initial Borrowing Date (after giving effect to the making of Term Loans on such
date).
(c) The Total Revolving Commitment shall be reduced in an amount of
$3,125,000 on each of the last Business Day of each March, June, September and
December of each year commencing June 1998 (each such reduction, a "Scheduled RF
Reduction").
(d) On each day on which (x) the Aggregate Remainder has been
increased and (y) after giving effect to such increase, the Aggregate Remainder
exceeds the Working Capital Sublimit as then in effect, the Total Revolving
Commitment and the Acquisition Sublimit shall be mandatorily reduced by an
amount equal to (I) such excess less (II) the aggregate reductions, if any,
theretofore made to the Total Revolving Commitment pursuant to this clause (d),
provided that the aggregate reductions to the Total Revolving Commitment made
pursuant to this clause (d) shall not exceed $80,000,000.
(e) The Total Revolving Commitment (and the Revolving Commitment of
each Bank) shall terminate on the RF Maturity Date.
(f) Each partial reduction of the Total Revolving Commitment provided
for in this Section 3.03 shall apply pro rata to the Revolving Commitment (if
--- ----
any) of each Bank.
SECTION 4. Payments.
--------
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<PAGE>
4.01 Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans, in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the
Administrative Agent at the Payment Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay the Loans, whether such
Loans are Term Loans or Revolving Loans (and if Revolving Loans, whether
Acquisition Loans or Working Capital Loans), the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which
made, which notice shall (I) in the case of Loans other than Swingline Loans, be
received by the Administrative Agent by 1:00 P.M. (New York time) one Business
Day prior to the date of such prepayment (and which notice shall promptly be
transmitted by the Administrative Agent to each of the Banks) or (II) in the
case of Swingline Loans, 1:00 P.M. (New York time) on the date of such
prepayment; (ii) each partial prepayment of any Borrowing shall be in an
aggregate principal amount of at least $500,000 ($100,000 in the case of
Swingline Loans), provided that (x) no prepayments of Eurodollar Loans may be
--------
made pursuant to this Section 4.01 except on the last day of an Interest Period
applicable thereto and (y) no partial prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
outstanding pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount applicable thereto; (iii) each prepayment in respect of any
Loans made pursuant to a Borrowing shall be applied pro rata among such Loans,
--- ----
provided that at the Borrower's election in connection with any prepayment of
- - - --------
Acquisition Loans or Working Capital Loans pursuant to this Section 4.01, such
prepayment shall not be applied to any Acquisition Loans or Working Capital
Loans of any Defaulting Bank to the extent its Acquisition Loans or Working
Capital Loans, as the case may be, represent a lower percentage of the aggregate
outstanding Acquisition Loans or Working Capital Loans, as the case may be, of
all Banks than the percentage which is such Defaulting Bank's RF Percentage; and
(iv) each prepayment of Term Loans pursuant to this Section 4.01 shall reduce
the then remaining Scheduled Repayments on a pro rata basis (based upon the then
--- ----
remaining principal amount of each such Scheduled Repayment).
4.02 Mandatory Prepayments.
---------------------
(A) Requirements:
------------
(a) If on any date (after giving effect to any other repayments or
prepayments on such date) the sum of (i) the aggregate outstanding principal
amount of Revolving Loans and Swingline Loans plus (ii) the aggregate amount of
Letter of Credit Outstandings exceeds the Total Revolving Commitment as then in
effect, the Borrower shall repay on such date that principal amount of Swingline
Loans (and, if insufficient, Revolving Loans) and, after Revolving Loans have
been paid in full, Unpaid Drawings, in an aggregate amount equal to such excess.
If, after giving effect to the prepayment of all outstanding Swingline Loans,
Revolving Loans and Unpaid Drawings, the aggregate amount of Letter
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<PAGE>
of Credit Outstandings exceeds the Total Revolving Commitment as then in effect,
the Borrower shall pay to the Administrative Agent an amount in cash and/or Cash
Equivalents equal to such excess and the Administrative Agent shall hold such
payment as security for the obligations of the Borrower hereunder pursuant to a
cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent and the Borrower (which shall permit
certain investments in Cash Equivalents satisfactory to the Administrative Agent
and the Borrower until the proceeds are applied to the secured obligations).
(b) On December 1 of each year commencing December, 1996, if a Clean-
Down Period shall not have occurred or commenced since the preceding January 1,
the Borrower shall repay Swingline Loans and Working Capital Loans in an amount
necessary to reduce the sum of the aggregate outstanding principal amount of
Swingline Loans and Working Capital Loans plus the Letter of Credit Outstandings
to $40,000,000, which amount may not be exceeded until the Clean-Down Period has
ended.
(c) On each date set forth below the Borrower shall be required to
repay the principal amount of Term Loans as is set forth opposite such date
(each such repayment, a "Scheduled Repayment"):
Scheduled Repayment Date Amount
------------------------ ------
October 31, 1995 $1,250,000
January 31, 1996 1,250,000
April 30, 1996 1,250,000
July 30, 1996 1,250,000
October 30, 1996 3,375,000
January 30, 1997 3,375,000
April 30, 1997 3,375,000
July 31, 1997 3,375,000
October 31, 1997 4,375,000
January 31, 1998 4,375,000
April 30, 1998 4,375,000
July 31, 1998 4,375,000
October 31, 1998 5,000,000
January 31, 1999 5,000,000
April 30, 1999 5,000,000
July 31, 1999 5,000,000
October 31, 1999 5,000,000
January 31, 2000 5,000,000
April 30, 2000 5,000,000
July 31, 2000 5,000,000
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<PAGE>
October 31, 2000 7,375,000
January 31, 2001 7,375,000
April 30, 2001 7,375,000
July 31, 2001 7,375,000
October 31, 2001 7,375,000
January 31, 2002 7,375,000
April 30, 2002 7,375,000
July 31, 2002 7,375,000
(d) On the third Business Day following the date of receipt thereof
by the Borrower and/or any of its Subs idiaries of the Cash Proceeds from any
Asset Sale, an amount equal to 100% of the Net Cash Proceeds then received from
such Asset Sale shall be applied as a mandatory repayment of principal of the
then outstanding Acquisition Loans. If after applying less than all of such Net
Cash Proceeds pursuant to the preceding sentence, no Acquisition Loans remain
outstanding, an amount equal to the Net Cash Proceeds not utilized pursuant to
the preceding sentence (other than Specified Proceeds) shall be applied as a
mandatory prepayment of the principal of the then outstanding Term Loans and,
once no Term Loans remain outstanding, as a mandatory repayment of the
principal of the then outstanding Swingline Loans (and, if insufficient, Working
Capital Loans), provided that to the extent any such Asset Sale constitutes a
Specified Asset Sale then the mandatory prepayments required to be made with the
Net Cash Proceeds thereof pursuant to this clause (d) shall be applied first to
-----
Term Loans, second to Acquisition Loans and third to Swingline Loans and, if
------ -----
insufficient, Working Capital Loans. Notwithstanding the foregoing, prepayments
of Term Loans shall be required to be made pursuant to this Section 4.02(A)(d)
only to the extent that the aggregate Net Cash Proceeds of Asset Sales that
would have been applied to such repayment of Term Loans in the absence of this
sentence exceeds $20,000,000, it being understood that no mandatory prepayments
of Acquisition Loans and/or Swingline Loans and/or Working Capital Loans
pursuant to Section 4.02(A)(d) or (e) shall reduce the Total Revolving
Commitment, with any mandatory reduction to such Total Revolving Commitment to
be made only as set forth in Section 3.03.
(e) On the date of the receipt thereof by the Borrower and/or any of
its Subsidiaries, an amount equal to 100% of the cash proceeds (net of
underwriting discounts and commissions and other customary fees and costs
associated therewith) from the incurrence of Indebtedness for borrowed money by
the Borrower, any of its Subsidiaries or any Consolidated Joint Venture (other
than (i) Permitted Other Mortgage Debt (except to the extent refinancing Loans
or to the extent constituting Incremental Refinancing Debt the proceeds of which
are not paid to the Borrower in repayment of advances made by the Borrower to
Existing Consolidated Joint Ventures after the Initial Borrowing Date), (ii)
Indebtedness permitted by Section 8.04(f) (directly or pursuant to Section
8.05(a)), (iii) Indebtedness permitted by Section 8.05(b), (iv) any other
Indebtedness for borrowed
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<PAGE>
money permitted by Section 8.04 or 8.05 to the extent the proceeds thereof are
utilized to refinance Indebtedness for borrowed money (other than the Loans) and
(v) Permitted Basket Debt) shall be applied first, as a mandatory repayment of
-----
principal of then outstanding Acquisition Loans, (y) once no Acquisition Loans
remain outstanding, second as a mandatory repayment of principal of the then
------
outstanding Term Loans and (z) once no Term Loans remain outstanding, third as a
-----
mandatory repayment of principal of the then outstanding Swingline Loans (and,
if insufficient, Working Capital Loans), provided that to the extent any such
Indebtedness (I) refinances a JV Loan initially funded with the proceeds of
Loans incurred on the Initial Borrowing Date, (II) refinances advances to
Existing Consolidated Joint Ventures outstanding on the Initial Borrowing Date
or (III) constitutes Incremental Refinancing Debt, then the mandatory
prepayments required to be made with the net cash proceeds thereof pursuant to
this clause (e) shall be applied first to Term Loans, second to Acquisitions
----- ------
Loans and third to Swingline Loans and Working Capital Loans.
-----
(f) On the date of the receipt thereof by the Borrower, an amount
equal to 50% of the cash proceeds (net of underwriting discounts and commissions
and other customary fees and costs associated therewith) from any sale or
issuance of equity by the Borrower after the Initial Borrowing Date (other than
(i) any over-allotment option related to the IPO and (ii) any sale or issuance
to management or employees) shall be applied first as a mandatory repayment of
-----
principal of then outstanding Acquisition Loans, (y) once no Acquisition Loans
remain outstanding, second as a mandatory repayment of principal of the then
------
outstanding Term Loans and (z) once no Term Loans remain outstanding, third as a
-----
mandatory repayment of principal of the then outstanding Swingline Loans (and,
if insufficient, Working Capital Loans).
(g) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
1995), an amount equal to 50% of Excess Cash Flow for such fiscal year (which in
the case of the first fiscal year shall be for the period from the Closing Date
to the end of such first fiscal year) shall be applied as a mandatory repayment
of principal of then outstanding Acquisition Loans, (y) once no Acquisition
Loans remain outstanding, second as a mandatory repayment of principal of the
------
then outstanding Term Loans and (z) once no Term Loans remain outstanding, third
-----
as mandatory repayment of principal of the then outstanding Swingline Loans
(and, if insufficient, Working Capital Loans).
(B) Application:
-----------
(a) Each mandatory repayment of Term Loans required pursuant to
Section 4.02(A)(d), (e) or (f) shall be applied to the repayment of the then
remaining Scheduled Repayments on a pro rata basis (based upon the then
remaining principal amount of each such Scheduled Repayment) and each mandatory
repayment of Term Loans required pursu-
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<PAGE>
ant to Section 4.02(g) shall be applied to the then remaining Scheduled
Repayments in direct order of maturity.
(b) With respect to each repayment of Loans required by this Section
4.02, the Borrower shall designate the Types of Loans which are to be repaid and
the specific Borrowing(s) under the affected Facility pursuant to which made,
provided that (i) the Borrower shall first so designate all Loans of the
respective Facility that are Base Rate Loans and Eurodollar Loans with Interest
Periods ending on the date of repayment prior to designating any other
Eurodollar Loans of such Facility for repayment, (ii) if the outstanding
principal amount of Eurodollar Loans made pursuant to a Borrowing is reduced
below the applicable Minimum Borrowing Amount as a result of any such
prepayment, then all the Loans outstanding pursuant to such Borrowing shall be
converted into Base Rate Loans, and (iii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans. In the
--- ----
absence of a designation by the Borrower as described in the preceding sentence,
the Administrative Agent shall, subject to the above, make such designation in
its sole discretion with a view, but no obligation, to minimize breakage costs
owing under Section 1.11.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its pro rata share) account of
--- ----
the Banks entitled thereto, not later than 1:00 P.M. (New York time) on the date
when due and shall be made in immediately available funds and in lawful money of
the United States of America at the Payment Office, it being understood that
written notice by the Borrower to the Administrative Agent to make a payment
from the funds in the Borrower's account at the Payment Office shall constitute
the making of such payment to the extent of such funds held in such account.
Any payments under this Agreement which are made later than 1:00 P.M. (New York
time) shall be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder,
------------
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
Governmental Authority (but excluding any tax, interest, penalties or additions
to tax imposed on or measured by the net income (or any franchise tax measured
by or imposed on net income) of a Bank pursuant to the laws of the jurisdiction
(or any political subdivision or taxing authority thereof or therein) under
which
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<PAGE>
such Bank is organized or in which the principal office or applicable lending
office of such Bank is located or under the laws of any political subdivision or
taxing authority of any such jurisdiction in which the principal office or
applicable lending office of such Bank is located) and all interest, penalties
or similar liabilities with respect thereto (collectively, "Taxes"). If any
Taxes are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes and such additional amounts as may be necessary so that every payment
of all amounts due hereunder, under any Note or under any other Credit Document,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note or in such other Credit
Document. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the written
request of such Bank, for taxes imposed on or measured by the net income or
profits of such Bank pursuant to the laws of the jurisdiction in which the
principal office or applicable lending office of such Bank is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or applicable lending office of such
Bank is located and for any withholding of income or similar taxes imposed by
the United States of America as such Bank shall determine are payable by, or
withheld from, such Bank in respect of such amounts so paid to or on behalf of
such Bank pursuant to the preceding sentence and in respect of any amounts paid
to or on behalf of such Bank pursuant to this sentence. The Borrower will
furnish to the Administrative Agent within 45 days after the date the payment of
any Taxes, or any withholding or deduction on account thereof, is due pursuant
to applicable law certified copies of tax receipts, or other evidence
satisfactory to the Bank, evidencing such payment by the Borrower. The Borrower
will indemnify and hold harmless the Administrative Agent and each Bank, and
reimburse the Administrative Agent or such Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Borrower on or prior to the Effective Date, or in the
case of a Bank that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or Section 12.04 (unless the respective Bank
was already a Bank hereunder immediately prior to such assignment or transfer
and such Bank is in compliance with the provisions of this Section 4.04(b)), on
the date of such assignment or transfer to such Bank, (i) two accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001
(or successor forms) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments to be made
under this Agreement, any Note or any other Credit Document, or (ii) if the Bank
is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and
cannot deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (i) above, (x) a certificate representing that such non-U.S. Bank is not
a bank for purposes of Section 881(c) of the Code, is not a 10% shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is
not a con-
-26-
<PAGE>
trolled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code) (any such certificate, a "Section 4.04(b)(ii)
Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor form) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement, any Note or any
other Credit Document. In addition, each Bank agrees that from time to time
after the Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect, it will deliver to the Borrower two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 4.04(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement, any Note or any other Credit Document,
or it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate. Notwithstanding anything to
the contrary contained in Section 4.04(a), but subject to Section 12.04(b) and
the immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or other
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder for the account of any Bank which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for United
States federal income tax purposes and which has not provided to the Borrower
such forms that establish a complete exemption from such deduction or
withholding and (y) the Borrower shall not be obligated pursuant to Section
4.04(a) hereof to pay a Bank in respect of income or similar taxes imposed by
the United States or any additional amounts with respect thereto if such Bank
has not provided to the Borrower the Internal Revenue Service forms required to
be provided to the Borrower pursuant to this Section 4.04(b). Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 4.04 and except as specifically provided for in Section 12.04(b),
the Borrower agrees to pay additional amounts and indemnify each Bank in the
manner set forth in Section 4.04(a) in respect of any Taxes deducted or withheld
by it as described in the previous sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
(c) If the Borrower determines in good faith that a reasonable basis
exists for contesting any taxes for which indemnification has been demanded
hereunder, the relevant Bank or the Administrative Agent, as applicable, shall
cooperate with the Borrower in challenging such taxes at the Borrower's expense
if so requested by the Borrower. If any Bank or the Administrative Agent, as
applicable, receives a refund of a tax for which a payment has been made by the
Borrower pursuant to this Agreement or receives any credit, relief or other tax
benefit in connection therewith, which refund or benefit in the
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<PAGE>
good faith judgment of such Bank or the Administrative Agent, as the case may
be, is attributable to such payment made by the Borrower, then the Bank or the
Administrative Agent, as the case may be, shall reimburse the Borrower for such
amount as the Bank or Administrative Agent, as the case may be, determines to be
the proportion of the refund or benefit as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment had not been required. A Bank or the Administrative Agent shall claim
any refund or benefit that it determines is available to it, unless it concludes
in its reasonable discretion that it would be adversely affected by making such
a claim. Neither the Bank nor the Administrative Agent shall be obliged to
disclose any information regarding its tax affairs or computations to the
Borrower in connection with this Section 4.04 (c).
(d) Each Bank represents and agrees that, on the date hereof and at
all times during the term of this Agreement, it is not and will not be a conduit
entity participating in a conduit financing arrangement (as defined in Section
7701(1) of the Code and the proposed regulations thereunder as of the date
hereof) with respect to the Borrowings hereunder unless the Borrower has
consented to such arrangement prior thereto.
SECTION 5. Conditions Precedent.
--------------------
5.01 Conditions Precedent to Initial Borrowing Date. The obligation
----------------------------------------------
of the Banks to make Loans, and of the Letter of Credit Issuer to issue Letters
of Credit, on the Initial Borrowing Date is subject to the satisfaction of each
of the following conditions at such time:
(a) Effectiveness; Notes. On or prior to the Initial Borrowing Date,
--------------------
(i) the Effective Date shall have occurred and (ii) there shall have been
delivered to the Administrative Agent for the account of each Bank the
appropriate Term Note and Revolving Note executed by the Borrower, in each
case, in the amount, maturity and as otherwise provided herein.
(b) Opinions of Counsel. On the Initial Borrowing Date, the
-------------------
Administrative Agent shall have received opinions, addressed to the
Administrative Agent and each of the Banks and dated the Initial Borrowing
Date, from (i) Latham & Watkins, special counsel to the Borrower, which
opinion shall cover the matters covered in Exhibit C-1 hereto, (ii) Beth A.
Ugoretz, General Counsel of the Borrower, which opinion shall cover the
matters contained in Exhibit C-2 hereto, (iii) White & Case, special
counsel to the Banks, which opinion shall cover the matters contained in
Exhibit C-3 hereto and (iv) local counsel satisfactory to the
Administrative Agent as it may request covering the perfection of the Liens
granted pursuant to the Security Documents and such other matters incident
to the transactions contemplated
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<PAGE>
by this Agreement as the Administrative Agent may reasonably request, all
in form and substance satisfactory to the Administrative Agent.
(c) Corporate Proceedings. (i) On the Initial Borrowing Date, the
---------------------
Administrative Agent shall have received from the Borrower a certificate,
dated the Initial Borrowing Date, signed by the President or any Vice-
President of the Borrower in the form of Exhibit D hereto with appropriate
insertions and deletions, together with (x) copies of the articles of
incorporation and the by-laws of the Borrower, (y) the resolutions of the
Borrower which shall be reasonably satisfactory to the Administrative Agent
and (z) a statement that all of the applicable conditions set forth in
Sections 5.01(g), (n), (o), (p) and (q) and 5.02 exist as of such date.
(ii) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Transaction
Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received all
information and copies of all certificates, documents and papers, including
good standing certificates and any other records of corporate proceedings
and governmental approvals, if any, which the Administrative Agent may have
reasonably requested in connection therewith, such documents and papers,
where appropriate, to be certified by proper corporate or governmental
authorities.
(d) Plans; Collective Bargaining Agreements; Existing Indebtedness
--------------------------------------------------------------
Agreements; Shareholders' Agreements; Management Agreements; Employment
-----------------------------------------------------------------------
Agreements; Joint Venture Agreements; Property Management Agreements; Tax
-------------------------------------------------------------------------
Sharing Agreements. On or prior to the Initial Borrowing Date, there shall
------------------
have been delivered to the Administrative Agent true and correct copies of:
(i) any Plans, and for each Plan (x) that is a Single-Employer
plan the most recently completed actuarial valuation prepared therefor
by such Plan's regular enrolled actuary and the Schedule B (Actuarial
Information) to the most recent annual report (Form 5500 Series) for
each Plan most recently filed with the Internal Revenue Service and
(y) that is a Multiemployer Plan, each of the documents referred to in
clause (x) either in the possession of the Borrower or any of its
Subsidiaries or any ERISA Affiliate or reasonably available thereto
from the sponsor or trustees of such Plan;
(ii) any collective bargaining agreements or any other similar
agreement or arrangements covering the employees of the Borrower or
any of its Subsidiaries (collectively, the "Collective Bargaining
Agreements");
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<PAGE>
(iii) all agreements evidencing or relating to the Existing
Indebtedness (the "Existing Indebtedness Agreements");
(iv) all agreements entered into by the Borrower governing the
terms and relative rights of its capital stock, and any agreements
entered into by members or shareholders of the Borrower with respect
to its capital stock (collectively, the "Shareholders' Agreements");
(v) any agreement with respect to, the management of the
Borrower or any of its Subsidiaries (collectively, the "Management
Agreements");
(vi) any material employment agreements entered into by the
Borrower or any of its Subsidiaries (collectively, the "Employment
Agreements");
(vii) all articles of incorporation, by-laws, partnership
agreements and/or joint venture agreements relating to all
Consolidated Joint Ventures in existence on the Effective Date (but
excluding any of such agreements relating to the Borrower's partners
or co-venturers in such Consolidated Joint Ventures and collectively,
the "Joint Venture Agreement");
(viii) all property management agreements in existence on the
Initial Borrowing Date relating to the Managed Properties
(collectively the "Property Management Agreements"); and
(ix) any tax sharing, tax allocation and other similar
agreements entered into by the Borrower and/or any of its Subsidiaries
(collectively, the "Tax Sharing Agreements");
all of which Plans, Collective Bargaining Agreements, Existing Indebtedness
Agreements, Shareholders' Agreements, Management Agreements, Employment
Agreements, Joint Venture Agreements, Property Management Agreements and
Tax Sharing Agreements shall be in form and substance satisfactory to the
Administrative Agent.
(e) Adverse Change, etc. From March 31, 1995 to the Initial
--------------------
Borrowing Date, nothing shall have occurred (and neither the Banks nor the
Administrative Agent shall have become aware of any facts or conditions not
previously known) which the Administrative Agent or the Required Banks
shall reasonably determine (i) has, or would reasonably be expected to
have, a material adverse effect on the Collateral or the rights or remedies
of the Banks or the Administrative Agent under
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<PAGE>
this Agreement or any other Credit Document, or on the ability of the
Borrower to perform its obligations to them, or (ii) has, or would
reasonably be expected to have, a Material Adverse Effect.
(f) Litigation. No actions, suits or proceedings shall be pending
----------
or, to the knowledge of the Borrower, threatened against the Borrower or
any of its Subsidiaries or any of their assets on the Initial Borrowing
Date (i) with respect to this Agreement or any other Credit Document or
(ii) which the Administrative Agent or the Required Banks shall determine
has, or would reasonably be expected to have, (x) a Material Adverse Effect
or (y) a material adverse effect on the Collateral or the rights or
remedies of the Banks or the Administrative Agent hereunder or under any
other Credit Document or on the ability of the Borrower to perform its
respective obligations to the Banks hereunder or under any other Credit
Document.
(g) Approvals. On the Initial Borrowing Date, except as set forth on
---------
Annex VIII hereto, all necessary governmental and material third party
approvals in connection with the transactions contemplated by the Credit
Documents and the other Transaction Documents and otherwise referred to
herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being
taken by any competent authority (including any court having jurisdiction)
which restrains or prevents such transactions or imposes, in the judgment
of the Required Banks or the Administrative Agent, materially adverse
conditions upon the consummation of such transactions.
(h) Security Documents. (i) On the Initial Borrowing Date, the
------------------
Borrower shall have duly authorized, executed and delivered a Pledge
Agreement substantially in the form of Exhibit E hereto (as modified,
amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "Pledge Agreement"), and shall have delivered to
the Collateral Agent, as pledgee thereunder, all of the certificates
representing the Pledged Securities referred to therein, endorsed in blank
or accompanied by executed and undated stock powers, and the Pledge
Agreement shall be in full force and effect.
(ii) On the Initial Borrowing Date, the Borrower shall have duly
authorized, executed and delivered a Security Agreement substantially in
the form of Exhibit F hereto (as modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "Security
Agreement") covering all of the Borrower's present and future Security
Agreement Collateral, in each case together with:
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<PAGE>
(A) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may
be reasonably necessary to perfect the security interests purported to
be created by the Security Agreement;
(B) copies of Requests for Information or copies (Form UCC-11),
or equivalent reports, each of recent date listing all effective
financing statements that name each such Person as debtor and that are
filed in the jurisdictions referred to in clause (A), together with
copies of such financing statements (none of which shall cover the
Collateral except (x) those with respect to which appropriate
termination statements executed by the secured lender thereunder have
been delivered to the Collateral Agent and (y) to the extent
evidencing Liens permitted pursuant to Section 8.03(d));
(C) evidence of the completion of all recordings and filings of,
or with respect to, the Security Agreement (other than the filing of
the UCC-1 Financing Statements referred to in (A) above) as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect the security interests intended to be created
thereunder; and
(D) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Security
Agreement have been taken or will be taken promptly after the Initial
Borrowing Date.
(iii) On the Initial Borrowing Date, the Collateral Agent shall have
received:
(A) fully executed counterparts of mortgages, deeds of trust or
deeds to secure debt, in each case in form and substance reasonably
satisfactory to the Collateral Agent (each as modified, amended or
supplemented from time to time in accordance under the terms hereof
and thereof, a "Mortgage" and, collectively, the "Mortgages"), which
Mortgages shall cover such of the Real Property owned or leased by the
Borrower and its Subsidiaries as is designated on Part B of Annex IV
as a mortgaged property (each a "Mortgaged Property" and,
collectively, the "Mortgaged Properties"), together with evidence that
counterparts of the Mortgages have been delivered to the title
insurance company insuring the Lien of the Mortgages for recording in
all places to the extent necessary or, in the reasonable opinion of
the Collateral Agent, desirable to effectively create a valid and
enforceable first priority mortgage lien on the Borrower's interest in
each Mortgaged Property (subject only to Permitted Encumbrances) in
favor
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<PAGE>
of the Collateral Agent (or such other trustee as may be required or
desired under local law) for the benefit of the Banks;
(B) executed copies of Financing Statements (Form UCC-1 or other
applicable form) in appropriate form for filing under the UCC of each
jurisdiction as may be reasonably necessary to perfect the security
interests in fixtures, equipment and personal property purported to be
created by the Mortgages;
(C) mortgagee title insurance policies (or marked commitments to
issue the same) for the Mortgaged Properties issued by title insurers
reasonably satisfactory to the Collateral Agent (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts
satisfactory to the Collateral Agent assuring the Collateral Agent
that the Mortgages on such Mortgaged Properties are valid and
enforceable first priority mortgage liens on such Mortgaged
Properties, free and clear of all defects and encumbrances except
Permitted Encumbrances, and the Mortgage Policies shall otherwise be
in form and substance reasonably satisfactory to the Collateral Agent;
and
(D) surveys, in form and substance reasonably satisfactory to
the Collateral Agent, of the Mortgaged Properties specified by the
Administrative Agent, certified in a manner satisfactory to the
Collateral Agent by a licensed professional surveyor reasonably
satisfactory to the Administrative Agent.
(i) Solvency. On the Initial Borrowing Date, the Administrative
--------
Agent shall have received from the chief financial officer of the Borrower
a certificate in the form of Exhibit G hereto, expressing opinions of value
and other appropriate facts or information regarding the solvency of the
Borrower.
(j) Fees. On or prior to the Initial Borrowing Date, the Borrower
----
shall have paid to the Administrative Agent and the Banks all Fees and
expenses agreed upon by such parties to be paid on or prior to such date.
(k) Consent Letter. On the Initial Borrowing Date, the
--------------
Administrative Agent shall have received a letter from The Prentice-Hall
Corporation System, Inc., presently located at 500 Central Avenue, Albany,
N.Y. 12206-2290, in the form of Exhibit H hereto indicating its consent to
its appointment by the Borrower as their agent to receive service of
process.
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<PAGE>
(l) Insurance Policies. On the Initial Borrowing Date, the
------------------
Collateral Agent shall have received evidence of insurance complying with
the requirements of Section 7.03 for the business and properties of the
Borrower and its Subsidiaries, in form and substance satisfactory to the
Agent and, with respect to all casualty insurance, naming the Collateral
Agent as an additional insured and loss payee.
(m) Environmental Reports. On or prior to the Initial Borrowing
---------------------
Date, the Administrative Agent shall have received Phase I environmental
assessments from Eckland Consultants, Inc. (or such other firm satisfactory
to the Administrative Agent), in form and substance satisfactory to, and
covering such Real Properties of the Borrower, its Subsidiaries and the
other JV Borrowers as requested by, the Administrative Agent.
(n) Formation. On or prior to the Initial Borrowing Date, the
---------
Partnership shall have contributed to the Borrower substantially all of its
assets and business, other than the Leased Properties, the Richland and
Kalispell hotel properties (which shall have been transferred to RLP),
certain minority joint venture interests to be retained by the Partnership
and certain other immaterial assets, with the Borrower assuming
substantially all of the Indebtedness of the Partnership, other than
mortgage debt relating to the Leased Properties (the "Formation"), such
contribution to be effected pursuant to the Contribution Agreement (the
"Contribution Agreement"), a copy of which certified as true and correct by
an Authorized Officer of the Borrower to have been delivered to the
Administrative Agent prior to the Initial Borrowing Date, which agreement
shall be in form and substance reasonably satisfactory to the
Administrative Agent. The Formation shall have been consummated in
accordance with the terms and conditions of the Contribution Agreement
(without any waiver thereto not agreed to by the Administrative Agent) and
all applicable law.
(o) IPO. On or prior to the Initial Borrowing Date, the Borrower
---
shall have received in available funds at least $135 million in gross cash
proceeds from the initial public issuance of its common stock (the "IPO")
effected as contemplated by the Registration Statement.
(p) Refinancing. (i) On the Initial Borrowing Date, the Borrower
-----------
shall have utilized all the net proceeds of the IPO, together with cash on
hand and all the proceeds of the Term Loans and up to $15,000,000 of the
Working Capital Loans to repay all the direct Indebtedness of the
Partnership assumed by the Borrower pursuant to the Formation (other than
(x) the Existing Hedges and (y) the Specified Obligations) and to refinance
certain existing debt of (I) its Consolidated Joint Ventures or (II) the
Partnership relating to the Richland and Kalispell hotel properties and
assumed by RLP pursuant to the Formation through mortgage loans
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<PAGE>
made by the Borrower to the respective Consolidated Joint Ventures or RLP,
as the case may be, (the "IBD JV Loans") secured by a mortgage on their
respective properties and otherwise in form and substance satisfactory to
the Administrative Agent (other than approximately $91 million of such
existing debt of such Consolidated Joint Ventures listed on Annex V hereto
which will remain outstanding after the Initial Borrowing Date) (all of the
foregoing repayments and refinancings, the "Refinancing"), which
Refinancing shall have been consummated on a basis (including the amount
and terms of all Existing Indebtedness not so repaid or refinanced)
reasonably satisfactory to the Administrative Agent (it being understood
that all of the documentation required to be delivered pursuant to Section
5.01(h)(iii) in respect of the Mortgages shall be delivered in connection
with the IBD JV Loans to the satisfaction of the Administrative Agent and
that the IBD JV Loans will be pledged pursuant to the Security Documents).
(ii) At least five Business Days prior to the Initial Borrowing Date,
the Administrative Agent shall have received from the Borrower a
certificate of the chief financial officer of the Borrower containing a
description of the aggregate principal amount, interest rate, maturity date
and borrower with respect to each IBD JV Loan to be made by the Borrower.
(q) Master Lease. On or prior to the Initial Borrowing Date, the
------------
Borrower and RLH Partnership shall have entered into a Lease (the "Master
Lease"), a copy of which certified as true and correct shall have been
delivered to the Administrative Agent prior to the Initial Borrowing Date,
which Master Lease shall be in form and substance reasonably satisfactory
to the Administrative Agent and pursuant to which Master Lease the Borrower
shall have leased from RLH Partnership the 17 hotel properties described
therein (the "Leased Properties").
(r) Partnership Credit Agreement. On the Initial Borrowing Date, the
----------------------------
Initial Borrowing Date under and as defined in the Partnership Credit
Agreement shall have occurred.
5.02 Conditions Precedent to All Credit Events. The obligation of
-----------------------------------------
the Banks to make each Loan and/or of a Letter of Credit Issuer to issue each
Letter of Credit is subject, at the time thereof, to the satisfaction of the
following condition:
(a) Notice of Borrowing, etc. The Administrative Agent shall have
-------------------------
received a Notice of Borrowing meeting the requirements of Section 1.03
with respect to the incurrence of Loans or a Letter of Credit Request
meeting the requirement of Section 2.03 with respect to the issuance of a
Letter of Credit.
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<PAGE>
(b) No Default; Representations and Warranties. At the time of each
------------------------------------------
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct
in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Loan, except to the extent that such representations and warranties
expressly relate to an earlier date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to each of the Banks that all of the
applicable conditions specified in Section 5.01 and/or 5.02, as the case may be,
exist as of that time. All of the certificates, legal opinions and other
documents and papers referred to in this Section 5, unless otherwise specified,
shall be delivered to the Administrative Agent for the account of each of the
Banks and, except for the Notes, in sufficient counterparts for each of the
Banks.
SECTION 6. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Banks to enter into this Agreement and to make the Loans, and/or to
issue and/or to participate in the Letters of Credit provided for herein, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and each Credit Event (with each Credit Event being deemed to
constitute a representation and warranty that the matters specified in this
Section 6 are true and correct in all material respects on and as of the date of
each such Credit Event, unless such representation and warranty expressly
indicates that it is being made as of any specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such specific date):
6.01 Corporate Status. Each of the Borrower and its Subsidiaries (i)
----------------
is a duly organized or formed and validly existing corporation or partnership,
as the case may be, in good standing under the laws of the jurisdiction of its
formation and has the corporate or partnership power and authority, as
applicable, to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (ii) has duly qualified and
is authorized to do business in all jurisdictions where it is required to be so
qualified except where the failure to be so qualified would not have a Material
Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate or other organizational power and authority to execute, deliver and
carry out the terms and provisions of the Credit Documents to which it is party
and has taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Credit Documents to
which it is party. Each Credit Party has duly executed and delivered each
Credit Document to which it is party and each Credit Document to which it is
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<PAGE>
party constitutes the legal, valid and binding obligation of each Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
6.03 No Violation. Neither the execution, delivery and performance
------------
by any Credit Party of the Credit Documents to which it is party nor compliance
with the terms and provisions thereof, nor the consummation of the loan
transactions contemplated therein (i) will contravene any provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality applicable to such Credit Party or its properties
and assets, (ii) will conflict or result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or (other
than pursuant to the Security Documents) result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Borrower or any of its Subsidiaries pursuant to the terms of any
material indenture, mortgage, deed of trust, agreement or other material
instrument to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the Charter or By-Laws of the
Borrower or the formation documents of any of its Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings pending
----------
or, to the knowledge of the Borrower, threatened with respect to the Borrower or
any of its Subsidiaries (i) that have, or would reasonably be expected likely to
have, a Material Adverse Effect or (ii) that have, or would reasonably be
expected to have, a material adverse effect on the rights or remedies of the
Banks or on the ability of the Borrower to perform its obligations to them
hereunder and under the other Credit Documents.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Term Loans shall be utilized (i) to finance, in part, the Transaction and (ii)
to pay certain fees and expenses arising in connection with the Transaction
Documents. The proceeds of Revolving Loans may be utilized (x) for the purposes
described in the preceding sentence to the extent the Term Facility is
insufficient and (y) as provided in the following sentence. The proceeds of
Acquisition Loans may only be utilized to finance Permitted Acquisitions, while
the proceeds of Working Capital Loans may be utilized for general corporate
purposes.
(b) No part of the proceeds of any Credit Event will be used to
purchase or carry Margin Stock. Neither any Credit Event, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Credit Event will be used to purchase or
carry any Margin Stock in violation of Regulation U or to
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<PAGE>
extend credit for the purpose of purchasing or carrying any Margin Stock in
violation of Regulation U.
6.06 Governmental Approvals. Except as disclosed on Annex VIII
----------------------
hereto, no order, consent, approval, license, authorization, or validation of,
or filing, recording or registration with, or exemption by, any foreign or
domestic governmental or public body or authority, or any subdivision thereof,
is required to authorize or is required in connection with (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
6.07 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or the Partnership in writing to the Administrative Agent or any Bank
for purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of the Borrower or the Partnership in
writing to any Bank will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading at such time in light of the circumstances under which
such information was provided. The projections and pro forma financial
--- -----
information prepared by the Borrower which are contained in such materials are
based on good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by the Banks that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
materially from the projected results. As of the Effective Date, there is no
fact known to the Borrower which has, or would reasonably be expected to have, a
Material Adverse Effect which has not theretofore been disclosed to the Banks or
to the Administrative Agent on behalf of the Banks.
6.08 Financial Condition; Financial Statements. (a) On and as of
-----------------------------------------
the Initial Borrowing Date on a pro forma basis after giving effect to the
--- -----
Transaction and to all Indebtedness incurred and to be incurred, and Liens
created, and to be created, by the Borrower in connection therewith, (i) the sum
of the assets, at a fair valuation, of the Borrower will exceed its debts, (ii)
the Borrower will not have incurred or intended to, or believe that it will,
incur debts beyond its ability to pay such debts as such debts mature and (iii)
the Borrower will have sufficient capital with which to conduct its business.
For purposes of this Section 6.08, "debt" means any liability on a claim, and
"claim" means (x) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced
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<PAGE>
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(b) (i) The consolidated statement of financial condition of the
Partnership and its Subsidiaries at December 31, 1994 and March 31, 1995, and
the related consolidated statements of income and cash flows for the fiscal
periods ended as of said dates, which, in the case of the December 31, 1994
statements, have been examined by Arthur Andersen LLP, independent certified
public accountants, and (ii) the pro forma (after giving effect to the
--- -----
Transaction and the related financings thereof) consolidated balance sheet of
the Borrower and its Subsidiaries as of March 31, 1995, copies of each of which
have heretofore been furnished to each Bank, present fairly the financial
position of the respective entities at the dates of said statements and the
results for the period covered thereby subject, in the case of quarterly
financials to normal, recurring year-end accruals (or, in the case of the pro
---
forma balance sheet, presents a good faith estimate of the consolidated pro
- - - ----- ---
forma financial condition of the Borrower and its Subsidiaries after giving
- - - -----
effect to the Transactions and the related financings thereof at the date
thereof). All such financial statements (other than the aforesaid pro forma
--- -----
balance sheets) have been prepared in accordance with generally accepted
accounting principles and practices consistently applied except to the extent
provided in the notes to said financial statements. Nothing has occurred since
December 31, 1994 that has had a Material Adverse Effect.
(c) Except as fully reflected in the financial statements and the
notes thereto described in Section 6.08(b) and for the assumption by the
Borrower of the Partnership's obligations under its Incentive Unit Plan, there
were as of the Initial Borrowing Date (after giving effect to the Loans made on
such date), no material Contingent Obligations, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, interest rate or foreign currency
swap or exchange transaction with respect to the Borrower or any of its
Subsidiaries which, either individually or in aggregate, would be material to
the Borrower and its Subsidiaries taken as a whole, except as incurred in the
ordinary course of business consistent with past practices of the Partnership
subsequent to December 31, 1994.
6.09 Security Interests. Once executed and delivered, and until
------------------
terminated in accordance with the terms thereof, each of the Security Documents
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected security interest in and Lien on all of the
Collateral subject thereto from time to time, superior to and prior to the
rights of all third Persons (subject in the case of the Mortgages to Permitted
Encumbrances and subject to no other Liens (except that the Security Agreement
Collateral and/or Mortgage Properties may be subject to Permitted Liens and (in
the case of the Mortgaged Properties) Permitted Encumbrances relating thereto))
in favor of the Collateral Agent for the benefit of the Banks. No filings or
recordings are required in order to perfect the security interests created under
any Security Document except for fil-
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<PAGE>
ings or recordings required in connection with any such Security Document which
shall have been made, or for which satisfactory arrangements have been made,
upon or prior to the execution and delivery thereof. All mortgage, mortgage
recording, stamp, intangible or other similar taxes required to be paid by any
Person under applicable Legal Requirements or other laws applicable to the Real
Property encumbered by the Mortgages in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of the Mortgages
have been paid.
6.10 Representations and Warranties in Transaction Documents. All
-------------------------------------------------------
representations and warranties of the Partnership, the Borrower and/or any
Consolidated Joint Venture set forth in any of the Transaction Documents were
true and correct in all material respects as of the time such representations
and warranties were made and shall be true and correct in all material respects
as of the Initial Borrowing Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
6.11 Tax Returns and Payments. Each of the Borrower and each of its
------------------------
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Subsidiaries have paid, or have provided adequate
reserves for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof (giving effect to the Formation).
6.12 Compliance with ERISA. Except to the extent that all events and
---------------------
obligations described in the following clauses of this Section 6.12 and at any
time in existence would not in the aggregate have a Material Adverse Effect,
each Plan is in substantial compliance with ERISA and the Code; no Reportable
Event has occurred with respect to a Plan; no Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability; no Plan has an
accumulated or waived funding deficiency or has applied for an extension of any
amortization period within the meaning of Section 412 of the Code; all
contributions required to be made with respect to a Plan have been timely made;
neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate
has incurred any material liability to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur
any liability (including any indirect, contingent, or secondary liability) under
any of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate of incurring a liability to or
on account of a Plan pursuant to the foregoing
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<PAGE>
provisions of ERISA and the Code; no lien imposed under the Code or ERISA on the
assets of the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate
exists or is likely to arise on account of any Plan; and the Borrower and its
Subsidiaries do not maintain or contribute to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA) the obligations with respect to which could reasonably be expected to
have a material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement.
6.13 Subsidiaries. (a) Annex III hereto lists each Subsidiary of
------------
the Borrower (and the direct and indirect ownership interest of the Borrower
therein), in each case existing on the Initial Borrowing Date but after giving
effect to the Formation.
(b) There are no contractual or consensual restrictions on the
Borrower, RLP or any of the Consolidated Joint Ventures which prohibit or
otherwise restrict the payment when due of principal or interest on JV Loans or,
except to the extent of restrictions contained in the partnership or joint
venture agreements governing any such Consolidated Joint Venture or in any
Existing Indebtedness Agreement, any other Indebtedness owing to the Borrower by
any such Consolidated Joint Venture.
6.14 Intellectual Property, etc. The Borrower has obtained or has
---------------------------
the right to use during the term of this Agreement all material patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, that are necessary for the operation of its
business as presently conducted and as proposed to be conducted.
6.15 Environmental Matters. (a) The Borrower and each of its
---------------------
Subsidiaries and each of the Consolidated Joint Ventures is in compliance with
all Environmental Laws governing its business except to the extent that any such
failure to comply (together with any resulting penalties, fines or forfeitures)
would not reasonably be expected to have a Material Adverse Effect. All
licenses, permits, registrations or approvals required for the business of the
Borrower and each of its Subsidiaries and each of the Consolidated Joint
Ventures, as conducted as of the Initial Borrowing Date, under any Environmental
Law have been secured and the Borrower and each of its Subsidiaries and each of
the Consolidated Joint Ventures is in substantial compliance therewith, except
for such licenses, permits, registrations or approvals the failure to secure or
to comply therewith is not reasonably likely to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries nor any of the Consolidated
Joint Ventures is in any respect in noncompliance with, breach of or default
under any applicable writ, order, judgment, injunction, or decree to which the
Borrower or such Subsidiary or such Consolidated Joint Venture is a party or
which would affect the ability of the Borrower or such Subsidiary or such
Consolidated
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<PAGE>
Joint Venture to operate any real property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute noncompliance, breach of or default thereunder, except in each
such case, such noncompliance, breaches or defaults as would not reasonably be
expected to, in the aggregate, have a Material Adverse Effect. There are as of
the Initial Borrowing Date no Environmental Claims pending or, to the best
knowledge of the Borrower, threatened wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a Material Adverse Effect. There
are no facts, circumstances, conditions or occurrences on any Real Property now
or at any time owned, leased or operated by the Borrower or any of its
Subsidiaries or any of the Consolidated Joint Ventures or, to the knowledge of
the Borrower, on any property adjacent to any such Real Property that could
reasonably be expected (i) to form the basis of an Environmental Claim against
the Borrower or any of its Subsidiaries or any of the Consolidated Joint
Ventures or any Real Property of the Borrower or any of its Subsidiaries or any
of the Consolidated Joint Ventures, or (ii) to cause such Real Property to be
subject to any restrictions on the ownership, occupancy, use or transferability
of such Real Property under any Environmental Law, except in each such case,
such Environmental Claims or restrictions that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
Notwithstanding the provisions of the preceding sentence, the Banks hereby
acknowledge and agree that the first $1,000,000 expended by the Borrower or any
of its Subsidiaries with respect to the matters referred to on Annex XI shall
not be considered in making any determination as to whether or not there has
been a Material Adverse Effect as provided for in the preceding sentence.
(b) Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or any of the Consolidated Joint Ventures or
(ii) released on any such Real Property, in each case where such occurrence or
event is reasonably likely to have a Material Adverse Effect.
6.16 Properties. Annex IV contains a true and complete list of each
----------
Real Property owned or leased by the Borrower or any of its Subsidiaries on the
Initial Borrowing Date (after giving effect to the Transaction) and the type of
interest therein held by the Borrower or the respective Subsidiary. The
Borrower and each of its Subsidiaries has good and indefeasible title in fee to
each Real Property owned by it and a valid Leasehold in each Real Property
leased by it, in each case, after giving effect to the Transaction, free and
clear of all Liens and security interests other than the Liens created pursuant
to the Mortgages, Permitted Liens and Permitted Encumbrances. The Borrower and
each of its Subsidiaries has received all material assignments, waivers,
consents and other documents, and duly effected all material recordings, filings
and other material actions necessary to establish, protect and perfect its
right, title and interest in and to each Real Property owned or leased by it.
All material transfer taxes, deed stamps, intangible
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<PAGE>
taxes or other amounts in the nature of transfer taxes required to be paid by
any Person under applicable Legal Requirements or other laws applicable to the
Real Property in connection with the Formation have been paid.
6.17 Labor Relations; Collective Bargaining Agreements. There is (i)
-------------------------------------------------
no significant unfair labor practice complaint pending against the Borrower or
any of its Subsidiaries or, to the knowledge of the Borrower, threatened against
any of them, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is now pending against the Borrower or any of
its Subsidiaries or, to the knowledge of the Borrower, threatened against any of
them, (ii) no significant strike, labor dispute, slowdown or stoppage is pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries and (iii)
to the knowledge of the Borrower, no union representation question exists with
respect to the employees of the Borrower or any of its Subsidiaries, except
(with respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as would not reasonably be expected to
have a Material Adverse Effect.
6.18 Indebtedness. Annex V sets forth a true and complete list of
------------
all Indebtedness of the Borrower and each of its Subsidiaries and of the
Existing Consolidated Joint Ventures (after giving effect to the Transaction and
other than the Specified Obligations) incurred prior to, but which is to remain
outstanding after, the Initial Borrowing Date (collectively, the "Existing
Indebtedness"), in each case showing the aggregate principal amount,
amortization and interest rate thereof (and available commitments, if any,
thereunder) and the name of the respective borrower and any other entity which
directly or indirectly guaranteed such debt.
6.19 Transaction. On and as of the Initial Borrowing Date, (i) all
-----------
material consents and approvals of, and filings and registrations with, and all
other actions in respect of, all governmental agencies, authorities or
instrumentalities required to be obtained, given, filed or taken by the Borrower
or any other Credit Party in order to make or consummate each component of the
Transaction will have been obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto will
have been obtained) except for filings, consents or notices not required by
federal or state securities laws to be made at such time, which filings,
consents or notices have been or will be made during the period in which they
are required to be made and except as set forth in Annex VIII hereto and (ii)
each component of the Transaction shall have been consummated in accordance, in
all material respects, with the applicable Transaction Documents and in
compliance, in all material respects, with all applicable laws.
6.20 Certain Material Agreements. Except as described in Annex VIII,
---------------------------
after giving effect to the Transaction, each of the Master Lease, each Property
Management
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<PAGE>
Agreement, each Existing Indebtedness Agreement and each Joint Venture Agreement
is in full force and effect in accordance with its respective terms, without any
material default existing thereunder.
6.21 Third-Party Rights. Except as set forth in the Joint Venture
------------------
Agreements, no Person holds any right of first refusal, option to purchase or
lease, buy-out right, right of first offer or other similar right or option with
respect to any portion of the Collateral or any partnership interest, joint
venture interest or shareholder interest owned by the Borrower in any of its
Subsidiaries.
SECTION 7. Affirmative Covenants. The Borrower hereby covenants and
---------------------
agrees that so long as this Agreement is in effect and until such time as the
Total Commitment has been terminated, no Notes are outstanding and the Loans,
together with interest, Fees and all other Obligations hereunder, have been paid
in full:
7.01 Reporting Requirements. The Borrower will furnish to each of
----------------------
the Banks:
(a) Annual Financial Statements. As soon as available and in any
---------------------------
event within 90 days after the close of each fiscal year of the Borrower,
the consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income, of stockholder's equity and of cash flows for such
fiscal year, in each case setting forth comparative figures for the
preceding fiscal year and examined by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of the Borrower or
any of its Subsidiaries as a going concern, together with a certificate of
such accounting firm stating that in the course of its regular audit of the
business of the Borrower and its Subsidiaries, which audit was conducted in
accordance with generally accepted auditing standards, nothing came to the
attention of such accounting firm which would lead it to believe that any
Default or Event of Default as they relate to accounting matters has
occurred and is continuing or if in the opinion of such accounting firm
such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in any
------------------------------
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such quarterly period and the related consolidated statements of
income, of stockholder's equity and of cash flows for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, in each case setting forth comparative figures
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for the related periods in the prior fiscal year and which shall be
certified by the Chief Financial Officer or other Authorized Officer of the
Borrower, subject to changes resulting from normal year-end audit
adjustments.
(c) Budget. Not less than 10 days prior to the commencement of each
------
fiscal year of the Borrower, a preliminary consolidated budget (to be
followed no later than 30 days after the commencement of such fiscal year
by a final consolidated budget) of the Borrower and its Subsidiaries in
reasonable detail for each of the four fiscal quarters of such fiscal year,
as customarily prepared by management for its internal use, setting forth,
with appropriate discussion, the principal assumptions upon which such
plans are based.
(d) Officer's Certificates. At the time of (i) the delivery of the
----------------------
financial statements provided for in Sections 7.01(a) and (b), a
certificate of the Chief Financial Officer or other Authorized Officer of
the Borrower to the effect that no Default or Event of Default exists or,
if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate shall set forth the calculations required
to establish whether the Borrower was in compliance with the provisions of
Sections 8.05(c), 8.12, 8.13, 8.14, 8.15 and 8.16 as at the end of such
fiscal year or quarter, as the case may be and (ii) the first delivery of
the financial statements referred to in Section 7.01(b), a certificate of
the Chief Financial Officer or other Authorized Officer of the Borrower
accompanying a supplement to Annex XII, such supplement to be reasonably
satisfactory to the Administrative Agent, with the financial information
therein computed on the same basis as the information contained in Annex
XII.
(e) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after the Borrower or any of its Subsidiaries
obtains knowledge thereof, notice of (x) the occurrence of any event which
constitutes a Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto and (y) any litigation or
governmental or regulatory proceeding pending against the Borrower or any
of its Subsidiaries which is likely to have a Material Adverse Effect or a
material adverse effect on the Collateral or the ability of the Borrower to
perform its obligations hereunder or under any other Credit Document.
(f) Auditors' Reports. Promptly upon receipt thereof, a copy of each
-----------------
other report or "management letter" submitted to the Borrower or any of its
Subsidiaries by their independent accountants or independent actuaries in
connection with any annual, interim or special audit made by them of the
books of the Borrower or any of its Subsidiaries.
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<PAGE>
(g) ERISA. Promptly upon completion thereof, deliver to each of the
-----
Banks a complete copy of the annual report (Form 5500) of each Plan
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information) required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of reports and any material
notices received by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate with respect to any Plan shall be delivered to the Banks no
later than 10 days after the date such report has been filed with the
Internal Revenue Service or such notice has been received by the Borrower,
the Subsidiary or the ERISA Affiliate, as applicable.
(h) Environmental Matters. Promptly upon, and in any event within 10
---------------------
Business Days after, an officer of the Borrower or any Subsidiary or any
Consolidated Joint Venture obtains knowledge thereof, notice of one or more
of the following environmental matters: (i) any pending or threatened (in
writing) material Environmental Claim against the Borrower or any of its
Subsidiaries or any Consolidated Joint Venture or any Real Property owned
or operated by the Borrower or any of its Subsidiaries or any Consolidated
Joint Venture; (ii) any condition or occurrence on or arising from any Real
Property owned or operated by the Borrower or any of its Subsidiaries or
any Consolidated Joint Venture that (a) results in material noncompliance
by the Borrower or any of its Subsidiaries or any Consolidated Joint
Venture with any applicable Environmental Law or (b) would reasonably be
expected to form the basis of a material Environmental Claim against the
Borrower or any of its Subsidiaries or any Consolidated Joint Venture or
any such Real Property; (iii) any condition or occurrence on any Real
Property owned, leased or operated by the Borrower or any of its
Subsidiaries or any Consolidated Joint Venture that could reasonably be
expected to cause such Real Property to be subject to any material
restrictions on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries or any Consolidated Joint Venture of
such Real Property under any Environmental Law; and (iv) the taking of any
material removal or remedial action in response to the actual or alleged
presence of any Hazardous Material on any Real Property owned, leased or
operated by the Borrower or any of its Subsidiaries or any Consolidated
Joint Venture as required by any Environmental Law or any governmental or
other administrative agency. All such notices shall describe in reasonable
detail the nature of the Environmental Claim and the Borrower's or such
Subsidiary's or such Consolidated Joint Venture's response thereto.
(i) Other Information. Promptly upon transmission thereof, copies of
-----------------
any filings and registrations with, and reports to, the SEC by the Borrower
or any of its Subsidiaries (other than any registration statement on Form
S-8) and copies of
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<PAGE>
all financial statements, proxy statements, notices and reports as the
Borrower or any of its Subsidiaries shall send to analysts generally or to
the holders (other than the Borrower and its Subsidiaries) of their capital
stock or of the Indebtedness in their capacity as such holders (in each
case to the extent not theretofore delivered to the Banks pursuant to this
Agreement) and, with reasonable promptness, such other information or
documents (financial or otherwise) as the Administrative Agent on its own
behalf or on behalf of the Required Banks may reasonably request from time
to time.
7.02 Books, Records and Inspections. The Borrower will, and will
------------------------------
cause each of its Subsidiaries to, permit, upon at least five Business Days'
notice to the Chief Financial Officer or any other Authorized Officer of the
Borrower, officers and designated representatives of the Administrative Agent or
the Required Banks to visit and inspect any of the properties or assets of the
Borrower and any of its Subsidiaries in whomsoever's possession (but only to the
extent the Borrower or such Subsidiary has the right to do so to the extent in
the possession of another Person), and to examine the books of account of the
Borrower and any of its Subsidiaries and discuss the affairs, finances and
accounts of the Borrower and of any of its Subsidiaries with, and be advised as
to the same by, its and their officers and independent accountants and
independent actuaries, if any, all at such reasonable times and intervals and to
such reasonable extent as the Administrative Agent or the Required Banks may
request.
7.03 Insurance. (a) The Borrower will, and will cause each of its
---------
Subsidiaries to, at all times maintain in full force and effect insurance with
reputable and solvent insurers in such amounts and covering such risks and
liabilities as are in accordance with normal industry practice, provided that
--------
this covenant shall be satisfied in respect of any Mortgaged Property to the
extent the insurance covenants in the related Mortgage are satisfied. The
Borrower will, and will cause each of its Subsidiaries to, furnish annually to
the Administrative Agent a summary of the insurance carried.
(b) The Borrower will, and will cause each of its Subsidiaries to, at
all times keep their respective property insured in favor of the Collateral
Agent, and all policies (including the Mortgage Policies) or certificates (or
certified copies thereof) with respect to such insurance (and any other
insurance maintained by the Borrower or any such Subsidiary) (i) shall be
endorsed to the Collateral Agent's satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as loss payee (with respect to Collateral) or, to the extent permitted by
applicable law, as an additional insured), (ii) shall state that such insurance
policies shall not be cancelled without 30 days' prior written notice thereof
(or 10 days' prior written notice in the case of cancellation for the non-
payment of premiums) by the respective insurer to the Collateral Agent, (iii)
shall provide that the respective insurers irrevocably waive any and all rights
of subrogation with respect to the Collateral Agent and the Banks and (iv) shall
be deposited
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<PAGE>
with the Collateral Agent. In no event shall the Borrower be required to
deposit the actual insurance policies with the Collateral Agent. The
Administrative Agent shall deliver copies of any certificates of insurance to a
Bank upon such Bank's request.
(c) If the Borrower or any of its Subsidiaries shall fail to maintain
all insurance in accordance with this Section 7.03, or if the Borrower or any of
its Subsidiaries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Administrative Agent and/or the
Collateral Agent shall have the right (but shall be under no obligation), upon
prior notice to the Borrower, to procure such insurance, and the Borrower agrees
to reimburse the Administrative Agent or the Collateral Agent, as the case may
be, for all costs and expenses of procuring such insurance.
7.04 Payment of Taxes. The Borrower will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims (other than claims relating to the adjustment or
settling, in the ordinary course of business, of claims in respect of insurance
policies or reinsurance contracts) which, if unpaid, might become a Lien or
charge upon any properties of the Borrower or any of its Subsidiaries; provided
--------
that neither the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves with respect
thereto in accordance with GAAP.
7.05 Corporate Franchises. The Borrower will do, and will cause each
--------------------
Material Subsidiary to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate existence, rights and authority;
provided that any transaction permitted by Section 8.02 will not constitute a
- - - --------
breach of this Section 7.05.
7.06 Compliance with Statutes, etc. The Borrower will, and will
------------------------------
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have,
and which would not be reasonably expected to have, a Material Adverse Effect or
a material adverse effect on the Collateral or the ability of the Borrower to
perform its obligations under any Credit Document.
7.07 Good Repair. The Borrower will, and will cause each of its
-----------
Material Subsidiaries to, ensure that its material properties and equipment used
or useful in its business in whomsoever's possession they may be, are kept in
good repair, working order and condition, normal wear and tear excepted, and
that from time to time there are made in such properties and equipment all
needful and proper repairs, renewals, replacements,
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<PAGE>
extensions, additions, betterments and improvements thereto, to the extent and
in the manner customary for companies in similar businesses.
7.08 Compliance with Environmental Laws. (a) (i) The Borrower will
----------------------------------
comply, and will cause each of its Subsidiaries and each Consolidated Joint
Venture to comply, in all material respects, with all Environmental Laws
applicable to the ownership, lease or use of all Real Property now or hereafter
owned, leased or operated by the Borrower or any of its Subsidiaries or any
Consolidated Joint Venture, will promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, and will keep or cause to
be kept all such Real Property free and clear of any Liens imposed pursuant to
such Environmental Laws and (ii) neither the Borrower nor any of its
Subsidiaries nor any Consolidated Joint Venture will generate, use, treat,
store, release or dispose of, or permit the generation, use, treatment, storage,
release or disposal of, Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by the Borrower or any of its Subsidiaries
or any Consolidated Joint Venture or transport or permit the transportation of
Hazardous Materials to or from any such Real Property other than in compliance
with applicable Environmental Laws and in the ordinary course of business. If
required to do so under any applicable directive or order of any governmental
agency, the Borrower agrees to undertake, and cause each of its Subsidiaries and
each Consolidated Joint Venture to undertake, any clean up, removal, remedial or
other action necessary to remove and clean up any Hazardous Materials from any
Real Property owned, leased or operated by the Borrower or any of its
Subsidiaries or any Consolidated Joint Venture in accordance with, in all
material respects, the requirements of all applicable Environmental Laws and in
accordance with, in all material respects, such orders and directives of all
governmental authorities, except to the extent that the Borrower or such
Subsidiary or such Consolidated Joint Venture is contesting such order or
directive in good faith and by appropriate proceedings and for which adequate
reserves have been established to the extent required by GAAP.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time (i) while an Event of Default exists
or (ii) after the Banks receive notice under Section 7.01(h) for any event for
which notice is required to be delivered for any Real Property, the Borrower
will provide, at its sole cost and expense, an environmental site assessment
report concerning any such Real Property now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries or any Consolidated Joint
Venture, prepared by an environmental consulting firm approved by the
Administrative Agent, indicating the presence or absence of Hazardous Materials
and the potential cost of any removal or remedial action in connection with any
Hazardous Materials on such Real Property. If the Borrower fails to provide the
same within 90 days after such request was made, the Administrative Agent may
order the same, and the Borrower shall grant and hereby grants, to the
Administrative Agent and the Banks and their agents, access to such
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<PAGE>
Real Property and specifically grants the Administrative Agent and the Banks an
irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at the Borrower's expense.
7.09 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.10 Interest Rate Hedging. The Borrower shall (x) keep in effect
---------------------
until maturity the Existing Hedges and (y) at its option, enter into Interest
Rate Agreements, on terms and conditions reasonably acceptable to the
Administrative Agent, provided that if at any time the all-in interest rate
determined by reference to Credit Lyonnais' swap rate (determined at New York,
New York) for the period from the maturity of the Existing Hedges to the TF
Maturity Date would exceed 11% per annum, the Borrower shall enter into within
15 days of a request from the Administrative Agent to do so and maintain
Interest Rate Agreements, on terms and conditions reasonably acceptable to the
Administrative Agent, such that at least 40% of Total Indebtedness outstanding
at such time will bear interest at a fixed rate and/or will be hedged.
7.11 Additional Security; Further Assurances. (a) The Borrower will
---------------------------------------
give the Collateral Agent not less than 15 days prior written notice of the
scheduled closing date for any Permitted Acquisition by the Borrower or any of
its Subsidiaries occurring after the Initial Borrowing Date. Subject to
obtaining any consents from third parties (including third party lessors and co-
venturers) necessary to be obtained for the granting of a Lien on the interests
or assets acquired pursuant to any such Permitted Acquisition (with the Borrower
hereby agreeing to use its reasonable efforts to obtain such consents), the
Borrower will, and will cause its Subsidiaries to, grant the Collateral Agent
for the benefit of the Banks security interests and mortgages (each an
"Additional Security Document") in the interests or properties (other than (I)
any Real Property and related personal property assets securing a JV Loan to the
extent such JV Loan is pledged to the Collateral Agent, (II) any Real Property
and related personal property assets acquired by a joint venture with the
proceeds of equity investments made by the Borrower or a Subsidiary to the
extent such equity investments are pledged to the Collateral Agent, (III) any
Real Property and related personal property assets acquired or refinanced with
the proceeds of, and securing, or subject to assumed, Permitted Other Mortgage
Debt and/or Permitted Basket Debt (and not refinanced by Loans), (IV) interests
or properties relating to hotel properties located outside the United States to
the extent such grant would create adverse U.S. income tax consequences for the
Borrower and its Subsidiaries and (V) those constituting expansions of existing
facilities subject to mortgages in favor of other Persons) as are acquired after
the Initial Borrowing Date by the Borrower or such Subsidiary (x) with the
proceeds of Acquisition Loans or (y) that, together with any improvements
thereof, individually have
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<PAGE>
a value of at least $1,000,000 and as may be requested from time to time by the
Administrative Agent or the Required Banks, as additional security for the
Obligations. Each Additional Security Document (and each mortgage securing
additional JV Loans) shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Administrative Agent and shall
constitute a valid and enforceable perfected Lien upon the interests or
properties so acquired, superior to and prior to the rights of all third Persons
and subject to no other Liens except those permitted by Section 8.03 or
otherwise agreed by the Administrative Agent at the time of perfection thereof
and such other encumbrances as may be set forth in the mortgage policy, if any,
relating to such Additional Security Document (or such additional JV Loan
mortgage) which shall be delivered to the Collateral Agent together with such
Additional Security Document and which shall be reasonably satisfactory in form
and substance to the Collateral Agent. The Additional Security Document (or
additional JV Loan mortgages) or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens created thereby required
to be granted pursuant to the Additional Security Document and all taxes, fees
and other charges payable in connection therewith shall have been paid in full.
(b) The Borrower will, and will cause each of its Subsidiaries to, at
the expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, and other
assurances or instruments and take such further steps relating to the Collateral
covered by any of the Security Documents as the Collateral Agent may reasonably
require. If at any time the Collateral Agent determines, based on applicable
law, that all applicable taxes (including, without limitation, mortgage
recording taxes or similar charges) were not paid in connection with the
recordation of any Mortgage, the Borrower shall promptly pay the same upon
demand. Furthermore, the Borrower shall cause to be delivered to the Collateral
Agent such opinions of counsel, title insurance, surveys and other related
documents as may be reasonably requested by the Collateral Agent to assure
itself that this Section 7.11 has been complied with, all of which documents
shall be in form and substance reasonably satisfactory to the Collateral Agent.
(c) The Borrower agrees that each action required above by this
Section 7.11 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Administrative Agent
or the Required Banks; provided that in no event shall any Credit Party be
--------
required to take any action, other than using its reasonable efforts, to obtain
consents from third parties with respect to its compliance with this Section
7.11.
7.12 ERISA. As soon as possible and, in any event, within 10 days
-----
after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
or has reason
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to know of the occurrence of any of the following, the Borrower will deliver to
each of the Banks a certificate of the chief financial officer of the Borrower
setting forth details as to such occurrence and the action, if any, that the
Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to
take, together with any notices required or proposed to be given to or filed
with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a contribution required to be made
to a Plan has not been timely made; that a Plan has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the
Code; that proceedings may be or have been instituted to terminate or appoint a
trustee to administer a Plan; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Plan; that the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any liability (including any indirect, contingent, or secondary liability)
to or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or
502(i) or 502(l) of ERISA; or that the Borrower or any Subsidiary of the
Borrower may incur any material liability for benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) pursuant
to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) or
under any employee pension benefit plan (as defined in Section 3(2) of ERISA).
SECTION 8. Negative Covenants. The Borrower hereby covenants and
------------------
agrees that on the Effective Date and thereafter for so long as this Agreement
is in effect and until such time as the Total Commitment has been terminated, no
Notes remain outstanding and the Loans, together with interest, Fees and all
other Obligations incurred hereunder are paid in full:
8.01 Changes in Business. The Borrower will not permit the business
-------------------
activities of itself, its Subsidiaries and the Designated Consolidated Joint
Ventures taken as a whole to be substantively altered from the business
activities (including incidental or related activities) conducted by the
Borrower, its Subsidiaries and its Consolidated Joint Ventures (after giving
effect to the Transaction) on the Initial Borrowing Date.
8.02 Consolidation, Merger or Sale of Assets, etc. The Borrower will
---------------------------------------------
not, and will not permit any Subsidiary to, wind up, liquidate or dissolve its
affairs, or enter into any transaction of merger or consolidation or sell or
otherwise dispose of any of its property or assets (but excluding any sale or
disposition of obsolete or excess FF&E or
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<PAGE>
excess land in the ordinary course of business), or purchase, lease or otherwise
acquire (in one transaction or a series of related transactions) all or any part
of the property or assets of any Person (excluding any purchases, leases or
other acquisitions of property or assets in, and for use in, the ordinary course
of business) or agree to do any of the foregoing at any future time, except that
the following shall be permitted:
(a) capital expenditures by the Borrower and its Subsidiaries;
(b) The investments permitted pursuant to Section 8.06;
(c) (i) The merger or consolidation of any Subsidiary Guarantor with
or into the Borrower or another Subsidiary Guarantor or the liquidation or
dissolution of any Subsidiary that is not a Material Subsidiary or (ii) the
transfer or other disposition of any property by the Borrower to any
Subsidiary Guarantor or by any Subsidiary Guarantor to the Borrower or any
other Subsidiary Guarantor, provided that all Liens granted pursuant to the
Security Documents on any property or assets involved in any of the
foregoing transactions shall remain in full force and effect (with the same
priority as they would have if such transfer pursuant to this clause (ii)
had not occurred), either as a result of any such transfer being made
subject to such Liens or as a result of the surviving or transferee entity
executing and delivering new Security Documents, in each case to the
satisfaction of the Administrative Agent;
(d) The Borrower or any Subsidiary Guarantor may make Permitted
Acquisitions provided that at least 15 days prior to the date of such
acquisition, the Borrower shall have delivered to the Administrative Agent
an officer's certificate executed by an authorized officer of the Borrower,
which certificate shall (i) contain the date such Permitted Acquisition is
scheduled to be consummated, (ii) contained the estimated purchase price of
such Permitted Acquisition, (iii) contain a description of the property
and/or assets acquired in connection with such Permitted Acquisition, (iv)
demonstrate that at the time of making any such Permitted Acquisition the
covenants contained in Sections 8.12, 8.13, 8.14 and 8.15 shall be complied
with on a pro forma basis as if the properties and/or assets so acquired
--- -----
had been owned by the Borrower for the 12 month period immediately
preceding such acquisition (without giving effect to any credit for
unobtained or unrealized gains in connection with such Permitted
Acquisition), (v) to the extent applicable, confirms that the Borrower has
performed engineering and environmental audits which demonstrate that the
representations and warranties of the Borrower contained in this Agreement
(including those set forth in Section 6.15) shall be true and correct after
giving effect to such Permitted Acquisition, (vi) confirms that the hotel
property acquired pursuant to such Permitted Acquisition (or owned by the
partnership and/or joint venture in which interests have been acquired or
to which
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<PAGE>
loans and/or advances have been made pursuant to such Permitted
Acquisition) is to be managed by the Borrower and (vii) attach thereto a
true and correct copy of the then proposed purchase agreement or similar
agreement, joint venture agreement and/or management agreement entered into
in connection with such Permitted Acquisition;
(e) The Borrower or any of its Subsidiaries may sell any Transferred
Property if (i) (A) the percentage determined by dividing the portion of
EBITDA for the 12-month period most recently ended attributable to such
property by the EBITDA for such period less any portion of such EBITDA
allocable to each hotel property, if any, previously sold during such 12-
month period pursuant to this clause (e)(i) does not exceed 3% and (B) such
percentage, when added to each percentage theretofore obtained as a result
of a sale pursuant to this clause (e)(i), does not exceed 6% or (ii) the
--
proceeds of such sale consists solely of cash and exceed (x) the product of
seven multiplied by the portion of EBITDA for the 12-month period most
recently ended attributable to such property less (y) in the case only of a
property to be managed pursuant to a management contract have a term of at
least five years by the Borrower or any of its Subsidiaries after giving
effect to the sale, the present value (at the time of such sale) of (I) the
aggregate base fee to be paid under such management contract plus (II) the
termination fee, if any, payable thereunder (which may not exceed at any
time the present value at such time of the remaining base fees payable
thereunder);
(f) the Borrower or any of its Subsidiaries may sell any hotel
property, land or building (other than any Transferred Property the sale of
which is subject to the provisions of Section 8.02(e)) or any interest in
any Joint Venture;
(g) The Formation;
(h) Purchases by the Borrower from the Partnership of the minority
joint venture interests retained by the Partnership at the time of the
formation;
(i) The Master Lease and the related non-disturbance and attornment
agreement;
(j) The Borrower or any of its Subsidiaries may enter into leases of
property or assets not constituting Permitted Acquisitions or Foreign
Acquisitions in the ordinary course of business not otherwise in violation
of this Agreement and to the extent not prohibited by Section 8.07(b);
(k) The Borrower and its Subsidiaries may make Foreign Acquisitions
provided that (A) the total amount of Foreign Acquisitions in Mexico made
--------
pursuant
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<PAGE>
to this clause (k) shall not at any time exceed $10,000,000, (B) the total
amount of Foreign Acquisitions in Canada made pursuant to this clause (k)
shall not at any time exceed $40,000,000 and (C) the sum of (1) the total
amount of Foreign Acquisitions in Canada made pursuant to this clause (k)
and (2) the aggregate Acquisition Loan Outstandings-Canada shall not at any
time exceed $40,000,000; and
(l) The Borrower and its Subsidiaries may purchase, lease, or
otherwise acquire any property or assets of any Person (other than pursuant
to Permitted Acquisitions and Foreign Acquisitions), provided that (x) such
purchases or acquisitions are made with funds other than the proceeds of
Acquisition Loans and (y) after giving effect thereto, Section 8.01 is
complied with.
To the extent the Required Banks (or all of the Banks as shall be required by
Section 12.12) waive the provisions of this Section 8.02 with respect to the
sale, transfer or other disposition of any Collateral, or any Collateral is
sold, transferred or disposed of as permitted by this Section 8.02, (i) such
Collateral shall be sold, transferred or disposed of free and clear of the Liens
created by the respective Security Document; (ii) if such Collateral includes
all of the capital stock of a Subsidiary Guarantor, such capital stock shall be
released from the Pledge Agreement and such Subsidiary shall be released from
the Subsidiary Guaranty; and (iii) the Administrative Agent and the Collateral
Agent shall be authorized to take actions deemed appropriate by them in order to
effectuate the foregoing.
8.03 Liens. The Borrower will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet delinquent or Liens for taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Borrower)
have been established;
(b) Liens in respect of property or assets imposed by law which were
incurred in the ordinary course of business, such as carriers',
warehousemen's, materialmen's and mechanics' Liens and other similar Liens
arising in the ordinary course of business, which do not in the aggregate
materially detract from the value
-55-
<PAGE>
of such property or assets or materially impair the use thereof in the
operation of the business of the Borrower or any Subsidiary;
(c) Liens created by this Agreement or the other Credit Documents;
(d) Liens in existence on the Initial Borrowing Date which (x) are
listed, and the property subject thereto on the Initial Borrowing Date
described, in Annex VI, without giving effect to any extensions or renewals
thereof or (y) are otherwise permitted under this Section 8.03;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.08;
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and return-
of-money bonds and other similar obligations incurred in the ordinary
course of business (exclusive of obligations in respect of the payment for
borrowed money);
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not in
violation of this Agreement (including the Master Lease and mortgages
created pursuant to the Partnership Credit Agreement or any successor
facility on the Leased Properties);
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from financing statements regarding leases not in
violation of this Agreement;
(j) Liens securing Indebtedness permitted by Section 8.05(b),
Permitted Other Mortgage Debt and/or Permitted Basket Debt to the extent
such Liens do not attach to any property or assets other than the
properties or assets acquired or refinanced by any such Debt;
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<PAGE>
(k) Liens created by virtue of Capitalized Lease Obligations,
provided that such Liens are only in respect of the property or assets
--------
subject to, and secure only, the respective Capital Lease;
(l) Liens (x) placed upon equipment or machinery used in the ordinary
course of business of the Borrower or any of its Subsidiaries at the time
of (or within 180 days after) the acquisition thereof by the Borrower or
any such Subsidiary to secure Indebtedness incurred to pay all or a portion
of the purchase price thereof, provided that the Lien encumbering the
--------
equipment or machinery so acquired does not encumber any other asset of the
Borrower or any such Subsidiary; or (y) existing on specific tangible
assets at the time acquired by the Borrower or any of its Subsidiaries or
on assets of a Person at the time such Person first becomes a Subsidiary of
the Borrower, provided that (i) any such Liens were not created at the time
--------
of or in contemplation of the acquisition of such assets or Person by the
Borrower or any of its Subsidiaries, (ii) in the case of any such
acquisition of a Person, any such Lien attaches only to specific tangible
assets of such Person and not assets of such Person generally, (iii) the
Indebtedness secured by any such Lien does not exceed 100% of the fair
market value of the asset to which such lien attaches, determined at the
time of the acquisition of such asset or the time at which such Person
becomes a Subsidiary of the Borrower (except in the circumstances described
in clause (y) above to the extent such Liens constituted customary purchase
money Liens at the time of incurrence entered into in the ordinary course
of business) and (iv) the Indebtedness secured thereby is permitted by
Section 8.04(b);
(m) Permitted Encumbrances;
(n) Liens on the hotel properties owned by RLP securing JV Loans; and
(o) Liens under the Master Lease in favor of the landlord thereunder.
8.04 Indebtedness. The Borrower will not, and will not permit any of
------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness subject to Liens permitted by Section 8.03(l) or
constituting Capitalized Lease Obligations, provided that the aggregate
--------
principal amount of such Indebtedness and Capitalized Lease Obligations
under all Capital Leases shall not exceed $7,500,000 at any time
outstanding;
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<PAGE>
(c) Existing Indebtedness and Specified Obligations, in each case
without giving effect to any subsequent extension, renewal or refinancing
thereof;
(d) Indebtedness of the Borrower under the Interest Rate Agreements
entered into pursuant to Section 7.10;
(e) Indebtedness of RLP pursuant to its IBD JV Loans;
(f) Indebtedness (x) of the Borrower to any Subsidiary Guarantor, (y)
of any Subsidiary Guarantor to the Borrower or any other Subsidiary
Guarantor or (z) to the extent constituting loans or advances permitted by
Section 8.06(k), of RLP, any Liquor License Subsidiary or any other
Subsidiary to the Borrower or any Subsidiary Guarantor, provided that such
Indebtedness shall be evidenced by a promissory note which shall be pledged
to the Collateral Agent pursuant to the Pledge Agreement;
(g) The Borrower may incur Permitted Subordinated Debt if after
giving effect thereto Section 8.12 is complied with;
(h) Contingent Obligations of (A) the Borrower in respect of (x)
leases of real property entered into by RLH Partnership with respect to the
Sea-Tac, Boise Downtowner, Eugene, Salt Lake City, Astoria and Quay
properties and (y) obligations of any Subsidiary Guarantor permitted under
this Agreement and (B) the Borrower or any Subsidiary in respect of any
other Person (other than in respect of indebtedness for borrowed money)
arising as a matter of applicable law because the Borrower or such
Subsidiary is or is deemed to be a general partner of such other Person;
(i) The Borrower or any Subsidiary Guarantor may incur additional
Indebtedness ("Permitted Basket Debt") if at the time of incurrence thereof
the aggregate outstanding principal amount of Permitted Basket Debt does
not exceed $25,000,000 (or $40,000,000 if at the time of any such
incurrence the ratio of (x) the sum of Total Indebtedness at such time plus
the Unutilized Total Revolving Commitment at such time to (y) EBITDA for
the Test Period last ended is less than 2.5:1), it being agreed that no
Permitted Basket Debt or Permitted Other Mortgage Debt in each case that is
issued pursuant to a public offering or a 144A offering may contain any
provision requiring such Indebtedness to be repaid, redeemed or repurchased
(as opposed to causing a default under such Indebtedness) upon the
occurrence of any Change of Control or similar event unless the Required
Banks consent to such provision; and
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<PAGE>
(j) Indebtedness of the Borrower or any of its Subsidiaries for
borrowed money permitted under Section 8.05.
8.05 Additional Limitations on Indebtedness for Borrowed Money. The
---------------------------------------------------------
Borrower will not, and will not permit any of its Subsidiaries or Consolidated
Joint Ventures to, contract, create, incur, assume, guarantee or suffer to exist
any Indebtedness for borrowed money, except:
(a) Indebtedness of the Borrower and any of its Subsidiaries for
borrowed money permitted under Section 8.04;
(b) The Borrower, any Subsidiary Guarantor, RLP and/or any
Consolidated Joint Venture may incur Indebtedness to refinance (in whole or
in part or in a greater amount up to an amount equal to the outstanding
aggregate principal amount of such Indebtedness as of the Initial Borrowing
Date) Existing Indebtedness (other than the Existing Hedges) and/or to
refinance IBD JV Loans (in whole or in a greater amount up to an amount
equal to the outstanding aggregate principal amount of such Indebtedness as
of the Initial Borrowing Date) to the extent such new Indebtedness is
incurred on the same basis (i.e., recourse or non-recourse) or a more
favorable basis (i.e., changing recourse to non-recourse) as the
Indebtedness being refinanced, provided that any Indebtedness incurred by
the Borrower to refinance the Existing Indebtedness secured by the
Glendale, California hotel property may be incurred on a recourse basis, it
being understood that for purposes of clauses (b) and (c) of this Section
8.05 and except where it is specifically provided that a refinancing may be
in whole or in part, any refinancing permitted by such clauses must, taken
alone or when added to additional repayments made (other than with the
proceeds of Acquisition Loans) by the Borrower, a Subsidiary Guarantor or a
Consolidated Joint Venture, as the case may be, be sufficient to repay in
full the Indebtedness being refinanced;
(c) The Borrower, any Subsidiary Guarantor, RLP and/or any
Consolidated Joint Venture may incur or assume debt that is non-recourse to
the Borrower or any Subsidiary Guarantor ("Permitted Other Mortgage Debt")
(x) to finance and/or refinance in whole or in part hotel properties
acquired pursuant to Permitted Acquisitions and/or to finance or refinance
JV Loans other than IBD JV Loans, (y) to refinance (in whole or in part)
hotel properties subject to Existing Indebtedness (other than the Existing
Hedges) and/or JV Loans where the aggregate principal amount of the
Indebtedness financed or refinanced is increased (the "Increase") from the
amount outstanding on the Initial Borrowing Date (or, in the case of the JV
Loans other than IBD JV Loans, on the date of such refinancing) and/or (z)
to finance properties subject to Existing Indebtedness or JV Loans by
incurring additional Indebtedness for borrowed money (such incremental
Indebtedness
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<PAGE>
incurred pursuant to clauses (y) (that represents the Increase) or (z)
being "Incremental Refinancing Debt"), provided that on the date of
incurrence or assumption of any Permitted Other Mortgage Debt and
thereafter (but, in the case of any Incremental Refinancing Debt only to
the extent such Incremental Refinancing Debt remains outstanding) and in
addition to compliance with Sections 8.12, 8.13 and 8.14 (as in effect
without giving effect to such incurrence or assumption), said Sections
8.12, 8.13 and 8.14 are complied with as if (x) the Subsidiary or
Consolidated Joint Venture, as the case may be, incurring such Permitted
Other Mortgage Debt was deemed not to be a Subsidiary or a Consolidated
Joint Venture, as the case may be, (but rather as an Unconsolidated Joint
Venture) for the purposes of all defined terms used therein (directly or
indirectly) so that all such defined terms exclude such hotel properties as
Consolidated Joint Ventures and/or Subsidiaries or (y) if the Borrower
incurs any such Permitted Other Mortgage Debt, (I) EBITDA does not include
any element of EBITDA attributable to the hotel being financed or
refinanced (other than to the extent of management fees and other non-
contingent distributions actually made to the Borrower by such hotel) and
(II) Total Indebtedness does not include such Permitted Other Mortgage Debt
plus (in the case of any such Permitted Other Mortgage Debt incurred
pursuant to clause (z) above) the existing Indebtedness secured by the
hotel properties securing such Permitted Other Mortgage Debt; and
(d) Existing Indebtedness of Existing Consolidated Joint Ventures,
Indebtedness for borrowed money of Consolidated Joint Ventures pursuant to
JV Loans and Indebtedness for borrowed money resulting from advances by the
Borrower or any Subsidiary Guarantor to Consolidated Joint Ventures
permitted under this Agreement.
If (i) the Borrower or any Subsidiary of the Borrower incurs Permitted Other
Mortgage Debt which finances or refinances in whole or in part any hotel
property subject to a Mortgage or as to which any interest in such property is
subject to a Security Document and which was acquired pursuant to a Permitted
Acquisition or (ii) a Consolidated Joint Venture or RLP incurs Permitted Other
Mortgage Debt which finances or refinances a JV Loan, in each case as permitted
by this Section 8.05 then, upon the repayment of the Indebtedness being
refinanced and the payment of any amounts required under Section 4.02, the
Collateral Agent shall release concurrent with such required payments, if any,
or if no payment is required concurrent with the incurrence of such Permitted
Other Mortgage Debt, the Mortgage or other Collateral relating to such property
or the assignment of the mortgage relating to the respective JV Loan. The
Administrative Agent and the Collateral Agent shall be authorized to take
actions deemed appropriate by them in order to effectuate the foregoing.
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<PAGE>
8.06 Advances, Investments and Loans. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except:
(a) The Borrower or any of its Subsidiaries may invest in cash and
Cash Equivalents;
(b) The Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(c) Loans and advances (x) to employees for business-related travel
expenses, moving expenses and other similar expenses, in each case incurred
in the ordinary course of business and (y) to employees in an aggregate
principal amount not to exceed $2,000,000 at any time outstanding, shall be
permitted;
(d) To the extent allowed by Section 8.02(c), (d), (g), (h), (j) or
(k), and the creation of Subsidiaries in compliance with Section 8.16 shall
be permitted;
(e) Investments acquired by the Borrower or any of its Subsidiaries
(x) in exchange for any other investment held by the Borrower or any such
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other investment
or (y) as a result of a foreclosure by the Borrower or any of its
Subsidiaries with respect to any secured investment or other transfer of
title with respect to any secured investment in default;
(f) Investments of the Borrower in (x) the Existing Hedges and
Interest Rate Agreements entered into pursuant to Section 7.10 and/or (y)
JV Loans;
(g) Equity investment in new hotel construction permitted by
Section 8.11;
(h) Loans and advances permitted by Section 8.04(f)(x) or (y);
(i) Purchase money notes received in Asset Sales (other than
Specified Asset Sales) not to exceed in the aggregate $15,000,000 at any
one time outstanding, provided that in connection with sales of Transferred
--------
Properties pursuant to Section 8.02(e)(i) any purchase money note taken
shall not exceed 25% of the respective sales price for a Transferred
Property and for all sales made pursuant to Section 8.02(e)(i) shall not
exceed $10,000,000 at any time outstanding;
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<PAGE>
(j) The investments outstanding on the Initial Borrowing Date which
are listed on Annex VII hereto (without any increase thereto); and
(k) The Borrower or any of its Subsidiaries may make any other cash
investments, advances or loans in or to any Person, provided such
investments, advances and/or loans are made with funds other than the
proceeds of Acquisition Loans.
8.07 Capital Expenditures; Leases. (a) The Borrower will not permit
----------------------------
the amount expended during any fiscal year for maintenance Consolidated Capital
Expenditures to be less than 3% of all revenues for such fiscal year of all
hotels owned or leased by the Borrower, its Subsidiaries and the Consolidated
Joint Ventures.
(b) The Borrower will not permit the aggregate payments (including,
without limitation, any property taxes paid by the Borrower and its Subsidiaries
as additional rent or lease payments) by the Borrower and its Subsidiaries on a
consolidated basis under agreements in effect as of the Initial Borrowing Date
and/or entered into after the Initial Borrowing Date (including any such
agreement that is an extension, replacement, substitution, or renewal of any
agreement entered into prior to such date) to rent or lease any real or personal
property (exclusive of lease obligations relating to corporate overhead and
operation, lease obligations (including obligations for direct leases of hotels)
existing under Permitted Acquisitions and Foreign Acquisitions, lease
obligations under ground leases existing on the Initial Borrowing Date,
Capitalized Lease Obligations and the Master Lease) to exceed $3,000,000 in any
fiscal year of the Borrower.
8.08 Prepayments of Indebtedness, Modifications of Agreements, etc.
--------------------------------------------------------------
The Borrower will not, and will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of any Permitted Subordinated Debt once issued;
(b) amend or modify (or permit the amendment or modification of) any
of the terms or provisions of or terminate (other than any scheduled
termination in accordance with the terms thereof) (A) in any manner adverse
to the interests of the Banks (i) the Master Lease and/or (ii) any
documents or agreement governing any Permitted Subordinated Debt once
issued or (B) in any manner that has, or which would reasonably be expected
to have, a Material Adverse Effect (i) any Property Management Agreement,
and (ii) any Joint Venture Agreement; and/or
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<PAGE>
(c) amend, modify or change in any manner materially adverse to the
interests of the Banks the Certificate of Incorporation (including, without
limitation, and in any event, by the filing of any certificate of
designation) or by-laws of the Borrower, or enter into any new agreement
with respect to the capital stock of the Borrower (to the extent adverse to
the interests of the Banks).
8.09 Dividends, etc. The Borrower will not declare or pay any
---------------
dividends (other than dividends payable solely in common stock of the Borrower)
or return any capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of the
Borrower, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued with respect to such capital stock) (all of the
foregoing "Dividends"), except for (i) shares of capital stock deemed to be
repurchased upon exercise of stock options if such capital stock represents a
portion of the exercise price of such options and (ii) repurchases of capital
stock in connection with employee management subscription agreements to the
extent the cash expended pursuant to this clause (ii) does not exceed $2,000,000
in any fiscal year.
8.10 Transactions with Affiliates. The Borrower will not, and will
----------------------------
not permit any Subsidiary to, enter into any transaction or series of
transactions with any Affiliate (other than, in the case of a Subsidiary, the
Borrower or a Subsidiary Guarantor) other than in the ordinary course of
business and on terms and conditions substantially as favorable to the Borrower
or such Subsidiary as would be obtainable, in the Borrower's reasonable
judgment, by the Borrower or such Subsidiary at the time in a comparable arm's-
length transaction with a Person other than an Affiliate except (i) the Master
Lease, (ii) Property Management Agreements with Red Lion MLP, (iii) the Services
Agreement, (iv) investments permitted by Section 8.06, (v) transactions pursuant
to the Contribution Agreement, (vi) payments made pursuant to Section 8.09 and
(vii) as set forth on Annex X.
8.11 Construction Activities. The Borrower will not permit the
-----------------------
aggregate equity investments made by the Borrower and its Subsidiaries in new
hotel construction activities (including purchases of land) to exceed
$25,000,000 at any time outstanding. Upon receipt by the Borrower or any of its
Subsidiaries of a certificate of occupancy (including temporary certificates of
occupancy) or similar governmental permit allowing occupancy of the premises
with respect to any new hotel construction project, the amount of equity
investments made by the Borrower or such Subsidiary in such project shall no
longer be deemed to be outstanding for purposes of this Section 8.11.
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<PAGE>
8.12 Leverage Ratio. The Borrower will not permit the ratio of (i)
--------------
Modified Total Indebtedness to (ii) Modified EBITDA for the Test Period last
ended at any time during any period set forth below to be greater than the ratio
set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Prior to Second Anniversary 4.0:1.0
of Initial Borrowing Date
Thereafter and Prior to Fourth 3.75:1.0
Anniversary of Initial
Borrowing Date
Thereafter 3.5:1.0
</TABLE>
8.13 Debt Service Coverage. The Borrower will not permit the Debt
---------------------
Service Coverage Ratio for any Test Period to be less than 1.15:1
8.14 Interest Coverage. The Borrower will not permit the Interest
-----------------
Coverage Ratio for any Test Period to be less than (x) at any time prior to the
first anniversary of the Initial Borrowing Date, 2.25:1 and (y) at any time
thereafter, 2.5:1.
8.15 Net Worth. The Borrower will not permit Consolidated Net Worth
---------
to be less than $140,000,000 million at any time.
8.16 Capitalization. The Borrower will not permit the ratio of (i)
--------------
Consolidated Indebtedness to (ii) Consolidated Net Worth to be greater than (x)
2.5:1 at any time prior to the first anniversary of the Initial Borrowing Date,
(y) 2.25:1 at any time thereafter and prior to the second anniversary of the
Initial Borrowing Date and (z) 2.0:1 at any time thereafter.
8.17 Creation of Subsidiaries. The Borrower shall not create or
------------------------
acquire any Subsidiary other than (i) Persons not located in the United States
and acquired pursuant to a Foreign Acquisition or a Permitted Acquisition, (ii)
a Liquor License Subsidiary and (iii) any corporate entity that is a wholly-
owned Subsidiary which guarantees the Obligations pursuant to a guaranty
satisfactory to the Administrative Agent (a "Subsidiary Guaranty") and 100% of
the capital stock of which is pledged to the Collateral Agent pursuant to the
Pledge Agreement.
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<PAGE>
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
9.02 Representations, etc. Any representation, warranty or statement
---------------------
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
9.03 Covenants. The Borrower shall (i) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Section 7.10, 7.11 or 8, or (ii) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (i) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice by the Administrative Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) The Borrower or any of its
------------------------------
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations, any non-recourse Indebtedness and/or the Specified
Obligations), and such default shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Indebtedness,
or (ii) default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (and all grace periods applicable to
such observance, performance or condition shall have expired), or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable, or shall be required to be prepaid (other than
by a regularly scheduled required prepayment or redemption, prior to the stated
maturity thereof) provided that it shall not constitute an Event of Default
--------
pursuant to this Section 9.04 unless the aggregate amount of all Indebtedness
referred to in clauses (a) and (b) above exceeds $10,000,000 at any one time; or
9.05 Bankruptcy, etc. The Borrower or any of its Material
----------------
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of
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<PAGE>
its Material Subsidiaries and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Borrower or any of its
Material Subsidiaries; or the Borrower or any of its Material Subsidiaries
commences (including by way of applying for or consenting to the appointment of,
or the taking of possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "conservator") of itself or all or
any substantial portion of its property) any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency, liquidation, rehabilitation, conservatorship or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Material Subsidiaries; or any such proceeding is commenced against the
Borrower or any of its Material Subsidiaries to the extent such proceeding is
consented to by such Person or remains undismissed for a period of 60 days; or
the Borrower or any of its Material Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any of its Material Subsidiaries
suffers any appointment of any conservator or the like for it or any substantial
part of its property which continues undischarged or unstayed for a period of 60
days; or the Borrower or any of its Material Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by the
Borrower or any of its Material Subsidiaries for the purpose of effecting any of
the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
-----
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any Plan shall have
an Unfunded Current Liability, a contribution required to be made to a Plan has
not been timely made, the Company or any Subsidiary of the Borrower or any ERISA
Affiliate has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or the
Borrower or any Subsidiary of the Borrower has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) that provide benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or employee
pension benefit plans (as defined in Section 3(2) of ERISA); (b) there shall
result from any such event or events the imposition of a Lien, the granting of a
security interest, or a liability or a material risk of incurring a liability;
and (c) which Lien, security interest or liability, individually, and/or in the
aggregate, in the opinion of the Required Banks, will have a Material Adverse
Effect;
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9.07 Security Documents. (a) Any Security Document shall cease to
------------------
be in full force and effect (other than upon termination thereof in accordance
with its terms), or shall cease to give the Collateral Agent the Liens purported
to be created thereby in favor of the Collateral Agent or (b) the Borrower shall
default in the due performance or observance of any material term, covenant or
agreement on its part to be performed or observed pursuant to any Security
Document and such default shall continue beyond any cure or grace period
specifically provided for in such Security Document; or
9.08 Judgments. One or more judgments or decrees shall be entered
---------
against the Borrower and/or any of its Subsidiaries involving a liability (not
paid or fully covered by insurance) of $10,000,000 or more in the aggregate for
all such judgments and decrees for the Borrower and its Subsidiaries) and any
such judgments or decrees shall not have been vacated, discharged or stayed or
bonded pending appeal within 60 days from the entry thereof; or
9.09 Master Lease. An Event of Default under and as defined in the
------------
Master Lease shall occur and be continuing; or
9.10 Change of Control. A Change of Control shall occur;
-----------------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Bank to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
--------
if an Event of Default specified in Section 9.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any Commitment Commission shall forthwith become due
and payable without any other notice of any kind; (ii) declare the principal of
and any accrued interest in respect of all Loans, all Unpaid Drawings and all
obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; (iii)
enforce, as Administrative Agent (or direct the Collateral Agent to enforce),
any or all of the Liens and security interests created pursuant to the Security
Documents; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms; and (v) direct the Borrower to pay (and the Borrower
hereby agrees that on receipt of such notice or upon the occurrence of an Event
of Default with respect to the Borrower under Section 9.05, it will pay) to the
Collateral Agent an amount of cash equal to the aggregate Stated Amount of all
Letters of Credit
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then outstanding (such amount to be held as security after the Borrower's
reimbursement obligations in respect thereof).
SECTION 10. Definitions. As used herein, the following terms shall
-----------
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquisition Loan Outstandings-Canada" shall mean at any time (i) the
aggregate principal amount of Acquisition Loans the proceeds of which were
utilized to make Permitted Acquisitions involving (directly or indirectly) hotel
properties located in Canada less (ii) the aggregate principal amount of
Acquisition Loans theretofore repaid with (or that would have been repaid
pursuant to the provisions of this Agreement and the Security Documents if
unlimited Acquisition Loans were outstanding at the time of receipt of) the
proceeds of the sale of, or of Indebtedness (other than the Loans) incurred in
connection with, any Canadian hotel properties or interests therein acquired
with the proceeds of Acquisition Loans.
"Acquisition Loan Outstandings - Non Brand Name" shall mean at any
time (i) the sum of (x) the aggregate principal amount of Acquisition Loans the
proceeds of which were utilized to make Permitted Acquisitions of hotels (or
interests therein) not to become Brand Name Hotels as contemplated in clause
(II) of the proviso in the definition of Permitted Acquisitions (fairly
allocated among all the Acquisition Loans being made to consummate the total
acquisition then being effected) plus (y) the aggregate principal amount of
Acquisition Loans the proceeds of which were utilized to acquire a hotel deemed
to be a Brand Name Hotel pursuant to clause (I) of the definition of Permitted
Acquisitions upon such hotel ceasing to be so deemed a Brand Name Hotel as
provided in said clause less (ii) the sum of (x) the aggregate principal amount
----
of any Acquisition Loans included in (i)(y) above to the extent the related
hotel subsequently becomes a Brand Name Hotel and (y) the aggregate principal
amount of Acquisition Loans theretofore repaid with (or that would have been
repaid pursuant to the provisions of this Agreement and the Security Documents
if unlimited Acquisition Loans were outstanding at the time of receipt of) the
proceeds of the sale of, or of Indebtedness (other than the Loans) incurred to
refinance, the non-Brand Name Hotel properties or interests described in clause
(i)(x) or (to the extent not already subtracted pursuant to and as provided in
clause (ii)(x) above) clause (i)(y) above.
"Acquisition Loans" shall mean Revolving Loans the proceeds of which
are utilized to make Permitted Acquisitions or to refinance loans or advances
the proceeds of which were utilized to make Permitted Acquisitions.
"Acquisition Sublimit" shall mean at any time $80,000,000 less the
aggregate Scheduled RF Reductions required to have been made to and including
such time.
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"Additional Security Documents" shall have the meaning provided in
Section 7.11.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a second
Person if such first Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise.
"Aggregate Remainder" shall mean, at any time and after giving effect
to any such mandatory prepayment then required to be made, the aggregate
mandatory prepayments of Swingline Loans and Working Capital Loans then and
theretofore required to have been made pursuant to Sections 4.02(A)(d) and/or
(e) (assuming an unlimited principal amount of Working Capital Loans were
outstanding on each date of any such required repayment).
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.
"Applicable Percentage" shall mean (i) in the case of Loans maintained
as Base Rate Loans, 1% and (ii) in the ease of Loans maintained as Eurodollar
Loans, 2%.
"Asset Sale" shall mean (x) the sale, transfer or other disposition
(including by liquidations of a Joint Venture of the interests therein of the
Borrower or any Subsidiary) by the Borrower or any Subsidiary to any Person
other than the Borrower or any Subsidiary Guarantor of any asset of the Borrower
or such Subsidiary (other than (i) sales, transfers or other dispositions of
obsolete or excess FF&E or excess land in the ordinary course of business, (ii)
transfers of liquor licenses to any Liquor License Subsidiary and (iii) sales,
transfers or other dispositions with Net Cash Proceeds aggregating no more than
$500,000 in any fiscal year) and (y) the sale, transfer or other disposition by
any Consolidated Joint Venture of any hotel property (or interest therein) to
any Person other than the Borrower or a Subsidiary Guarantor).
"Assignment Agreement" shall mean an Assignment Agreement
substantially in the form of Exhibit I hereto.
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"Authorized Officer" shall mean any executive officer of the Borrower
designated as such in writing to the Administrative Agent by the Borrower to the
extent acceptable to the Administrative Agent.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans or
any Mandatory Borrowing or to fund its portion of any unreimbursed payment under
Section 2.05(c) or (ii) a Bank having notified the Administrative Agent and/or
the Borrower that it does not intend to comply with the obligations under
Section 1.01(A) or 1.01(C) and/or Section 2.05(c), in the case of either (i) or
(ii) as a result of the appointment of a receiver or conservator with respect to
such Bank at the direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (i) the rate which is
1/2 of 1% in excess of the overnight cost of funds of the Administrative Agent
(as determined by the Administrative Agent in its sole discretion) and (ii) the
Reference Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan pursuant to
a single Facility by the Borrower from all of the Banks having Commitments with
respect to such Facility on a pro rata basis on a given date (or resulting from
--- ----
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
--------
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"Brand Name Hotels" shall mean any hotels (x) operated as "Red Lion"
hotels or under any other name utilized solely by the Borrower or any Subsidiary
Guarantor for hotel operations and which is not used by any other hotel chain
and (y) managed by the Borrower or a Subsidiary Guarantor.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by
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<PAGE>
law or other governmental actions to close and (ii) with respect to all notices
and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, any day which is a Business Day described in clause (i)
and which is also a day for trading by and between banks in U.S. dollar deposits
in the interbank Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
--------
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank or
(y) any bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank, an "Approved Bank"), in each case with maturities of not
more than one year from the date of acquisition, (iii) commercial paper issued
by any Bank or Approved Bank or by the parent company of any Bank or Approved
Bank and commercial paper issued by, or guaranteed by, any industrial or
financial company with a short-term commercial paper rating of at least A-1 or
the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent of each thereof, from S&P or
Moody's, as the case may be, and in each case maturing within one year after the
date of acquisition and (iv) investments in money market funds substantially all
the assets of which are comprised of securities of the types described in
clauses (i) through (iii) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. (S) 9601 et seq.
-- ----
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<PAGE>
"Change of Control" shall mean and include (i) the Partnership shall
cease to own at least 40% of the outstanding voting stock of the Borrower (other
than as a direct result of (A) one or more public offerings of the common stock
of the Borrower and (B) the distribution of outstanding voting stock of the
Borrower to the partners of the Partnership other than KKR Associates), (ii)
during any period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Borrower's Board of Directors (together
with any new directors whose election by the Borrower's Board of Directors or
whose nomination for election by the Borrower's shareholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the directors then in office, (iii) KKR, its general partners and/or
its Affiliates (determined without giving effect to the second sentence of the
definition of such term) shall cease to own, directly or indirectly, at least
50% of the outstanding voting stock of the sole general partner of the
Partnership (unless KKR or any of such Affiliates is such general partner), (iv)
the general partner of the Partnership shall cease to hold, directly or
indirectly, the voting and investment power with respect to at least 80% of the
shares of the Borrower owned by the Partnership and/or (v) any "change in
control" or any similar term as defined in any of the indentures, agreements or
instruments governing any Permitted Subordinated Debt or any other Indebtedness
of the Borrower (other than any Indebtedness a default under which would not
constitute an Event of Default under Section 9.04).
"Clean-Down Period" shall mean a 30 consecutive day period which shall
commence on or after January 1 of each year and terminate on or before December
31 of such year during which no more than $40,000,000 in aggregate principal
amount of Swingline Loans, Working Capital Loans and Letter of Credit
Outstandings, taken as a whole, is outstanding at any time during such period.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Banks pursuant to the Security Documents.
"Collective Bargaining Agreement" shall have the meaning provided in
Section 5.01(d).
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"Commitment" shall mean, with respect to each Bank, such Bank's Term
Commitment plus its Revolving Commitment.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consolidated Capital Expenditures" shall mean, with respect to the
Borrower, all expenditures made by the Borrower, its Subsidiaries and its
Consolidated Joint Ventures for the maintenance of properties in the ordinary
course (and not in connection with acquisitions or major expansion/renovation
programs).
"Consolidated Indebtedness" shall mean all indebtedness of the
Borrower and its Subsidiaries and the Consolidated Joint Ventures required to be
accounted for as debt in accordance with GAAP, determined on a consolidated
basis.
"Consolidated Joint Ventures" shall mean any Joint Venture in which
the Borrower has an interest either directly or indirectly and whose debt is
included, in accordance with GAAP, on the consolidated balance sheet of the
Borrower (whether or not directly assumed or guaranteed by the Borrower or any
of its other Subsidiaries).
"Consolidated Net Income" shall mean for the Borrower, for any period,
the net income (or loss), without deduction for minority interests, of the
Borrower and its Subsidiaries and the Consolidated Joint Ventures on a
consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP, provided that there shall be excluded (i)
--------
the income (or loss) of any entity (other than a Subsidiary or a Consolidated
Joint Venture) in which any other Person (other than the Borrower or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower or any of its
Subsidiaries by any such entity during such period, (ii) the income (or loss) of
any entity accrued prior to the date it becomes a Subsidiary or a Consolidated
Joint Venture or is merged into or consolidated with the Borrower or any of its
Subsidiaries or on which its assets are acquired by the Borrower or any of its
Subsidiaries and (iii) the income of any Subsidiary or Consolidated Joint
Venture to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary or Consolidated Joint Venture of that income is
not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or Consolidated Joint Venture.
"Consolidated Net Worth" shall mean at any time for the determination
thereof all amounts which, in conformity with GAAP, would be included under the
caption "total stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Borrower, its Subsidiaries and Consolidated Joint Ventures
as at such date.
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"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing any Indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, (d) otherwise
to assure or hold harmless the owner of such primary obligation against loss in
respect thereof, provided, however, that the term Contingent Obligation shall
-------- -------
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Contribution Agreement" shall mean the Contribution Agreement
(including Exhibits and Schedules thereto) substantially in the form delivered
to the Administrative Agent pursuant to Section 5.01(n) and as the same may be
subsequently amended with the consent of the Required Banks.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, all instruments evidencing, governing and securing the JV Loans and
if executed, the Subsidiary Guaranty.
"Credit Event" shall mean the making of any Loans and/or the issuance
of any Letter of Credit.
"Credit Lyonnais" shall mean Credit Lyonnais New York Branch.
"Credit Party" shall mean the Borrower, each JV Borrower (in respect
of its JV Loan) and each Subsidiary Guarantor.
"Debt Service Coverage Ratio" shall mean, for any Test Period the
ratio of (x) EBITDA less the sum of (i) Consolidated Capital Expenditures, (ii)
----
provision for taxes based on income for the Borrower, its Subsidiaries and
Consolidated Joint Ventures on a consolidated basis, (iii) joint
venture/partnership distributions made by the Borrower or by any Consolidated
Joint Venture other than to the Borrower and (iv) any investment, loan or
advance made by any Consolidated Joint Venture other than any thereof included
in
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Consolidated Capital Expenditures or constituting or a component of a Permitted
Acquisition funded directly or indirectly with Acquisition Loans plus Rental
----
Payments to (y) the sum of Total Debt Service plus Rental Payments, in each case
for such Test Period.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated Consolidated Joint Venture" shall mean and include (x)
each Existing Consolidated Joint Venture and (y) each Consolidated Joint Venture
the acquisition of the ownership interests of the Borrower therein and/or of the
hotel property owned or leased thereby was financed by Acquisition Loans,
provided that any such Consolidated Joint Venture may cease to constitute a
Designated Consolidated Joint Venture upon written notice from the Borrower to
the Administrative Agent to such effect provided that on the effective date for
such cessation as specified in such notice and thereafter, and in addition to
compliance with Sections 8.12, 8.13 and 8.14 (as in effect without giving effect
to such cessation), said Sections 8.12, 8.13 and 8.14 are complied with as if
such Consolidated Joint Venture was deemed an Unconsolidated Joint Venture for
the purposes of all defined terms used therein (directly or indirectly).
"Dividends" shall have the meaning provided in Section 8.09.
"EBIT" shall mean, for any period, (A) the sum of the amounts for such
period of (i) Consolidated Net Income, (ii) provisions for taxes based on
income, (iii) Total Interest Expense, (iv) amortization or write-off of deferred
financing costs to the extent deducted in determining Consolidated Net Income
and (v) losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses and other one-time non-cash charges
less (B) the sum of the amounts for such period of (i) Rental Payments to the
- - - ----
extent not otherwise deducted in determining Consolidated Net Income and (ii)
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains and other one-time non-cash gains, all as
determined for the Borrower, its Subsidiaries and the Consolidated Joint
Ventures on a consolidated basis in accordance with GAAP.
"EBITDA" shall mean, for any period, the sum of the amounts for such
period of (i) EBIT, (ii) depreciation expense, (iii) amortization expense and
(iv) any other non-cash charges, all as determined for the Borrower, its
Subsidiaries and its Consolidated Joint Ventures on a consolidated basis in
accordance with GAAP.
"Effective Date" shall have the meaning provided in Section 12.10.
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"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D), in each case which is not a direct competitor of the Borrower or
engaged in the same or similar business as the Borrower, or any of its
respective Subsidiaries or is not an Affiliate of any such competitors of the
Borrower or any of its respective Subsidiaries.
"Employment Agreements" shall have the meaning provided in Section
5.01(d).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued under any such law
(hereafter "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any binding and
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment issued to or
rendered against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. (S) 2601 et seq., the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe
-- ---- -- ----
Drinking Water Act, 42 U.S.C. (S) 3803 et seq.; the Oil Pollution Act of 1990,
-- ----
33 U.S.C. (S) 2701 et seq.; the Emergency Planning and the Community Right-to-
-- ----
Know Act of 1986, 42 U.S.C. (S) 11001 et seq., the Hazardous Material
-- ----
Transportation Act, 49 U.S.C. (S) 1801 et seq. and the Occupational Safety and
-- ----
Health Act, 29 U.S.C. (S) 651 et seq. (to the extent it regulates occupational
-- ----
exposure to Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
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"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or a Subsidiary of the Borrower would
be deemed to be a "single employer" (i) within the meaning of Section
414(b),(c), (m) or (o) of the Code or (ii) as a result of the Borrower or a
Subsidiary of the Borrower being or having been a general partner of such
person.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (A) (i) the rate for deposits in U.S. Dollars for a period
equal to such Interest Period which appears on the Telerate Page 3750 as of
11:00 A.M. London time, on the day that is two Business Days prior to the
commencement of such Interest Period or (ii) in the event that the Eurodollar
Rate can not be determined pursuant to the preceding clause (i), the offered
quotation to first-class banks in the interbank Eurodollar market by the
Administrative Agent for dollar deposits of amounts in same day funds comparable
to the outstanding principal amount of the Eurodollar Loan of the Administrative
Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 11:00 A.M. (London time) on the date which is two Business Days
prior to the commencement of such Interest Period, in each case divided (and
rounded upward to the next whole multiple of 1/16 of 1%) by (B) a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable to any member bank of the Federal Reserve System
in respect of Eurocurrency liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any period, (x) EBITDA for such
period less (y) the sum, without duplication, of the amount for such period of
(i) Total Interest Expense, (ii) provisions for taxes based on income, (iii)
Consolidated Capital Expenditures, (iv) all scheduled principal payments on
Total Indebtedness (including all Scheduled Repayments) and (v) all joint
venture/partnership distributions made by the Borrower or by any Consolidated
Joint Venture other than to the Borrower.
"Existing Consolidated Joint Venture" shall mean each of the
Consolidated Joint Ventures listed on Part I of Annex III as an Existing
Consolidated Joint Venture.
"Existing Hedges" shall mean the Interest Rate Agreements existing on
the Initial Borrowing Date and listed in Part B of Annex V.
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"Existing Indebtedness" shall have the meaning provided in Section
6.18.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.01(d).
"Expiration Date" shall mean September 30, 1995.
"Facility" shall mean either of the credit facilities established
under this Agreement, i.e., the Term Facility or the Revolving Facility.
----
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"FF&E" shall mean furniture, fixtures and equipment.
"Foreign Acquisitions" shall mean and include (i) any acquisition
(whether by purchase, lease or otherwise) of any hotel property (or direct or
indirect interests in such property) located in Canada or Mexico and/or of
interests in (or the making of advances to or credit extensions to or other
investments in) Persons owning (or acquiring) a hotel property or properties
located in Canada or Mexico, (ii) any expansion of any hotel property located in
Canada or Mexico (including purchases of land adjacent to existing properties),
and (iii) any advance or credit extension to, or other investment in, Persons
owning a hotel property located in Canada or Mexico made in connection with the
Borrower or any Subsidiary of the Borrower obtaining a management contract for
such hotel property. Foreign Acquisitions shall exclude any Permitted
Acquisition.
"Formation" shall have the meaning provided in Section 5.01(n).
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; provided, however, that
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if there occurs after the date hereof any change in GAAP that affects in any
respect the calculation of (x) any covenant contained in Section 8 or (y) Excess
Cash Flow, the Banks and the Borrower shall negotiate in good faith amendments
(to be satisfactory to the Borrower and the
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Required Banks) to the provisions of this Agreement that relate to the
calculation of such covenant with the intent of having the respective positions
of the Banks and the Borrower after such change in GAAP conform as nearly as
possible to their respective positions as of the date of this Agreement and,
until any such amendments have been agreed upon, the covenants in Section 8 and
Excess Cash Flow shall be calculated as if no such change in GAAP has occurred.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed JV" shall mean any Joint Venture other than a Consolidated
Joint Venture whose indebtedness for borrowed money is guaranteed in whole or in
part by the Borrower or any Subsidiary Guarantor.
"Guaranteed Percentage" shall mean, at any time, for any Guaranteed
JV, the percentage determined by dividing the portion of the outstanding
principal of indebtedness for borrowed money of such Guaranteed JV that is
guaranteed by the Borrower or any Subsidiary Guarantor by the outstanding
principal of all indebtedness for borrowed money of such Guaranteed JV.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect under any applicable Environmental Law.
"IBD JV Loans" shall have the meaning provided in Section 5.01(p).
"Increase" shall have the meaning provided in Section 8.05(c).
"Incremental Refinancing Debt" shall have the meaning provided in
Section 8.05(c).
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of
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such Person and, without duplication, all drafts drawn thereunder, (iv) all
Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such indebtedness has been assumed, (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all net
----
obligations of such Person under Interest Rate Agreements and (viii) all
Contingent Obligations of such Person, provided that Indebtedness shall not
include trade payables and accrued expenses, in each case arising in the
ordinary course of business.
"Initial Borrowing Date" shall mean the date, on or after the
Effective Date, upon which the initial Borrowing of Loans occurs.
"Interest Coverage Ratio" shall mean, for any Test Period, the ratio
of (x) EBITDA plus Rental Payments to (y) Total Interest Expense plus Rental
Payments, in each case for such Test Period.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect against fluctuations in
interest rates.
"IPO" shall have the meaning provided in Section 5.01(o).
"Joint Venture" shall mean any entity or arrangement between the
Borrower or any of its Subsidiaries and one or more Persons other than the
Borrower or any of its Subsidiaries (whether now existing or created in the
future) for the joint ownership, operation, construction or development of any
hotel property or any land or building under development as a hotel property or
the joint ownership or operation of any business or enterprise for such
property, land, or building.
"Joint Venture Agreement" shall have the meaning provided in Section
5.01(d).
"JV Borrowers" shall mean and include any Consolidated Joint Venture
that has incurred JV Loans from the Borrower on and after the Initial Borrowing
Date.
"JV Loans" shall mean and include (i) the IBD JV Loans and (ii) loans
made after the Initial Borrowing Date by the Borrower to a Consolidated Joint
Venture other than pursuant to Section 8.06(k), which loans are secured by a
perfected mortgage on the hotel property owned by such Consolidated Joint
Venture.
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"KKR" shall mean Kohlberg Kravis Roberts & Co., L.P., a Delaware
limited partnership.
"KKR Associates" shall mean KKR Associates (Delaware), a Delaware
limited partnership.
"Leased Properties" shall have the meaning provided in Section
5.01(q).
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Legal Requirements" shall mean all applicable laws, rules, orders and
regulations made by any legislature or government or any governmental body or
regulatory authority having jurisdiction over the Borrower or a Subsidiary.
"Letter of Credit" shall have the meaning provided in Section 2.01.
"Letter of Credit Issuer" shall mean (i) Credit Lyonnais, (ii) in
respect of each Existing Letter of Credit, the Bank that has issued same as of
the Effective Date and/or (iii) such other Bank that is requested, and agrees,
to so act by the Borrower and acceptable to the Administrative Agent.
"Letter of Credit Outstandings" shall mean, at any time, the sum,
without duplication, of (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Liquor License Subsidiary" shall mean any wholly-owned Subsidiary of
the Borrower the only business of which is to hold one or more liquor licenses
for hotels owned by the Borrower and/or any of its Subsidiaries.
"Loan" shall have the meaning provided in Section 1.01.
"Managed Properties" shall mean the properties listed on Annex IV,
Part C.
"Management Agreements" shall have the meaning provided in Section
5.01(d).
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"Mandatory Borrowing" shall have the meaning provided in Section
1.01(C).
"Margin Stock" shall have the meaning provided in Regulation U.
"Master Lease" shall mean the Lease (including all Exhibits and
Schedules thereto) covering the Leased Properties substantially in the form
delivered to the Administrative Agent pursuant to Section 5.01(q) and as the
same may be amended pursuant to the terms hereof and thereof.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, operations or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole.
"Material Subsidiary" shall mean, at any time, any Subsidiary of the
Borrower that (x) has assets at such time comprising 5% or more of the
consolidated assets of the Borrower and its Subsidiaries or (y) had net income
in the most recently ended fiscal year of the Borrower comprising 5% or more of
the consolidated net income of the Borrower and its Subsidiaries for such fiscal
year.
"Minimum Borrowing Amount" shall mean (i) for Base Rate Loans,
$1,000,000, (ii) for Eurodollar Loans, $5,000,000 and (iii) for Swingline Loans,
$100,000.
"Modified EBITDA" shall mean for any Test Period (i) EBITDA for such
period plus (ii) the EBITDA for each Guaranteed JV for such period (determined
as if such Guaranteed JV were the Borrower) multiplied by the Guaranteed
Percentage for such Guaranteed JV.
"Modified Total Indebtedness" shall mean at any time (i) Total
Indebtedness plus (ii) that portion of the aggregate outstanding principal of
indebtedness for borrowed money of all Guaranteed JVs that is guaranteed by the
Borrower or any Subsidiary Guarantor, in each case at such time.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Mortgage" shall have the meaning provided in Section 5.01(h)(iii)
and, after the execution and delivery thereof, shall include each mortgage
constituting an Additional Security Document.
"Mortgage Policies" shall have the meaning provided in Section
5.01(h)(iii).
"Mortgaged Property" shall have the meaning provided in Section
5.01(h)(iii) and, after the execution and delivery of any mortgage or deed of
trust
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constituting an Additional Security Document, shall include the respective
property subject thereto but shall not include after the date of such release
any real property theretofore a Mortgaged Property that has been released from
the Liens of the Security Documents in accordance with the terms thereof or of
this Agreement.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (i) reasonable and customary expenses
of sale incurred in connection with such Asset Sale, and other reasonable and
customary fees and expenses incurred, and all state, and local taxes paid or
reasonably estimated to be payable by such Person, as a consequence of such
Asset Sale and the payment of principal, premium and interest of Indebtedness
secured by the asset which is the subject of the Asset Sale and required to be,
and which is, repaid under the terms thereof as a result of such Asset Sale,
(ii) amounts of any distributions payable to holders of minority interests in
the relevant Person or in the relevant property or assets and (iii) incremental
income taxes paid or payable as a result thereof.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean and include each Term Note and each Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent at
1301 Avenue of the Americas, New York, New York 10019, Attention: Jenny
Hutchison, or such other office as the Administrative Agent may designate to the
Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent or any Bank pursuant to the terms of this Agreement or
any other Credit Document.
"Partnership" shall mean Red Lion, a California limited partnership.
"Partnership Credit Agreement" shall mean the Credit Agreement dated
as of the date hereof among RLH Partnership, Credit Lyonnais as Administrative
Agent and the Banks party thereto.
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"Payment Office" shall mean the office of the Administrative Agent at
1301 Avenue of the Americas, New York, New York, Attention: Jenny Hutchison, or
such other office as the Administrative Agent may designate to the Borrower from
time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisitions" shall mean and include (i) expenditures
(including the purchase of adjacent land) to expand then existing hotel
facilities located in the United States or Canada to the extent owned by the
Borrower, any Subsidiary or any Joint Venture on the Initial Borrowing Date or
acquired pursuant to a Permitted Acquisition, (ii) advances or credit extensions
to, or other investments in, any Person owning a hotel property located in the
United States or Canada made in connection with the Borrower or any Subsidiary
Guarantor obtaining a management contract for such hotel property, (iii) the
purchase by the Borrower of the Specified Obligations, (iv) acquisitions
(whether by purchase, lease or otherwise, and including expenditures for start-
up activities and operations and renovations) of hotel properties (or interests
in such properties) located in the United States or Canada, and/or of interests
in (or the making of advances or credit extensions to or investments in) joint
ventures owning hotel properties located in the United States or Canada, in the
case of each of the foregoing clauses to the extent any such hotel is a Brand
Name Hotel, provided that (I) a hotel shall be considered as being a Brand Name
Hotel for the purposes of this definition even if managed by a Person other than
the Borrower or a Subsidiary Guarantor at the time of acquisition and/or
operated at the time of acquisition under another name if (x) the Borrower
certifies in writing to the Administrative Agent at the time of the acquisition
thereof (or of the interests therein) that the Borrower intends to have such
hotel become a Brand Name Hotel as soon as practical, it being agreed that any
such hotel that does not become a Brand Name Hotel by the date 15 months after
such acquisition will cease to be considered a Brand Name Hotel for the purposes
hereof until it actually becomes a Brand Name Hotel, (II) the Borrower and/or a
Subsidiary Guarantor may acquire a hotel or hotels (or interests therein) not to
become a Brand Name Hotel (after giving effect to clause (I) above) if (x) such
acquisition is part of a larger acquisition wherein the consideration fairly
allocated to the purchase of non Brand Name Hotels is less than 50% of the
consideration being paid for all hotels included in such acquisition and (y)
after giving effect to any Acquisition Loans being incurred to finance such
acquisition, the aggregate Acquisition Loan Outstandings-Non Brand Name do not
exceed $15,000,000 and (III) the Acquisition Loan Outstandings-Canada shall not
exceed $25,000,000 at any time and/or (v) the use of the proceeds of Acquisition
Loans to refinance debt secured by properties located in the United States and
theretofore the subject of a Permitted Acquisition as described in clause (iv)
above (to the extent Section 7.11 is complied with in connection therewith).
"Permitted Basket Debt" shall have the meaning provided in Section
8.04(i).
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"Permitted Encumbrances" shall mean, with respect to a Real Property
constituting part of the Collateral, (i) the liens, encumbrances and other
matters disclosed in the Mortgage Policy relating to the Mortgage on such Real
Property or "insured over" or "insured around" to the satisfaction of the
Collateral Agent in such Mortgage Policy, (ii) such other title and survey
exceptions as the Collateral Agent may approve in writing in its sole
discretion, and (iii) the Permitted Liens, if any, described in Section 8.03(h)
affecting such Real Property.
"Permitted Liens" shall mean Liens described in Section 8.03.
"Permitted Other Mortgage Debt" shall have the meaning provided in
Section 8.05(c).
"Permitted Subordinated Debt" shall mean unsecured subordinated debt
of the Borrower provided that all material terms thereof (such as maturity,
interest rate, amortization and prepayments, covenants, defaults and
subordination provisions), together with any amendment to any thereof, shall be
satisfactory to the Administrative Agent and the Required Banks.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as defined
in Section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) the Borrower or a Subsidiary of the
Borrower or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Borrower, or a Subsidiary of
the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section
5.01(h)(i).
"Pledged Securities" shall mean all the Pledged Securities as defined
in the Pledge Agreement.
"Prohibited Transaction" shall mean a transaction with respect to a
Plan that is prohibited under Section 4975 of the Code or Section 406 of ERISA
and not exempt under Section 4975 of the Code or Section 408 of ERISA.
"Property Management Agreements" shall have the meaning provided in
Section 5.01(d).
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"PSD Interest Period" shall mean an Interest Period commenced prior to
the Syndication Date, each of which Interest Periods must satisfy the
requirements of Section 1.09(iv) and must be the same as the corresponding PSD
Interest Periods under the Partnership Credit Agreement.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. (S) 6901 et seq.
-- ----
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Red Lion MLP" shall mean, collectively, Red Lion Inns Limited
Partnership, a Delaware limited partnership, and Red Lion Inns Operating L.P., a
Delaware limited partnership.
"Reference Rate" shall mean the rate which the Administrative Agent
establishes from time to time as its reference rate for short term commercial
loans in U.S. dollars, the Reference Rate to change when and as such reference
rate changes. The Reference Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. The
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Reference Rate.
"Refinancing" shall have the meaning provided in Section 5.01(p).
"Registration Statement" shall mean the Registration Statement on Form
S-1, Registration Number 33-90306 filed by the Borrower with the SEC on March
14, 1995, and Amendments No. 1 through ( ) thereto, together with any
subsequent amendment thereto satisfactory to the Administrative Agent.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Rental Payments" shall mean, for any period, the aggregate amount of
all fixed and percentage rents (but excluding the interest component of Capital
Leases) paid under all leases, including the Master Lease, during such period,
all determined for the Borrower, its Subsidiaries and the Consolidated Joint
Ventures on a consolidated basis in accordance with GAAP.
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"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks whose outstanding
Term Loans and Term Commitments, and Revolving Commitments (or, if after the
Total Revolving Commitment has been terminated, outstanding Revolving Loans)
constitute at least 51% of the sum of (i) the total outstanding Term Loans and
Term Commitments of Non-Defaulting Banks and (ii) the Total Revolving Commitment
(or, if after the Total Revolving Commitment has been terminated, the total
outstanding Revolving Loans of Non-Defaulting Banks).
"Revolving Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "Revolving Commitment", as the same may be reduced from time to
time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to Section 1.13 and/or
12.04.
"Revolving Facility" shall mean the Facility evidenced by the Total
Revolving Commitment.
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RF Maturity Date" shall mean July 31, 2002.
"RF Percentage" shall mean, at any time for each Bank with a Revolving
Commitment, the percentage obtained by dividing such Bank's Revolving Commitment
by the Total Revolving Commitment, provided that if the Total Revolving
--------
Commitment has been terminated, the RF Percentage of each Bank shall be
determined by dividing such Bank's Revolving Commitment immediately prior to
such termination by the Total Revolving Commitment immediately prior to such
termination.
"RLH Partnership" shall mean RLH Partnership, L.P., a Delaware limited
partnership.
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"RLP" shall mean Red Lion Properties, Inc., a Delaware corporation, a
Subsidiary of the Borrower.
"S&P" shall mean Standard & Poor's Corporation and its successors.
"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(c).
"Scheduled RF Reduction" shall have the meaning provided in Section
3.03(c).
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Security Agreement" shall have the meaning provided in Section
5.01(h)(ii).
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, each of the Mortgages, each other Additional Security Document and
each security document entered into pursuant to Section 8.02(c).
"Services Agreement" shall mean the Services Agreement, dated as of
August 1, 1995, among the Borrower, the Partnership and Affiliates of the
Partnership party thereto, as the same may be amended pursuant to the terms
hereof and thereof.
"Shareholders' Agreements" shall have the meaning provided in Section
5.01(d).
"Specified Asset Sale" shall mean and include (i) a sale of a
Transferred Property pursuant to Section 8.02(e) (ii) (which does not meet the
requirements of Section 8.02(e)(i)), (ii) a sale by the Borrower or any of its
Subsidiaries of its joint venture or partnership interests in any Existing
Consolidated Joint Venture and (iii) a sale of any hotel property owned by any
Existing Consolidated Joint Venture.
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"Specified Obligations" shall mean the Indebtedness outstanding on the
Effective Date relating to, and secured by, the Austin, Texas property.
"Specified Proceeds" shall mean, the Net Cash Proceeds of any Asset
Sale (other than a Specified Asset Sale) involving the sale or disposition of
any hotel property by the Borrower or any of its Subsidiaries (x) to a
Consolidated Joint Venture, (y) to any Person to the extent the hotel property
is to be managed by the Borrower or (z) to any Person to the extent such hotel
property was acquired as part of a multiple hotel property acquisition, in each
case to the extent such sale or disposition is consummated within 12 months of
the acquisition by the Borrower or such Subsidiary of such hotel property.
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower. In addition, no Joint Venture shall be deemed to
constitute a Subsidiary of the Borrower, whether or not satisfying the
provisions of the first sentence of this definition.
"Subsidiary Guarantor" shall mean each Subsidiary party to the
Subsidiary Guaranty provided that for the purposes of Section 8.02(c) and (d)
(but not to the extent relating to a Permitted Acquisition (x) effected prior to
or concurrently with, such Subsidiary incurring the Permitted Other Mortgage
Debt or (y) in respect of a property already subject to the Permitted Other
Mortgage Debt as to which such Subsidiary is obligated) and 8.04(f) and (h) such
term shall not include any Subsidiary that is the obligor under any Permitted
Other Mortgage Debt so long as any of same remains outstanding.
"Subsidiary Guaranty" shall have the meaning provided in Section 8.17.
"Swingline Commitment" shall mean the lesser of (x) $5,000,000 and (y)
the Total Revolving Commitment.
"Swingline Lender" shall mean Credit Lyonnais.
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"Swingline Loans" shall have the meaning provided in Section 1.01(B).
"Swingline Maturity Date" shall mean the date which is five Business
Days prior to the RF Maturity Date.
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Initial Borrowing Date and (y) the date upon which the
Administrative Agent determines in its sole discretion (and notifies the
Borrower) that the primary syndication has been completed.
"Tax Sharing Agreement" shall have the meaning provided in Section
5.01(d).
"Taxes" shall have the meaning provided in Section 4.04.
"Term Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto directly below the column
entitled "Term Commitment," as the same may be reduced or terminated pursuant to
Section 3.03.
"Term Facility" shall mean the Facility evidenced by the Total Term
Commitment.
"Term Loan" shall have the meaning provided in Section 1.01(a).
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Period" shall mean at any time the period (taken as one
accounting period) of four consecutive fiscal quarters then last ended provided
that for the computation for a Test Period that includes less than four full
fiscal quarters commencing on or after the Initial Borrowing Date, (x) any
amount for Total Interest Expense and Rental Payments included in a computation
for such Test Period shall be the amount of Total Interest Expense or Rental
Payments, respectively, for the period commencing on the Initial Borrowing Date
annualized for a 12 month period, (y) any amount for EBITDA, Consolidated
Capital Expenditures, provision for taxes and joint venture distributions by the
Borrower and Consolidated Joint Ventures shall include same for the portion of
the Test Period subsequent to the Initial Borrowing Date plus the amount for any
such item for the portion of the Test Period prior to the Initial Borrowing Date
as set forth in Annex XII hereto for such portion, which amount is attributable
to the properties of the Borrower and its Consolidated Joint Ventures (with the
EBITDA included in Annex XII to reflect a pro rata reduction for pro forma
Master Lease expenses) and (z) any other amount will be solely the amount for
the period after the Initial Borrowing Date.
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"TF Maturity Date" shall mean July 31, 2002.
"Total Commitment" shall mean the sum of the Total Term Commitment,
the Total Revolving Commitment and the Swingline Commitment.
"Total Debt Service" shall mean, for any period, the sum, without
duplication, of the amounts for such period of (i) Total Interest Expense and
(ii) all scheduled principal payments on Total Indebtedness (including all
Scheduled Repayments).
"Total Indebtedness" shall mean all Indebtedness for borrowed money of
or guaranteed by the Borrower, any of its Subsidiaries and/or any Consolidated
Joint Venture all as determined on a consolidated basis.
"Total Interest Expense" shall mean, for any period, total interest
expense (including that attributable to Capital Leases in accordance with GAAP)
of the Borrower, its Subsidiaries and the Consolidated Joint Ventures on a
consolidated basis with respect to all outstanding Indebtedness of the Borrower,
its Subsidiaries and the Consolidated Joint Ventures, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and net costs under Interest Rate Agreements, but
excluding, however, any amortization of deferred financing costs, all as
determined in accordance with GAAP, provided that there shall be excluded all of
--------
the foregoing of any Person accrued prior to the date it becomes a Subsidiary or
Consolidated Joint Venture or is merged into or consolidated with the Borrower
or any of its Subsidiaries or that Person's assets are acquired by the Borrower
or any of its Subsidiaries.
"Total Revolving Commitment" shall mean the sum of the Revolving
Commitments of each of the Banks.
"Total Term Commitment" shall mean the sum of the Term Commitments of
each of the Banks.
"Transaction" shall include (i) the Formation, (ii) the IPO, (iii) the
Refinancing and (iv) the execution and effectiveness of the Master Lease.
"Transaction Documents" shall mean and include the Contribution
Agreement, the Registration Statement, all agreements and documents governing
the Refinancing (including, without limitation, all notes, loan agreements
and/or mortgages evidencing or governing the IBD JV Loans), the Master Lease and
the Credit Documents.
"Transferred Property" shall mean each of the properties designated on
Part A of Annex IV as a Transferred Property.
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"Two Thirds Banks" shall mean Non-Defaulting Banks whose outstanding
Term Loans and Term Commitments, and Revolving Commitments (or, if after the
Total Revolving Commitment has been terminated, outstanding Revolving Loans)
constitute at least 66-2/3% of the sum of (i) the total outstanding Term Loans
and Term Commitments of Non-Defaulting Banks and (ii) the Total Revolving
Commitment (or, if after the Total Revolving Commitment has been terminated, the
total outstanding Revolving Loans of Non-Defaulting Banks).
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
----
"UCC" shall mean the Uniform Commercial Code.
"Unconsolidated Joint Venture" shall mean any Joint Venture other than
a Consolidated Joint Venture.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.04.
"Unutilized Commitment" for any Bank at any time shall mean the excess
of (i) such Bank's Revolving Commitment at such time over (ii) the sum of the
principal amount of Revolving Loans made by such Bank and outstanding at such
time and (y) such Bank's RF Percentage of Letter of Credit Outstandings at such
time.
"Unutilized Total Revolving Commitment" shall mean, at any time, the
excess of (i) the Total Revolving Commitment at such time over (ii) the sum of
(x) the aggregate principal amount of all Swingline Loans and Revolving Loans
then outstanding plus (y) the aggregate Letter of Credit Outstandings at such
time.
"Working Capital Loans" shall mean all Revolving Loans other than
Acquisition Loans.
"Working Capital Sublimit" shall mean at any time (x) the Total
Revolving Commitment at such time less (y) the Acquisition Sublimit at such
time.
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"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 11. The Administrative Agent.
------------------------
11.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints Credit Lyonnais as Administrative Agent (such term to include for the
purposes of this Section 11 Credit Lyonnais acting as Collateral Agent) to act
as specified herein and in the other Credit Documents, and each such Bank hereby
irrevocably authorizes Credit Lyonnais as the Administrative Agent for such
Bank, to take such action on its behalf under the provisions of this Agreement
and the other Credit Documents and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. The Administrative Agent agrees to act as
such upon the express conditions contained in this Section 11. Notwithstanding
any provision to the contrary elsewhere in this Agreement, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein or in the other Credit Documents, nor any fiduciary relationship
with any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Administrative Agent. The provisions of this Section 11 are solely
for the benefit of the Administrative Agent, and the Banks, and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the
Administrative Agent shall act solely as agent of the Banks and does not assume
and shall not be deemed to have assumed any obligation or relationship of agency
or trust with or for any Credit Party.
11.02 Delegation of Duties. The Administrative Agent may execute any
--------------------
of its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 11.03.
11.03 Exculpatory Provisions. Neither the Administrative Agent nor
----------------------
any of its respective officers, directors, employees, agents, attorneys-in-fact
or affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrower or any Subsidiary or any of
their respective officers contained in this Agreement, any other Credit Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any
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other Credit Document or for any failure of the Borrower or any Subsidiary or
any of their respective officers to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any Subsidiary. The
Administrative Agent shall not be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Banks or by or on behalf of
the Borrower to the Administrative Agent or any Bank or be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Loans or of the existence or possible existence of any
Default or Event of Default.
11.04 Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, facsimile transmission, telex or teletype message,
statement, order or other document or conversation believed by it, in good
faith, to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Credit Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Credit Documents in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks.
11.05 Notice of Default. The Administrative Agent shall not be
-----------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Bank or the Borrower or any other Credit Party referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give prompt notice thereof to the Banks.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks, provided
--------
that unless and until the Administrative Agent shall have received such
directions, the
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Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
11.06 Non-Reliance. Each Bank expressly acknowledges that neither
------------
the Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any Subsidiary, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the
Administrative Agent, or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrower and its Subsidiaries.
The Administrative Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any Subsidiary which may come into the
possession of the Administrative Agent or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
11.07 Indemnification. The Banks agree to indemnify the
---------------
Administrative Agent in its capacity as such ratably according to their
respective Loans and unutilized Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the Borrower or any of its Subsidiaries, provided that
--------
no Bank shall be liable to the Administrative Agent for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting
solely from the Administrative Agent's gross negligence or willful misconduct.
If any indemnity furnished to the
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Administrative Agent for any purpose shall, in the opinion of the Administrative
Agent, be insufficient or become impaired, the Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section 11.07 shall survive the payment of all Obligations.
11.08 The Administrative Agent in Individual Capacity. The
-----------------------------------------------
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower and its
Subsidiaries as though not acting as Administrative Agent hereunder. With
respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Bank and may exercise the same as though it were not the Administrative
Agent, and the terms "Bank" and "Banks" shall include the Administrative Agent
in its individual capacity.
11.09 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as the Administrative Agent upon 20 days' notice to the Banks and the
Borrower. The Required Banks shall appoint from among the Banks a successor
Administrative Agent for the Banks subject to prior approval by the Borrower
(such approval not to be unreasonably withheld), whereupon such successor agent
shall succeed to the rights, powers and duties of the Administrative Agent, and
the term "Administrative Agent" shall include such successor agent effective
upon its appointment, and the resigning Administrative Agent's rights, powers
and duties as the Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement. After the retiring Administrative Agent's
resignation hereunder as the Administrative Agent, the provisions of this
Section 11 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.
SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether
-------------------------
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case) and of the Administrative Agent and each of the
Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Administrative Agent
and for each of the Banks); (ii) in the event (x) that any of the Mortgages are
foreclosed in whole or in part or that any of the Mortgages are put into the
hands of an attorney for
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collection, suit, action or foreclosure, (y) of the foreclosure of any mortgage
prior to or subsequent to any of the Mortgages in which proceeding the
Collateral Agent is made a party, or (z) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of the Borrower or any of
its Subsidiaries, pay all costs of collection and defense, including reasonable
attorneys' fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable together with all required service or use taxes; (iii) pay and hold each
of the Banks harmless from and against any and all present and future stamp and
other similar taxes with respect to the foregoing matters and save each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes; and (iv) indemnify each Bank, its officers,
directors, employees, representatives and agents (collectively, the
"Indemnitees") from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of (a) any interest in
any Real Property (other than as permitted hereunder and/or under the other
Credit Documents) is claimed by any other Person, (b) any investigation,
litigation or other proceeding (whether or not any Bank is a party thereto)
related to the entering into and/or performance of any Credit Document or the
use of the proceeds of any Loans hereunder or the Transaction or the
consummation of any transactions contemplated in any Credit Document, or (c) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property owned, leased
or at any time operated by the Borrower or any of its Subsidiaries, the release,
generation, storage, transportation, handling or disposal of Hazardous Materials
at any location, whether or not owned or operated by the Borrower or any of its
Subsidiaries, the non-compliance of any Real Property with foreign, federal,
state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim asserted
against the Borrower or any of its Subsidiaries or any Real Property owned,
leased or at any time operated by the Borrower or any of its Subsidiaries,
including, in each case, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified or of any other
Indemnitee who is such Person or an affiliate of such Person). To the extent
that the undertaking to indemnify, pay or hold harmless any Person set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrower shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
12.02 Right of Setoff. (a) In addition to any rights now or
---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Bank is hereby authorized at any time or
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from time to time, without presentment, demand, protest or other notice of any
kind to the Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Bank (including, without limitation, by branches and agencies of such Bank
wherever located) to or for the credit or the account of the Borrower against
and on account of the Obligations and liabilities of the Borrower to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations the Borrower purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
(b) Notwithstanding anything to the contrary contained in Section
12.02(a), if at any time that the Total Commitment or Loans or Letters of Credit
shall be secured by real property, neither any Letter of Credit Issuer nor any
Bank (including any Bank no longer party hereto but party to an Interest Rate
Agreement secured by the Security Documents) shall exercise a right of setoff,
banker's lien or counterclaim or take any court or administrative action to
enforce any provision of this Agreement or any Note or any Letter of Credit (or
participation therein) or any Interest Rate Agreement secured by the Security
Documents if such setoff or action would constitute an "action" within the
meaning of Section 726 of the California Code of Civil Procedure, as amended
from time to time, which would impair the validity, priority, or enforceability
of the lien on the real property without the prior consent of the Required
Banks, and any attempted exercise by any Letter of Credit Issuer of any such
right without obtaining the prior consent of the Required Banks shall be null
and void. This subsection (b) shall be solely for the benefit of each Letter of
Credit Issuer and each of the Banks hereunder.
12.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
--------
transfer any of its rights or obligations hereunder without the prior written
consent of all the Banks. Each Bank may at any time grant participations in any
of its rights hereunder or under any of the Notes to
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another financial institution, provided that in the case of any such
--------
participation, (i) the participant shall not have any rights under this
Agreement or any of the other Credit Documents, including rights of consent,
approval or waiver (the participant's rights against such Bank in respect of
such participation to be those set forth in the agreement executed by such Bank
in favor of the participant relating thereto), (ii) such Bank's obligations
under this Agreement (including, without limitation, its Commitment hereunder)
shall remain unchanged, (iii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iv) such Bank
shall remain the holder of any Note for all purposes of this Agreement and (v)
the Borrower, the Administrative Agent, and the other Banks shall continue to
deal solely and directly with the selling Bank in connection with such Bank's
rights and obligations under this Agreement, and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation, except that the participant shall be entitled to the benefits of
Sections 1.10, 1.11 and 4.04 of this Agreement to the extent that such Bank
would be entitled to such benefits if the participation had not been entered
into or sold, and, provided further, that no Bank shall transfer, grant or sell
any participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (x) extend the final scheduled
maturity of the Term Loans or Revolving Loans in which such participant is
participating (it being understood that any waiver of the making of, or the
application of any amortization payment or other prepayment or the method of any
application of any prepayment to the amortization of the Loans shall not
constitute an extension of the final maturity date thereof), or reduce the rate
or extend the time of payment of interest or Fees thereon (except in connection
with a waiver of the applicability of any post-default increase in interest
rates), or reduce the principal amount thereof, or increase such participant's
participating interest in any Commitment over the amount thereof then in effect
(it being understood that a waiver of any Default or Event of Default or of any
mandatory prepayment or a mandatory reduction in the Total Commitment, or a
mandatory prepayment, shall not constitute a change in the terms of any
Commitment), (ii) release all or substantially all of the Collateral (in each
case except as expressly provided in the Credit Documents) or (iii) consent to
the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its Loans and/or Commitments, which does not have to be pro rata
among the Facilities, and its rights and obligations hereunder to another Bank
that is not a Defaulting Bank, and (y) any Bank may assign all or a portion of
its Loans and/ or Commitments and its rights and obligations hereunder, which
assignment does not have to be pro rata between the Facilities, to one or more
--- ----
Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Bank by execution of an Assignment Agreement, provided that, (i)
--------
at such time Annex I shall be deemed modified to reflect the Commitments (and/or
outstanding Term Loans, as the case may be) of such new Bank and of the existing
Banks,
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(ii) upon surrender of the old Notes, new Notes will be issued, at the
Borrower's expense, to such new Bank and to the assigning Bank, such new Notes
to be in conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments (and/or
outstanding Term Loans, as the case may be), (iii) in the case of clause (y)
only, the consent of the Administrative Agent and the Borrower shall be required
in connection with any such assignment (which consent shall not be unreasonably
withheld) and (iv) the Administrative Agent shall receive at the time of each
such assignment, from the assigning or assignee Bank, the payment of a non-
refundable assignment fee of $3,000 and, provided further, that such transfer or
----------------
assignment will not be effective until recorded by the Administrative Agent on a
register maintained by it. To the extent of any assignment pursuant to this
Section 12.04(b) the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Commitments. At the time of each
assignment pursuant to this Section 12.04(b) to a Person which is not already a
Bank hereunder and which is not a United States Person (as such term is defined
in Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall provide to the Borrower and the Administrative
Agent the appropriate Internal Revenue Service Forms (and, if applicable a
Section 4.04(b)(i) Certificate) described in Section 4.04(b). To the extent
that an assignment of all or any portion of a Bank's Commitments and related
outstanding Obligations pursuant to this Section 12.04(b) would, at the time of
such assignment, result in increased costs under Section 1.10 from those being
charged by the respective assigning bank prior to such assignment, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to any other increased costs of the type described
above resulting from changes after the date of the respective assignment).
Nothing in this clause (b) shall prevent or prohibit any Bank from pledging its
Notes or Loans to a Federal Reserve Bank in support of borrowings made by such
Bank from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that became a Bank pursuant to an assignment permitted by this
Section 12.04 will, upon its becoming party to this Agreement, represent that it
is a commercial lender, other financial institution or other "accredited"
investor (as defined in SEC Regulation D) which makes or acquires loans in the
ordinary course of its business and that it will make or acquire Loans for its
own account in the ordinary course of such business, provided that subject to
--------
the preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Bank shall at all
times be within its exclusive control.
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(e) The Administrative Agent shall maintain at its Notice Office a
copy of each Assignment Agreement delivered to and accepted by it and a register
for the recordation of the names and addresses of the Banks and the Commitment
of, and principal amount of the Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Administrative Agent
and the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Bank shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Bank would otherwise have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Banks to any other or further action in any
circumstances without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees that
-----------------
promptly after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations, it shall distribute such payment to the Banks (other
than any Bank that has expressly waived its right to receive its pro rata share
--- ----
thereof) pro rata based upon their respective shares, if any, of the Obligations
--- ----
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks in
such amount as shall result in a proportional participation by all of the Banks
in such amount, provided that if all or any portion of such
--------
-101-
<PAGE>
excess amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
12.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks). At any time the computations determining
compliance with Section 8 utilize accounting principles different from those
utilized in the financial statements furnished to the Banks pursuant to Section
7.01, such financial statements shall be accompanied by reconciliation work-
sheets.
(b) All computations of interest on Loans and Fees hereunder shall be
made on the actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
-----------------------------------------------------------
Jury Trial. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
- - - ----------
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, EXCEPT THAT
THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS
CREATED PURSUANT TO THE MORTGAGES SHALL BE GOVERNED BY AND CONSTRUED ACCORDING
TO THE LAW OF THE STATE IN WHICH THE APPLICABLE REAL PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND ENFORCEABILITY OF
ALL CREDIT DOCUMENTS, INCLUDING ALL MORTGAGES, AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK GOVERNS THIS
AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, EXCEPT TO THE EXTENT AFORESAID
WITH RESPECT TO THE LIENS CREATED BY THE MORTGAGES. Any legal action or
proceeding with respect to this Agreement or any other Credit Document may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby irrevocably designates, appoints and empowers The
Prentice-Hall Corporation System, Inc., with offices on the date hereof at 500
Central Avenue, Albany, N.Y. 12206-2290 as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices and documents
which may be served in any such action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act as such, the
Borrower agrees to designate a new designee, appointee and agent in New York
City on the terms and for the purposes of this provision satisfactory to the
agent under this Agreement. The Borrower hereby further irrevocably consents to
the service of process out of any of the
-102-
<PAGE>
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower, at
its address for notices pursuant to Section 12.03, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right of
the Administrative Agent, any Bank to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) Each of the parties to this Agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
12.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which each of the Borrower and each of the Banks
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered the same to the Administrative Agent at the Notice Office of the
Administrative Agent or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver. Neither this Agreement nor any terms
-------------------
hereof or thereof may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed by the Borrower
and the Required Banks (or the Two Thirds Banks if such change or waiver is to
Section 4.02(A)(c)), provided that no such change, waiver, discharge or
--------
termination shall, without the consent of each Bank (other than a Defaulting
Bank) affected thereby, (i) extend the final maturity date applicable
-103-
<PAGE>
to a Facility (it being understood that any waiver of the making of, or
application of any prepayment of or the method of application of any
amortization payment or other prepayment to, the amortization of, the Loans
shall not constitute an extension of such final maturity thereof), reduce the
rate or extend the time of payment of interest (other than as a result of
waiving the applicability of any post-default increase in interest rates) or
Fees thereon, or reduce the principal amount thereof, or increase the Commitment
of any Bank over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of any mandatory prepayment or a
mandatory reduction in the Total Commitment shall not constitute a change in the
terms of any Commitment of any Bank), (ii) release all or substantially all of
the Collateral (in each case except as expressly provided in the Credit
Documents), (iii) amend, modify or waive any provision of this Section 12.12, or
Section 11.07, 12.01, 12.04, 12.06 or 12.07(b), (iv) reduce the percentage
specified in, or otherwise modify, the definition of Required Banks or (v)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement. No provision of Section 11 may be amended
without the consent of the Administrative Agent.
12.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Section 1.10, 1.11, 4.04, 11.07 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
--------
under Section 1.10 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 Confidentiality. Subject to Section 12.04, the Banks shall
---------------
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide transferee or participant in
---- ----
connection with the contemplated transfer of any Loans or Commitments or
participation therein (provided, that each such prospective transferee and/or
--------
participant shall execute an agreement for the benefit of the Borrower with such
prospective transferor Bank containing provisions substantially identical to
those contained in this Section 12.15), to its auditors, attorneys or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process, provided that, unless specifically prohibited by
--------
applicable law or court order, each Bank shall notify the Borrower of any
request by any governmental agency or representative thereof (other than any
such request in connection with an examination of the financial condition of
such Bank by such governmental agency) for disclosure of any such non-public
information prior to
-104-
<PAGE>
disclosure of such information, and provided further, that in no event shall any
----------------
Bank be obligated or required to return any materials furnished by the Borrower
or any Subsidiary. The Borrower hereby agrees that the failure of a Bank to
comply with the provisions of this Section 12.15 shall not relieve the Borrower
of any of the obligations to such Bank under this Agreement and the other Credit
Documents.
12.16 Bank Register. The Borrower hereby designates the
-------------
Administrative Agent to serve as its agent, solely for purposes of this Section
12.16, to maintain a register (the "Bank Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Bank Register maintained by the Administrative Agent with respect to ownership
of such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Bank Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
12.04(b). The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 12.16 other than those
resulting from the Administrative Agent's willful misconduct or gross
negligence.
* * *
-105-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
RED LION HOTELS, INC.
By /s/ David J. Johnson
----------------------------------------------
Title: President, Chief Executive Officer
and Chairman of the Board
CREDIT LYONNAIS NEW YORK BRANCH,
Individually and as Administrative Agent
By /s/ Rick Rohrbach
----------------------------------------------
Title: First Vice President
THE BANK OF TOKYO, LTD.,
PORTLAND BRANCH
By /s/ Mike Kringlen
----------------------------------------------
Title: Vice President
BANK OF SCOTLAND
By /s/ Catherine Oniffrey
----------------------------------------------
Title: Vice President
<PAGE>
THE ROYAL BANK OF SCOTLAND, plc
By /s/ Derek Bonnar
----------------------------------------------
Title: Vice President
CIBC INC.
By /s/ Paul J. Chakmak
----------------------------------------------
Title: Vice President
DRESDNER BANK AG LOS ANGELES
AGENCY and GRAND CAYMAN BRANCH
By /s/ Jon M. Bland
----------------------------------------------
Title: Senior Vice President
By /s/ Dennis G. Blank
----------------------------------------------
Title: Vice President
MITSUI LEASING (U.S.A.) INC.
By /s/ Jerry Parisi
----------------------------------------------
Title: Senior Vice President
<PAGE>
SEATTLE FIRST NATIONAL BANK
By /s/ Gordon H. Gray
----------------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ Errett Hummel
----------------------------------------------
Title: Relationship Manager
SOCIETE GENERALE
By /s/ J. Blaine Shaum
----------------------------------------------
Title: Regional Manager
KEY BANK OF WASHINGTON
By /s/ John H. Brock
----------------------------------------------
Title: Vice President
<PAGE>
GIROCREDIT BANK AG DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH
By /s/ John Redding
----------------------------------------------
Title:
By /s/ Richard Stone
----------------------------------------------
Title:
THE BANK OF NEW YORK
By /s/ Gregory R. Reimers
----------------------------------------------
Title: Vice President
WELLS FARGO BANK, N.A.
By /s/ Mathew Harvey
----------------------------------------------
Title: Assistant Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/ Toshinari Iyoda
----------------------------------------------
Title: Senior Vice President & Senior Manager
<PAGE>
Exhibit 10.5
CONTRIBUTION AGREEMENT
This Contribution Agreement dated as of August 1, 1995 is by and
between Red Lion Hotels, Inc., a Delaware corporation ("RLI"), and Red Lion, a
California Limited Partnership (the "Partnership").
RECITALS
--------
WHEREAS, as part of a plan of reorganization, the Partnership intends
to transfer certain of its hotel properties, and certain of the assets and
liabilities associated with those hotels, to a wholly owned subsidiary, RLH
Partnership, L.P., a Delaware limited partnership;
WHEREAS, RLH Partnership, L.P. will lease those certain hotel
properties to RLI pursuant to the Master Lease and, in connection therewith, RLI
will guarantee certain real property leases of RLH Partnership, L.P.;
WHEREAS, following the transfer of hotel properties and related debt
to RLH Partnership, L.P., the Partnership will contribute all of its right,
title and interest in the Contributed Property (as hereinafter defined) to RLI
and assign to RLI all of the Assumed Liabilities (as hereinafter defined); and
WHEREAS, RLI desires to acquire the Contributed Property and to assume
the Assumed Liabilities.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows.
ARTICLE 1 - DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings:
"Affiliate" of a Person means any other Person which directly or
---------
indirectly controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
1
<PAGE>
"Assumed Liabilities" shall mean all Liabilities of the Partnership as
-------------------
of the Closing Date other than the Newpart Liabilities and the Retained
Liabilities, including without limitation, Liabilities incurred in connection
with, arising out of, resulting from or incident to (i) the Contributed Property
(including Liabilities arising out of the transfer of the Contributed Property
pursuant to this Agreement) or any event or condition relating to the
Contributed Property, including Liabilities relating to mortgage debt, bank
debt, accounts payable, employee and trade payables, amounts due to creditors
for merchandise, supplies, or services, property taxes, supplemental taxes,
utility charges, Liabilities in connection with any environmental law, amounts
payable under the Contracts and the Leases, and all Liabilities in connection
with the Plan which are not satisfied by the Partnership as contemplated hereby,
and (ii) the Newpart Property (including Liabilities arising out of the transfer
of the Newpart Property pursuant to the Newpart Contribution Agreement) or any
event or condition relating to the Newpart Property, including mortgage debt,
bank debt, accounts payable, employee and trade payables, amounts due to
creditors for merchandise, supplies, or services, property taxes, supplemental
taxes, utility charges, and Liabilities in connection with any environmental
law, but with respect to this clause (ii), only to the extent not assumed by
Newpart as a Newpart Liability.
"Books and Records" shall mean all books, ledgers, files, reports,
-----------------
plans, drawings and operating records of every kind maintained by the
Partnership pertaining to the Contributed Property and the Assumed Liabilities,
but excluding books and records included in the Retained Property or the Newpart
Property.
"Closing Date" shall mean the date of the closing of the Offering or
------------
such other date as the Partnership and RLI shall mutually agree upon.
"Contract" shall mean any agreement, contract, note, loan, evidence of
--------
indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, employee pension and
welfare benefit plan, policy and agreement, compensation plan, policy and
agreement, license, concession, instrument, obligation or commitment to which
the Partnership is a party or is bound, or to which its property is subject,
whether oral or written, other than the Leases, the Management Agreements, the
Transferred Joint Venture Interests and the Retained Joint Venture Interests.
"Contributed Property" shall mean all of the Partnership's right,
--------------------
title and interest in the business, goodwill, real and personal property, assets
and rights of any kind, whether tangible or intangible, of the Partnership,
other than the Newpart Property and the Retained Property, including without
limitation the following:
(a) all accounts and notes receivable (whether current or noncurrent),
refunds, deposits, prepayments or prepaid expenses (including without
limitation any prepaid insurance premiums) and deferred loan costs of the
Partnership;
2
<PAGE>
(b) all cash and cash equivalents held by the Partnership as of the
Closing Date, other than the Retained Cash;
(c) all Leases, Contracts and Management Agreements;
(d) all Owned Real Property;
(e) all Leasehold Estates;
(f) all Leasehold Improvements;
(g) all Fixtures and Equipment;
(h) all Inventory;
(i) all Books and Records;
(j) all Proprietary Rights;
(k) all Permits;
(l) all computers and software;
(m) all Insurance Policies;
(n) all supplies, sales literature, promotional literature, customer,
supplier and distributor lists, art work, display units, telephone and fax
numbers and purchasing records of the Partnership;
(o) all rights under or pursuant to all warranties, representations
and guarantees made by suppliers to the Partnership;
(p) all outstanding advances from the Partnership to the Joint
Ventures at the Closing Date other than the Retained Joint Venture
Advances;
(q) the Transferred Securities;
(r) the Transferred Joint Venture Interests; and
(s) all claims, causes of action, choses in action, rights of recovery
and rights of set-off of any kind, against any person or entity, of the
Partnership on or prior to the Closing Date.
3
<PAGE>
"Cooperation Agreement" shall mean the Cooperation Agreement by and
---------------------
between the Partnership and RLI, substantially in the form of Exhibit 1.1(A)
attached hereto.
"Escrow Agent" shall mean First American Title Insurance Company.
------------
"Facilities" shall mean all hotels, plants, offices, manufacturing
----------
facilities, stores, warehouses, improvements, administration buildings, and all
real property and related facilities located on the Owned Real Property or the
Leased Real Property.
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
----------------------
furnishings, machinery, automobiles, trucks, spare parts, supplies, equipment
and other tangible personal property owned by the Partnership.
"Insurance Policies" shall mean all insurance policies of the
------------------
Partnership.
"Inventory" shall mean all of the Partnership's inventory held for
---------
resale and all of the Partnership's raw materials, work in process, finished
products, and similar items, in each case wherever the same may be located.
"Johnson Incentive Unit Plan" shall mean the Incentive Compensation
---------------------------
Agreement dated as of October 1, 1991 by and between the Partnership and David
J. Johnson, together with the related Escrow Agreement dated as of October 1,
1991, and the Promissory Note made by David J. Johnson dated August 10, 1992, as
such agreements and instrument have been and may be amended.
"Joint Ventures" shall mean the following joint ventures: Red Lion La
--------------
Posada, Bakersfield Red Lion Motor Inn, Ontario - Red Lion Motor Inn, Village
Motor Inn, and Fess Parker - Red Lion Hotel; and the following limited
partnerships: Red Lion Orange County Partners, L.P. and Glendale Red Lion
Hotel, a California limited partnership.
"La Posada Guaranty" shall mean that certain guaranty dated as of the
------------------
date hereof, by and between the Partnership and La Posada Resort Hotel Limited
Partnership, entered into in connection with the transfer of a portion of the
Partnership's interest in the Red Lion La Posada Joint Venture to RLI.
"Leased Personal Property" shall mean all leased personal property
------------------------
described in the Leases.
"Leased Real Property" shall mean all leased real property described
--------------------
in the Leases.
"Leasehold Estates" shall mean all of the Partnership's rights and
-----------------
obligations as lessee under the Leases.
4
<PAGE>
"Leasehold Improvements" shall mean all leasehold improvements
----------------------
situated in or on the Leased Real Property.
"Lease Guaranties" shall mean the guarantee by RLI of certain real
----------------
property leases made in connection with the transfer of such leases to Newpart
by the Partnership pursuant to the Newpart Contribution Agreement.
"Leases" shall mean all of the existing leases with respect to the
------
personal or real property of the Partnership.
"Liabilities" shall mean all liabilities, obligations, commitments,
-----------
claims, actions, demands, losses, damages, judgments, interests, penalties,
costs and expenses of any nature, absolute, accrued, contingent or otherwise,
known or unknown, whether matured or unmatured.
"Management Agreements" means the Partnership's agreements to manage
---------------------
hotel properties.
"Master Lease" means the master lease by and between Newpart and RLI,
------------
substantially in the form of Exhibit 1.1(B).
"Newpart" means RLH Partnership, L.P., a Delaware limited partnership,
-------
and its successors and assigns.
"Newpart Contribution Agreement" means that Contribution Agreement, by
------------------------------
and among Newpart and the Partnership, substantially in the form attached hereto
as Exhibit 1.1(C).
"Newpart Demand Note" means the non-interest bearing demand note of
-------------------
the Partnership held by Newpart G.P.
"Newpart G.P." means Red Lion G.P., Inc., a Delaware corporation, and
------------
its successors and assigns.
"Newpart Liabilities" means the Partnership's Liabilities assumed by
-------------------
Newpart pursuant to the Newpart Contribution Agreement.
"Newpart Property" means the Partnership's right, title and interest
----------------
to the real and personal property, assets and rights of any kind, whether
tangible or intangible, of the Partnership which are transferred to Newpart
pursuant to the Newpart Contribution Agreement.
"Offering" means the proposed initial public offering of the Common
--------
Stock of RLI.
5
<PAGE>
"Owned Real Property" shall mean the real property owned in fee by the
-------------------
Partnership, including without limitation all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Facilities thereon, if any.
"Permits" shall mean all of the Partnership's transferable licenses,
-------
permits, franchises, approvals, authorizations, consents or orders of, or
filings with, any governmental authority, whether foreign, federal, state or
local, or any other person.
"Person" shall mean any person or entity, whether an individual,
------
trustee, corporation, general partnership, limited partnership, trust,
unincorporated organization, business association, firm, joint venture,
governmental agency or authority.
"Proprietary Rights" shall mean all of the Partnership's domestic or
------------------
foreign federal and state registrations of trademarks and of other marks, trade
names or other trade rights, and all pending applications for any such
registrations and all of the Partnership's patents and copyrights and all
pending applications therefor, all other trademarks and other marks, trade names
and other trade rights or in which the Partnership has any interest whatsoever,
and all other trade secrets, designs, plans, specifications, technical
information and other proprietary rights, whether or not registered, created or
used by or on behalf of the Partnership.
"Registration Rights Agreement" shall mean a registration rights
-----------------------------
agreement, substantially in the form set forth as Exhibit 1.1(D), between the
Partnership and RLI.
"Registration Statement" shall mean the registration statement on
----------------------
Form S-1 filed with the Securities and Exchange Commission pursuant to which RLI
shall make the Offering.
"Retained Cash" shall mean all funds on deposit as of the Closing Date
-------------
in that certain account maintained by the Partnership at Bank of California and
managed by Payden & Rygel.
"Retained Joint Venture Interests" shall mean the Partnership's
--------------------------------
interests in the Joint Ventures which are not transferred to RLI, as set forth
on Schedule 1.1(a) attached hereto.
"Retained Joint Venture Advances" shall mean the Partnership's
-------------------------------
interest in the advances to Joint Ventures which are not transferred to RLI, as
set forth on Schedule 1.1(b) attached hereto.
"Retained Liabilities" shall mean all Liabilities directly and solely
--------------------
relating to:
(a) the Retained Joint Venture Interests;
6
<PAGE>
(b) the La Posada Guaranty;
(c) the Newpart Demand Note;
(d) the McClaskey Limited Units, and;
(e) the Johnson Incentive Unit Plan.
"Retained Property" shall mean the following assets of the Partnership
-----------------
which are not to be acquired by RLI hereunder:
(a) the Retained Cash;
(b) all of the capital stock of RLI and Newpart G.P.;
(c) all of the limited partnership interests in Newpart;
(d) books, files, reports and operating records relating to the
management, governance and finances of the Partnership,
including, without, limitation the Partnership's minute books,
tax returns, correspondence with the Partnership's partners and
related items;
(e) the Retained Joint Venture Interests;
(f) the Retained Joint Venture Advances;
(g) the receivable from Newpart representing amounts due to the
Partnership for fees and expenses relating to Newpart paid by the
Partnership before the Closing Date;
(h) the Johnson Incentive Unit Plan; and
(i) all of the partnership interests in Santa Barbara Red Lion Hotel,
a California general partnership.
"Service Agreement" shall mean the Service Agreement by and between
-----------------
the Partnership and RLI, substantially in the form of Exhibit 1.1(E) attached
hereto.
"Title Company" shall mean First American Title Insurance Company.
-------------
"Transferred Joint Venture Interests" shall mean the Partnership's
-----------------------------------
interests in the Joint Ventures which are not Retained Joint Venture Interests.
7
<PAGE>
"Transferred Securities" shall mean all securities of any entity in
----------------------
which the Partnership has an interest, including the stock of Red Lion
Properties, Inc., but excluding the Retained Joint Venture Interests, the
Retained Joint Venture Advances, the capital stock of RLI and Newpart G.P. and
the limited partnership interests in Newpart.
1.2 Other Defined Terms. The following terms shall have the meanings
-------------------
defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
--------------------------------- -------
<S> <C>
Call Option 5.4(d)
Call Option Commencement Date 5.4(d)
Call Option Exercise Notice 5.4(d)
Claim Notice 8.2
Closing 3.1
Damage 8.1
Dispute Notice 8.2
Indemnified Party 8.1
Indemnitor 8.1
McClaskey Limited Units 5.3
Option Joint Venture Assets 5.4(c)
Partnership Preamble
Plan 5.3
Put Option 5.4(c)
Put Option Commencement Date 5.4(c)
Put Option Exercise Notice 5.4(c)
RLI Preamble
RLI Advances 5.4(b)
RLI Common Stock 2.1
Securities Act 4.1(b)
Transfer Fees 2.3
</TABLE>
ARTICLE 2 - CONTRIBUTION OF ASSETS
2.1 Transfer of Contributed Property. Upon the terms and subject to
--------------------------------
the conditions contained herein, at the Closing, the Partnership will
contribute, convey, transfer, assign, and deliver to RLI, and RLI will acquire
from the Partnership, all of the Partnership's right, title and interest in and
to, the Contributed Property, and RLI shall deliver to the Partnership
20,899,900 shares of validly issued, fully paid and nonassessable common stock,
par value $.01 per share, of RLI (the "RLI Common Stock"), free and clear of all
liens and encumbrances.
8
<PAGE>
2.2 Assumption of Liabilities. Upon the terms and subject to the
-------------------------
conditions contained herein, at the Closing, RLI shall assume the Assumed
Liabilities.
2.3 Closing Costs; Transfer Taxes and Fees. RLI shall be responsible
--------------------------------------
for any documentary transfer taxes and any sales, use or other taxes (and any
deficiency, interest or penalty asserted with respect thereto), escrow fees,
including fees and charges of Escrow Agent, any recording or filing fees, and
any costs and fees of title searches or insurance premiums for title insurance
on the Owned Real Property or Leased Real Property (collectively "Transfer
Fees"), incurred in transferring and conveying the Contributed Property
hereunder, and shall promptly reimburse the Partnership for any Transfer Fees
incurred by it. RLI shall pay all costs of applying for new permits and
obtaining the transfer of existing Permits. In addition, RLI shall be
responsible for and shall pay all Transfer Fees or other fees or expenses
incurred in connection with obtaining or perfecting its title in the Contributed
Property after the Closing, and shall reimburse the Partnership for any such
fees or expenses incurred by it.
ARTICLE 3 - CLOSING
3.1 Closing. The Closing of the transactions contemplated herein
-------
(the "Closing") shall be held at 8:00 a.m. local time on the Closing Date at the
offices of Latham & Watkins, 633 West Fifth Street, Los Angeles, California,
unless the parties hereto otherwise agree.
3.2 Deliveries at Closing.
---------------------
(a) By the Partnership. On or prior to the Closing Date, the
------------------
Partnership shall execute and deliver, for recordation and/or delivery:
(i) to the Escrow Agent, escrow instructions substantially in the
form attached hereto as Exhibit 3.2(a)(i);
(ii) to the Escrow Agent, one or more recordable deeds conveying
fee simple title to all Owned Real Property included in the Contributed Property
to RLI;
(iii) to the Escrow Agent, one or more recordable assignments
conveying all of the Partnership's interest in the Leases with respect to the
Leased Real Property and the Leased Personal Property;
(iv) to RLI, one or more bills of sale conveying in the aggregate
all of the Partnership's owned personal property included in the Contributed
Property;
(v) to RLI, one or more assignments of Contracts and Management
Agreements conveying all of the Partnership's interests in the Contracts and
Management Agreements;
9
<PAGE>
(vi) to RLI, one or more assignments of Joint Venture Interest
conveying all of the Transferred Joint Venture Interests;
(vii) to RLI, one or more assignments conveying all of the
Proprietary Rights in recordable form to the extent necessary to assign such
rights;
(viii) to RLI, endorsements, stock transfer certificates and other
appropriate instruments with respect to any Transferred Securities;
(ix) to RLI, all cash and cash equivalents included in the
Contributed Property;
(x) to RLI, a FIRPTA affidavit in the form specified in Internal
Revenue Code Section 1445;
(xi) to RLI, an executed copy of the Cooperation Agreement, the
Registration Rights Agreement and the Service Agreement; and
(xii) to RLI and/or the Escrow Agent, such other instruments as
shall be requested by RLI and/or the Escrow Agent to vest in RLI title in and to
the Contributed Property in accordance with the provisions hereof.
(b) By RLI. On the Closing Date, RLI shall execute and deliver, for
------
recordation and/or delivery:
(i) to the Escrow Agent, escrow instructions substantially in the
form attached hereto as Exhibit 3.2(a)(i);
(ii) to the Escrow Agent, one or more recordable assumptions
assuming all of the Partnership's interest in the Leases with respect to the
Leased Real Property;
(iii) to Newpart, an executed copy of the Master Lease and fully
executed copies of the Lease Guaranties;
(iv) to the Partnership, one or more assumptions of Contracts and
Management Agreements assuming the Partnership's interests in the Contracts and
the Management Agreements;
(v) to the Partnership, one or more assumptions of Joint Venture
Interest assuming the Transferred Joint Venture Interests;
(vi) to the Partnership, an assumption of the Partnership's
obligations under the Plan as contemplated by Section 5.3;
10
<PAGE>
(vii) to the Partnership, one or more assumptions assuming all of
the Assumed Liabilities;
(viii) to the Partnership, an executed copy of the Cooperation
Agreement, the Registration Rights Agreement and the Service Agreement; and
(ix) to Tod E. McClaskey, the Registration Rights Agreement in the
form attached to the letter dated June 16, 1995 by and among the Partnership,
Tod E. McClaskey and the Partnership's other partners; and
(x) to the Partnership, such other instruments as shall be
requested by the Partnership to evidence RLI's assumption of the Assumed
Liabilities in accordance with the provisions hereof.
3.3 Actions by Newpart. On the Closing Date, Newpart shall execute
------------------
and deliver to RLI the Master Lease.
3.4 Actions by Escrow Agent. On the Closing Date, Escrow Agent
-----------------------
shall:
(a) Recording. Cause the deeds (with documentary transfer tax
---------
information to be affixed by separate affidavit or other method whereby the same
shall not become a part of the Official Records), the assignments and
assumptions of Leases with respect to the Leased Real Property and any other
documents which the parties hereto may mutually designate to be recorded in the
Official Records of the appropriate counties in which the Owned Real Property
and the Leased Real Property is located.
(b) Title Policy. Direct the Title Company to issue and deliver
------------
the binding commitment to issue the title insurance described in Section 7.4,
effective as of the Closing Date.
3.5 Form of Instruments. To the extent that a form of any document
-------------------
to be delivered hereunder is not attached as an Exhibit or schedule hereto, such
documents shall be in form and substance, and shall be executed and delivered in
a manner, satisfactory to the Partnership and RLI.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Partnership. The
-------------------------------------------------
Partnership represents and warrants to RLI as follows:
(a) Authorization. The Partnership has the requisite partnership
-------------
power and authority and has taken all partnership action necessary to execute
and deliver this Agreement, to consummate the transactions contemplated
hereunder and to perform its obligations hereunder. This Agreement has been duly
executed and delivered by the
11
<PAGE>
Partnership and constitutes a legally valid and binding obligation of the
Partnership enforceable against the Partnership in accordance with its terms.
(b) Investment Representations. The Partnership is acquiring the
--------------------------
RLI Common Stock solely for its own account and not as nominee or agent for any
other person or entity and not with a view to, or for offer or sale in
connection with, any distribution thereof, within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), that would be in violation of
the Securities Act, without prejudice, however, to its right at all times to
sell or otherwise dispose of all or any part of said RLI Common Stock pursuant
to a registration statement under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act. The Partnership
further represents that it and its partners are knowledgeable, sophisticated and
experienced in business and financial matters; that it and its partners are able
to bear the economic risk of their investment in the RLI Common Stock and are
presently able to afford the complete loss of such investment; that it is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act or 1933, as amended; and that by reason of its prior ownership of
the Contributed Property it has fully evaluated and investigated the RLI Common
Stock, and has not relied upon any representation or warranty with respect to
the Contributed Property in its decision to invest in the RLI Common Stock.
(c) Transfer Restrictions. The RLI Common Stock will not been
---------------------
registered under the Securities Act, or qualified under applicable state
securities laws and may not be sold or otherwise transferred unless, among other
things, the RLI Common Stock has been included in an effective registration
statement under the Securities Act and has been qualified for resale under
applicable state securities laws or such sale or transfer is exempt from such
registration or qualification requirements. A legend to this effect shall be
placed upon the certificate representing the RLI Common Stock.
4.2 Representations, Warranties and Acknowledgements of RLI. RLI
-------------------------------------------------------
represents and warrants to the Partnership as follows:
(a) Authority. RLI has the requisite corporate power and
---------
authority and has taken all corporate action necessary to execute and deliver
this Agreement, to consummate the transactions contemplated hereunder and to
perform its obligations hereunder. The execution and delivery of this Agreement
by RLI and the consummation by RLI of the transactions contemplated hereunder
have been duly approved by the board of directors of RLI. No other corporate
proceedings on the part of RLI are necessary to authorize the execution and
delivery of this Agreement by RLI or the performance by RLI of its obligations
hereunder. This Agreement has been duly executed and delivered by RLI and
constitutes a legally valid and binding obligation of RLI enforceable against
RLI in accordance with its terms.
(b) Contributed Property Transferred "As Is". RLI acknowledges
----------------------------------------
that each of the assets to be transferred hereunder shall be transferred "as is"
with all faults
12
<PAGE>
and without representation, express or implied, that the same are merchantable
or fit for a particular purpose; that the Partnership is transferring whatever
title it may have in and to such assets without any representation or warranty,
express or implied, with respect to its title to such assets or its contractual
ability to do the same; and that each of the interests to be transferred
hereunder pursuant to a Lease, Contract, Management Agreement or Transferred
Joint Venture Interest shall be transferred without representation or warranty
that RLI shall receive such interest free of claims by any third party or with
any right to the quiet enjoyment of any such interest.
(c) Validity of RLI Common Stock. The RLI Common Stock to be
----------------------------
issued pursuant to this Agreement has been duly authorized, and will be, upon
issuance in accordance with the terms hereof, validly issued fully paid,
nonassessable and free of all preemptive rights.
ARTICLE 5 - COVENANTS
5.1 Further Assurances. Upon the terms and subject to the conditions
------------------
contained herein, each of the parties hereto agrees, to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement, (ii) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder, and (iii)
to cooperate with each other in connection with the foregoing.
5.2 Set Aside of Joint Venture Assignment. In the event that the
-------------------------------------
other venturer in the Joint Venture known as Fess Parker-Red Lion Hotel
challenges the assignment of the Partnership's interest in such joint venture
pursuant hereto, and is successful in setting aside such assignment, the
Partnership will (a) provide RLI with the net cash distributed to the
Partnership from continuing joint venture operations of Fess Parker-Red Lion
Hotel, (b) in the event that the Partnership sells its interest in Fess Parker-
Red Lion Hotel, provide RLI with the net cash received by the Partnership from
any sale of such joint venture interest, and (c) in the event that Fess Parker-
Red Lion Hotel sells the hotel, provide RLI with the net proceeds received by
the Partnership from the joint venture's sale of the hotel, in each case after
providing for any tax liability of the Partnership's partners.
5.3 Incentive Unit Plan. As part of the transactions contemplated by
-------------------
this Agreement, RLI shall assume the obligation of the Partnership to make
payments under the Amended and Restated RL Acquisition Incentive Unit Plan,
adopted by the Partnership as of November 1, 1987, as amended by the Amendment
to Incentive Unit Plan, dated as of July 26, 1995 (the "Plan"); except that RLI
shall not assume the obligation to pay amounts due upon 36.25 fully vested
limited units (the "McClaskey Limited Units"). In addition, and without
limiting the indemnification provided under Section 8, RLI shall promptly
indemnify and hold harmless the Partnership from all Damages, including all
expenses and fees, arising out of any dispute, claim, action, arbitration or
litigation relating to the administration of the
13
<PAGE>
Plan or the amendment to the Plan dated as of July 26, 1995, it being understood
that RLI shall advance the Partnership all such amounts. While RLI will assume
the Partnership's obligation to make payments under the Plan, the Plan shall
continue to be administered by the Partnership and its general partner. The
Partnership agrees not to issue any additional Units (as defined in the Plan)
under the Plan after the Closing Date.
5.4 Retained Joint Venture Interests and Retained Joint Venture
-----------------------------------------------------------
Advances.
- - - --------
(a) Cooperation Agreement. Subject to the terms and conditions
---------------------
hereof, upon the Closing, the Partnership and RLI shall execute the Cooperation
Agreement.
(b) Joint Venture Obligations. If at any time during which the
-------------------------
Partnership owns a Retained Joint Venture Interest the Partnership is required
(i) to contribute or advance funds to the respective joint venture, (ii) to make
payments to the lenders of such joint venture, or (iii) to otherwise satisfy any
obligation or liability as a result of owning the Retained Joint Venture
Interest, then RLI shall advance the Partnership the funds necessary to satisfy
such obligation (the "RLI Advances"). The RLI Advances shall not bear interest
and shall be repaid by the Partnership solely out of the first funds distributed
or paid to the Partnership by the respective joint venture.
(c) Option to Sell to RLI. Commencing on the first anniversary
---------------------
of the Closing Date plus one day (the "Put Option Commencement Date"), the
Partnership shall have the option to sell (the "Put Option") the Retained Joint
Venture Interests and the Retained Joint Venture Advances, excluding the
Retained Joint Venture Interest in the Fess Parker-Red Lion Hotel Joint Venture
and any Retained Joint Venture Interest the transfer of which would result in a
breach of the relevant joint venture agreement (collectively, the "Option Joint
Venture Assets") to RLI. The purchase price to be paid by RLI upon the closing
of the Put Option shall be $1,300,000, payable in immediately available funds,
and the cancellation of the RLI Advances. The Partnership may exercise the Put
Option at any time within the 60 days following the Put Option Commencement
Date, by delivering written notice to RLI that it has determined to exercise the
Put Option (the "Put Option Exercise Notice"). If the Put Option Notice has not
been received by RLI within such 60 day period, then the Put Option shall expire
and be of no further force or effect. The sale of the Option Joint Venture
Assets shall close as soon as practicable after delivery of the Put Option
Exercise Notice. In connection with the sale of the Option Joint Venture Assets
by the Partnership, RLI shall assume all of the Partnership's Liabilities with
respect to the Option Joint Venture Assets, and upon the closing of such a sale
such Liabilities shall be deemed Assumed Liabilities.
(d) Option to Purchase from the Partnership. If the Put Option
---------------------------------------
has expired without being exercised, then commencing with the 70th day following
the first anniversary of the Closing Date (the "Call Option Commencement Date"),
RLI shall have the option to purchase (the "Call Option") the Option Joint
Venture Assets from the Partnership. The purchase price to be paid by RLI upon
the closing of the Call Option shall be
14
<PAGE>
$1,300,000, payable in immediately available funds, and the cancellation of the
RLI Advances. RLI may exercise the Call Option at any time within the 60 days
following the Call Option Commencement Date, by delivering written notice to the
Partnership that it has determined to exercise the Call Option (the "Call Option
Exercise Notice"). If the Call Option Notice has not been received by the
Partnership within such 60 day period, then the Call Option shall expire and be
of no further force or effect. The sale of the Option Joint Venture Assets
shall close as soon as practicable after delivery of the Call Option Exercise
Notice. In connection with the sale of the Option Joint Venture Assets by the
Partnership, RLI shall assume all of the Partnership's Liabilities with respect
to the Option Joint Venture Assets, and upon the closing of such a sale such
Liabilities shall be deemed Assumed Liabilities. The Partnership agrees not to
sell or otherwise transfer the Option Joint Venture Assets other than pursuant
to the Put Option or the Call Option until the Call Option has expired.
5.5 Release of Contingent Liabilities. RLI shall use commercially
---------------------------------
reasonable efforts (i) to obtain as promptly as practicable after the Closing
the Partnership's release from all liabilities or obligations the Partnership
may have with respect to any of the Leases, Contracts, Management Agreements,
Transferred Joint Venture Interests or any other Contributed Property or Assumed
Liability, and (ii) upon the Partnership's request, to satisfy the conditions
necessary to terminate the La Posada Guaranty.
5.6 Use of Red Lion Name by the Partnership. RLI irrevocably grants
---------------------------------------
to each of the Partnership, Newpart and Newpart G.P. the nonexclusive right to
use the name "Red Lion" as part of their respective corporate or partnership
name and in no other capacity whatsoever.
5.7 Access to Books and Records. From and after the Closing, RLI
---------------------------
shall make available to the Partnership, its agents and employees the Books and
Records (and the assistance of RLI's employees responsible for such Books and
Records) during regular business hours. RLI shall maintain and preserve all
such Books and Records for a period of ten years after the Closing.
ARTICLE 6 - CONDITIONS TO PARTNERSHIP'S OBLIGATIONS
6.1 Conditions Precedent. The obligations of the Partnership to
--------------------
consummate the transactions provided for hereby are subject, in the discretion
of the Partnership, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by the Partnership:
(a) Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of RLI contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and RLI
15
<PAGE>
shall have performed and satisfied in all material respects all agreements and
covenants required hereby to be performed by it prior to or on the Closing Date.
(b) Deliveries. Each of RLI, Newpart and the Escrow Agent shall have
----------
delivered all documents and other items under Section 3 hereof.
(c) No Proceedings, Litigation or Laws. No action, proceeding or
----------------------------------
claim by any governmental authority or other person shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby which could reasonably be expected to (a) materially affect
the right or ability of RLI to own, operate, possess or transfer the Contributed
Property after the Closing, or (b) materially damage the Partnership if the
transactions contemplated hereunder are consummated.
(d) Newpart Capitalization. Newpart shall have been capitalized in
----------------------
accordance with the Newpart Contribution Agreement.
(e) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the Securities and Exchange
Commission and the Offering shall have been commenced.
6.2 Conditions Subsequent. The obligations of the Partnership to
---------------------
consummate the transactions provided for hereby are subject, in the discretion
of the Partnership, to the satisfaction, on or prior to one day following the
Closing Date, of each of the following conditions, any of which may be waived by
the Partnership:
(a) Offering. The Offering shall have closed.
--------
ARTICLE 7 - CONDITIONS TO RLI'S OBLIGATIONS
7.1 Conditions Precedent. The obligations of RLI to consummate the
--------------------
transactions provided for hereby are subject, in the discretion of RLI, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by RLI:
(a) Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of the Partnership contained in this Agreement shall be true and
correct in all material respects at and as of the date of this Agreement and at
and as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof, and the
Partnership shall have performed and satisfied in all material respects all
agreements and covenants required hereby to be performed by it prior to or on
the Closing Date.
(b) No Proceedings, Litigation or Laws. No action, proceeding or
----------------------------------
claim by any governmental authority or other person shall have been instituted
or threatened which
16
<PAGE>
questions the validity or legality of the transactions contemplated hereby which
could reasonably be expected to (a) materially affect the right or ability of
RLI to own, operate, possess or transfer the Contributed Property after the
Closing, or (b) materially damage RLI if the transactions contemplated hereunder
are consummated.
(c) Deliveries. Each of the Partnership, Newpart and the Escrow Agent
----------
shall have executed and delivered each of documents and other items described in
Section 3 hereof.
(d) Title Policy. RLI shall have received an owner's policy or
------------
policies of title insurance insuring fee title to the Partnership's Owned Real
Property or written commitment to issue the same in form and substance
satisfactory to RLI and shall have received a leasehold policy or policies of
title insurance insuring the Partnership's leasehold interest in the Leased Real
Property, in form and substance satisfactory to RLI.
(e) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the Securities and Exchange
Commission and the Offering shall have been commenced.
(f) Concurrent Transactions. The Cooperation Agreement, the
-----------------------
Registration Rights Agreement and the Service Agreement shall have been executed
and delivered by the Partnership and RLI and the Master Lease shall have been
executed and delivered by RLI and Newpart, each simultaneous with the Closing.
7.2 Conditions Subsequent. The obligations of RLI to consummate the
---------------------
transactions provided for hereby are subject, in the discretion of RLI, to the
satisfaction, on or prior to one day following the Closing Date, of each of the
following conditions, any of which may be waived by RLI:
(a) Offering. The Offering shall have closed.
--------
ARTICLE 8 - INDEMNIFICATION
8.1 By RLI. RLI and its successors and assigns (the "Indemnitor")
------
agrees to indemnify, save and hold harmless the Partnership and each of its
limited partners, general partners, owners, subsidiaries and affiliates, and
each of their respective officers, directors, employees, shareholders, partners,
agents, representatives and advisors, or any of the foregoing's successors and
assigns (the "Indemnified Parties") from and against all liabilities, costs,
losses (including diminution in value), lost profits, taxes, lawsuits, damages
and expenses, whether or not arising out of third-party claims (including,
without limitation, interest, penalties, costs of mitigation and losses in
connection with any environmental law), and all amounts paid in investigation,
defense or settlement, in each case grossed-up for all taxes (collectively,
"Damages") incurred in connection with, arising out of, resulting from or
incident to, (i) any event or condition, past, present or future, relating to
the assets,
17
<PAGE>
liabilities, employees, business, rights, obligations or property transferred,
assumed, assigned or contributed to RLI, (ii) any Assumed Liability, (iii) any
event occuring prior to or condition existing as of the Closing Date relating to
the assets, liabilities, employees, business, rights, obligations or property
transferred, assumed, assigned or contributed to Newpart which Damages are not
Newpart Liabilities, (iv) any transaction contemplated hereby, (v) any breach of
any covenant or agreement made by RLI pursuant to this agreement, (vi) the
Partnership's ownership of the RLI Common Stock, or (vii) any liability imposed
upon any Indemnified Party due to the Partnership's status as the transferor to,
or predecessor of, RLI. Without limiting the foregoing, the Indemnitor shall
indemnify, save and hold harmless the Indemnified Parties from Damage incurred
in connection with, arising out of, resulting from or incident to (a) any
litigation, claim, action, dispute or investigation in connection with the Plan,
(b) any litigation, claim, action, dispute or investigation arising out of the
transfer of the Transferred Joint Venture Interests, Transferred Joint Venture
Advances, Leases, Contracts, indebtedness, mortgages, deeds of trust or
Management Contracts, (c) any hazardous substances or violation of environmental
laws, and (d) any litigation, claim, action, dispute or investigation in
connection with the Partnership's ownership of the RLI Common Stock, including,
without limitation, securities laws litigations. Payments by an Indemnified
Party shall not be a condition to recovery. Indemnitor's obligation to
indemnify the Indemnified Parties shall not limit any other right, including
without limitation, rights of contribution which an Indemnified Party may have
under statute or common law.
8.2 Indemnification Procedures. If any Indemnified Party seeks
--------------------------
indemnification hereunder it shall give the Indemnitor a notice (a "Claim
Notice") describing in reasonable detail the facts giving rise to any claims for
indemnification hereunder and the amount or the method of computation of the
amount of such claim, and a reference to the provision of this Agreement or any
agreement, document or instrument executed pursuant hereto or in connection
herewith upon which such claim is based, provided that failure to give such
notice shall not relieve the Indemnitor of its obligations hereunder.
Indemnitor shall have thirty (30) days after the giving of any Claim Notice
pursuant hereto to (i) agree to the amount or method of determination set forth
in the Claim Notice and pay such amount to the Indemnified Party in immediately
available funds to the extent not previously advanced pursuant to Section 8.4
hereof, or (ii) provide Indemnified Party with notice that it disagrees with the
amount or method of determination set forth in the Claim Notice (the "Dispute
Notice"). Within fifteen (15) days after the giving of the Dispute Notice, a
representative of Indemnitor and a representative of Indemnified Party shall
negotiate in a bona fide attempt to resolve the matter. In the event that the
controversy is not resolved within thirty (30) days of the giving of the Dispute
Notice, the parties shall be free to pursue whatever remedies are available to
them at law or equity.
8.3 Third Person Claims. If a claim by a third person is made
-------------------
against an Indemnified Party, and if such party intends to seek indemnity with
respect thereto under this Article 8, such Indemnified Party shall promptly
notify the Indemnitor in writing of such claims, setting forth such claims in
reasonable detail. Indemnitor shall have ten (10) days
18
<PAGE>
after receipt of such notice to elect to undertake, conduct and control, through
counsel of its own choosing and at its own expense, the settlement or defense
thereof, and the Indemnified Party shall cooperate with it in connection
therewith; provided that the Indemnified Party may participate in such
settlement or defense through counsel chosen by such Indemnified Party; and
provided further that if in the reasonable judgment of the Indemnified Party,
there exists a conflict between the Indemnified Party and the Indemnitor,
Indemnitor shall bear all costs and expenses of Indemnified Party's separate
counsel of choice. So long as the Indemnitor is reasonably contesting any such
claim in good faith, the Indemnified Party shall not pay or settle any such
claim without the consent of the Indemnitor. If the Indemnitor does not notify
the Indemnified Party within ten (10) days after receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to contest, settle
or compromise the claim and shall be entitled to indemnification for all fees,
costs and expenses incurred in connection therewith. The Indemnitor shall not,
except with the consent of each Indemnified Party, enter into any settlement
that does not include as an unconditional term thereof the giving by the person
or persons asserting such claim to all Indemnified Parties of unconditional
release from all liability with respect to such claim or consent to entry of any
judgment. The Indemnitor shall not be liable for damages relating to any
settlement entered into without the consent of such Indemnitor.
8.4 Advance of Damages. Notwithstanding anything to the contrary, the
------------------
Indemnitor shall advance to any Indemnified Party, all funds necessary to pay
when due all Damages, provided that if the Indemnitor disputes its obligation to
indemnify the Indemnified Party with respect to such Damages, the Indemnified
Party shall provide an undertaking to reimburse the Indemnitor for such amounts
if it is later determined in a final nonappealable order by a court of competent
jurisdiction that the Indemnified Party was not entitled to indemnification
under this Agreement.
ARTICLE 9 - MISCELLANEOUS
9.1 Termination.
-----------
(a) Failure of Condition. If any condition precedent to the
--------------------
Partnership's obligations hereunder is not satisfied by the Closing Date and
such condition is not waived by the Partnership, the Partnership may terminate
this Agreement at its option by written notice to RLI. If any condition
precedent to RLI's obligations hereunder is not satisfied by the Closing Date
and such condition is not waived by RLI, RLI may terminate this Agreement at its
option by written notice to the Partnership. In the event that a condition
precedent to its obligations is not satisfied, nothing contained herein shall be
deemed to require either party to terminate this Agreement rather than to waive
such condition precedent and proceed with the Closing.
(b) Effect of Termination. In the event of a termination of this
---------------------
Agreement by either party as provided in subparagraph (a) above, this Agreement
shall thereafter
19
<PAGE>
become void and have no effect and neither party shall have any liability
hereunder to the other party, except that nothing herein shall relieve either
party from liability for any breach of this Agreement which occurs prior to such
termination.
9.2 Entire Agreement; Amendments and Waivers. This Agreement,
----------------------------------------
together with all exhibits and schedules hereto constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
9.3 Successors and Assigns. This Agreement may not be assigned by a
----------------------
party hereto, whether by operation of law or otherwise, without the consent of
the other party hereto, and any assignment made without such consent shall be
void and without effect. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
9.4 Governing Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws of the
State of Washington applicable to contracts entered into and wholly to be
performed in Washington by Washington residents (without reference to its choice
of law provisions).
9.5 Multiple Counterparts. This Agreement may be executed in one or
---------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.6 Captions and References. The captions or headings of the
-----------------------
Articles and Sections herein are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
9.7 Limited Liability. Notwithstanding any provisions hereof, none
-----------------
of the obligations of the Partnership or RLI under or contemplated by this
Agreement shall be an obligation of any officer, director, shareholder, limited
partner, general partner, or owner of the Partnership or RLI, or any of their
respective officers, directors, shareholders, limited partners, general
partners, or owners, or successors or assigns. The Partnership and RLI shall be
the only persons or entities liable with respect to such obligations. Each of
the Partnership and RLI hereby irrevocably waives any right it may have against
any such officer, director, shareholder, general partner or limited partner,
owner, successor or assign identified above as a result of the performance of
the provisions under or contemplated by this Agreement. This provision shall
survive any termination of this Agreement.
20
<PAGE>
9.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent permitted by
law, such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
Red Lion Hotels, Inc., a Delaware
corporation
/s/ Beth A. Ugoretz
--------------------------------------------------
By: Beth A. Ugoretz
Its: Senior Vice President
Red Lion, a California Limited Partnership
By: RLA-GP, Inc., a Delaware corporation
Its: General Partner
/s/ David J. Johnson
------------------------
By: David J. Johnson
Its: Executive Vice President
22
<PAGE>
EXHIBIT 1.1(A)
COOPERATION AGREEMENT
This Agreement is made and entered into as of August 1, 1995 by and
between Red Lion Hotels, Inc., a Delaware corporation ("RLI"), and Red Lion, a
California Limited Partnership ("Red Lion").
RECITALS
--------
WHEREAS, Red Lion owns directly or indirectly certain interests in the
following joint ventures: Red Lion La Posada, Bakersfield Red Lion Motor Inn,
Ontario -Red Lion Motor Inn, Village Motor Inn and Fess Parker - Red Lion Hotel;
and certain interests in the following limited partnerships: Red Lion Orange
County Partners, L.P. and Glendale Red Lion Hotel, a California Limited
Partnership (collectively, the "Joint Ventures");
WHEREAS, pursuant to the Contribution Agreement of even date herewith
by and between Red Lion and RLI (the "Contribution Agreement"), Red Lion will
transfer to RLI the Transferred Joint Venture Interests (as defined in the
Contribution Agreement);
WHEREAS, subsequent to the transfer described in the preceding
recital, Red Lion will retain the Retained Joint Venture Interests (as defined
in the Contribution Agreement); and
WHEREAS, the parties desire to enter into this Agreement in order to
regulate Red Lion's conduct with respect to any and all Retained Joint Venture
Interests.
AGREEMENT
---------
NOW, THEREFORE, in acknowledgement of the foregoing recitals and in
consideration of the mutual agreements expressed herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows.
1. Exercise of Powers by RLI.
-------------------------
The parties hereby agree that RLI has sole discretion to determine and
prescribe Red Lion's conduct with respect to any Joint Venture to the extent of
the Retained Joint Venture Interests.
<PAGE>
2. Agreement to Abide by RLI Instructions.
--------------------------------------
Red Lion hereby irrevocably agrees that with respect to the Retained
Joint Venture Interests, Red Lion will act or vote or refrain from acting or
voting with respect to any Joint Venture solely at the direction of and in
accordance with the instructions of RLI.
3. Termination.
-----------
This Agreement shall remain in full force and effect until such time
as all of the Retained Joint Venture Interests have been transferred to RLI.
4. Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties.
5. Amendment.
---------
This Agreement may be amended only by a written agreement signed by
the parties.
6. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.
7. Specific Performance.
--------------------
RLI and Red Lion agree that monetary damages would not be adequate
compensation for any loss incurred by RLI by reason of a breach of the
provisions of this Agreement by Red Lion. Therefore, RLI shall be entitled to
specific performance of the provisions of this Agreement and Red Lion hereby
waives the claim or defense that there exists an adequate remedy at law to
redress the nonperformance or other breach of this Agreement.
8. Agreement to Perform Necessary Acts.
-----------------------------------
Each party agrees to perform any further acts and to execute and
deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement.
9. Conditions to Transfer.
----------------------
Any transferee or assignee of any or all of the Retained Joint Venture
Interests must, as a condition to such transfer or assignment, execute such
documents as may be
2
<PAGE>
requested by RLI in order to confirm the agreement of such assignee or
transferee to be bound by all of the terms and provisions of this Agreement as
though an original signatory hereto and to assume all obligations of the
transferor or assignor hereof.
10. Invalid Provision.
-----------------
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions, and this Agreement shall be
construed in all respects as if the invalid or unenforceable provision were
omitted.
11. No Waiver of Breach.
-------------------
No failure by RLI to insist upon the strict performance of any
covenant, agreement, term or provision of this Agreement, or to exercise any
right or remedy consequent upon a breach thereof, shall constitute a waiver of
any such breach or subsequent breach of such covenant, agreement, term or
provision. No waiver of any breach shall affect or alter this Agreement and this
Agreement shall remain in full force and effect.
12. Entire Agreement.
----------------
This instrument evidences the entire agreement of the parties with
respect to the matters covered herein, and supersedes all prior oral or written
agreements or other understandings.
13. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Red Lion Hotels, Inc., a Delaware corporation
----------------------------------------
By: Beth A. Ugoretz
Its: Senior Vice President
Red Lion, a California Limited Partnership
By: RLA-GP, Inc., a Delaware corporation
Its: General Partner
----------------------------------
By: David J. Johnson
Its: Executive Vice President
4
<PAGE>
EXHIBIT 1.1(B)
- - - --------------------------------------------------------------------------------
LEASE
BETWEEN
RLH PARTNERSHIP, L.P.,
A DELAWARE LIMITED PARTNERSHIP
("LANDLORD")
AND
RED LION HOTELS, INC.,
A DELAWARE CORPORATION
("TENANT")
- - - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
LEASE
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - LEASE OF PREMISES............................................... 1
1.1 "As-Is" Letting................................................... 1
1.2 Tenant's Right of Possession...................................... 2
1.3 Landlord's Cooperation............................................ 2
ARTICLE II - DEFINITION OF TERMS............................................ 3
ARTICLE III - TERM.......................................................... 10
3.1 Term.............................................................. 10
3.2 Extended Term..................................................... 10
3.3 Notice of Termination............................................. 11
3.4 Obligations of Parties at Termination............................. 11
ARTICLE IV - ABSOLUTELY NET LEASE........................................... 12
4.1 Net Lease......................................................... 12
4.2 Non-Terminability................................................. 12
ARTICLE V - RENT............................................................ 13
5.1 Base Rent and Percentage Rent..................................... 13
5.2 Payment of Rent................................................... 13
5.3 Records; Audit by Landlord........................................ 15
5.4 Subleases, Licenses, and Concessions.............................. 16
5.5 Rent Upon Certain Expansions...................................... 17
ARTICLE VI - OPERATION AND MAINTENANCE OF PREMISES.......................... 17
6.1 Operation and Maintenance of Premises............................. 17
6.2 Taxes............................................................. 18
6.3 Compliance with Requirements, Covenants and Restrictions.......... 19
6.4 Landlord's Right to Perform Tenant Obligations.................... 19
6.5 Compliance with Laws and Agreements............................... 19
6.6 Tenant's Right to Contest......................................... 19
6.7 Liens............................................................. 20
ARTICLE VII - USE........................................................... 21
ARTICLE VIII - INDEMNIFICATION.............................................. 21
8.1 General Indemnification by Tenant................................. 21
8.2 Environmental Indemnification..................................... 22
8.3 Defense of Indemnified Parties.................................... 22
8.4 Payment by Tenant................................................. 23
8.5 Survival.......................................................... 23
8.6 Continuing Obligations............................................ 23
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX - ALTERATIONS AND EXPANSIONS..................................... 23
9.1 Alterations and Expansions........................................ 23
9.2 Alterations and Expansions During Last Five Years of Term......... 24
ARTICLE X - FF&E, FIXED ASSET SUPPLIES AND INVENTORIES...................... 24
10.1 FF&E Upon Commencement Date...................................... 24
10.2 Replacement of FF&E.............................................. 25
10.3 FF&E Upon Termination............................................ 25
10.4 Landlord's Security Interest in Tenant's FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories................ 26
ARTICLE XI - TRADEMARKS, TRADE NAMES AND SERVICE MARKS...................... 26
11.2 Use of Trademarks, Trade Names and Service Marks................. 26
11.3 Proprietary Software............................................. 26
ARTICLE XII - ENVIRONMENTAL HAZARDS......................................... 27
12.1 Compliance with Environmental Law................................ 27
12.2 Site Assessments................................................. 28
ARTICLE XIII - INSURANCE.................................................... 30
13.1 Property & Business Interruption Insurance....................... 30
13.2 Application of Proceeds.......................................... 31
13.3 Waiver of Rights of Subrogation.................................. 32
13.4 Operational Insurance............................................ 32
13.5 Blanket and Self-Insurance....................................... 33
13.6 Costs of Insurance............................................... 33
13.7 Defense of Claims after Termination.............................. 33
13.8 Coverage and Certificates........................................ 33
13.9 Alternative Insurance Coverage................................... 34
ARTICLE XIV - DAMAGE BY FIRE OR OTHER CASUALTY.............................. 34
14.1 Damage by Fire or Other Casualty................................. 34
14.2 Partial Damage by Fire or Other Casualty......................... 34
14.3 Damage Occurring After the 10th Anniversary of Commencement
Date......................................................... 34
14.4 No Abatement of Rent Due to Casualty............................. 35
14.5 Early Termination................................................ 35
ARTICLE XV - CONDEMNATION................................................... 36
15.1 Notice of Condemnation and Assignment of Rights.................. 36
15.2 Tenant's Right to Pursue a Claim................................. 36
15.3 Temporary Taking................................................. 36
15.4 Total Taking..................................................... 37
15.5 Substantial Taking............................................... 38
15.6 Partial Taking................................................... 38
ARTICLE XVI - ASSIGNMENT, SALE AND SUBLETTING............................... 39
16.1 Sale or Assignment by Landlord, Subject to Lease................. 39
16.2 Assignment by Tenant............................................. 40
16.3 Tenant's Right to Sublease....................................... 40
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE XVII - HOLDING OVER................................................. 40
ARTICLE XVIII - ESTOPPEL CERTIFICATES....................................... 41
ARTICLE XIX - LANDLORD/TENANT FINANCING..................................... 41
19.1 Right to Finance................................................. 41
19.2 Priority......................................................... 41
19.3 Mortgagee Amendments............................................. 42
ARTICLE XX - DEFAULT BY TENANT.............................................. 42
20.1 Events of Default................................................ 42
20.2 Landlord's Rights Upon an Event of Default....................... 44
20.3 Implied Waiver................................................... 45
20.4 Injunctive Relief................................................ 46
ARTICLE XXI - PROVISIONS APPLICABLE TO PURCHASE BY TENANT
OF THE PREMISES........................................... 46
21.1 Purchase "As Is"................................................. 46
21.2 Timing of Closing................................................ 46
21.3 Deliveries at Closing........................................... 46
21.4 TENANT'S FAILURE TO CLOSE........................................ 47
21.5 LANDLORD'S FAILURE TO CLOSE...................................... 47
21.6 Payment of Costs................................................. 48
21.7 Prorations....................................................... 48
ARTICLE XXII - MISCELLANEOUS................................................ 48
22.1 Notices.......................................................... 48
22.2 Memorandum of Lease.............................................. 49
22.3 Determination of Fair Market Value............................... 49
22.4 Partial Invalidity............................................... 51
22.5 Headings......................................................... 51
22.6 Binding Effect................................................... 51
22.7 Representations.................................................. 51
22.8 Amendments....................................................... 51
22.9 Brokers.......................................................... 51
22.10 Authority to Execute............................................ 51
22.11 Applicable Law.................................................. 51
22.12 Construction.................................................... 51
22.13 Impossibility of Performance.................................... 52
22.14 Time of Essence................................................. 52
22.15 Attorney's Fees................................................. 52
22.16 No Merger....................................................... 52
22.17 Landlord's Right to Enter....................................... 52
22.18 Corporate Reorganization of Tenant.............................. 52
22.19 No Waiver....................................................... 52
22.20 Confidentiality................................................. 53
22.21 Gender and Number............................................... 53
22.22 Survival........................................................ 53
22.23 Acceptance of Surrender......................................... 53
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
22.24 Non-Recourse as to Landlord..................................... 53
22.25 Entire Agreement; Integration................................... 54
22.26 Waiver of Trial by Jury......................................... 54
22.27 Tenant's Remedies............................................... 54
22.28 Landlord and Tenant Relationship................................ 54
22.29 Relationship with Groundlessors................................. 54
22.30 Limited Liability............................................... 55
EXHIBITS
- - - --------
A Descriptions of Land
B Schedule of Rent
</TABLE>
iv
<PAGE>
LEASE
-----
THIS LEASE is made as of the 1st day of August, 1995 ("Commencement Date"),
by and between RLH PARTNERSHIP, L.P., a Delaware limited partnership
("Landlord"), with a mailing address in care of KKR Associates, 2800 Sand Hill
Road, Suite 2000, Menlo Park, California 94025, and RED LION HOTELS, INC.
("Tenant"), a Delaware corporation, with a mailing address at 4001 Main Street,
Vancouver, Washington 98663.
R E C I T A L S:
WHEREAS, Landlord currently holds an interest in certain parcels of real
property either in fee or as ground lessee, which parcels are more specifically
described in Exhibits A-1 through A-17 hereto, and each of which has been
developed, improved, and is currently being utilized for, the operation of a Red
Lion hotel (individually, a "Hotel," and, collectively, the "Hotel(s)");
WHEREAS, the lease transaction described herein is a portion of a larger
transaction involving, among other things, an initial public offering of the
common stock of Tenant, and wherein, among other matters, Tenant will succeed to
certain of the assets of the Red Lion hotel business, including the operation of
"Red Lion" hotels on other properties not the subject of this Lease, and wherein
both Tenant and Landlord shall borrow funds from certain lenders and each of
their respective interests under this Lease shall be pledged as collateral for
such loans (collectively, such larger series of transactions shall be referred
to herein as the "Restructuring"); and
WHEREAS, prior to the Restructuring, Tenant or Tenant's predecessor's in
interest have possessed and operated each Hotel leased hereunder.
ARTICLE I
LEASE OF PREMISES
-----------------
Section 1.1 "As-Is" Letting
---------------
(a) In consideration of the Rents, covenants and agreements to be
paid, kept and performed hereunder, Landlord, for the term and upon the
conditions hereinafter set forth, leases to Tenant and Tenant leases and
takes from Landlord, the Premises (including, without limitation, all FF&E,
Fixed Asset Supplies, Operating Equipment and Inventories located at the
Hotels on the Commencement Date), together with all privileges, easements
and appurtenances beneficial thereto.
(b) The Premises are leased to Tenant "as-is" and Landlord makes no
representation or warranty, express or implied, with respect to the
condition of the Premises, or as to the compliance of the Premises with any
Legal Requirements. Tenant has examined the Premises and title to the
Premises and has found all of the same satisfactory for its purposes.
Tenant accepts the Premises subject to the existing state of title. During
the term of this Lease, Tenant shall have the exclusive right to use,
enforce and obtain the benefits of (i) all guaranties, representations, and
warranties relating to the construction, improvement, alteration and repair
of the Premises and all architectural and engineering plans, drawings and
specifications related thereto, and (ii) all of Landlord's transferable
licenses, permits, franchises, approvals,
1
<PAGE>
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person
related to any Hotel which is required to be held by Tenant in connection
with the operation of the Hotels and/or the transactions contemplated
hereby. During the term of this Lease, Landlord shall execute such
assignments or other transfer instruments as are necessary to transfer the
benefits of all such items to Tenant, and shall not waive, surrender or
modify any of Landlord's rights with respect thereto without obtaining
Tenant's prior written consent.
Section 1.2 Tenant's Right of Possession. Subject to the provisions of
----------------------------
Sections 6.4 and 12.2, and any other provision of applicable law affording any
inspection rights to Landlord and/or any Mortgagee, Tenant shall have exclusive
possession and control of the Premises during the term of this Lease.
Section 1.3 Landlord's Cooperation
----------------------
(a) Landlord agrees upon request by Tenant to provide all information
relevant to Landlord, its general partners, officers and directors, and to
execute, and to cause its general partners, officers and directors to sign,
promptly, and without charge, all applications (including all documents
related thereto) for licenses, permits, instruments or other general
approvals required to be submitted to any governmental authority that are
necessary for the proper and successful conduct of Tenant's lawful business
operations at any of the Hotels if and to the extent such execution and/or
information by or from Landlord and/or any of its officers and directors is
required by law, regulation or governmental practice in order for Tenant to
obtain any such license, permit, instrument or other governmental approval;
provided, however, that all costs and expenses associated therewith shall
be the sole obligation of Tenant, and Tenant shall promptly pay and
discharge the same, and provided further, that the proper execution of any
such application shall not expose Landlord or any of its constituent
partners to any personal liability. In all cases, Landlord shall have a
reasonable amount of time to comply with Tenant's requests pursuant to this
Section 1.3(a), Landlord and Tenant shall, in good faith, cooperate with
each other in determining and complying with relevant governmental
requirements, and Tenant shall afford Landlord every reasonable opportunity
to question and challenge by appropriate administrative and/or judicial
process any relevant governmental requirement so long as such challenge
does not materially and adversely affect any material license, permit or
governmental approval of Tenant. Tenant hereby agrees that it will fully
indemnify, defend and save Landlord harmless from and against any and all
costs, losses and expenses, including, without limitation, any and all
legal fees and court costs incurred or suffered by Landlord as a result of
its compliance with the obligations imposed upon Landlord under this
Section 1.3 or as a result of Tenant's contest of the results of any such
application to any governmental entity, except in the case of Landlord's
fraud, willful misconduct or gross negligence.
(b) If Landlord should fail to comply with the requirements of Section
1.3(a) above, and such failure should continue for more than thirty (30)
days after Notice from Tenant to Landlord and the Senior Landlord's
Mortgagee specifying the required cooperation and informing the recipients
of such Notice that Tenant intends to act pursuant to this Section 1.3(b)
if such cooperation is not provided (whether by action of Landlord or by
action of the Senior Landlord's Mortgagee) within said thirty (30) day
period and such failure results, or with reasonable certainty will result,
in the denial, non-renewal or withdrawal of a material license, permit or
governmental approval that will materially and adversely affect Tenant's
business at such Hotel, then, in addition and not as a substitution for any
remedies available to Tenant under Section
2
<PAGE>
22.27 of this Lease, if such failure is not cured within such thirty (30)
day period, Tenant shall have the right to terminate this Lease with
respect to the affected Hotel by so notifying Landlord not later than the
date which is sixty (60) days after the date of the aforesaid Notice. If
Tenant elects to exercise the right described in the preceding sentence, it
shall, simultaneously with its delivery of its Notice of termination,
deliver to Landlord its irrevocable offer to purchase such Hotel, but only
such Hotel, for an amount equal to the Leasehold Purchase Price. Tenant
shall not, by reason of exercising said right to terminate, be excluded
from exercising any other right or remedy afforded to Tenant under Section
22.27 as a result of Landlord's breach of this Section 1.3.
(c) Landlord may accept or reject Tenant's irrevocable offer to
purchase such Hotel by sending Tenant a Notice of rejection or acceptance
within thirty (30) days from the date upon which Landlord received Tenant's
Notice of termination. If Landlord fails to send Tenant a Notice of
rejection or acceptance within thirty (30) days of its receipt of Tenant's
irrevocable offer to purchase such Hotel, Landlord shall be deemed to have
rejected such offer. If Landlord accepts Tenant's offer to purchase, this
Lease shall terminate with respect to such Hotel and closing of such
purchase shall occur in accordance with the provisions of Article XXI.
Upon such termination, Tenant shall pay to Landlord all Rent due through
such date of termination, in addition to the Leasehold Purchase Price.
Landlord shall convey such Hotel to Tenant in accordance with the
provisions of Article XXI.
(d) If Landlord rejects or is deemed to have rejected Tenant's
irrevocable offer to purchase pursuant to Section 1.3(b), this Lease shall
terminate with respect to such Hotel on a Base Rent payment date specified
by Tenant in its Notice of termination which occurs not earlier than ninety
(90) days nor later than one hundred twenty (120) days after delivery to
Landlord of Tenant's irrevocable offer to purchase, provided that this
Lease shall not terminate with respect to such Hotel unless and until
Tenant shall have paid all sums due hereunder (including, without
limitation, all taxes and insurance premiums) as of the actual date of
termination. Upon such termination, Tenant shall vacate such Hotel in
accordance with the provisions of Section 3.4.
(e) Landlord shall have the right at all times prior to either a
closing date for any purchase under Section 1.3(c) or the termination date
under Section 1.3(d), to cancel the right of Tenant to so purchase or
terminate pursuant to said sections, by complying with the requirements of
Section 1.3(a) in sufficient time and manner so that the subject license,
permit or approval is obtained or reinstated by a date that is prior to the
aforesaid closing date or termination date as the case may be.
ARTICLE II
DEFINITION OF TERMS
-------------------
The following terms when used in this Lease shall have the meanings
indicated:
"Accounting Period" shall mean a calendar month.
-----------------
"Additional Rent" shall mean any obligation of Tenant to pay money to
---------------
Landlord under this Lease, other than Base Rent, Percentage Rent, and any
Leasehold Purchase Price.
3
<PAGE>
"Affiliate" shall mean, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a second
Person if such first Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise.
"Base Rent" shall have the meaning set forth in Section 5.1.
---------
"Base Revenues" shall have the meaning set forth in Section 5.1(b).
-------------
"Business Day(s)" means Monday through Friday (except holidays); "normal
---------------
business hours" means 8:00 a.m. to 6:00 p.m. on Business Days; and "holidays"
means New Year's Day, President's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
"Change in Control" shall mean that Kohlberg Kravis Roberts & Co., L.P., a
-----------------
Delaware limited partnership, its general partners and its Affiliates
(determined without giving effect to the second sentence of the definition
thereof) (x) shall cease to possess, directly or indirectly, the power to direct
or cause the direction of the management policies of Landlord, whether through
the ownership of voting securities, by contract or otherwise or (y) shall cease
to own, directly or indirectly, at least 50% of the direct or indirect economic
interest owned by them in Landlord on the Commencement Date.
"Commencement Date" shall have the meaning set forth in the Preamble.
-----------------
"Concurrent Tenant Credit Facility" shall mean that certain Credit
---------------------------------
Agreement of even date herewith by and among Tenant, as Borrower, various
lending institutions, as the Banks, and Credit Lyonnais, New York Branch, as
Administrative Agent, as the same may from time to time be amended, modified
and/or supplemented.
"Effective Extended Term" means any Extended Term that has become effective
-----------------------
by reason of the occurrence of the first day of such Extended Term or because
Tenant has irrevocably exercised its option to extend the Term through such
Extended Term.
"Environmental Laws" shall mean any applicable federal, state, foreign, or
------------------
local law, statute, ordinance, rule, regulation, or rule of common law (now or
hereafter in effect), or any binding and enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree, or judgment, relating to (1) the use, generation, treatment, management,
storage, transportation or other handling of Hazardous Materials, (2)
occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, and (3) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery, losses or injuries resulting from the
release, threatened release, discharge, disposal or other handling of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Clean Water Act (29 U.S.C.
Section 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide, Rodenticide Act (7 U.S.C. Section
136 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), any analogous present or future federal, state, foreign, or local law,
4
<PAGE>
statute or ordinance, and any regulation or rule promulgated thereunder, each as
amended or supplemented.
"Environmental Violation" shall mean any violation of any Environmental Law
-----------------------
at or relating to any Premises.
"Event of Default" shall have the meaning set forth in Section 20.1.
----------------
"Expansion" shall have the meaning set forth in Section 9.1.
---------
"Expansion Rent" shall have the meaning set forth in Section 5.5.
--------------
"Extended Term(s)" shall have the meaning set forth in Section 3.2.
----------------
"Fair Market Value" shall mean the fair market value of any affected Hotel
-----------------
determined in accordance with the appraisal procedures set forth in
Section 22.3. Fair Market Value shall be determined without regard to any
condition such as casualty or condemnation which might have given rise to the
need to determine the Fair Market Value, and by assuming the Hotel is
unencumbered by this Lease or by any encumbrance securing funded indebtedness;
provided, however, that if any such encumbrance may not be removed without
penalty, the positive or negative effect on Fair Market Value attributable to
the interest rate, amortization schedule, maturity date, prepayment penalty and
other terms and conditions of such encumbrance shall be taken into account. The
Hotel shall be valued at its highest and best use which shall be presumed to be
as a hotel operated in accordance with the provisions of this Lease. Fair Market
Value of the Hotel shall not include "going concern" or "business enterprise"
value attributable to factors other than the highest and best use of the Hotel.
"FF&E" shall mean the Furnishings, Fixtures, machinery and equipment
----
installed and used in any Hotel, including, without limitation, floor and window
coverings, decorative light fixtures and equipment.
"FF&E Reserve Account" shall have the meaning set forth in Section 10.2.
--------------------
"Fiscal Year" shall mean Tenant's Fiscal Year which ends at midnight on
-----------
December 31 in each calendar year. If Tenant's Fiscal Year is changed in the
future, appropriate adjustment to this Lease's reporting and accounting
procedures shall be made; provided, however, that no such change or adjustment
shall alter the Term of this Lease or in any way reduce the payment of
Percentage Rent or other payments due Landlord hereunder.
"Fixed Asset Supplies" shall mean supply items included within "Property
--------------------
and Equipment" under the Uniform System of Accounts including linen, china,
glassware, silver, uniforms, and similar items.
"Fixtures" shall mean all permanently affixed equipment, machinery,
--------
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection with
and permanently affixed to or incorporated into any Hotel, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto.
5
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"Furnishings" shall mean all furniture and furnishings (including art work
-----------
and other items of decor) for guest rooms, public areas and non-public areas,
and movable equipment (but not Fixtures), inventory and linens.
"GDP Deflator" shall mean the "Gross Domestic Product Implicit Price
------------
Deflator" issued from time to time by the United Sates Bureau of Economic
Analysis of the Department of Commerce, or if the aforesaid GDP Deflator is not
at such time so prepared and published, any comparable index selected by
Landlord and reasonably satisfactory to Tenant (a "Substitute Index") then
prepared and published by an agency of the Government of the United States,
appropriately adjusted for changes in the manner in which such index is prepared
and/or year upon which such index is based. Except as otherwise expressly
stated herein, whenever a number or amount is required to be "adjusted by the
GDP Deflator", or similar terminology, such adjustment shall be equal to the
percentage increase in the GDP Deflator which is issued for the month which is
two months earlier than the month in which such adjustment is to be made as
compared to the GDP Deflator which was issued for the month which is two months
earlier than the month in which the Commencement Date occurred, it being agreed
that for purposes of this Lease, no GDP Deflator adjustment shall operate to
decrease any sum or number specified in this Lease.
"Hazardous Materials" shall mean (1) any substance or material defined as
-------------------
or included in the definition of one or more of any of the following:
"hazardous material," "hazardous waste," "hazardous substance," "regulated
substance," "toxic substance," "pollutant," "contaminant," "radioactive
material," or any other similar designation in, or otherwise subject to
regulation under an Environmental Law, (2) any oil, petroleum, petroleum
fraction or petroleum derived substance, (3) any flammable substance or
explosive, (4) asbestos in any form, (5) polychlorinated biphenyls, (6) urea
formaldehyde foam insulation, (7) pesticides, and (8) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated
under any Environmental Law.
"Hotel" shall have the meaning specified in the Recitals.
-----
"Improvements" shall mean the buildings and structures, together with the
------------
electrical, mechanical, plumbing and HVAC systems installed therein, parking
lots and all other improvements and FF&E (other than personalty owned by Tenant)
now or hereafter located on the Land.
"Indemnified Parties" shall have the meaning set forth in Section 8.1.
-------------------
"Initial Term" shall have the meaning set forth in Section 3.1.
------------
"Insubstantial Taking" shall mean a condemnation of a portion of any Hotel
--------------------
that is less than all or substantially all of, or less than a material portion
of, such Hotel if: (i) the Improvements can be restored to substantially the
same physical condition which prevailed therein and thereon prior to such
condemnation at a cost not exceeding the condemnation award payable with respect
thereto, (ii) the condemnation does not cause a material reduction in the size
or useability of any such Hotel or any material disruption to Tenant's use and
occupancy of such Hotel, and (iii) such condemnation will not materially reduce
the operating profitability of Tenant's business at the Hotel after any
restoration when compared to such profitability before the condemnation.
"Insurance Requirements" shall mean the requirements of any and all
----------------------
insurance policies procured in accordance with the terms hereof or required to
be carried hereunder.
6
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"Insurance Trustee" shall mean a bank, insurance company, pension fund,
-----------------
real estate investment trust or commercial lending institution, with financial
statements audited by an independent public accounting firm and a net worth of
at least One Hundred Million Dollars ($100,000,000). The Senior Landlord's
Mortgagee for a Hotel shall be the Insurance Trustee for such Hotel if the
Senior Landlord's Mortgagee fulfills the requirements of the first sentence of
this paragraph. If there is no Senior Landlord's Mortgagee for such Hotel that
fulfills the requirements of the first sentence of this paragraph, the Insurance
Trustee shall be such qualifying institution as is selected by Tenant and
approved by Landlord, such approval not to be unreasonably withheld, conditioned
or delayed.
"Inventories" shall mean "Inventories" as defined in the Uniform System of
-----------
Accounts, such as provisions in storerooms, refrigerators, pantries and
kitchens; beverages in wine cellars and bars; other merchandise intended for
sale; fuel; mechanical supplies; stationery; and other expensed supplies and
similar items.
"Land" shall mean all of the real property owned or leased by Landlord
----
underlying the Hotels as described in Exhibits A-1 through A-17 hereto, or such
lesser area for any such Hotel that from time to time may be leased by Tenant
hereunder as set forth in this Lease.
"Landlord" shall have the meaning set forth in the Preamble and shall
--------
include its successors and assigns.
"Landlord's Audit" shall have the meaning set forth in Section 5.3.
----------------
"Landlord's Mortgagee" shall mean the holder of, or beneficiary under, any
--------------------
Mortgage of Landlord's interest in any of the Hotels and/or this Lease,
including without limitation all members of any syndicate and the trustee or any
other agent thereof, if Landlord's Mortgagee consists of more than one entity or
person.
"Landlord's Temporary Taking Award" shall have the meaning set forth in
---------------------------------
Section 15.3.
"Lease" shall mean this Lease between Landlord and Tenant dated as of the
-----
Commencement Date as the same may be from time to time amended, modified and/or
supplemented.
"Lease Interest Rate" shall mean the Prime Rate plus two (2) percentage
-------------------
points per annum; provided, however, that the Lease Interest Rate shall not
exceed the maximum rate of interest from time to time permitted to be charged
under applicable law with respect to the indebtedness of any party for which and
against whom such interest is charged under this Lease.
"Lease Memorandum" shall have the meaning set forth in Section 22.2.
----------------
"Lease Year" shall refer to the first four full fiscal quarters (based on
----------
Tenant's Fiscal Year) after the Commencement Date and to each successive four
fiscal quarter period that occurs during the Term.
"Leasehold Purchase Price" shall be at any particular time during the Term,
------------------------
the dollar amount equal to the present value as of the date of such purchase of
the payments of Base Rent applicable to such Hotel (as determined in accordance
with the Schedule of Rent shown on Exhibit B), that would have been payable
during the period commencing on the date of such purchase and ending on the date
of expiration of the then current term of this Lease (including any Effective
Extended Term) for such Hotel, discounted to the date of purchase at an interest
rate equal to the effective interest rate on United States Treasury
7
<PAGE>
obligations as of the month preceding the date of such purchase and having a
maturity most nearly equal to the number of months remaining in the current term
of this Lease (including any Effective Extended Term) as of the date of such
purchase.
"Legal Requirement(s)" shall have the meaning set forth in Section 6.5.
--------------------
"Major Casualty" shall mean any damage to or destruction of all or any
--------------
portion of any Hotel when such casualty is likely to result in a reduction of
40% or more of the then operating profitability of Tenant's business at such
Hotel for a period exceeding twelve (12) months based upon the assumption that
the casualty will be repaired with reasonable diligence.
"Mortgage" shall mean any security instrument to which Landlord or Tenant
--------
is a party and which encumbers any interest in any of the Hotels and/or this
Lease, including, without limitation, mortgages, deeds of trust, security deeds
and similar instruments.
"Mortgagee" shall refer to each and every Landlord's Mortgagee and Tenant's
---------
Mortgagee.
"Notice" shall have the meaning set forth in Section 22.1.
------
"Operating Equipment" shall mean equipment which is capital in nature, but
-------------------
is removable and therefore not affixed to or installed permanently in a Hotel,
such as shuttle vans, cleaning equipment and other personalty utilized by Tenant
specifically for the operation of the business of the Hotel.
"Operating Revenues" shall mean in accordance with the Uniform System of
------------------
Accounts all revenues received or receivable for the use, occupancy or enjoyment
of the Hotels, or any part thereof, or received or receivable by Tenant for the
sale of any goods, services or other items sold on or provided from the Premises
in the ordinary course of each Hotel's operation, including without limitation:
(a) all income and proceeds received from rental of rooms and other space within
the Hotels including net parking revenue; (b) all income and proceeds received
from food and beverage operations and from catering services conducted from any
Hotel even though rendered outside of such Hotel; (c) all income and proceeds
(amortized over the period for which it relates) from business interruption,
rental interruption and use and occupancy insurance with respect to the
operation of each Hotel (after deducting therefrom all necessary costs and
expenses incurred in the adjustment or collection thereof); (d) all awards
allocated to Tenant for condemnation for temporary use (allocated over the
period for which it relates) (after deducting therefrom all costs incurred in
the adjustment or collection thereof); and (e) all income and proceeds from
judgments, settlements and other resolutions of disputes (allocated over the
period for which it relates) with respect to matters which would be included in
"Operating Revenues" if received in the ordinary course of any Hotel's operation
(after deducting therefrom all necessary costs and expenses incurred in the
adjustment or collection thereof). Such term shall not include: (1) gross
receipts received by lessees, licensees or concessionaires of any Hotel to the
extent not expressly included in Operating Revenues; (2) consideration received
at the Hotel for hotel accommodations, goods and services to be provided at
other hotels, although arranged by, for or on behalf of Tenant; (3) income and
proceeds from the sale or other disposition of goods, capital assets and other
items not in the ordinary course of any Hotel's operation; (4) federal, state
and municipal excise sales and use taxes collected directly from patrons or
guests of any Hotel as part of or based on the sales receipts, room admission,
cabaret or equivalent taxes; (5) condemnation awards (except to the extent
provided in clause (d) of the first sentence of this definition); (6) reasonable
bad debt reserves taken in the ordinary course of business, subject to
adjustment; (7) gratuities paid to Hotel employees; (8) the proceeds of any
financing or sale of any Hotel, (9) insurance proceeds other than from business
interruption, rental interruption and use and occupancy
8
<PAGE>
insurance with respect to operation of any Hotel; (10) other income or proceeds
resulting other than from the use or occupancy of any Hotel, or any part
thereof, or other than from goods, services or other items sold on or provided
from the Premises in the ordinary course of business; or (11) interest and
income on any funds standing from time to time in any Hotel's agency or reserve
accounts.
"Partial Condemnation Reduction Percentage" shall mean that percentage
-----------------------------------------
applicable upon a condemnation equal to the fraction whose numerator is the Fair
Market Value of the condemned Hotel immediately prior to the effective date of
such condemnation less the Fair Market Value of the portion of such Hotel
remaining immediately after such condemnation has become effective, and whose
denominator is the Fair Market Value of such Hotel immediately prior to the
effective date of such condemnation. Thus, for example, if the Fair Market
Value of the affected Hotel immediately prior to such condemnation was $20
million and the Fair Market Value of the portion of the affected Hotel remaining
immediately after such condemnation was $15 million, the Partial Condemnation
Reduction Percentage would be 25%.
"Partial Lease Year" shall mean the period between the end of the last full
------------------
Lease Year and the termination of this Lease.
"Percentage Rent" shall have the meaning set forth in Section 5.1.
---------------
"Premises" shall mean all of the Land and the Improvements associated with
--------
the Hotels, or such lesser area or portion of each such Hotel that from time to
time may be leased by Tenant hereunder as set forth in this Lease.
"Prime Rate" shall mean the prime commercial lending rate as announced
----------
from time to time by Credit Lyonnais at its branch in New York City (or such
other financial institution as Landlord and Tenant may mutually agree in
writing), each change in said rate to be effective as of the date of such
change.
"Prospectus" shall have the meaning set forth in Section 22.20.
----------
"Renovations" shall have the meaning set forth in Section 10.2.
-----------
"Rent(s)" shall mean Base Rent, Percentage Rent, Additional Rent and
-------
Expansion Rent either collectively or any one or more of same as the context may
indicate.
"Sale of a Hotel" shall mean any sale, assignment, transfer or other
---------------
disposition, for value or otherwise, voluntary or involuntary, of Landlord's
title to a Hotel, including, if applicable, the Land or Landlord's leasehold
interest in the underlying ground lease for the Land or an assignment or
sublease of Landlord's leasehold interest in the underlying lease of the Hotel
but excluding any Mortgage on Landlord's interest in any Hotel and/or this
Lease. For purposes of this Lease, a Sale of a Hotel shall also include a lease
(subject to this Lease) of all or substantially all of any Hotel or the Land
located at any such Hotel and any Change in Control of Landlord.
"Senior Landlord's Mortgagee" for any Hotel shall mean the holder of, or
---------------------------
beneficiary under, from time to time the most senior Mortgage against Landlord's
interest in such Hotel and/or this Lease.
"Site Assessment" shall have the meaning ascribed to it in Section 12.2.
---------------
9
<PAGE>
"Site Reviewer" shall have the meaning ascribed to it in Section 12.2.
-------------
"Substantial Taking" shall mean a condemnation of a portion of any Hotel
------------------
which is not an Insubstantial Taking.
"Surviving Obligations" shall mean any obligations of Tenant under this
---------------------
Lease, actual or contingent, which arise on or prior to the expiration or prior
termination of this Lease and which survive such expiration or termination by
their own terms.
"Tenant" shall have the meaning set forth in the Preamble and shall include
------
its successors and assigns.
"Tenant's Mortgagee" shall mean the holder of, or beneficiary under any
------------------
Mortgage of Tenant's interest in any of the Hotels and/or this Lease, including
without limitation all members of any syndicate and the trustee or any other
agent thereof, if Tenant's Mortgagee consists of more than one entity or person.
"Term" shall have the meaning set forth in Section 3.1.
----
"Uniform System of Accounts" shall mean the Uniform System of Accounts for
--------------------------
Hotels, as adopted and published from time to time by the American Hotel and
Motel Association. [Eighth Revised Edition, 1986, as published by the Hotel
Association of New York City, Inc.]
"Use Award" shall have the meaning set forth in Section 15.3.
---------
"Year" shall mean a calendar year commencing on January 1 and ending on
----
December 31. A "Partial Year" shall mean that portion of a Year that occurs
during the Term in the case of the Year in which the Commencement Date occurs
and the Year in which the expiration or termination of this Lease occurs.
ARTICLE III
TERM
----
Section 3.1 Term. The "Term" shall consist of the Initial Term and the
----
Extended Term(s), if any. The Initial Term of this Lease shall commence on the
Commencement Date, and, unless sooner terminated as otherwise provided herein,
shall expire on December 31, 2010.
Section 3.2 Extended Term. If Tenant has not given Notice of its
-------------
intention to terminate this Lease with respect to any Hotel pursuant to
Section 3.3 and the Initial Term or any then current Extended Term with respect
to such Hotel has not been sooner terminated, the Term of this Lease with
respect to each such Hotel shall automatically be extended on the same terms and
conditions as set forth herein for an Extended Term of five (5) years (the
"Extended Term"); provided, however, that there shall not be more than five such
Extended Terms and, if the Land for such Hotel is leased by Landlord, no such
Term shall extend in excess of one month less than the remaining term of
Landlord's leasehold interest in such Land. Notwithstanding the foregoing,
Tenant may elect at any time throughout the Term to exercise, by Notice to
Landlord, its option to extend the Term with respect to any or all Hotels
through any or all Extended Terms. If and to the extent Tenant elects by written
notice to Landlord to exercise its option to extend the Term for any such Hotel
through any Extended Term, Tenant's option to terminate this
10
<PAGE>
Lease pursuant to Section 3.3 with respect to such Extended Term for which
Tenant has exercised its extension option shall no longer be applicable, but
such option to terminate pursuant to Section 3.3 shall continue to apply to any
Extended Term with respect to which such option to extend was not exercised
pursuant to this Section 3.2. All elections to extend the Term shall be
irrevocable after exercise.
Section 3.3 Notice of Termination. Tenant may terminate this Lease with
---------------------
respect to any Hotel at the end of the Initial Term or at the end of any
Extended Term upon Notice to Landlord not less than twelve (12) calendar months
prior to the expiration of the Initial Term or the then current Extended Term,
as the case may be. In addition, Tenant may terminate this Lease with respect
to any Hotel if Tenant gives a Notice of termination to Landlord after the date
which is twelve (12) months prior to the expiration of the Initial Term or the
then current Extended Term, as the case may be (but prior to the last day of the
Initial Term or the then current Extended Term and prior to the expiration of
the thirty (30) day period referenced below), and in such event this Lease shall
terminate with respect to such Hotel on the date which is twelve (12) months
after the date upon which Tenant delivers such Notice; except that if, after the
beginning of the twelve (12) month period prior to the expiration of the Initial
Term or the then current Extended Term, as the case may be, Tenant does not give
a Notice of termination within thirty (30) days after Landlord requests Tenant
to notify Landlord whether Tenant intends to terminate this Lease with respect
to all or any portion of the Premises, the Term of this Lease shall be
automatically extended with respect to the portion of the Premises that was the
subject of Landlord's request for the next Extended Term, and Tenant's right to
terminate this Lease with respect to such portion of the Premises prior to the
expiration of the next Extended Term shall cease to have any further force or
effect.
Section 3.4 Obligations of Parties at Termination
-------------------------------------
(a) Promptly upon the effective date of any termination of this Lease
with respect to any Hotel or Hotels: (i) Tenant shall peaceably surrender
all of such Hotel or Hotels to Landlord in the same condition as existed as
of the Commencement Date, subject only to such additions or alterations as
have been permitted pursuant to Article IX hereof and subject to reasonable
wear and tear; (ii) Tenant shall assign and deliver to Landlord Tenant's
entire interest in any and all service contracts, guaranties and warranties
relating to the construction, improvement, alteration and repair of such
Hotels and all architectural and engineering plans, drawings and
specifications related thereto; (iii) if Landlord exercises its option
described in subsection 10.3(a) to purchase certain equipment relating to
such Hotel or Hotels from Tenant, Tenant shall assign and deliver
appropriate title documentation and possession of such equipment; and (iv)
if Landlord so requests, Tenant shall cause any person or entity occupying
the Premises by, through or under Tenant to be evicted and removed from the
Premises.
(b) Rent relating to such Hotel or Hotels shall be paid through the
date of termination. Within one hundred twenty (120) days after this Lease
terminates, Tenant shall deliver to Landlord a complete and final
accounting, prepared in accordance with the provisions of Section 5.3
hereof, of Operating Revenues relating to such Hotel or Hotels together
with all payments of Rent relating to such Hotel or Hotels due hereunder
and, if Landlord opted to purchase the equipment described in Subsection
10.3(a), the purchase price therefor. Landlord's right to audit Tenant's
books and records as described in Section 5.3 and to receive Percentage
Rent and Additional Rent relating to such Hotel or Hotels, if any, together
with interest at the Lease Interest Rate shall survive the termination of
this Lease.
(c) If Landlord, directly or indirectly, intends to conduct upon
termination of this Lease a business or use at any of the Hotels similar to
Tenant's business or use at such Hotel, Tenant,
11
<PAGE>
at Landlord's request, shall: (i) make available to Landlord such books and
records as are appropriate to such business and/or use (but not including
employee records that must remain confidential either under Legal
Requirements or reasonable policies of Tenant, or any proprietary
information or property of Tenant), and (ii) assign or transfer to Landlord
or its designee, to the extent permitted by Legal Requirements, all
licenses, permits, permissions and approvals pertinent to the conduct of
such business or use at such Hotel; provided that if Tenant has expended
any of its own funds within the five (5) year period preceding the
termination date in the acquisition or maintenance of any such license,
permit, permission or approval (other than annual license fees whether
prepaid or paid currently), or if there are any deposits or escrow funds
relevant thereto that Tenant assigns and transfers to Landlord, Landlord
shall, as a condition of receiving an assignment or transfer of such
license, permit, deposit, escrow fund, permission or approval (if requested
by Landlord), reimburse Tenant therefor. The cost of effectuating any such
transfer of any licenses, permits, permissions or approvals shall be borne
by Landlord except when termination is due to Tenant's default.
(d) The provisions of Section 10.3 shall apply upon termination of
this Lease with respect to all or any portion of the Premises, and Tenant
shall take all other appropriate actions as required under all other
applicable provisions of this Lease. The provisions of this Section 3.4,
as well as all Surviving Obligations, Landlord's right to receive the late
charges described in Section 5.2(b), interest on sums outstanding at the
Lease Interest Rate and legal fees (but if termination was not due to an
Event of Default such Legal Fees shall be reasonable legal fees) and court
costs, shall survive termination of this Lease with respect to all or any
portion of the Premises.
ARTICLE IV
ABSOLUTELY NET LEASE
--------------------
Section 4.1 Net Lease. Subject to any express obligation of Landlord to
---------
the contrary under this Lease, it is expressly understood and agreed by and
between the parties that this Lease is an absolutely net lease, and that Tenant
shall pay the Rents and all other sums payable hereunder to or on behalf of
Landlord without Notice or demand and without set-off, counterclaim, abatement,
suspension, deduction, or defense, and Landlord is not obligated to expend any
of its funds in connection with the Hotels, Premises or this Lease.
Section 4.2 Non-Terminability of Lease
--------------------------
(a) Except as otherwise expressly provided herein, this Lease shall
not terminate, nor shall Tenant have any right to terminate this Lease, nor
shall the obligations hereunder of Tenant be otherwise affected, for any
reason whatsoever, including without limitation by reason of any damage to
or destruction of all or any part of the Premises from whatever cause, the
taking of the Premises or any portion thereof by condemnation, the
prohibition, limitation or restriction of Tenant's use of the Premises, or
interference with such use by any private person or corporation or by
reason of any eviction or otherwise, or Tenant's acquisition of ownership
of the Premises otherwise than pursuant to an express provision of this
Lease, or for any other cause whether similar or dissimilar to the
foregoing, any present or future Legal Requirement to the contrary
notwithstanding, it being the intention of the parties hereto that the Rent
and all other charges payable hereunder to or on behalf of Landlord, shall
continue to be payable in all events
12
<PAGE>
and the obligations of Tenant hereunder shall continue unaffected, unless
the requirement to pay or perform the same shall be terminated pursuant to
an express provision of this Lease.
(b) Tenant covenants and agrees that it will remain obligated under
this Lease in accordance with its terms, and that Tenant will not take any
action to terminate, rescind, reject or avoid this Lease or any term, part,
or provision hereof, notwithstanding the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other proceeding affecting Landlord or any assignee of
Landlord in any such proceeding and notwithstanding any action with respect
to this Lease which may be taken by any trustee or receiver of Landlord or
of any assignee of Landlord in any such proceeding or by any court in any
such proceeding.
(c) Except as otherwise expressly provided in this Lease, Tenant
waives all rights now or hereafter conferred by law or obtainable in equity
(i) to quit, terminate or surrender this Lease or the Premises, or any part
thereof, or (ii) to any abatement, suspension, deferment or reduction of
any Rents or charges payable hereunder to or on behalf of Landlord,
regardless of whether such rights shall arise from any present or future
constitution, statute or rule of law.
ARTICLE V
RENT
----
Section 5.1 Base Rent and Percentage Rent. Tenant covenants to pay
-----------------------------
Landlord Rent for the Premises as follows:
(a) Commencing with the Commencement Date and continuing to the end
of the Term (including all Extended Terms), "Base Rent" in an amount equal
to Fifteen Million Dollars ($15,000,000) per Year for each Year; plus
(b) Commencing with the Second Lease Year and continuing for each
succeeding Lease Year until the end of the Term (including during all
Extended Terms), "Percentage Rent" equal to seven and one half percent
(7.5%) of that portion of the Operating Revenues for all Hotels for such
Lease Year that exceed the total Operating Revenues for the first Lease
Year ("Base Revenues"); provided, however, that in the case of a Partial
Lease Year, Percentage Rent shall be calculated by comparing Operating
Revenues for the Partial Lease Year against Base Revenues for the
comparable period of the first Lease Year. Once Base Revenues are
calculated and such figures are certified by Tenant's auditors and chief
financial officer, and Landlord has concurred in such calculation, the Base
Revenues with respect to each Hotel shall be inserted on Exhibit B and the
so revised Exhibit B shall become and remain a part of this Lease to be
utilized for reference purposes if a future recalculation of Base Revenues
becomes necessary due to the termination of this Lease with respect to any
one or more, but not all, Hotels.
Section 5.2 Payment of Rent
---------------
(a) Base Rent shall be paid (i) with respect to each calendar month
in each of the first two (2) fiscal quarters (based on Tenant's Fiscal
Year) after the Commencement Date, monthly in arrears, in six equal
payments of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) on
or before the last business day of each such calendar month, and (ii) with
respect to all periods thereafter during the Term, quarterly in arrears, in
four equal payments of Three
13
<PAGE>
Million Seven Hundred Fifty Thousand Dollars ($3,750,000), on or before the
last business day of each March, June, September and December during each
Year of the Term. Base Rent for any partial quarter shall be prorated and
computed by multiplying the quarterly Base Rent by a fraction, the
numerator of which is the number of days in such partial quarter and the
denominator of which is ninety. In the event this Lease terminates
pursuant to the specific terms hereof with respect to one or more Hotels
(but not all Hotels), Base Rent shall be recalculated in accordance with
the Schedule contained on Exhibit B, and Percentage Rent shall be
recalculated by deleting the Base Revenues of the so terminated Hotel or
Hotels from the Base Revenues utilized to calculate Percentage Rent.
Percentage Rent shall be calculated on an annual basis beginning at the end
of the second Lease Year and then for each succeeding Lease Year. The
calculation of Operating Revenues for the then ended Lease Year shall be
made by Tenant and provided to Landlord within one hundred and twenty (120)
days after the end of such Lease Year in accordance with Section 5.3(a).
Tenant shall pay the Percentage Rent annually in arrears on or before one
hundred twenty (120) days after the end of the applicable Lease Year. All
installments of Rent not paid by Tenant when the same become due shall bear
interest from the date due until paid at the Lease Interest Rate. Time is
of the essence with respect to this obligation, and installments of Rent
shall become due and payable without Notice or demand. All Rent payments
shall be made in lawful money of the United States of America and shall be
paid to Landlord at Landlord's address for receipt of Notices or to such
other party and/or to such other address as Landlord may from time to time
designate by Notice to Tenant in accordance with this Lease.
(b) Tenant acknowledges that late payment of Rent by Tenant to
Landlord will cause Landlord to incur costs not contemplated in this Lease,
the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges
and late charges that may be imposed upon Landlord by the terms of any
Mortgage on any or all of the Hotels. Accordingly, in addition to the
interest payable by Tenant pursuant to Section 5.2(a), after a period of
five (5) days following the date all or any portion of Rent is due and
unpaid Tenant shall pay to Landlord an amount equal to five percent (5%) of
the amount of such unpaid installment or portion thereof. The parties agree
such late charges represent a fair and reasonable estimate of the cost
Landlord will incur by reason of the late payment by Tenant.
(c) If any of the Hotels are damaged by fire or other casualty and
Tenant must discontinue all or substantially all business operations
therein for a period of time in excess of the period covered by business
interruption insurance required to be carried hereunder, Tenant's
obligation to pay Percentage Rent for the Lease Year in which Tenant has so
discontinued its business operations shall be computed as if such Lease
Year were a Partial Lease Year and as if the number of days in such Partial
Lease Year excluded the number of days during which Tenant discontinued all
or substantially all of its business operations at such Hotel and which are
not covered by business interruption insurance required to be carried by
Tenant hereunder. In no event shall Tenant's obligation to pay Base Rent
be abated for any reason whatsoever, including without limitation, any fire
or other casualty.
(d) If, at any time during the Term, there is a good faith dispute
between Landlord and Tenant with respect to the amount of Percentage Rent
properly due hereunder, Tenant's failure to pay the disputed amount shall
not be deemed an Event of Default with respect to the provisions of
Sections 20.1 and/or 20.2 until such time as the dispute is resolved;
provided, that Tenant shall promptly pay any such disputed amount of
Percentage Rent claimed by Landlord into an escrow
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account specifically created for such purpose, to be held and invested by
the Insurance Trustee or such other escrow agent as may be mutually
approved by Landlord and Tenant. Any amount finally determined to be due
Landlord shall bear interest at the Lease Interest Rate from the date which
is one hundred twenty (120) days after the end of the Lease Year or Partial
Lease Year as to which such disputed Percentage Rent arose until paid. Any
amounts in such escrow account, including any interest earned thereon, not
required to be paid to Landlord shall be returned to Tenant. Tenant shall
have no right of offset as against any Base Rent for any overpayments of
Percentage Rent.
Section 5.3 Records; Audit by Landlord
--------------------------
(a) Tenant shall keep, in appropriate detail and in accordance with
standard accounting practices, at its principal business office, records of
all sums constituting and/or specifically excluded from Operating Revenues
with respect to each Fiscal Year for a period of not less than four (4)
Fiscal Years after the expiration of the Fiscal Year to which such records
relate. Within one hundred twenty (120) days after the end of the first
Lease Year, Tenant shall deliver to Landlord a statement from an
appropriate corporate officer of Tenant and, within two hundred ten (210)
days after the end of the First Lease Year, from Tenant's independent
certified public accountants, certifying the calculation of Base Revenues
required by Section 5.1(b) hereof. Within one hundred twenty (120) days
after the end of each subsequent Lease Year, Tenant shall deliver to
Landlord a statement from an appropriate corporate officer of Tenant
certifying the annual Operating Revenues for such Lease Year. If there is
any overpayment of Percentage Rent, the excess shall be credited against
any future Percentage Rent when next due. If Landlord delivers its written
request to Tenant for copies of records and data to support such statement,
then Tenant shall provide same to Landlord within thirty (30) days after
receipt of such written request. Landlord shall be entitled to rely
directly on Tenant's independent outside certified auditors or, at
Landlord's option and at its own expense, to audit such statement and
supporting records and data, provided Landlord shall cause such audit to
commence within ninety (90) days after receipt of said statement and to be
completed within one hundred twenty (120) days after receipt of all
information requested by Landlord reasonably related to such audit. In
order to provide finality, absent fraud and, except as otherwise provided
below in this Section, Tenant shall be entitled to treat such statement as
being correct if Landlord does not so audit or otherwise challenge said
statement within the time period above provided, and Landlord shall have no
right thereafter to question or examine the same. If the audit or any
audit hereinafter referred to in this Section (collectively a "Landlord's
Audit") discloses an understatement of annual Operating Revenues, Tenant
shall immediately pay Landlord the additional Percentage Rent found to be
due plus interest thereon at the Lease Interest Rate from the date such
additional Percentage Rent was otherwise due until the date actually paid.
However, if Landlord's Audit discloses that Percentage Rent has been
overpaid by Tenant, the excess shall be credited against any future
Percentage Rent when next due hereunder. Tenant shall have the right to be
informed as to any final results of any such audit. In addition, if
Landlord's Audit discloses any underreporting of the total Operating
Revenues for any Lease Year, which underreporting is in excess of three
percent (3%) of the Operating Revenue for such Lease Year, Tenant shall,
upon demand and receipt of evidence of payment, pay Landlord as Additional
Rent the reasonable cost of Landlord's Audit; and Landlord shall have the
option, at Tenant's expense, to audit the certified statements and
supporting records and data for the two (2) immediately preceding Lease
Years, with such audit to be commenced by Landlord within sixty (60) days
after Landlord's receipt of the initial audit showing an underpayment of
Percentage Rent, and to be completed within one
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hundred twenty (120) days after receipt of all information requested by
Landlord reasonably related to such audit.
(b) In addition to the deliveries required under Section 5.3(a),
Tenant shall, within one hundred twenty (120) days after the end of each
Fiscal Year that ends during the Term, deliver to Landlord a statement from
an appropriate corporate officer of Tenant and from Tenant's independent
certified public accountants, certifying the annual Operating Revenues for
such Fiscal Year.
(c) Landlord shall keep all information regarding annual Operating
Revenues and Base Revenues with respect to the Premises in strict
confidence and shall not divulge such information to third parties except:
(i) to Landlord's accountants and attorneys, (ii) to existing or
prospective purchasers, Mortgagees, partners, lenders, or trustees of
Landlord, (iii) in connection with any claim relating to Percentage Rent
payable under this Lease, (iv) as may be required by law, or (v) to the
holders of direct and indirect beneficial ownership interests in Landlord
and its Affiliates.
Section 5.4 Subleases, Licenses, and Concessions
------------------------------------
(a) If Tenant should sublease all or substantially all of any Hotel,
then notwithstanding any other provision of this Lease to the contrary,
Operating Revenues shall not include any rent or other consideration paid
by such sublessee to Tenant but Operating Revenues shall include all gross
receipts of such sublessee that would be included in Operating Revenues if
realized by Tenant.
(b) If Tenant should ever contract with a third party sublessee,
licensee, or concessionaire to deliver goods or services to the customers
at any of the Hotels, which goods and services had previously been provided
by Tenant to Tenant's customers at such Hotel (and exclusive of any such
service businesses which individually do not utilize space exceeding 500
square feet of rentable area), then notwithstanding any other provision of
this Lease to the contrary, the gross receipts of such sublessee(s),
licensee(s), and concessionaire(s) that would be included in Operating
Revenues if realized by Tenant shall be included in Operating Revenues; and
in any case in which the gross receipts of any sublessee, licensee, or
concessionaire are included in Operating Revenues hereunder, the rental,
license, or concession fees, if any, paid by such sublessee, licensee, or
concessionaire to Tenant shall not be included in Operating Revenues;
provided, however, that the provisions of this Section 5.4(b) shall not
apply to the gross receipts of any one or more sublessees, licensees, or
concessionaires if the gross receipts of all such sublessees, licensees, or
concessionaires in the applicable Lease Year do not exceed Fifty Thousand
Dollars ($50,000), which $50,000 amount shall be increased on the fifth
(5th) anniversary of the Commencement Date and every fifth (5th)
anniversary thereafter by an amount proportionate to the percentage
increase in the GDP Deflator over the preceding five (5) year period.
(c) If any sublessee, licensee, or concessionaire that delivers goods
or services to Tenant's customers at any Hotel is an Affiliate of Tenant,
the gross receipts of such sublessee, licensee, or concessionaire that
would be included in Operating Revenues if realized by Tenant shall be
included in Operating Revenues, and the rental, license, or concession
fees, if any, paid by such sublessee, licensee, or concessionaire to Tenant
shall not be included in Operating Revenues.
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(d) Tenant shall not enter into any sublease, license, or concession
agreement or amendment thereto in which the determination of the amount of
rent, license, or concession fee depends in whole or in part on, or is
expressed in whole or in part as, a percentage of the income or profits
derived by such sublessee, licensee, or concessionaire or any other person
or entity. In any lease, license, or concession agreement or amendment
thereto executed by Tenant in which the amount of rent, license, or
concession fee is determined in whole or in part by reference to the gross
sales or gross receipts of the sublessee, licensee, or concessionaire or
any other person or entity, such sublease, license, or concession agreement
shall contain a provision stating that the gross receipts or gross sales of
the sublessee, licensee, or concessionaire or any other person or entity
shall not be determined in whole or in part by reference to the income or
profits derived by the sublessee, licensee, or concessionaire or any other
person or entity from the Premises or the subject matter or such lease,
license, or concession agreement (other than an amount based on a fixed
percentage or percentages of gross receipts or gross sales). If Tenant
violates the provisions of this paragraph with respect to any sublease,
license, or concession agreement, then in addition to any other rights and
remedies that Landlord may have under this Lease or applicable law, the
gross receipts of such sublessee, licensee, or concessionaire under such
sublease, license, or concession agreement that would be included in
Operating Revenues if realized by Tenant shall be included in Operating
Revenues and the rental, license, or concession fee, if any, paid by such
sublessee, licensee, or concessionaire shall not be included in Operating
Revenues.
Section 5.5 Rent Upon Certain Expansions. If Tenant completes any
----------------------------
Expansion at any Hotel with respect to which: (i) the cost of such Expansion
exceeds One Million Dollars ($1,000,000), and (ii) such Expansion results,
either by itself or aggregated with any and all prior Expansions, in an increase
greater than five percent (5%) in the capacity (measured either in terms of net
useable building square footage, or the aggregate number of rooms) of such Hotel
then, from the first day of the first month following the date of completion of
such Expansion throughout the remaining Term of this Lease, Tenant shall pay in
lieu of Percentage Rent with respect to such Hotel the lesser of either (x)
Percentage Rent for such Hotel calculated pursuant to Section 5.1 hereof, or
(y) Expansion Rent for such Hotel for each Lease Year or portion thereof during
the remainder of the Term hereof in an amount equal to the average amount of
Percentage Rent payable by Tenant with respect to such Hotel (without regard to
the Gross Income from any other Hotels included in the Premises) for the two (2)
full Lease Years immediately preceding the commencement of construction of such
Expansion; provided, however, that the amount of Expansion Rent shall be
increased on each anniversary of the date such Expansion Rent first became
effective by an amount proportionate to the percentage increase in the GDP
Deflator over the preceding twelve (12) month period.
ARTICLE VI
OPERATION AND MAINTENANCE OF PREMISES
-------------------------------------
Section 6.1 Operation and Maintenance of Premises.
-------------------------------------
(a) Tenant shall not alter its operational and/or management
practices with respect to any of the Hotels so as to cause the standard at
which the Hotels are operated and managed to deviate significantly from the
standard of operation and management existing on the Commencement Date,
without obtaining Landlord's prior written consent.
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(b) Throughout the Term, Tenant, at its own expense, shall keep and
maintain each of the Hotels in condition and repair at least as good as the
condition and repair of each Hotel on the Commencement Date, reasonable
wear and tear excepted, and in conformity with all applicable Legal
Requirements and shall make or cause to be made all ordinary and
extraordinary, foreseen and unforeseen items of maintenance, repair,
replacement and alteration to the Premises as necessary for such purpose.
Landlord shall not be required to maintain, repair, or rebuild all or any
part of the Premises. Tenant shall provide all services required and
perform all obligations incurred in connection with the use, operation and
maintenance of the Premises, and Tenant shall be responsible for the
payment of all costs and expenses incurred in the use, operation, or
maintenance of the Premises, including, but not limited to, rents and other
amounts owed under any ground lease, management fees, real estate taxes,
insurance, supplies and materials used in the operation and maintenance of
the Premises, the cost of all maintenance, janitorial, security and service
agreements for the Premises and the equipment therein and thereon, and the
cost of electricity, water and any and all other utilities, supplied to the
Premises, but not including any costs or expenses affirmatively incurred by
Landlord that are not attributable to a default by Tenant in the
performance of Tenant's obligations under this Lease.
Section 6.2 Taxes
-----
(a) Tenant shall pay, prior to delinquency: (i) all taxes, including
sales, excise, value added, use, real estate and personal property taxes,
assessments, levies and fees, water and sewer rents and charges, vault
charges, and all other taxes, levies, assessments, and other similar
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every kind and nature whatsoever, which are imposed or
levied upon or assessed against or which arise with respect to the
Premises, any Rent or other sums payable hereunder, this Lease or the
leasehold estate hereby created or which arise in respect of the ownership
of the Premises by Landlord, the operation, possession or use of the
Premises by Tenant or the leasing, operation, possession or use of the
Premises; (ii) all gross receipts, sales, excise or similar taxes (i.e.,
taxes based upon gross income which fail to take into account deductions
with respect to the Premises, such as depreciation, interest, taxes or
ordinary and necessary business expenses) imposed or levied upon, assessed
against or measured by any Rent, or other issues or profits derived from
the Premises or other sums payable hereunder; and (iii) all charges of
utilities, communications and other services serving the Premises, together
with any and all interest costs or penalties with respect to any of the
foregoing.
(b) Notwithstanding the foregoing provisions of Section 6.2(a) but
subject to the provisions of Section 6.2(c), Tenant shall not be required
to pay any franchise, estate, inheritance, transfer, income or similar tax
assessed or imposed against Landlord, any Rent or other sums payable
hereunder, this Lease, the Land or Improvements (other than any tax
referred to in clause (ii) of Section 6.2(a)). Tenant will furnish to
Landlord, within ten (10) days after demand therefor, proof of payment of
all items referred to above which are payable by Tenant.
(c) If, at any time, any federal, state or local governmental entity
shall impose upon the Rent payable to Landlord any tax or other imposition
in lieu of any existing real estate or other tax payable by Tenant as of
the Commencement Date, then notwithstanding the provisions of
Section 6.2(b), Tenant, at its sole cost and expense, shall pay such tax or
imposition on Landlord's behalf the same as if such tax or imposition had
been levied against Tenant or Tenant's interest in the Premises, as well as
any additional income taxes assessed against Landlord with respect to such
payment.
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Section 6.3 Compliance with Requirements, Covenants and Restrictions.
--------------------------------------------------------
Tenant shall comply with and cause each of the Hotels to comply with all
obligations and liabilities with respect to all Insurance Requirements
(including, without limitation, to the extent necessary to prevent cancellation
thereof and to insure full payment of any claims made under such policies).
Tenant shall comply with, cause each of the Hotels to comply with, and shall
assume all easements, agreements, covenants, conditions and restrictions
applicable to each such Hotel or the ownership, operation, use or possession
thereof that are of record on the Commencement Date or are hereafter executed by
Tenant or are hereafter consented to by Tenant in writing, including, without
limitation, (i) any superior ground lease currently in effect with respect to
any portion of the Premises, and (ii) any Mortgage or other agreement executed
directly in connection therewith. During the Term, Tenant will not enter into
or consent to any easements, covenants, conditions or restrictions which would
materially affect any Hotel beyond the Term or any termination of this Lease
without the prior consent of Landlord, which consent will not be unreasonably
withheld, conditioned, or delayed.
Section 6.4 Landlord's Right to Perform Tenant Obligations. If Tenant
----------------------------------------------
fails promptly to make any repairs, payments or otherwise take any actions that
are Tenant's obligation to make or do under this Lease, Landlord, at its option,
may make or perform same at the expiration of any applicable Notice and grace
period provided for herein (except that upon any emergency presenting immediate
danger to person or property, such Notice and grace period shall only be what is
reasonable under the circumstances), and Tenant shall pay Landlord, upon demand
and receipt of evidence of payment, as Additional Rent, Landlord's actual costs
plus interest thereon from the date of expenditure until paid at the Lease
Interest Rate. The provisions of this Section 6.4 shall be for the sole and
exclusive benefit of Landlord. Nothing contained herein shall be construed so
as to require Landlord to exercise any of its rights under this Section 6.4.
Section 6.5 Compliance with Laws and Agreements. Subject to the
-----------------------------------
provisions of Section 6.6, Tenant, at its sole expense, shall comply with and
cause each Hotel to comply with, and assume all obligations and liabilities with
respect to all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting each Hotel or the construction, use or alteration thereof,
whether now or hereafter enacted and in force, including any which may (i)
require repairs, modifications or alterations in or to any Hotel; (ii) in any
way adversely affect the use and enjoyment thereof, and all permits, licenses
and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant (other than encumbrances created by Landlord
without the consent of Tenant), at any time in force affecting any Hotel,
including without limitation, all superior ground leasehold agreements and any
Mortgage or other agreement executed directly in connection therewith; or (iii)
require the cleanup or other treatment of any Hazardous Material (such laws,
orders, ordinances, agreements and regulations being herein referred to as
"Legal Requirements").
Section 6.6 Tenant's Right to Contest. Notwithstanding any other
-------------------------
provision of this Lease, Tenant shall have the right to contest (a) the payment
of any tax or other imposition, (b) compliance with any Legal Requirement or (c)
any lien referred to in Section 6.7 so long as (i) at the time of any such
contest, no Event of Default exists, (ii) no such contest shall subject Landlord
to the risk of criminal liability, (iii) any such taxes or impositions are paid
prior to the assessment of penalties or interest thereon unless such payment
would deprive Tenant of the right to contest the validity or amount of such
taxes or impositions, and (iv) Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused thereby,
or the extent of its or Landlord's liability therefor by appropriate proceedings
which shall operate during the pendency thereof to prevent or stay (1) the
collection of, or other realization upon, the matter contested, (2) the sale,
forfeiture or loss of any of the Hotels or any
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portion thereof or any Rent to satisfy or to pay any damages caused by any of
the matters described in clauses (a), (b), and (c), (3) any interference with
the use or occupancy of any of the Hotels, (4) any interference with the payment
of any Rent, (5) the cancellation of any insurance policy, and (6) the
enforcement or execution of any injunction, order or Legal Requirement with
respect to such matter. Tenant further agrees that any such contest shall be
prosecuted to a final conclusion or settled as expeditiously as is reasonably
possible under the circumstances. Any rebate made on account of any taxes or
other impositions shall be repaid to the party who made such payment, or if such
payment relates to a period prior to the Commencement Date, such payment shall
be made to Tenant. If and to the extent required by applicable law or
regulation, Landlord shall render to Tenant, at no cost to Landlord, any and all
reasonable assistance in contesting the validity or amount of any impositions,
including (if requested by Tenant) joining in the signing of any protests or
pleading which Tenant may reasonably deem advisable to file. Tenant shall pay
any and all losses, judgments, decrees and costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. Upon termination of this Lease for any reason
other than an Event of Default, Landlord shall promptly reimburse Tenant for any
such payment made by Tenant for taxes and impositions described in
Section 6.2(a) attributable to the Premises applicable to any period subsequent
to the termination of this Lease.
Section 6.7 Liens. Tenant shall keep the Premises free from any liens
-----
arising from any work performed, materials furnished, or obligations incurred by
or at the request of Tenant or any sublessee, licensee, or concessionaire of
Tenant or arising from any breach by Tenant of its obligations under this Lease,
and any liens with respect to any taxes Tenant is obligated to pay under this
Lease or Legal Requirements. If any lien is filed against any Hotel or Tenant's
leasehold interest therein, or if any lien is filed against any Hotel which
arises out of any purported act or agreement of Tenant, or any sublessee,
licensee, or concessionaire of Tenant, Tenant shall discharge the same within
thirty (30) days after Tenant receives Notice of its filing by payment, filing
of the bond required by law, or endorsement over by a title company reasonably
satisfactory to Landlord (it being understood that any title company with a
national presence and a sound financial condition and reputation shall be
acceptable to Landlord). If Tenant fails to discharge such lien within such
period, then, in addition to any other right or remedy of Landlord, Landlord
may, at its election, discharge the lien by paying the amount claimed to be due,
by obtaining the discharge by deposit with a court or a title company, or by
bonding. Tenant shall pay on demand, as Additional Rent, any amount paid by
Landlord for the discharge or satisfaction of any such lien, together with
interest thereon from the date of such expenditure until paid at the Lease
Interest Rate, and all reasonable attorneys' fees and other costs and expenses
of Landlord incurred in defending any such action or in obtaining the discharge
of such lien, together with all necessary disbursements in connection therewith.
Nothing contained in this Lease shall be construed as constituting the consent
or request of Landlord, express or implied, to or for the performance by any
contractor, laborer, materialman, or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to any of the Hotels or any part thereof, or as making
Tenant the agent of Landlord with respect to any such matter, and no such agency
relationship shall exist unless Tenant and Landlord so agree in writing. Notice
is hereby given that Landlord will not be liable for any labor, services or
materials furnished or to be furnished to Tenant, or to anyone holding an
interest in the Premises or any part thereof through or under Tenant, and that
no mechanic's, materialmen's or other liens for any such labor, services or
materials shall attach to or affect the interest of Landlord in and to the
Premises; and appropriate notice to this effect will be included in the Lease
Memorandum and all construction contracts entered into by Tenant, and Tenant
shall take all steps
20
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reasonably necessary under the laws of the jurisdiction(s) in which the relevant
portion of the Premises is located to protect Landlord against such liability
(including, if required, the posting of notices of nonresponsibility on
Landlord's behalf).
ARTICLE VII
USE
---
Subject to the provisions of Section 6.5, Tenant shall have the right to
use the Premises for hotel and related purposes, including, without limitation,
restaurants, bars, gift shops, car rental agencies, airline reservations desks,
golf, tennis and other recreational activities, and other ancillary services.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1 General Indemnification by Tenant. In addition to the
---------------------------------
provisions of any indemnity provided elsewhere in this Lease, Tenant shall pay,
protect, indemnify, defend, save and hold harmless, Landlord, Landlord's
constituent partners, any ground lessor, and any Affiliate, partner, trustee,
officer, director, employee, agent or shareholder or other holder of any
beneficial interest in any of them (collectively, the "Indemnified Parties" and,
individually, an "Indemnified Party"), from and against all liabilities
(including, without limitation, liabilities expressly retained by Landlord in
connection with a sale of all or any portion of the Premises), obligations,
claims, damages (including, without limitation, punitive damages), penalties and
causes of action or judgments of any nature whatsoever, whether foreseen or
unforeseen, howsoever and whensoever caused including, without limitation, if
caused prior to the Commencement Date, without regard to the form of action and
whether based on strict or statutory liability, gross negligence, negligence
(including the negligence of any Indemnified Party) or any other theory of
recovery at law or in equity, and all reasonable and documented costs and
expenses (including reasonable attorneys' fees, costs of experts, and other
legal costs and expenses), imposed upon or incurred by or asserted against any
of the Indemnified Parties by reason of or in connection with:
(a) Any matter pertaining to the leasing, use, non-use, occupancy,
operation, management, condition, design, construction, maintenance, repair
or restoration of any of the Hotels or Premises, or the employment of any
persons at the Hotels or on the Premises, in each case whether by Tenant or
otherwise;
(b) Any casualty in any matter arising from or in connection with any
of the Premises or any operations or activities thereon, whether or not
Landlord or any Indemnified Party has or should have knowledge or notice of
any default or condition causing or contributing to the casualty;
(c) Any violation by Tenant (or any employees, agents, invitees,
guests, sublessees, concessionaires, or licensees of Tenant) of any
provision of this Lease, any contract or agreement to which Tenant (or any
sublessee, concessionaire, or licensee of Tenant) is a party, any violation
or alleged violation of any Legal Requirement (including anti-
discrimination laws) or any Insurance Requirement; and
(d) Any contest undertaken by or on behalf of Tenant with respect to
any Legal Requirement, Insurance Requirement, tax imposition or otherwise,
regardless of whether the same
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is permitted pursuant to the terms hereof; except in each case to the
extent the same directly result from the gross negligence or willful
misconduct by an Indemnified Party.
Section 8.2 Environmental Indemnification. Tenant shall pay, protect,
-----------------------------
indemnify, defend, save and hold harmless the Indemnified Parties and each of
them, from and against all liabilities (including, without limitation,
liabilities expressly retained by Landlord in connection with a sale of all or
any portion of the Premises), obligations, claims (including, without
limitation, claims by third parties alleging violation of or liability under any
Environmental Law), damages (including, without limitation, punitive damages and
damages to natural resources), penalties and causes of action or judgments of
any nature whatsoever, both foreseen and unforeseen, howsoever and whensoever
caused including, without limitation, if caused prior to the Commencement Date,
without regard to the form of action and whether based on strict or statutory
liability, gross negligence, negligence (including the negligence of any
Indemnified Party or their agents), or any other theory of recovery at law or in
equity, and all reasonable and documented costs and expenses (including
reasonable attorneys' fees, costs of experts, and other legal costs and
expenses), imposed upon or incurred by or asserted against any of the
Indemnified Parties by reason of or in connection with:
(a) Tenant's failure to perform its duties and obligations as set
forth in Article XII;
(b) All claims asserted during or after the Term by any third party
for personal or bodily injury or death where such claims allege injury or
damages as a result of exposure, that occurred prior to or during the Term,
to Hazardous Material that existed at or were located in, on, or under, or
were released from, any of the Hotels and/or any portion of the Premises at
any time prior to or during the Term; provided, however, that this
indemnity shall not cover claims arising by reason of the gross negligence
or willful misconduct of Landlord and its agents, or of an Indemnified
Party and its agents; and
(c) The violation of any Environmental Law occurring at any time
prior to the Commencement Date at or in connection with the leasing, use,
non-use, occupancy, management or operation of any of the Hotels and/or any
portion of the Premises; the discharge, disposal or release of any
Hazardous Material at any time prior to the Commencement Date in, on,
under, at or from, or in connection with the leasing, use, non-use,
occupancy, management or operation of, any of the Hotels and/or any portion
of the Premises; or the presence of any Hazardous Material at any time
prior to the Commencement Date in, on, under or at any of the Hotels and/or
any portion of the Premises, including without limitation any off-site
migration onto any of the Hotels and/or any portion of the Premises.
Section 8.3 Defense of Indemnified Parties. Promptly after receipt by an
------------------------------
Indemnified Party of notice of the commencement or assertion against it of any
claim, action or proceeding, such Indemnified Party shall, if a claim in respect
thereof is to be made against Tenant under this Article VIII, notify Tenant
thereof; but the omission so to notify Tenant shall not relieve Tenant from any
liability which it may have to such Indemnified Party under this Article VIII
except to the extent that Tenant shall have been prejudiced by such failure. As
long as no Event of Default exists and provided that representation by counsel
selected by Tenant will not, in Indemnified Party's reasonable judgment (which
judgment may be based on, without limitation, due consideration of any
obligation such Indemnified Party may have to indemnify other parties in
connection with the same matter, including requirements as to right of contest,
time of indemnification and undertaking of defense of such other parties),
prejudice Indemnified Party in any manner, Tenant, at its sole cost and expense,
shall have the right by counsel reasonably satisfactory to the Indemnified
Party, to contest, resist and defend any claim, action or proceeding with
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respect to which it shall have received the Notice described in the preceding
sentence; provided, however, that Tenant may not compromise or otherwise dispose
of the same without the prior written approval of the Indemnified Party, such
approval not to be unreasonably withheld, conditioned, or delayed so long as the
Indemnified Party receives a full release with respect to the claim, action or
proceeding. If an Event of Default exists, or, in Indemnified Party's judgment,
representation by counsel selected by Tenant will prejudice Indemnified Party in
any manner, such Indemnified Party shall have the right to retain its own
counsel and defend such action. If Tenant shall have assumed responsibility for
such contest and defense, Tenant shall not be obligated to pay any attorneys'
fees or other legal costs incurred by or on behalf of the Indemnified Party
unless an Event of Default exists. Notwithstanding the foregoing, each
Indemnified Party shall, at Tenant's request and expense, cooperate with Tenant,
at no cost or expense to the Indemnified Party, in the defense of any such
claim, action or proceeding.
Section 8.4 Payment by Tenant. Any amounts which become payable by Tenant
-----------------
under this Article VIII shall be paid as Additional Rent no later than ten (10)
days after demand by the Indemnified Party entitled thereto (which demand shall
not be made more than ten (10) days prior to the proposed date of actual payment
by the Indemnified Party to a third party) and, if such payment is not timely
paid, shall bear interest at the Lease Interest Rate form the date when due to
the date of payment.
Section 8.5 Survival. Tenant's liability under this Article VIII shall
--------
survive the expiration or earlier termination of this Lease. The failure or
inability on the part of Tenant to carry insurance required to be maintained
under Article XIII shall not affect in any way its indemnification obligations
hereunder.
Section 8.6 Continuing Obligations. The indemnities set forth herein
----------------------
shall in no way affect or impact any other obligations on the part of Tenant or
any of its Affiliates that may exist under law or under any other agreement in
favor of any Indemnified Party.
ARTICLE IX
ALTERATIONS AND EXPANSIONS
--------------------------
Section 9.1 Alterations and Expansions
--------------------------
(a) Tenant may at its expense and without Landlord's prior written
consent, make any replacements or aesthetic alterations to any of the
Hotels. Tenant may expand the existing Improvements or construct
additional Improvements on the Land located at a Hotel (the expansion of
existing Improvements or the construction of additional Improvements being
referred to collectively herein as an "Expansion"), provided, that: (i)
such Expansion does not (A) increase the rooms available for occupancy at
the subject Hotel by greater than 10% of those existing as of the
Commencement Date; or (B) increase the net area of other revenue producing
square footage at the subject Hotel by more than 10% of that existing as of
the Commencement Date, (ii) no structural elements of the improvements
shall be demolished without obtaining Landlord's prior written consent,
which consent shall not be unreasonably withheld, conditioned, or delayed,
and (iii) such replacements, alterations and/or Expansions will not
adversely affect the structure or the safety of the Improvements, or
adversely affect the electrical, heating, ventilating, air-conditioning,
plumbing or mechanical systems or the functioning thereof. Landlord has
the right to require from Tenant assurances, reasonably acceptable to
Landlord, to be delivered to Landlord prior to the commencement of any
work, that Tenant will fully perform and complete its Expansion, free and
clear of any mechanics' and materialmen's liens. Tenant shall procure
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at its own expense such governmental approvals and permits as may be
required for any alterations made by Tenant. At Tenant's expense, Landlord
shall join in submitting Tenant's plans for any necessary governmental
approval, if required by Legal Requirements. All such construction,
alterations, and maintenance work done by, or for, Tenant, shall comply
with all Legal Requirements and Insurance Requirements, and shall be
completed in a good and workmanlike manner and with reasonable diligence,
and will be completed in all material respects in accordance with plans
prepared by a licensed architect. If any Expansion will cost more than One
Million Dollars ($1,000,000), adjusted by the GDP Deflator, (w) Tenant
shall furnish Landlord with the plans and specifications therefor prior to
commencing work, (x) the contractor selected by Tenant to perform the work
shall be subject to Landlord's approval, which approval shall not be
unreasonably withheld, conditioned or delayed, (y) Tenant shall carry
builder's risk insurance in amounts reasonably sufficient to cover the cost
of replacement of the work during the course of such construction, and (z)
upon the request of Landlord or any Mortgagee, Tenant will provide
appropriate securities, completion bonds, guarantees, or like reasonable
assurances that construction will be completed. Tenant shall also furnish
Landlord with copies of any and all final plans and specifications
(including all changes and modifications thereto) and all necessary
governmental permits prepared or issued for all alterations (whether or not
Landlord's consent was required in connection with such alterations). With
respect to any Expansion or other alteration for which Tenant must obtain
Landlord's consent, Landlord shall not unreasonably withhold, condition or
delay such consent.
(b) All replacements, alterations and substitutions of Improvements
and Expansions made to the Premises pursuant to this Article 9.1 (but not
the replacement FF&E, Fixed Asset Supplies, Operating Equipment or
Inventories described in Article 10.1) shall be and remain part of the
realty and the property of Landlord and shall be subject to this Lease.
Section 9.2 Alterations and Expansions During Last Five Years of Term.
---------------------------------------------------------
Landlord's prior written consent, which may be withheld in Landlord's sole,
absolute, and subjective discretion, shall be required for any Expansions of or
to the Premises to be constructed during the last five (5) years of the Term
(including any Effective Extended Term); provided, however, that if Tenant shall
then exercise its rights under Section 3.2 to extend the Term hereof so that at
least five (5) years will remain in the Term once the construction is completed,
the provisions of Section 9.1(a) shall apply.
ARTICLE X
FF&E, FIXED ASSET SUPPLIES AND INVENTORIES
------------------------------------------
Section 10.1 FF&E Upon Commencement Date. On the Commencement Date,
---------------------------
Landlord shall make available to Tenant all of the FF&E, Fixed Asset Supplies,
Operating Equipment and Inventories located at the Premises and to be used and
consumed at the Premises during the Term at no further cost to Tenant and the
FF&E shall be owned by Landlord and leased to Tenant hereunder as part of the
Premises. Landlord shall have no further obligations to provide any additional
FF&E, Fixed Asset Supplies, Operating Equipment or Inventories. Thereafter
during the Term, Tenant shall, at its own cost, replace FF&E as hereinafter
provided, and shall provide such Fixed Asset Supplies, Operating Equipment and
Inventories as it deems necessary and all such replacement FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories shall be and remain the property
of Tenant. Tenant shall also repair and replace, as necessary, all Fixtures
which, as such may be repaired or replaced, shall be and remain property of
Tenant. Tenant shall be obligated to maintain all such Fixtures which are
necessary for the operation of the Hotel in good operating condition.
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Section 10.2 Replacement of FF&E. On or before one hundred twenty (120)
-------------------
days after the end of each Fiscal Year that ends during the Term (for purposes
of this Section 10.2, the "Subject Fiscal Year"), Tenant shall deposit, into a
reserve account to be maintained as a separate interest bearing account with a
bank or banks reasonably acceptable to Landlord (the "FF&E Reserve Account"), an
amount equal to (A) the positive result, if any, of (I) three percent (3%) of
the Operating Revenues for the subject Fiscal Year minus (II) the amount
actually expended by Tenant during the Subject Fiscal Year to repair and/or
replace FF&E, Fixtures, Fixed Asset Supplies and/or Operating Equipment at any
one or more of the Hotels (individually or collectively, the "Renovations"),
minus (B) with respect to each Fiscal Year prior to the Subject Fiscal Year, if
any, the aggregate amount, if any, by which Tenant's expenditures for
Renovations in each such prior Fiscal Year exceeded three percent (3%) of the
Operating Revenues for that Fiscal Year, less the portion of such amount which
has previously been taken into account in determining the amount to be deposited
into the FF&E Reserve Account in and with respect to Fiscal Years prior to the
Subject Fiscal Year, if any. Tenant shall be entitled to withdraw funds from
such FF&E Reserve Account without Landlord's prior written approval; provided
that Tenant shall deliver to Landlord an annual auditor's statement, with
reasonable supporting detail, within one hundred twenty (120) days of the end of
each Fiscal Year, of all amounts expended for Renovations during such Fiscal
Year, including all amounts withdrawn from the FF&E Reserve Account.
Section 10.3 FF&E Upon Termination
---------------------
(a) Landlord shall have the option, to be exercised by sending Notice
to Tenant on or before the date that is either (i) six (6) months prior to
the date of expiration of the Term of this Lease or (ii) the date of
termination of the Term of this Lease, if this Lease terminates prior to
the expiration of the Term, to purchase from Tenant upon the date of
termination of this Lease any or all of the items of FF&E, Furnishings,
Fixed Asset Supplies, Operating Equipment and Inventories then located at
the Premises and owned by Tenant at their then fair market value. If the
parties are unable to agree upon such fair market value within thirty (30)
days following such expiration or termination, the parties shall appoint an
independent appraiser mutually agreeable to them to determine such fair
market value, which determination shall be net of the cost to Tenant to
remove such items from the Premises, and which shall be binding on the
parties. The costs of such appraiser shall be shared equally by the
parties. If Landlord exercises its option to purchase, Landlord shall have
the right to use, after the date of expiration or termination of this
Lease, the items of FF&E, Furnishings, Fixed Asset Supplies, Operating
Equipment and Inventories so elected to be purchased by Landlord and
Landlord shall pay such fair market value to Tenant within thirty (30) days
after agreement by the parties or determination by the appraiser; and this
provision shall survive such expiration or termination. Landlord shall not
have the option of purchasing from Tenant any computer software that is
proprietary to Tenant, any Affiliate, or the licensor of any of them
(including without limitation applications used by Tenant as part of
Tenant's accounting, centralized or local sales, business management
systems and otherwise), or any leased equipment. The option granted to
Landlord under this Section 10.3 shall be in addition to, and shall not
prevent, delay or otherwise restrict Landlord from exercising, any and all
rights and remedies as against Tenant in the event of a default under this
Lease, including without limitation, foreclosure of its security interest
described in Section 10.4.
(b) Subject to the provisions of Section 10.3(a), Tenant shall
remove, at Tenant's expense, all of its Furnishings, Fixed Asset Supplies
and Inventories from the Premises on or before the date of expiration or
termination of this Lease and repair any damage caused to the Premises by
such removal. If Tenant fails to remove such items by such date and/or
fails to
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repair such damage, Landlord shall have the right to do so and charge
Tenant the cost therefor together with interest thereon from the date of
such expenditure until paid at the Lease Interest Rate. The provisions of
this Section 10.3 shall survive the expiration or termination of this
Lease.
Section 10.4 Landlord's Security Interest in Tenant's FF&E, Fixed Asset
----------------------------------------------------------
Supplies, Operating Equipment and Inventories. As security for payment by
- - - ---------------------------------------------
Tenant of the Rents payable hereunder and the performance of all of Tenant's
obligations under this Lease, Tenant hereby grants to Landlord a security
interest under the Uniform Commercial Code of each of the States in which a
Hotel is located, in the FF&E Reserve Account and in all FF&E, Fixed Asset
Supplies, Operating Equipment and Inventories now or hereafter owned by Tenant
and now or hereafter ordinarily used on or in the Premises. Tenant shall
execute and deliver to Landlord such documentation as is reasonably necessary to
evidence or perfect said security interest, including without limitation, such
Uniform Commercial Code financing statements and continuation statements as
Landlord determines to be necessary from time to time to perfect and continue
the perfection of Landlord's security interest in such collateral. Provided no
Event of Default shall exist, Tenant shall have the right to replace any such
collateral, to remove any such collateral from the Premises and dispose of any
such collateral, in the ordinary course of Tenant's business.
ARTICLE XI
TRADEMARKS, TRADE NAMES AND SERVICE MARKS
-----------------------------------------
Section 11.1 Tenant's Trademarks, Trade Names and Service Marks. All
--------------------------------------------------
Tenant's trademarks, service marks, trade names, logos, symbols and designs
shall in all events remain the exclusive property of Tenant and its Affiliates,
and nothing contained herein shall confer on Landlord the right to use such
names, trademarks, service marks, trade names, logos, symbols or designs other
than in strict accordance with the terms of this Lease. Except as provided in
Section 11.2, upon the expiration or termination of this Lease, any use of or
right to use said names, trademarks, service marks, trade names, logos, symbols
or designs by Landlord shall cease forthwith and Tenant shall (at Tenant's sole
cost and expense) promptly remove from the Premises any signs or similar items
which contain any of Tenant's names, trademarks, trade names, service marks,
logos, symbols or designs; provided, however, that Tenant shall be responsible
for the cost of any resulting repairs that may be necessary as a result of such
removal. Included under the terms of this Section are all trademarks, service
marks, trade names, symbols, logos or designs used in conjunction with the
Premises, including but not limited to restaurant names, lounge names, etc.,
whether or not the marks contain the "Red Lion" name. The right to use such
trademarks, service marks, trade names, symbols, logos or designs belongs
exclusively to Tenant, and the use thereof inures to the benefit of Tenant
whether or not the same are registered and regardless of the source of the same.
Section 11.2 Use of Trademarks, Trade Names and Service Marks. Landlord
------------------------------------------------
covenants that any items of FF&E, Furnishings, Operating Equipment, Inventories
or Fixed Asset Supplies which are purchased by Landlord upon the expiration or
termination of this Lease, and which are marked with Tenant's name or any Tenant
trademark, trade name, logo, symbol or design, shall be used exclusively in
connection with the Premises until they are consumed; but in no event for more
than sixty (60) days after any such termination of this Lease, unless such
trademark, trade name, logo, symbol or design is thereafter removed from such
items.
Section 11.3 Proprietary Software. Any computer software (including
--------------------
upgrades and replacements) at the Premises owned by Tenant, an Affiliate, or the
licensor of any of them which is
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proprietary to Tenant, such Affiliate, or the licensor of any of them and shall
remain proprietary to Tenant and shall in all events remain the exclusive
property of Tenant, the Affiliate, or the licensor of any of them, as the case
may be, and nothing contained in this Lease shall confer on Landlord the right
to use any of such software. Upon expiration or termination of this Lease,
Tenant shall have the right to remove from the Premises without compensation to
Landlord any computer software (including upgrades and replacements) owned by
Tenant, any Affiliate, or the licensor of any of them, provided Tenant repairs
any damage caused by removing such computer software.
ARTICLE XII
ENVIRONMENTAL HAZARDS
---------------------
Section 12.1 Compliance with Environmental Law
---------------------------------
(a) During the Term, Tenant at its cost shall cause the Premises to
be in compliance with all Environmental Laws, whether or not such
noncompliance is the result of a breach of Tenant's obligations under
Sections 12.1(c) or 12.2(b).
(b) Tenant shall never during the Term permit Hazardous Materials to
be (i) generated, used, treated, stored, discharged, released, or otherwise
disposed of in, on, under, or at, or (ii) transported to or from any of the
Hotels, in each case other than in the ordinary course of Tenant's
operation of the Hotels. If, with or without Tenant's knowledge or
permission, there is any generation, use, treatment, storage, discharge,
release, or other disposal of Hazardous Materials in, on, under, or at any
of the Hotels during the Term other than as permitted in the preceding
sentence, Tenant shall, subject to the provisions of this Article XII,
diligently clean up and remove such Hazardous Materials in compliance with
all applicable Environmental Laws.
(c) During the Term and for a period of five (5) years commencing
after the expiration of the Term, if any Hazardous Materials are discovered
in, on or under any of the Hotels and result from, are introduced by, or
arise out of, or the damage from which is materially expanded as a result
of Tenant's acts or failure to act, its negligence, or the acts or
negligence of its employees or agents, or the acts or negligence of any
sublessees, licensees, concessionaires, contractors or entities acting on
behalf of Tenant or any of their employees or agents, the cost incurred in
complying with Environmental Laws with respect to such Hazardous Materials
shall be borne by Tenant. Tenant's obligation under this Section 12.1(c)
shall continue after expiration of the Term until no further compliance is
required with respect to such Hazardous Materials.
(d) If during the Term any Hazardous Materials are discovered in, on
or under any of the Hotels and are the result of migration from a source
other than any of the Hotels and are not a result of Tenant's acts, its
negligence, or the acts or negligence of its employees or agents, or the
acts or negligence of any sublessees, licensees, concessionaires,
contractors or entities acting on behalf of Tenant or any of their
employees or agents, the cost incurred in complying with Environmental Laws
for such Hazardous Materials shall be borne by Tenant.
(e) If Tenant is required to implement a plan to investigate,
monitor, abate or remove Hazardous Materials pursuant to the requirements
of any Environmental Law, Tenant shall notify Landlord of its planned
method, time and procedure for such implementation and Landlord shall have
the right to require reasonable changes in such method, time or procedure.
Nothing
27
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contained herein shall be deemed to vest any control whatsoever in Landlord
with respect to Tenant's use, management, or disposal of Hazardous
Materials on any of the Hotels.
(f) During the Term, Landlord may not enter into any agreement,
settlement or consent order with any third party or governmental entity
concerning the payment or possible payment of funds, or the investigation,
monitoring, abatement or removal of Hazardous Materials located in, on, or
near any of the Hotels without the written consent of Tenant which consent
shall not be unreasonably withheld, conditioned or delayed. If Landlord
fails to obtain Tenant's written consent prior to entering into any such
agreement, settlement or consent order, any terms, conditions, obligations
or liabilities contained therein shall be non-binding on Tenant, Tenant
shall have no responsibility to Landlord under this Article XII, and
Landlord shall indemnify Tenant for any costs or losses incurred by Tenant
as a result of such agreement, settlement or consent order.
(g) During the Term, Tenant may not enter into any agreement,
settlement or consent order with any third party or governmental entity
concerning the payment or possible payment of funds, or the investigation,
monitoring, abatement or removal of Hazardous Materials located in, on, or
near any of the Hotels without the written consent of Landlord if such
agreement, settlement or consent order will impose any financial
obligations on (1) Landlord which are to be paid, in whole or in part, at
any time during the Term or after expiration thereof, or (2) on Tenant
which are to be paid, in whole or in part, after the expiration of the
Term. Landlord's consent shall not be unreasonably withheld, conditioned
or delayed. Failure by Tenant to obtain Landlord's written consent shall
be an Event of Default.
(h) During the Term and so long as no Event of Default exists, Tenant
may elect to defend any imposition, order, demand, decree, lawsuit or
governmental action that seeks to impose liability on Tenant or Landlord
due to the existence of Hazardous Materials in, on, or near any of the
Hotels. If Tenant elects to take such action, Tenant shall not be deemed
to be in violation of any provision of this Article XII so long as such
action or contest by Tenant does not result in a risk of the imposition of
any criminal sanctions against Landlord or any of its directors, officers
or employees; provided, however, if Landlord or Tenant is ultimately held
liable for the costs associated with the existence of such Hazardous
Materials, Tenant's liability shall not be reduced by reason of any delay
in such remediation.
Section 12.2 Site Assessments
----------------
(a) If Landlord has reasonable cause to believe that an Environmental
Violation may exist on the Premises, or if Landlord desires to sell or
finance any of the Premises, or if any Mortgagee desires to sell or
participate its interest in any of the Hotels, or if an Event of Default
exists, or if there is less than one (1) year remaining prior to the
expiration of the Term, then, upon written direction by Landlord to Tenant,
Tenant shall engage such persons as Tenant shall select ("Site Reviewers"),
such selection subject to the reasonable approval of Landlord, to visit any
of the Hotels and perform such environmental site investigations and
assessments ("Site Assessments") as may be necessary to determine whether
any Environmental Violation exists, and, if any Environmental Violation
exists, to estimate the cost of remediating any such Environmental
Violation; provided, however, if an Event of Default exists or if there is
less than one year remaining prior to the expiration of the Term, Tenant
shall select the Site Reviewer from a list of no less than five (5)
nationally recognized Site Reviewers, such list to be provided by Landlord,
and Landlord and Landlord's Mortgagee, if any, shall have the right to
approve the
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Site Reviewer, such approval to be exercised in a reasonable manner
recognizing Landlord's significant interest in the adequacy of the report
and the scope of work to be performed by such Site Reviewer. Landlord
shall have the right to approve any guidance or instruction requested by
such Site Reviewer during the Site Assessment, and Landlord shall have the
right to confirm that any draft or final reports furnished by such Site
Reviewers conform to approved scope of work, guidance and instructions,
provided that such approvals or confirmation shall not be unreasonably
withheld. If Tenant fails or refuses to engage Site Reviewers within
thirty (30) days after such direction, Landlord may engage the Site
Reviewers. If an Event of Default or a material Environmental Violation
exists that was caused by Tenant, its employees or agents, or by any
sublessee, licensee, concessionaire, contractor or entity acting on behalf
of Tenant, or any of their employees or agents, the cost of any Site
Assessment shall be paid by Tenant. In all other cases, the costs of a
Site Assessment shall be paid by Landlord or by the Mortgagee requesting
such Site Assessment, and Tenant may demand adequate assurances that such
costs will be paid before engaging the Site Reviewers. Such Site
Assessments may, at the option of Landlord, include both above and below
the ground testing and such other tests as may be necessary, in the
reasonable opinion of the Site Reviewers, to verify the existence of an
Environmental Violation or to estimate the cost of remediating any such
Environmental Violation. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The Site Reviewers
shall include in their report a statement estimating the cost of any
remediation, monitoring and other compliance program, if any, necessary to
cure or remediate such Environmental Violation. All of the Site Reviewers'
work shall be made available to Landlord and Tenant.
(b) If Tenant fails diligently to pursue any of its obligations under
this Section 12.2 and such failure continues for a period of thirty (30)
days after Notice from Landlord, Landlord shall have the right (but no
obligation), in addition to any other rights or remedies it may have
pursuant to this Lease or under applicable law, to take any and all
reasonable actions as Landlord shall deem necessary or advisable in order
to effect such compliance, for and on behalf of Tenant and at the cost and
expense of Tenant, including to enter the Premises for the purpose of
making tests, obtaining samples and surveys and performing any other acts
as may be reasonably necessary or desirable, in the reasonable discretion
of Landlord, and reimbursement to Landlord of the cost thereof shall be due
and payable by Tenant as Additional Rent on demand with interest thereon at
the Lease Interest Rate from the date such cost is incurred.
(c) If, during the Term, an Environmental Violation occurs or is
found to exist at the Premises which shall impose a liability to Tenant
after the expiration of the Term pursuant to this Article XII, and in the
judgment of the Site Reviewers, remediation, monitoring or other compliance
program relating to any such Environmental Violation has not or will not be
completed as required by any applicable Environmental Laws by the
expiration or earlier termination of the Term, then Tenant shall provide to
Landlord, no later than thirty (30) days prior to the expiration or earlier
termination of the Term, a bond, letter of credit or other security
reasonably satisfactory to Landlord for 110% of the amount determined by
the Site Reviewers to be necessary to complete such remediation, monitoring
or other compliance program. Upon completion of such remediation,
monitoring or other action in accordance with the applicable Environmental
Law, Landlord shall release the security provided by Tenant. If an
Environmental Violation occurs because of the existence of Hazardous
Material in, on or under any of the Hotels in excess of any reportable
quantity established under any Environmental Law, and Tenant makes
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all notifications and undertakes and diligently prosecutes to completion
all regulatory, remedial or other actions which are required by any
applicable Environmental Law by any federal, state or local governmental
agency having jurisdiction over such affected Premises, then Tenant shall
not be in default under this Lease so long as Tenant diligently pursues any
and all such actions toward completion, and any action or non-action by
Tenant does not result in a risk of the imposition of any criminal
sanctions against Landlord or any of its directors, officers or employees.
ARTICLE XIII
INSURANCE
---------
Section 13.1 Property & Business Interruption Insurance. Tenant shall, at
------------------------------------------
its own expense, commencing with the Commencement Date and continuing throughout
the Term, procure and maintain with insurance companies of recognized
responsibility (with a rating of no less than A-VI by A.M. Best, except that
such rating shall not be applicable to those insurers providing flood and
earthquake insurance under this Section), in a manner consistent with prudent
industry practice, property insurance with the following minimum coverages:
(a) insurance on the Hotels and Premises (including contents) against
loss or damage by fire, lightning and all other risks covered by the usual
standard extended coverage endorsement, and with coverage in the amount of
not less than one hundred percent (100%) of the replacement cost thereof,
exclusive of footings and foundations;
(b) insurance against loss or damage from explosion of boilers,
pressure vessels, pressure pipes and sprinklers installed in the Hotels;
(c) business interruption insurance covering loss of profits and
necessary continuing expenses (including Rents payable under this Lease)
for interruptions caused by any occurrences covered by the insurance
referred to in Sections 13.1(a) and 13.1(b), for a period of at least
eighteen (18) months and of a type and in amounts generally carried by
prudent owners of similar properties;
(d) for each Hotel which is located in a zone identified by the
Federal Emergency management Agency as flood hazard area, flood insurance
in an amount not less than the maximum limit available under the National
Flood Insurance Program;
(e) if and to the extent such insurance is then carried by prudent
owners of similar properties: (i) earthquake insurance and, (ii) for the
Hotels which are not located in a zone identified by the Federal Emergency
Management Agency as a flood hazard area, flood insurance; and
(f) such other property risk insurance, as may from time to time be
generally carried by prudent owners of similar properties, in such amounts
and against such risks as are then customary for property similar in use to
the Premises.
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Section 13.2 Application of Proceeds
-----------------------
(a) All proceeds of any insurance payable on account of any casualty
other than proceeds attributable to Tenant's personal property and other
than the proceeds of insurance referred to in Section 13.1(c) shall be paid
to the Insurance Trustee, who shall hold said proceeds in trust for the
parties in accordance with the provisions of this Section 13.2; provided,
however, that if the aggregate amount of such proceeds with respect to any
such casualty is less than Five Hundred Thousand Dollars ($500,000), such
proceeds shall be paid to Tenant who shall use such proceeds for the
purpose of restoration of the Premises. Insurance proceeds attributable to
Tenant's personal property shall be paid directly to Tenant and shall not
be considered when making calculations pursuant to the preceding sentence.
The proceeds of the insurance referred to in Section 13.1 shall be paid to
Tenant except that any such proceeds attributable to the Rents payable
under this Lease shall be paid to Landlord (as a credit against such Rents)
to the extent that such Rents have not been previously paid by Tenant to
Landlord.
(b) Provided that no Tenant default hereunder has occurred and is
continuing, and provided that Tenant complies with all of the terms and
conditions of this Section 13.2, all insurance proceeds received with
respect to a casualty shall be applied to the restoration of the Premises.
(c) Tenant shall commence the restoration of the Premises not later
than the date which is one hundred eighty (180) days after the date upon
which the casualty occurred and thereafter prosecute the restoration with
diligence and continuity without regard to whether insurance proceeds
available to Tenant at any particular time are sufficient to fund the costs
of such restoration.
(d) Prior to commencing any restoration work that will cost more than
One Million Dollars ($1,000,000) to repair, as adjusted by the GDP
Deflator, Tenant, at its sole cost shall (i) obtain the services of a
licensed architect to prepare any required plans and specifications for
such restoration to the extent that such restoration work cannot be
performed based upon previously existing plans and specifications for the
Improvements; and (ii) submit a set of final plans and specifications to
Landlord and the Senior Landlord's Mortgagee for approval to the extent
that such restoration work involves a departure from or addition to
previously existing plans and specifications for the Premises (which
approval may not be unreasonably withheld, conditioned, or delayed); and
(iii) the contractor selected by Tenant to perform the work shall be
subject to Landlord's approval, which approval shall not be unreasonably
withheld, conditioned or delayed, and (iv) Tenant shall carry builder's
risk insurance in amounts reasonably sufficient to cover the cost of
replacement of the work during the course of such construction.
(e) In proceeding with such restoration work, Tenant shall first
expend an amount, if any, equal to the excess of the projected cost of the
restoration work over the amount of all proceeds paid to the Insurance
Trustee. Thereafter, Tenant shall be entitled to submit to the Insurance
Trustee, not more frequently than once every thirty (30) days, an invoice
together with such other documentation (including an architect's
certificate as to the status of work completion, mechanics lien waivers and
title insurance policy endorsements, all obtained at Tenant's sole cost and
expense) as is customarily required by lenders at such time making
construction loans. Upon receipt of an invoice in proper form, the
Insurance Trustee shall make a disbursement within ten (10) business days
equal to the amount shown on the invoice; provided, however, that the
Insurance Trustee shall not be required to disburse more than 90% of the
total projected cost of
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the work, unless and until it has received all of the following: (i) final
mechanics lien waivers from all parties having rights to mechanics liens
against the Premises on account of such restoration work, (ii) appropriate
endorsements or policies of title insurance protecting Landlord and
Mortgagee against mechanics liens arising out of the restoration work, or a
mechanic's lien bond, and (iii) final certification from the architect that
the restoration work has been completed in accordance with the plans and
specifications therefor and all applicable building codes.
(f) If (i) the amount disbursed upon final completion of the
restoration work in accordance with Section 13.2(e) is less than the total
insurance proceeds then held by the Insurance Trustee, and (ii) no Event of
Default is existing, such excess shall be paid to Tenant.
(g) If Tenant shall fail to prosecute the restoration work with
diligence and continuity until completion, regardless of whether an Event
of Default has occurred, Landlord shall have the right to use any proceeds
held by Insurance Trustee to complete such renovation work. Tenant shall
be liable for any sums incurred by Landlord to complete such restoration
work in excess of the amount held and disbursed by the Insurance Trustee.
(h) If an Event of Default has occurred, Tenant shall not have access
to any insurance proceeds unless and until Tenant shall have cured such
Event of Default, and until such time, Tenant shall use its own funds to
prosecute the restoration work.
(i) Upon the expiration or termination of this Lease, all insurance
proceeds received by the Insurance Trustee or Tenant and not applied to the
costs of restoration shall be paid to Landlord except as otherwise provided
in Article XXI.
Section 13.3 Waiver of Rights of Subrogation. Landlord and Tenant hereby
-------------------------------
waive their rights of recovery against each other, their respective officers,
directors, agents and employees for loss or damage to the Premises and any
resultant business interruption to the extent covered by the insurance
maintained under Section 13.1. Should any such policies of insurance require an
endorsement to effect such a waiver, Tenant shall cause them to be so endorsed.
Section 13.4 Operational Insurance. Tenant shall, at its own expense,
---------------------
commencing with the Commencement Date and continuing throughout the Term,
procure and maintain operational insurance with reputable insurance companies of
recognized responsibility; provided, however, that with respect to the first One
Million Dollars ($1,000,000) of coverage required by this Section such coverage
shall be obtained from insurance companies authorized to do business in the
United States with a rating of no less than A-VII by A.M. Best. All other
coverage shall be obtained from one or more insurance companies with an A.M.
Best rating of no less than B+V with respect to domestic insurance companies or
of at least comparable standing if a foreign-based insurer. Operational
insurance required herein shall have the following minimum coverage:
(a) comprehensive or commercial general liability insurance against
claims for death, bodily injury, or property damage occurring on, in or
about the Premises, and automobile liability insurance on vehicles operated
in conjunction with the Premises with a combined single limit of not less
than One Hundred Million Dollars ($100,000,000) per occurrence or such
other amounts, with Landlord's consent, that may from time to time be more
prudent in light of then current practices with respect to insurance costs
and premiums.
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(b) such other insurance as Tenant in its reasonable judgment deems
advisable for protection against claims, liabilities and losses arising out
of or connected with its operation of the Premises.
Section 13.5 Blanket and Self-Insurance. All insurance described in
--------------------------
Sections 13.1 and 13.4 may be obtained by Tenant by endorsement or equivalent
means under its blanket insurance policies, provided that such blanket policies
fulfill the requirements specified herein. With respect to the insurance
described in Section 13.4, the deductible or self-insured retention limits shall
not exceed Two Hundred Fifty Thousand Dollars ($250,000) (to be increased on the
fifth (5th) anniversary of the Commencement Date and every subsequent fifth
(5th) anniversary thereof by an amount proportionate to the percentage increase
in the GDP Deflator over the preceding five (5) year period) or such other
amounts, with Landlord's consent, that Tenant may reasonably deem from time to
time be more prudent in light of the then current practices with respect to
insurance costs and premiums; provided that, with respect to earthquake
insurance, the deductible shall be no higher than 10% of the building cost. As
to all insurance described in Section 13.1, deductible limits or self-insured
retentions shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) (to be
increased on the fifth (5th) anniversary of the Commencement Date and every
subsequent fifth (5th) anniversary thereof by an amount proportionate to the
percentage increase in the GDP Deflator over the preceding five (5) year period)
or, with respect to "high hazard classification" (as such term is customarily
understood in the insurance industry), such other amount as may then be required
by responsible insurance companies for similar properties and risks.
Section 13.6 Costs of Insurance. Insurance premiums and any costs or
------------------
expenses with respect to the insurance described in this Article XIII shall be
borne by Tenant. Any losses, costs, damages or expenses which fall within the
deductible limits or are included within an allowed self-insurance program
pursuant to Section 13.5 above shall be borne by Tenant. If Tenant shall fail to
pay any premium for any such insurance, or if an Event of Default with respect
to any of the provisions of this Article XIII shall occur, Landlord may pay such
premium or procure the insurance coverages required by this Article XIII and all
amounts paid by Landlord in accordance herewith shall become Additional Rent
which is due and payable within five (5) Business Days after such expenditures
are made.
Section 13.7 Defense of Claims after Termination. With respect to any
-----------------------------------
claim relating to an accident or other occurrence within a given Year for which
Tenant is obligated to indemnify Landlord under Article VIII which is not
finally resolved either through litigation or settlement prior to the expiration
or termination of this Lease, Tenant shall be obligated to continue to defend
such accrued claims regardless of such expiration or termination.
Section 13.8 Coverage and Certificates. All insurance policies provided
-------------------------
for under Section 13.1 or Section 13.4 above shall be carried in the name of
Tenant, with Landlord and any Mortgagee on the Premises as additional insureds,
and with loss payable, in the case of any policies procured under Section 13.1,
in accordance with the provisions of Section 13.2. Tenant shall deliver to
Landlord original certificates of insurance with respect to all policies so
procured under Section 13.1 or Section 13.4, including existing, additional and
renewal policy certificates and, in the case of insurance about to expire, shall
deliver certificates of insurance with respect to the renewal policies prior to
the respective dates of expiration. All insurance policies provided for under
Section 13.1 or Section 13.4 above shall, to the extent obtainable, have
attached thereto an endorsement that such policy shall not be cancelled or
materially changed without at least thirty (30) days' prior written Notice to
Landlord, Tenant, and the holder of any Mortgage. Upon request by Landlord or
any Mortgagee, the requesting party or its representatives shall be entitled to
examine at Tenant's corporate headquarters all insurance policies maintained by
Tenant with respect to the Premises.
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Section 13.9 Alternative Insurance Coverage. Notwithstanding any other
------------------------------
provision of this Lease to the contrary, if at any time during the Term hereof
Tenant is not able to obtain any one or more of the insurance coverages required
pursuant to this Article XIII because the subject insurance coverage(s) are not
then reasonably available in the insurance marketplace, then Tenant's failure to
so obtain such insurance coverage(s) shall not constitute an Event of Default so
long as Tenant does obtain coverage as similar to that required under this Lease
as is reasonably available. For purposes of this Section 13.9 the term
"reasonably available" means that type of coverage then obtainable from
reputable insurance companies for properties similar to the Premises and
purchased by prudent owners of businesses similar to that operated by Tenant at
the Premises.
ARTICLE XIV
DAMAGE BY FIRE OR OTHER CASUALTY
--------------------------------
Section 14.1 Damage by Fire or Other Casualty. If during the Term any of
--------------------------------
the Hotels shall be damaged or destroyed by fire, or any other casualty or cause
whatsoever, Tenant shall forthwith proceed to repair and/or rebuild the same,
free of all liens, claims and encumbrances, to the same general design and
specification as existed immediately before such damage or destruction occurred,
subject to such delays as may be reasonably attributable to governmental
restrictions or failure to obtain materials or labor, or other causes (other
than financial), whether similar or dissimilar, beyond the control of Tenant.
Materials used in repair shall be as nearly like or superior in quality to
original materials as may then be reasonably procured in regular channels of
supply. All proceeds of insurance carried on the Premises pursuant to Article
XIII hereof and payable as a result of such damage or destruction, other than
proceeds attributable to Tenant's personal property and other than the proceeds
of insurance referred to in Section 13.1(c), shall be used for the purpose of
such repair or rebuilding in accordance with the provisions of Article XIII,
and, if either Landlord or the Insurance Trustee shall fail to make such
insurance proceeds available in violation of the provisions of Article XIII, and
such failure shall continue for a period of 90 days after Notice of such failure
is delivered by Tenant to Landlord, Tenant's obligation to repair and rebuild
hereunder shall be suspended until such time as such insurance proceeds are so
made available. If such insurance proceeds are not so made available within one
(1) year thereafter as a result of a continued violation of the provisions of
Article XIII by the Insurance Trustee or Landlord then, but only then, may
Tenant at its option, terminate this Lease upon ninety (90) days prior Notice to
Landlord. Upon any such termination, Landlord shall have all rights to any
insurance proceeds. If Tenant is not required to repair or rebuild by the terms
or conditions of this Lease, all such insurance proceeds (whether paid to the
Insurance Trustee or Tenant) shall be paid to Landlord. If Tenant is required
to, and does repair or rebuild, any excess insurance proceeds shall be paid to
Tenant.
Section 14.2 Partial Damage by Fire or Other Casualty. Upon any partial
----------------------------------------
damage or destruction, Tenant shall continue to occupy and use the Premises to
the extent that it may be practicable to do so, and Tenant shall proceed to
repair and/or rebuild the Premises in the manner and at the time described in
Sections 13.2 and 14.1.
Section 14.3 Damage Occurring After the 10th Anniversary of Commencement
-----------------------------------------------------------
Date
- - - ----
(a) Upon a Major Casualty occurring after the tenth (10th)
anniversary of the Commencement Date, Tenant shall have the right to
terminate this Lease with respect to the affected Hotel by so notifying
Landlord not later than the date which is sixty (60) days after the
occurrence of such Major Casualty. If Tenant elects to exercise the right
described in the preceding sentence, it shall, simultaneously with its
delivery of its Notice of termination, deliver
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to Landlord its irrevocable offer to purchase the applicable portion of the
Premises for an amount equal to the Fair Market Value thereof.
(b) Landlord may accept or reject Tenant's irrevocable offer to
purchase the applicable portion of the Premises by sending Tenant a Notice
of rejection or acceptance within thirty (30) days from the date upon which
Landlord received Tenant's Notice of termination. If Landlord fails to
send Tenant a Notice of rejection or acceptance within thirty (30) days of
its receipt of Tenant's irrevocable offer to purchase the applicable
portion of the Premises, Landlord shall be deemed to have rejected such
offer. If Landlord accepts Tenant's offer to purchase, this Lease shall
terminate with respect to such portion of the Premises upon the closing of
such purchase, which shall occur in accordance with the provisions of
Article XXI. Upon such termination, Tenant shall pay to Landlord all Rent
due with respect to such portion of the Premises through such date of
termination, in addition to the Fair Market Value thereof, and Landlord and
the Insurance Trustee shall assign to Tenant all their right, title and
interest in insurance proceeds payable and shall deliver to Tenant any
insurance proceeds previously paid to, or then held by, either Landlord or
the Insurance Trustee with respect to such Major Casualty, and Landlord
shall convey the Premises to Tenant in accordance with the provisions of
Article XXI.
(c) If Landlord rejects or is deemed to reject Tenant's irrevocable
offer to purchase pursuant to Section 14.3(a), this Lease shall terminate
with respect to the applicable portion of the Premises on a Base Rent
payment date specified by Tenant in its Notice of termination which occurs
not earlier than ninety (90) days nor later than one hundred twenty (120)
days after Landlord's receipt of Tenant's irrevocable offer to purchase,
provided that this Lease shall not so terminate unless and until Tenant
shall have paid all sums due hereunder (including, without limitation, all
taxes and insurance premiums) with respect to the applicable portion of the
Premises as of the actual date of termination. Upon such termination,
Tenant shall vacate the applicable portion of the Premises in accordance
with the provisions of Section 3.4, and Tenant shall have no right to
receive any insurance proceeds payable, previously paid to, or then held
by, either Landlord or the Insurance Trustee with respect to such Major
Casualty, other than insurance proceeds attributable to Tenant's personal
property, if any such proceeds have not been paid directly to Tenant in
accordance with Section 13.2(a).
Section 14.4 No Abatement of Rent Due to Casualty. No damages,
------------------------------------
compensation, or claim shall be payable by Landlord for inconvenience, loss of
business, or annoyance arising from any repair or restoration of any portion of
the Premises or the Improvements. If this Lease is not terminated as a result of
a casualty pursuant to Section 14.3, all proceeds of insurance carried pursuant
to Section 13.1 shall be paid to Tenant (except as otherwise provided in
Section 13.2). Except with respect to Percentage Rent as set forth in
Section 5.2(c), there shall be no abatement of Rents following any casualty and
during any period of repair or reconstruction contemplated in this Article 14.
Section 14.5 Early Termination. Upon the termination of this Lease
-----------------
pursuant to the provisions of Sections 14.3 or 15.4 of this Lease, the Term and
the estate hereby granted shall expire as of the date of such termination in the
same manner and with the same effect as if it were the date set for the normal
expiration of the Term, and Rent shall be apportioned as of the date of
termination.
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ARTICLE XV
CONDEMNATION
------------
Section 15.1 Notice of Condemnation and Assignment of Rights
-----------------------------------------------
(a) The party receiving any notice of the kinds specified below with
respect to any one or more Hotels shall promptly give the other party
Notice of the receipt, contents and date of the Notice received:
(i) Notice of intended condemnation;
(ii) Service of any legal process relating to condemnation of
any portion of any of the Hotels or Improvements;
(iii) Notice in connection with any proceedings or negotiations
with respect to such a condemnation; or
(iv) Notice of intent or willingness to make or negotiate a
private purchase, sale or transfer in lieu of condemnation.
(b) Subject to the rights of each party as set forth in this
Article XV, each party hereby irrevocably assigns to Insurance Trustee any
award or payment to which they may be or become entitled by reason of any
taking of any Hotel or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any law, general or special.
Insurance Trustee shall distribute all such condemnation proceeds to the
benefit of Landlord and/or Tenant in accordance with the provisions of this
Article XV. Each party shall be entitled to participate at its own expense
in any such proceedings.
Section 15.2 Tenant's Right to Pursue a Claim. Notwithstanding anything
--------------------------------
herein to the contrary, provided that no Tenant default hereunder has occurred
and is continuing, Tenant shall have the right to pursue a claim with and retain
any award from the condemning authority or entity for damage to or loss of
Tenant's leasehold estate in any Hotel or any portion thereof as well as for any
other separate damages that Tenant may suffer; provided, however, that such
award or payment to Tenant is completely separate from and shall in no manner
reduce the award or payment to Landlord for the value of any such Hotel
unencumbered by this Lease. If the foregoing contingency is not met, any
Tenant's award or payment shall be deemed assigned to the Insurance Trustee
pursuant to Section 15.1.
Section 15.3 Temporary Taking. If the use of any Hotel or any part
----------------
thereof is taken in condemnation by any governmental authority under the power
of eminent domain for a period of time, whether definite or indefinite (but less
than the acquisition of a fee simple interest in perpetuity), or whether less
than, equal to or greater than the unexpired portion of the Term of this Lease,
this Lease shall nevertheless continue in full force and effect and Tenant shall
have the right (except as hereinafter provided) to receive the entire award
("Use Award") attributable to the unexpired portion of the Term of this Lease
(including any Effective Extended Term), and Landlord shall have the right to
receive the entire award ("Landlord's Temporary Taking Award") attributable to
the period after the expiration of the Term of this Lease (including any
Effective Extended Term), such allocation between periods to be determined
either (i) by the court in which the complaint in eminent domain was filed (a
request for which determination Tenant shall make to such court) or (ii) absent
a decision by such court, by Landlord using a formula reasonably calculated to
arrive at a fair and equitable allocation, and no claim or demand
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of any kind shall be made by Tenant against Landlord by reason of such taking,
no claim for abatement of Base Rent or Percentage Rent and other amounts which
may become due under this Lease shall be made by reason of such taking and the
rights and liabilities of the parties hereto shall be the same as if there had
been no such taking.
(a) The Use Award, in such amount as may be eventually determined,
shall be paid to and held in trust by the Insurance Trustee and shall be
administered as hereinafter set forth. There shall first be deducted
therefrom and paid out all legal and other expenses, reasonable in amount,
which were incurred in obtaining such Use Award, except that Landlord shall
pay that portion of such expenses (but not to exceed the amount of
Landlord's Temporary Taking Award) that Landlord's Temporary Taking Award
bears to the sum of Landlord's Temporary Taking Award and the Use Award.
The Use Award shall be administered as follows:
(i) If any such Use Award shall be in the form of rent
recoverable for such taking and shall be payable in quarterly (or more
frequent) installments, the Insurance Trustee shall pay to Landlord
quarterly such installments of the Use Award on account of and to the
extent of Tenant's obligations to pay Base Rent and Percentage Rent
under this Lease; any balance remaining from each such quarterly (or
more frequent) installment shall be paid by the Insurance Trustee to
Tenant. The entire amount of such quarterly (or more frequent)
installments of the Use Award received by the Insurance Trustee
(whether paid to Landlord or Tenant) shall be included in the cash
receipts of Tenant during the quarter when received by the Insurance
Trustee for purposes of determining Operating Revenues.
(ii) If any such Use Award is made in a lump sum or in the form
of rent recoverable for such taking and is payable in installments
less frequently than quarterly, the lump sum or other installment
shall be divided by the number of calendar quarters included in the
period for which such award has been paid, and the Insurance Trustee
shall pay to Landlord such quotient quarterly on account of and to the
extent of Tenant's obligation to pay Base Rent and Percentage Rent
under this Lease; any balance remaining from each such quarterly
quotient shall be paid by the Insurance Trustee to Tenant. The entire
amount of such quarterly installments of the Use Award received by the
Insurance Trustee (whether paid to Landlord or Tenant) shall be
included in the cash receipts of Tenant during the quarter in which
such quarterly quotient is distributed by the Insurance Trustee to
Landlord and Tenant for purposes of determining Operating Revenues.
(iii) If any such Use Award shall be made for the cost of
repairs and restoration following termination of such temporary
taking, then the Insurance Trustee shall apply the same to Tenant's
obligation hereunder to repair and restore as herein provided.
(b) Any Use Award deposited with the Insurance Trustee shall be
invested by the Insurance Trustee in an interest-bearing account, with
interest to be added to the amount of the Use Award and distributed as part
of the Use Award in accordance with the provisions of this Section 15.3.
All such interest shall be included in Operating Revenues for the month in
which such interest is distributed by the Insurance Trustee.
Section 15.4 Total Taking. If, during the Term, all or substantially all
------------
of any Hotel shall be taken in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, then this Lease shall
terminate with respect to such Hotel on the date such taking becomes
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effective. Tenant shall pay all Rent and all other sums due hereunder
(including, without limitation, all taxes and insurance premiums) through such
date with respect to such Hotel. All condemnation proceeds shall belong to and
be paid to Landlord, except that, to the extent such proceeds exceed the Fair
Market Value thereof as of such termination date, such excess shall be paid to
Tenant up to an amount equal to any unamortized investments made by Tenant in
Expansions, with any remaining portion of such excess being payable to Landlord.
Section 15.5 Substantial Taking
------------------
(a) Upon a Substantial Taking of any Hotel, Tenant shall have the
right to terminate this Lease with respect to such Hotel by so notifying
Landlord not later than the date which is sixty (60) days after the
occurrence of such Substantial Taking. If Tenant elects to exercise the
right described in the preceding sentence, it shall, simultaneously with
its delivery of its Notice of termination, deliver to Landlord its
irrevocable offer to purchase such Hotel for an amount equal to the Fair
Market Value thereof.
(b) Landlord may reject or accept Tenant's irrevocable offer to
purchase such Hotel by sending Tenant a Notice of such rejection or
acceptance within thirty (30) days from the date upon which Landlord
received Tenant's Notice of termination. If Landlord fails to send Tenant
a Notice of rejection or acceptance within thirty (30) days of its receipt
of Tenant's irrevocable offer to Purchase such Hotel, Landlord shall be
deemed to have rejected such offer. If Landlord accepts Tenant's offer to
purchase, this Lease shall terminate with respect to such Hotel on a Base
Rent payment date specified by Tenant in its Notice of termination which
occurs not earlier than ninety (90) days nor later than one hundred twenty
(120) days after Landlord's receipt of Tenant's irrevocable offer to
purchase. Upon such termination, Tenant shall pay Landlord all Rent due
with respect to such Hotel through such date in addition to the Fair Market
Value thereof, and Landlord and the Insurance Trustee shall assign to
Tenant all their right, title and interest in condemnation proceeds payable
and shall deliver to Tenant any condemnation proceeds previously paid to,
or then held by, either Landlord or the Insurance Trustee with respect to
such Substantial Taking, and Landlord shall convey such Hotel to Tenant in
accordance with the provisions of Article XXI.
(c) If Landlord rejects or is deemed to reject Tenant's irrevocable
offer to purchase pursuant to Section 15.5(a), this Lease shall terminate
with respect to the affected Hotel on a Base Rent payment date specified by
Tenant in its Notice of termination which occurs not earlier than ninety
(90) days nor later than one hundred twenty (120) days after Landlord's
receipt of Tenant's irrevocable offer to purchase, provided that this Lease
shall not terminate with respect to such Hotel unless and until Tenant
shall have paid all sums due hereunder (including, without limitation, all
taxes and insurance premiums) as of the actual date of termination. Upon
such termination, all condemnation proceeds shall be delivered to Landlord
and Tenant shall vacate such Hotel in accordance with the provisions of
Section 3.4.
Section 15.6 Partial Taking
--------------
(a) Upon a Substantial Taking of any Hotel pursuant to which Tenant
has not given an irrevocable offer to purchase pursuant to the provisions
of Section 15.5, Tenant shall be obligated to restore the portion of such
Hotel not taken by the governmental authority to a condition as good as or
better than the condition which prevailed thereon and therein prior to such
condemnation as nearly as is practicable under the circumstances,
regardless of whether the
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condemnation proceeds are sufficient to complete such restoration. Upon an
Insubstantial Taking, Tenant shall not be obligated to replace any
landscaping or facilities taken by the governmental authority but shall
only be obligated to repair any damage to the portion of the affected Hotel
not taken by the governmental authority. Materials used in repair and
restoration shall be as nearly like or superior in quality to the original
materials as may then be reasonably procured in regular channels of supply,
and construction shall be completed in a workmanlike manner free of all
liens and encumbrances. All condemnation proceeds payable on account of
such condemnation other than proceeds attributable to Tenant's personal
property shall be paid to the Insurance Trustee who shall hold said
proceeds in trust for the parties in accordance with the provisions of this
Section 15.6.
(b) Tenant shall commence the restoration of any affected Hotel as
soon as practicable, but in no event later than the date which is one
hundred eighty (180) days after the date upon which the condemnation
occurred, and thereafter shall prosecute the restoration with diligence and
continuity. The provisions of Section 13.2(d) and 13.2(e) shall apply to
any such restoration.
(c) If the amount disbursed in accordance with Section 13.2(e) shall
be less than the total condemnation proceeds, such excess shall be
distributed to Landlord.
(d) Any award attributable to personal property owned by Tenant that
is not attributable to FF&E owned by Landlord shall be paid to Tenant. Any
award attributable to FF&E owned by Tenant shall be paid to Tenant and
applied by Tenant for the purpose of replacing such FF&E if and to the
extent that the Hotel requires such replacement FF&E to be fully
operational.
(e) Upon a condemnation that is an Insubstantial Taking, there shall
be no reduction in or abatement of the Base Rent or Percentage Rent
thereafter payable by Tenant. Upon a condemnation that is a Substantial
Taking and if this Lease is not terminated pursuant to Section 15.5, there
shall be a reduction in the Base Rent payable by Tenant effective as of the
date of the Substantial Taking in an amount equal to the lesser of:
(i) 7 1/2% of the condemnation award received by Landlord with respect to
such affected Hotel; or (ii) an amount equal to the Base Rent shown for
such Hotel on Exhibit B, multiplied by the Partial Condemnation Reduction
Percentage.
(f) If Tenant shall fail to prosecute the restoration work with
diligence and continuity until completion, regardless of whether an Event
of Default has occurred, Landlord shall have the right to use any proceeds
held by Insurance Trustee to complete such restoration work. Tenant shall
be liable for any sums incurred by Landlord to complete such restoration
work in excess of the amount held and disbursed by the Insurance Trustee.
(g) If an Event of Default has occurred, Tenant shall not have access
to any condemnation proceeds unless and until Tenant shall have cured such
Event of Default, and until such time, Tenant shall use its own funds to
prosecute the restoration work.
ARTICLE XVI
ASSIGNMENT, SALE AND SUBLETTING
-------------------------------
Section 16.1 Sale or Assignment by Landlord, Subject to Lease. Landlord
------------------------------------------------
shall have the right to assign or transfer its interest in this Lease in
connection with a Sale of a Hotel subject to this Lease
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which shall remain in full force and effect, but may be evidenced by a separate
lease agreement on the same terms and conditions, except that Base Rent shall be
calculated in accordance with the amounts shown on Exhibit B and Percentage Rent
shall be calculated based solely on the Operating Revenues of such Hotel (or
Hotels) alone. For purposes of calculating Percentage Rent under this Lease,
the Base Revenues attributed to such Hotel shall be deducted from total Base
Revenues for purposes of the next Percentage Rent due to Landlord hereunder. In
the event such sale or assignment takes place at any time other than the end of
a Lease Year, Percentage Rent for both the Hotel or Hotels so assigned and the
then remaining Hotels shall be calculated based on a proration computed in
accordance with the number of days in the Partial Lease Year. Furthermore,
Landlord shall have right to assign or transfer without restriction its interest
in this Lease as collateral security with respect to any financing secured by an
interest in the Premises. Upon any Sale of a Hotel, Landlord shall assign this
Lease to the purchaser and, concurrently with the finalization thereof, the
purchaser shall, by an appropriate written instrument, assume (subject to the
provisions of Section 22.24) all of Landlord's obligations hereunder. Any
attempted sale or assignment in violation of the provisions of this Section 16.1
shall be void and without effect. Within thirty (30) days after Landlord sends
Notice to Tenant advising Tenant of the name, identity and address of any
proposed assignee or transferee and requesting a determination as to whether the
proposed assignment or transfer would violate the requirements of the first
sentence of this Section 16.1, Tenant shall advise Landlord by Notice to
Landlord whether or not such proposed assignment or transfer would violate such
requirements and, if so, setting forth in reasonable detail the basis for such
violation (which Notice shall be binding upon Tenant), and if Tenant fails to
send such Notice to Landlord prior to the expiration of such thirty (30) day
period, such assignment or transfer shall be deemed to comply with the
requirements of the first sentence of this Section 16.1.
Section 16.2 Assignment by Tenant. Tenant shall have the right to
--------------------
transfer or assign its interest in any Hotel demised hereunder without
Landlord's consent provided that (w) the transferee or assignee is a corporation
organized under the laws of any state in the United States and in good standing
and authorized to do business in each state in which any of the Hotels is
located, (x) such transferee or assignee assumes this Lease by an appropriate
writing, (y) Tenant shall continue to remain liable under all of the provisions
of this Lease and (z) Tenant first obtains the consent of any and all applicable
ground lessors, if such consent is required.
Section 16.3 Tenant's Right to Sublease. Tenant may sublease space or
--------------------------
grant concessions or licenses at any of the Hotels so long as the terms of any
such subleases, concessions or licenses do not exceed the Term and shall expire
upon any termination of this Lease.
ARTICLE XVII
HOLDING OVER
------------
Should Tenant continue to hold any Hotel after the termination of this
Lease, whether the termination occurs by lapse of time or otherwise, such
holding over, unless otherwise agreed to by Landlord in writing, shall
constitute and be construed as a tenancy at sufferance at a daily Rent equal to
1/30th of an amount equal to two hundred percent (200%) of the monthly Base Rent
last in effect and subject to all of the other obligations imposed on Tenant
hereunder, but the foregoing shall not constitute a consent by Landlord to such
holding over and shall not prevent Landlord from exercising any of its remedies
under this Lease or applicable law by reason of such holding over.
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ARTICLE XVIII
ESTOPPEL CERTIFICATES
---------------------
Tenant agrees to furnish periodically, within ten (10) days after
written request therefor by Landlord, or any actual or prospective Mortgagee for
any Hotel, or any interest of Landlord therein or any actual or prospective
purchaser of Landlord's interest, a certificate signed by Tenant (which may
require a true and correct copy of this Lease and any and all amendments hereto
to be attached) certifying (to the extent same is true) to the then current Rent
due hereunder; that Tenant is not in default hereunder; that this Lease is in
full force and effect and unmodified; that the Term has commenced and the full
rental is then accruing hereunder; that no Rent under this Lease has been paid
more than ninety (90) days in advance of its due date; that the address for
Notices to be sent to Tenant is as set forth in this Lease (or has been changed
by Notice duly given and is as set forth in the certificate); that Tenant has no
knowledge of any default by Landlord then existing under this Lease; and such
other matters as may be reasonably requested by Landlord or any Mortgagee,
prospective Mortgagee or prospective purchaser. If Tenant is unable to so
certify as to one or more of the foregoing items, Tenant shall specify its
reason therefor in writing. Any such certificate may be relied upon by any
prospective purchaser, ground lessor, Mortgagee, or any beneficiary under any
deed of trust on the Improvements or the Land or any part thereof. Landlord
agrees to furnish periodically, within ten (10) days after written request
therefor by Tenant or any actual or prospective Mortgagee, a certificate signed
by Landlord containing substantially the same information as described above.
ARTICLE XIX
LANDLORD/TENANT FINANCING
-------------------------
Section 19.1 Right to Finance
----------------
Landlord shall have the right, at any time, and from time to time, to
subject its interest in any of the Hotels to one or more Mortgages without
Tenant's consent. Landlord also acknowledges that, concurrently with the
Commencement Date, Tenant's interests under this Lease shall be collaterally
assigned to Tenant's Mortgagee and that Tenant from time to time may secure
additional financings and/or refinancings with all or some portion of its
interests hereunder. Landlord agrees to cooperate with Tenant with respect to
any such financings; provided, however, that Landlord shall have no obligation
to amend the terms of this Lease, expend any sums in connection therewith, or
subordinate or waive any of its rights hereunder.
Section 19.2 Priority
--------
(a) Landlord agrees that this Lease and any extensions, renewals,
replacements or modifications thereto and all right and interest of Tenant
in and to the Hotels shall be superior to any and all Mortgages now or
hereafter granted by Landlord.
(b) As more particularly described herein, Tenant has no right to
cancel, rescind or terminate this Lease except as expressly provided in the
particular provisions specified herein. If Tenant exercises any such right
to cancel or terminate this Lease with respect to a specific Hotel or
Hotels, this Lease shall remain in full force and effect with respect to
all other Hotels leased hereunder.
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(c) If at any time there shall occur a foreclosure action with
respect to the interest of Landlord under this Lease, or a deed in lieu of
foreclosure, or any similar action or proceeding, then (i) this Lease shall
not terminate, and (ii) Tenant shall attorn to and recognize the purchaser
at such foreclosure sale (whether such person is the Mortgagee or another
person or entity) or the grantee of a deed in lieu of foreclosure as
Tenant's Landlord under this Lease, except that neither such purchaser or
grantee, nor anyone claiming by, through or under any such person or
grantee, shall be:
(i) liable for any action or omission of Landlord (or its
predecessors in interest);
(ii) subject to any offsets or defenses which Tenant may have
against Landlord (or its predecessors in interest); or
(iii) bound by any payment of Rent which Tenant might have made
to Landlord (or its predecessors in interest) for more than one month
in advance of the date the same was due under this Lease; but the
foregoing shall not relieve any such purchaser or grantee, or anyone
claiming by, through or under any such purchaser or grantee from
performing all obligations of Landlord under this Lease with respect
to each Hotel so owned after it acquires title to such Hotels.
Section 19.3 Mortgagee Amendments. If at any time, any prospective
--------------------
Mortgagee requests any change or modification to this Lease as a condition of
granting a Mortgage to either Landlord or Tenant, the other party shall consent
to such change or modification provided that (i) the requesting party bears the
cost of preparing all documentation required to effect such change or
modification; (ii) such change or modification does not materially and adversely
increase the other party's cost of operating any of the Hotels or performing its
obligations under this Lease; and (iii) such change does not materially and
adversely affect the rights of the other party and/or its Mortgagees hereunder.
Examples of modifications to which each party shall consent include, without
limitation, obligations to give copies of notices and other documents to
Mortgagees where one party has previously agreed to give same to the other, to
obtain a Mortgagee's consent or approval where one party has previously agreed
to obtain the other's consent or approval, to allow a Mortgagee to act for the
requesting party if such party fails to exercise a right granted to it
hereunder, and provisions which govern the relationship between the other party
and Mortgagee.
ARTICLE XX
DEFAULT BY TENANT
-----------------
Section 20.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default" by Tenant under this
Lease:
(a) if Tenant shall fail to make any payment of Base Rent payable by
it under this Lease when the same becomes due and payable and such failure
continues for five or more days;
(b) if Tenant shall fail to make any payment of Percentage Rent or
Additional Rent payable by it under this Lease when the same becomes due
and payable and such failure is not cured by Tenant within a period of 10
days after receipt by Tenant of notice thereof from Landlord; provided,
however, that such notice shall, to the full extent permitted by applicable
law, be in lieu of and not in addition to any notice required under
applicable law; and provided,
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further, that such notice requirement shall not prevent the imposition of
the required payment of interest and/or late charges on such overdue
amounts;
(c) if Tenant shall fail to observe or perform any material term,
covenant or condition of this Lease and such failure is not cured by Tenant
within a period of 30 days after receipt by Tenant of notice thereof from
Landlord, unless such failure cannot with diligence be cured within a
period of 30 days, in which case such failure shall not be deemed to
continue if Tenant proceeds promptly and with diligence to cure the failure
and diligently completes the curing thereof in no event later than 180 days
after receipt of such notice; provided, however, that such 180-day
limitation shall not apply with respect to the cure by Tenant of defaults
in its obligations under Article XII, so long as Tenant has promptly
commence to cure said default within the initial 30-day period, and
thereafter diligently prosecutes the cure to completion; and provided,
further, that such notice described above shall, to the full extent
permitted by applicable law, be in lieu of and not in addition to any
notice required under applicable law;
(d) if Tenant shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state thereof;
(e) if Tenant shall, on a petition in bankruptcy filed against it, be
adjudicated as bankrupt or a court of competent jurisdiction shall enter an
order or decree appointing, without the consent of Tenant, a receiver of
Tenant or of the whole or substantially all of its property, or approving a
petition filed against it seeking reorganization or arrangement of Tenant
under the federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof, and such judgment, order
or decree shall not be vacated or set aside or stayed within 60 days from
the date of the entry thereof;
(f) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution;
(g) if the estate or interest of Tenant in any Hotel or any part
thereof shall be levied upon or attached in any proceeding and the same
shall not be vacated or discharged within the later of 90 days after
commencement thereof or 30 days after receipt by Tenant of notice thereof
from Landlord (unless Tenant shall be contesting such lien or attachment in
accordance with the terms of this Lease); provided, however, that such
notice shall, to the full extent permitted by applicable law, be in lieu of
and not in addition to any notice required under applicable law;
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(h) if, except as a result of damage, destruction or a partial or
complete Condemnation, Tenant voluntarily ceases operations at any Hotel
for a period in excess of 30 consecutive days;
(i) if, with respect to the Concurrent Tenant Credit Facility, any
written notice is sent to Tenant by the Administrative Agent or the
Required Banks (as such terms are defined in the Concurrent Tenant Credit
Facility) notifying Tenant in its capacity as Borrower thereunder that it
is in default under the Concurrent Tenant Credit Facility, and such default
shall not be cured within the cure period applicable therefor, if any; or
(j) if Tenant shall make, or purport to make, any assignment or
subletting of its interest under this Lease for which Landlord's consent is
required without first obtaining such consent.
Section 20.2 Landlord's Rights Upon an Event of Default
------------------------------------------
(a) If an Event of Default occurs, then Landlord may commence doing
any one or more of the following provided that such commencement is prior
to the date that Tenant cures such default:
(i) Terminate this Lease upon ten (10) days Notice to Tenant, in
which event Tenant shall immediately surrender the Premises to
Landlord and Tenant shall be liable to Landlord for all Surviving
Obligations and to the extent provided in Article XVII and to the
extent hereinafter provided in this Section 20.2(a). If Tenant fails
to do so, Landlord may, without Notice and without prejudice to any
other remedy Landlord may have, enter upon and take possession of any
or all of the Premises and expel or remove Tenant and its effects
without being liable to prosecution or any claim for damages therefor.
Tenant shall indemnify Landlord for all loss and damage which Landlord
may suffer by reason of such Termination, whether through inability to
relet any or all of the Premises or otherwise, including any loss of
Rent for the remainder of the Term. In connection with Landlord's
exercise of the remedy described in this Subparagraph, Landlord shall
have the right to seize and take possession of all of Tenant's FF&E
located at the Hotels and either use same in connection with operating
the property or dispose of same as Landlord sees fit to do. To the
greatest extent permitted by law, Tenant hereby fully, finally and
forever waives any and all protections provided by applicable law
against Landlord's right of distraint.
(ii) Enter upon and take possession of any or all of the
Premises as Tenant's agent, with the right but not the obligation of
terminating this Lease and without being liable to prosecution or any
claim for damages therefor, and Landlord may relet any or all of the
Premises either in its own name or as Tenant's agent and in either
event receive the rent therefor, in any of which events Tenant shall
pay to Landlord on demand (i) any and all costs of re-leasing,
renovating, repairing, and altering any or all of the Premises and/or
the Hotels (including but not limited to advertising costs,
commissions, finders fees, legal fees and other costs) for a new
Tenant or Tenants and (ii) any deficiency that may arise by reason of
such reletting from the net income from the Hotels that Landlord would
have received if there had not been a default by Tenant. In addition,
to the extent any of the Hotels are not relet, Tenant shall continue
to be obligated to satisfy all of its obligations under this Lease.
In connection with Landlord's exercise of the remedy described in this
Subparagraph, Landlord shall have the right to seize and take
possession of all of Tenant's FF&E located in the Hotels and either
use same in connection with
44
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operating the property or dispose of same as Landlord sees fit to do.
To the greatest extent permitted by law, Tenant hereby fully, finally
and forever waives any and all protections provided by applicable law
against Landlord's right of distraint.
(iii) Do whatever Tenant is obligated to do under this Lease and
enter any or all of the Hotels without being liable to prosecution or
any claim for damages therefor to accomplish this purpose. Tenant
shall reimburse Landlord, as Additional Rent, immediately upon demand
for any expenses which Landlord incurs in thus effecting compliance
with this Lease on Tenant's behalf, together with interest thereon
from the date of such expenditure until paid at the Lease Interest
Rate.
(iv) Bring a summary proceeding/action for ejectment in order to
recover possession of any or all of the Hotels.
(v) Landlord hereby reserves the right to institute successive
legal actions to collect any damages payable to Landlord hereunder, it
being intended that a suit for damages shall not bar any subsequent
suit for damages that have subsequently accrued.
(vi) Accelerate the Base Rents due under this Lease. Upon any
termination pursuant to subsection 20.2(a)(i) hereunder, in addition
to all other rights and remedies it may have under this Lease,
Landlord may recover from Tenant: (A) the worth at the time of award
of any unpaid Rent which has been earned at the time of such
termination, plus (B) the worth at the time of award of any unpaid
Rent which would have been earned after termination until the time of
award (less any rental loss which applicable law requires Landlord to
mitigate and which is proved by Tenant that Landlord could reasonably
have avoided), plus (C) the worth at the time of award of the amount
of the unpaid Rent for the balance of the term of this Lease after the
time of award (less any rental loss that Tenant proves reasonably
could be avoided if applicable law requires such to be deducted), plus
(D) any other amount in addition to or in lieu of the foregoing as may
be permitted from time to time under applicable law. The discount
rate to be used in computing the amount of Base Rent due hereunder
shall be equal to the effective annual yield prevailing on the date
the Event of Default occurred with respect to United States treasury
obligations having a maturity date that is the same or nearest to the
date on which this Lease would have expired if no Event of Default
occurred.
(b) If an Event of Default has occurred under Section 20.1(b), then,
notwithstanding anything in applicable law to the contrary, Landlord shall
have no obligation whatsoever to mitigate any of its damages. If any other
Event of Default shall have occurred, Landlord shall be obligated to
mitigate its damages only to the extent it is required to do so under
applicable law.
Section 20.3 Implied Waiver
--------------
(a) No act or thing done by Landlord or its agents during the Term
shall constitute an acceptance of an attempted surrender of the premises,
and no agreement to accept a surrender of the Premises shall be valid
unless made in writing and signed by Landlord. No re-entry or taking
possession of the Premises by Landlord pursuant to Section 20.2(a)(ii) or
otherwise shall constitute an election by Landlord to terminate this Lease,
unless a written Notice of such
45
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intention is given to Tenant. No waiver by Landlord of any breach of this
Lease shall constitute a waiver of any other violation or breach of any of
the terms hereof.
(b) No provision of this Lease shall be deemed to have been waived by
Landlord or Tenant unless such waiver is in writing and signed by such
party. The rights granted to Landlord and Tenant in this Lease shall be
cumulative of every other right or remedy which Landlord or Tenant may
otherwise have at law or in equity or by statute, and the exercise of one
or more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
Section 20.4 Injunctive Relief. Landlord shall be entitled to obtain
-----------------
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the provisions hereof, or to a decree compelling
performance of any of the provisions hereof, to the extent that any such relief
is provided by a court of equity.
ARTICLE XXI
PROVISIONS APPLICABLE TO
------------------------
PURCHASE BY TENANT OF THE PREMISES
----------------------------------
Section 21.1 Purchase "As Is". If Tenant is to acquire any Hotel pursuant
----------------
to Sections 1.3, 14.3 or 15.5 of this Lease, such Hotel shall be transferred
"As Is" on the date of transfer and otherwise as provided in Section 1.1 hereof.
Landlord shall convey title to such Hotel to Tenant in the same condition of
title (including all restrictions, limitations, covenants and easements of
record and all encroachments) that existed as of the Commencement Date, subject,
however, to (i) the lien of real estate taxes, water and sewer charges and other
governmental charges that are not then due and payable, (ii) all restrictions,
limitations, covenants, easements and encroachments that were created after the
Commencement Date other than those created by Landlord without the written
consent of Tenant, and (iii) all Legal Requirements, but free of the following
items ("Landlord Obligations"): (x) the lien of any security interest created by
any Mortgage on Landlord's interest, (y) the lien of any judgment, tax
assessment or other obligation incurred by Landlord that is not the
responsibility of Tenant under this Lease, and (z) any liens created on and
after the Commencement Date which have been created by or resulted solely from
acts of Landlord undertaken without the written consent of Tenant. Landlord
shall pay off and discharge all Landlord Obligations at closing of Tenant's
purchase of such Hotel, but Landlord shall have the right to apply the purchase
price proceeds for the purpose of discharging such Landlord Obligations.
Section 21.2 Timing of Closing. If Landlord accepts Tenant's irrevocable
-----------------
offer pursuant to Sections 1.3, 14.3 or 15.5 to purchase any Hotel, closing of
such purchase shall be held on the date (the "Purchase Closing Date") specified
by Tenant in its notice of Termination pursuant to Sections 1.3, 14.3 or 15.5
which occurs not earlier than ninety (90) days nor later than one hundred twenty
(120) days after Landlord's receipt of Tenant's irrevocable offer to purchase.
Closing of such purchase shall be conducted by an escrow agent (the "Closing
Escrow Agent") which shall be a national title insurance company designated by
Tenant that meets with the reasonable satisfaction of Landlord.
Section 21.3 Deliveries at Closing. On the Purchase Closing Date,
----------------------
Landlord shall deliver to the Closing Escrow Agent:
(a) a deed ("Landlord's Deed") conveying such Hotel to Tenant or
Tenant's designee and containing no warranties other than a warranty that
any of the Hotels are not subject to: (i)
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the lien of any security interest created by an Mortgage executed by
Landlord on Landlord's interest, (ii) the lien of any judgment, tax
assessment or other obligation incurred by Landlord that is not the
responsibility of Tenant under this Lease and (iii) any liens created on or
after the Commencement Date which have been created by or resulted solely
from acts of Landlord undertaken without the consent of Tenant.
(b) a written instrument (the "Assignment"), without warranty of
title, assigning and transferring to Tenant or Tenant's designee (i)
Landlord's interest in any FF&E leased by Landlord to Tenant hereunder and
any licenses or permits relating to such Hotel and (ii) Landlord's interest
in any insurance proceeds payable with respect to any casualty that has
previously occurred to such Hotel (if any) (which assignment of insurance
proceeds shall be consented to by the Insurance Trustee). If and to the
extent that there are any insurance proceeds previously paid to Landlord or
the Insurance Trustee which have not been applied for the purpose of repair
or restoration and are then held by Landlord or the Insurance Trustee,
Landlord and the Insurance Trustee, as the case may be, shall deliver such
insurance proceeds (the "Escrowed Insurance Proceeds") to the Closing
Escrow Agent. Tenant shall deliver to the closing Escrow Agent current
immediately available funds in the amount of the purchase price and any
costs payable by Tenant hereunder that are set forth in Section 21.7
("Tenant's Funds"). Closing Agent shall then proceed to consummate the
Closing in accordance with local custom and practice.
SECTION 21.4 TENANT'S FAILURE TO CLOSE. IF TENANT FAILS TO PERFORM ITS
-------------------------
OBLIGATIONS UNDER THIS ARTICLE XXI ON THE PURCHASE CLOSING DATE FOR ANY REASON
OTHER THAN THE DEFAULT OF LANDLORD, AND SUBJECT TO ANY CURE RIGHTS EXPRESSLY
GRANTED TO TENANT'S MORTGAGEE, TENANT'S NOTICE OF TERMINATION PURSUANT TO
SECTIONS 1.3, 14.3 OR 15.5 SHALL BE RESCINDED AND DEEMED NULL AND VOID, THIS
LEASE SHALL CONTINUE IN FULL FORCE AND EFFECT AND NEITHER TENANT NOR LANDLORD
SHALL HAVE ANY LIABILITY OR OBLIGATION TO THE OTHER BY REASON OF SUCH FAILURE TO
CONSUMMATE SETTLEMENT OF SUCH PURCHASE EXCEPT THAT, IN RECOGNITION OF THE FACT
THAT SUCH FAILURE OF PERFORMANCE WILL CAUSE LANDLORD TO INCUR COSTS NOT
CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH WILL BE EXTREMELY
DIFFICULT TO ASCERTAIN, TENANT SHALL PAY TO LANDLORD, AS FIXED, AGREED AND
LIQUIDATED DAMAGES FOR TENANT'S DEFAULT, THE SUM OF FIFTY THOUSAND DOLLARS
($50,000), WHICH AMOUNT THE PARTIES AGREE REPRESENTS A FAIR AND REASONABLE
ESTIMATE OF SUCH COSTS.
------------------------- --------------------------
Tenant's Initials Landlord's Initials
SECTION 21.5 LANDLORD'S FAILURE TO CLOSE. IF LANDLORD FAILS TO PERFORM
---------------------------
ITS OBLIGATIONS UNDER THIS ARTICLE XXI ON THE PURCHASE CLOSING DATE FOR ANY
REASON OTHER THAN THE DEFAULT OF TENANT AND SUBJECT TO ANY CURE RIGHTS EXPRESSLY
GRANTED TO LANDLORD'S MORTGAGEE, AND AN ORDER OF SPECIFIC PERFORMANCE IS NOT
OBTAINED BY TENANT AND COMPLIED WITH, THIS LEASE SHALL TERMINATE AS OF THE
PURCHASE CLOSING DATE AND NEITHER TENANT NOR LANDLORD SHALL HAVE ANY LIABILITY
OR OBLIGATION TO THE OTHER BY REASON OF SUCH FAILURE TO CONSUMMATE SETTLEMENT OF
SUCH PURCHASE EXCEPT
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THAT, IN RECOGNITION OF THE FACT THAT SUCH FAILURE OF PERFORMANCE WILL CAUSE
TENANT TO INCUR COSTS NOT CONTEMPLATED IN THIS LEASE, THE EXACT AMOUNT OF WHICH
WILL BE EXTREMELY DIFFICULT TO ASCERTAIN, LANDLORD SHALL PAY TO TENANT, AS
FIXED, AGREED AND LIQUIDATED DAMAGES FOR LANDLORD'S DEFAULT, THE SUM OF FIFTY
THOUSAND DOLLARS ($50,000), WHICH AMOUNT THE PARTIES AGREE REPRESENTS A FAIR AND
REASONABLE ESTIMATE OF SUCH COSTS.
------------------------- --------------------------
Tenant's Initials Landlord's Initials
Section 21.6 Payment of Costs. All costs and expenses in connection with
----------------
any such purchase, including title insurance, transfer taxes, recording costs
and the reasonable attorney's fees of Landlord and any Mortgagee, shall be paid
by Tenant.
Section 21.7 Prorations. Percentage Rent shall be prorated as of the date
----------
of such purchase, calculated in accordance with Section 5.1(b) and Exhibit B, so
that such dollar figure is multiplied by a fraction whose numerator is the
number of days in such Lease Year that precede the date of such purchase and
whose denominator is three hundred sixty-five (365).
ARTICLE XXII
MISCELLANEOUS
-------------
Section 22.1 Notices
-------
(a) Any Notice or demand, consent, approval or disapproval, or
statement (collectively called "Notice" or "Notices") required or permitted
to be given by the terms and provisions of this Lease, or by any law or
governmental regulation, shall be in writing (unless otherwise specified
herein) and unless otherwise required by such law or regulation, shall be
personally delivered with receipt acknowledged in writing or sent by United
States mail postage prepaid as registered or certified mail, return receipt
requested or by courier service guarantying overnight delivery. Any Notice
shall be addressed to Landlord or Tenant, as applicable, at its address
specified below as said address may be changed from time to time as
hereinafter provided. By giving the other party at least ten (10) days'
prior written Notice, either party may designate a different address or
addresses for Notices. Landlord may elect to require Tenant to send a copy
of any Notice of Landlord's default to Landlord's Mortgagee(s)
simultaneously with the sending of Notice to Landlord, provided that
Landlord shall have supplied to Tenant the name and address of such
Mortgagee(s).
(b) Any Notice shall be deemed given as of the date of delivery as
indicated by affidavit in case of personal delivery or by the return
receipt in the case of mailing or by the confirmation of the courier
service making delivery; and upon any failure to deliver by reason of
changed address of which no Notice was given or refusal to accept delivery,
as of the date of such failure as indicated by affidavit or on the return
receipt or by Notice of the postal service or by the confirmation of the
courier service making delivery, as the case may be.
(c) A copy of each Notice given pursuant to Section 22.1(a) above
shall also be sent to the addressee by FAX.
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(d) Notices shall be sent as follows:
To Tenant: Red Lion Hotels, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: Mr. Anupam Narayan
FAX No: (360) 750-4165
with a Beth A. Ugoretz, Esq.
copy to: 4001 Main Street
Vancouver, WA 98663
FAX No: (360) 693-1739
To Landlord: RLH Partnership, L.P.
in care of Mr. Todd A. Fisher
2800 Sand Hill Rd., Suite 2000
Menlo Park, CA 94025
FAX No.: (415) 233-6564
with a Beth A. Ugoretz, Esq.
copy to: 4001 Main Street
Vancouver, WA 98663
FAX No: (360) 693-1739
Section 22.2 Memorandum of Lease
-------------------
(a) Landlord and Tenant shall execute, acknowledge and deliver a
memorandum of this Lease (a "Lease Memorandum") in recordable form setting
forth the date and general description of this Lease, the names of the
parties hereto, the Commencement Date, the Expiration Date, a description
of the Land and the Hotels, Tenant's rights to renew this Lease, Landlord's
disclaimer of liability for mechanic's liens attributable to Tenant's use,
occupancy and possession of the Hotels, and such other provisions of this
Lease (including, if necessary or advisable under applicable law, the
incorporation by reference of all of the terms of this Lease) as either
party may designate. Said Lease Memorandum shall not in any circumstances
be deemed to modify or to change any of the provisions of this Lease.
(b) Tenant shall after the expiration or termination of the Term, at
the request of Landlord, execute, acknowledge and deliver to Landlord a
memorandum in recordable form evidencing the expiration or Termination of
this Lease.
Section 22.3 Determination of Fair Market Value
----------------------------------
(a) If it becomes necessary to determine the Fair Market Value of any
Hotel for any purpose of this Lease, the party required or permitted to
give notice of such required determination shall give the other party
Notice that such determination is required and shall set forth such party's
estimate of the Fair Market Value of the Hotel to be valued. The parties
shall thereupon attempt, in good faith, to agree upon the Fair Market Value
of such Hotel within 10 days of such Notice. Failing any agreement within
such 10 day period, the party who gave such
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Notice shall send a second notice of such required determination and shall
include in such Notice the name of a Person selected to act as appraiser on
its behalf. Within 10 days after receipt of any such notice, Landlord or
Tenant, as the case may be, shall by notice to Tenant or Landlord, as the
case may be, appoint a second Person as appraiser on its behalf. Each
appraiser must be licensed as an appraiser in the State and be a member of
the Appraisal Institute (or any successor organization thereto).
(b) After appointment, the appraisers shall, within 45 days after the
date of the notice appointing the first appraiser, determine the Fair
Market Value of the Hotel as of the date it becomes necessary to determine
the Fair Market Value (giving effect to the impact, if any, of inflation
from that date to the date the appraisers determine such Fair Market
Value); provided, however, that if only one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one
such appraiser shall have made such determination within the required 45
days, then the determination of such appraiser shall be final and binding
upon the parties.
(c) Unless the parties otherwise jointly instruct the appraisers in
writing to the contrary, the appraisers shall value the Hotel at Fair
Market Value pursuant to the Uniform Standards of Professional Appraisal
Practice and, to the extent not inconsistent therewith, the Appraisal
Institute's Standards of Professional Practice, and in accordance with
generally accepted appraisal methodology.
(d) Subject to Sections 22.3(d)(i) and 22.3(d)(ii), if two
appraisers shall have been appointed and shall have made their
determinations of the Fair Market Value of the Hotel within the required
45-day period, then the Fair Market Value of that property shall be an
amount equal to the sum of fifty percent (50%) of each appraiser's
determination.
(i) If the difference between the appraisals made pursuant to
Section 22.3(b) shall exceed ten percent (10%) of the lesser of such
amounts, then the appraisers shall have 20 days to appoint a third
appraiser. If such appraisers fail to appoint such third appraiser,
then either party may request the American Arbitration Association (or
any successor organization) or a court (having jurisdiction over such
appointment) to appoint the third appraiser. The third appraiser
shall be licensed as an appraiser in the State and be a member of the
Appraisal Institute. If a third appraiser is not appointed under this
Section 22.3(d)(i), then the Fair Market Value of the Hotel shall be
determined as provided for in Section 22.3(d) notwithstanding this
Section 22.3(d)(i).
(ii) Any appraiser appointed by the original appraisers, by the
American Arbitration Association or by an appropriate court shall be
instructed to determine the Fair Market Value within 30 days after
appointment of such appraiser. The determination of the appraiser
which differs most in terms of dollar amount from the determinations
of the other two appraisers shall be excluded, and fifty percent (50%)
of the sum of the remaining two determinations shall be final and
binding upon Landlord and Tenant as the Fair Market Value for the
Hotel.
(e) This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under
applicable law, and any determination hereunder shall be final and binding
upon the parties except as otherwise provided by applicable law. Landlord
and Tenant shall each pay the fees and expenses of the appraiser appointed
by it and each shall pay
50
<PAGE>
one-half of the fees and expenses of the third appraiser and one-half of
all other costs and expenses incurred in connection with each appraisal.
Section 22.4 Partial Invalidity. If any portion of this Lease shall be
------------------
declared invalid by order, decree or judgment of a court, or governmental agency
having jurisdiction, this Lease shall be construed as if such portion had not
been inserted herein, except when such construction would operate as an undue
hardship on Tenant or Landlord, constitute a substantial deviation from the
general intent and purpose of said parties as reflected in this Lease, or deny
either Tenant or Landlord to a material extent a right or benefit pursuant to
this Lease as originally written, in which event this Lease in pertinent part
shall be reformed so as to place both Landlord and Tenant to the greatest extent
permitted by law in the same relative positions as they would have enjoyed under
this Lease as originally written.
Section 22.5 Headings. The article and section headings and the Table of
--------
Contents contained in this Lease are for convenience only and shall not enlarge
or limit the scope or meaning of the various and several provisions hereof.
Section 22.6 Binding Effect. All agreements and covenants herein
--------------
contained shall be binding upon the respective heirs, personal representatives,
successors, and, to the extent permitted under this Lease, assigns of the
parties hereto.
Section 22.7 Representations. Neither Landlord nor Landlord's agents have
---------------
made any representations or promises with respect to the Premises except as
herein expressly set forth and all reliance with respect to any representations
or promises is based solely on those contained herein.
Section 22.8 Amendments. No amendment or modification of this Lease shall
----------
be binding or valid unless expressed in a writing executed by both parties
hereto or their respective successors and assigns.
Section 22.9 Brokers. Neither party has engaged any agents or brokers
-------
with respect to the negotiation and execution of this Lease and each party shall
indemnify and defend the other with respect to any claim by an agent or broker
claiming through the indemnifying party against the indemnified party.
Section 22.10 Authority to Execute
--------------------
(a) Tenant represents and warrants that Tenant has the full right and
authority to enter into this Lease, and that all persons signing on behalf
of Tenant were authorized to do so by any and all necessary or appropriate
corporate actions.
(b) Landlord represents and warrants that Landlord has the full right
and authority to enter into this Lease, and that all persons signing on
behalf of Landlord were authorized to do so by any and all necessary or
appropriate corporate or Landlord actions.
Section 22.11 Applicable Law. This Lease shall be governed by and
--------------
construed under the laws of the state within which the Land is located.
Section 22.12 Construction. All exhibits referred to in this Lease are by
------------
this reference incorporated fully herein. The term "this Lease" shall be
considered to include all such exhibits.
51
<PAGE>
Section 22.13 Impossibility of Performance. If any covenant or obligation
----------------------------
of Tenant under this Lease (other than a covenant or obligation to pay Rent or
other sums payable by Tenant hereunder) as applied to a particular circumstance
would be incapable of being fully performed by any person or entity
notwithstanding the fact that such person or entity had sufficient funds
available to enable it to perform such covenants or obligations under this
Lease, then Tenant shall only be obligated to perform such covenant or
obligation as applied to such circumstance to the extent that such covenant or
obligation can be so performed.
Section 22.14 Time of Essence. Time is of the essence with respect to the
---------------
rights and obligations of Landlord and Tenant under this Lease.
Section 22.15 Attorney's Fees. Except as otherwise provided herein, in
---------------
any action or proceeding (including without limitation appellate proceedings)
brought by either party against the other under this Lease, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees,
investigation costs, and other reasonable legal expenses and court costs
incurred by such party in such action or proceeding.
Section 22.16 No Merger. There shall be no merger of the leasehold estate
---------
created by this Lease with respect to each of the Hotel sites, with the fee
estate or any superior ground leasehold estate, by reason of the fact that the
same legal entity or person may own or hold the leasehold estate created by this
Lease or any interest in such leasehold estate, and any interest in either or
both of the fee estate or any superior ground leasehold estate. No merger of
any leasehold estate and fee estate shall occur unless and until all persons or
entities, having any interest in: (i) the leasehold estate created by this
Lease, (ii) the leasehold estate created by any applicable superior ground
leasehold estate, and (iii) the fee estate in the site of the affected Hotel,
shall join in a written instrument effecting such merger and shall duly record
the same.
Section 22.17 Landlord's Right to Enter. Landlord and its agents and
-------------------------
designees may enter upon and examine any Hotel at reasonable times, accompanied
by a representative of Tenant that Tenant shall make available to Landlord, and
show any Hotel to prospective purchasers, partners, investors, mortgagees or
lessees as long as such examination or showing shall not unreasonably interfere
with the business operations of Tenant at the Hotel.
Section 22.18 Corporate Reorganization of Tenant. Upon the merger of
----------------------------------
Tenant into another corporation where Tenant is not the surviving corporation or
the consolidation of Tenant with one or more other corporations where Tenant is
not the surviving corporation, or the sale or other disposition of all or
substantially all of the assets of Tenant to one or more other entities, the
surviving entity or transferee of assets, as the case may be, shall be deemed to
have assumed all obligations, covenants and responsibilities of Tenant under
this Lease. Promptly after such corporate reorganization, such entity shall
deliver to Landlord an instrument in recordable form reasonably acceptable to
counsel for both parties, evidencing such assumption.
Section 22.19 No Waiver. The failure of either party to insist upon a
---------
strict performance of any of the terms or provisions of this Lease or to
exercise any option, right or remedy herein contained shall not be construed as
a waiver or as a relinquishment for the future of such term, provision, option,
right or remedy, but the same shall continue and remain in full force and
effect. No waiver by either party of any term or provision hereof shall be
deemed to have been made unless expressed in writing and signed by such party.
52
<PAGE>
Section 22.20 Confidentiality. The parties hereby agree that the matters
---------------
set forth in this Lease (except to the extent such matters are expressly
disclosed in any Memorandum of Lease recorded pursuant to Section 22.2(a)) are
strictly confidential and each party will make every effort to ensure that such
information is not disclosed to any outside persons or entities (including the
press) without the consent of the other party, except as required by ERISA or
any other Legal Requirement reporting and disclosure rules or otherwise
specifically provided herein. For purposes of the preceding sentence, the words
"outside persons or entities" do not include the parties' attorneys,
accountants, consultants, shareholders, lenders, partners, investors, or any
prospective lenders, partners and investors. No references to Tenant or to any
Affiliate will be made in any prospectus, private placement memorandum, offering
circular or offering documentation related thereto (collectively referred to as
the "Prospectus"), issued by Landlord or one of its affiliates, which is
designated to interest potential investors in any Hotel, unless Tenant has
previously received a copy of all such references. However, regardless of
whether Tenant does or does not so receive a copy of all such references,
neither Tenant nor any Affiliate will be deemed a sponsor of the offering
described in the Prospectus, nor will it have any responsibility for the
Prospectus, and the Prospectus will so state. Landlord shall indemnify, defend
and hold Tenant harmless from and against all loss, costs, liability and damage
(including reasonable attorneys' fees and expenses, and the cost of litigation)
arising out of any Prospectus or the offering described therein; and this
obligation of Landlord shall survive Termination of this Lease.
Section 22.21 Gender and Number. Words of any gender used in this Lease
-----------------
shall be held to include any other gender, and words in the singular shall be
held to include the plural and vice versa, when the sense requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "the
Premises" shall mean "the Premises or any part thereof or interest therein";
(vi) "Hotel" shall mean "Hotel or any part thereof or interest therein"; (vii)
"any of the Land" shall mean "the Land or any part thereof or interest therein";
(viii) "any of the Improvements" shall mean "the Improvements or any part
thereof or interest therein"; and (ix) "any of the personal property" shall mean
"the personal property or any part thereof or interest therein."
Section 22.22 Survival. All claims and liabilities of either party
--------
existing or arising prior to the expiration or earlier termination of this
Lease, unless otherwise specifically provided herein, and all Surviving
Obligations shall survive such expiration or earlier Termination.
Section 22.23 Acceptance of Surrender. No surrender to Landlord of this
-----------------------
Lease or of any of the Hotels or of any part thereof or of any interest therein
shall be valid or effective unless agreed to and accepted in writing by Landlord
and the Senior Mortgagee if any, and no act by Landlord or any representative or
agent of Landlord, other than a written acceptance, shall constitute an
acceptance of any such surrender.
Section 22.24 Non-Recourse as to Landlord. Anything contained herein to
---------------------------
the contrary notwithstanding, any claim based on or in respect of any liability
of Landlord under this Lease shall be enforced only against the Premises and not
against any other tangible or intangible assets, properties or funds of (i)
Landlord, (ii) any shareholder of Landlord or any director, officer, general
partner, limited partner, employee or agent of Landlord, (or any legal
representative, heir, estate, successor or assign of any thereof), (iii) any
predecessor or successor partnership or corporation (or other entity) of
Landlord, or any of its shareholders, either directly or through Landlord or its
shareholders or any predecessor or
53
<PAGE>
successor partnership or corporation or their shareholders, officers, directors,
employees or agents (or other entity), or (iv) any other Affiliate of any of the
foregoing, or any director, officer, employee or agent of any thereof; provided,
however, that if, as a result of a judicial foreclosure of any Mortgage, the
interest of Landlord in any Hotel is transferred to a Mortgagee or any other
person or entity and at the date of such foreclosure, Tenant has a legal
proceeding against Landlord, which is determined adversely to Landlord after the
exhaustion of all appeal periods, Tenant shall have the right to enforce any
judgment from any assets or other properties of Landlord but not against any
Mortgagee or any other person or any of the parties listed at (ii) through (iv)
above.
Section 22.25 Entire Agreement; Integration
-----------------------------
(a) This Lease contains all the agreements and conditions made
between the parties hereto with respect to the matters contained herein and
may not be modified orally or in any manner other than as provided in
Section 22.8. All prior written and oral understandings and agreements
shall be deemed to have merged into this Lease and have no further force
and effect.
(b) Landlord and Tenant are business entities having substantial
experience with the subject matter of this Lease and have each fully
participated in the negotiation and drafting of this Lease. Accordingly,
this Lease shall be construed without regard to the rule that ambiguities
in a document are to be construed against the drafter.
(c) No inferences shall be drawn from the fact that the final, duly
executed Lease differs in any respect from any previous draft hereof.
(d) If there is more than one Tenant, the obligations of each shall
be joint and several.
Section 22.26 Waiver of Trial by Jury. The parties hereto each waive, to
-----------------------
the full extent permitted by applicable law, all right to elect a trial by jury
in any litigation relative to this Lease.
Section 22.27 Tenant's Remedies. Tenant shall have the right to seek all
-----------------
remedies at law and/or in equity, including an order for specific performance,
to obtain full performance of all Landlord's obligations under this Lease,
and/or to recover damages for any breach by Landlord hereunder; provided,
however, that Tenant shall not have the right (i) to terminate this Lease
(except as otherwise specifically provided in this Lease) by reason of any
breach of Landlord's obligations hereunder; (ii) to set-off against Rents
hereunder any amounts owing to Tenant by Landlord; or (iii) to assert by way of
defense, cross-claim or counterclaim in any action by Landlord to recover Rent
or other sums due from Tenant any right to withhold Rent or to pay less than the
amount due hereunder. Any exercise of Tenant's rights hereunder shall be
through a separate and independent action unrelated to any claim Landlord has
against Tenant for Rent due hereunder.
Section 22.28 Landlord and Tenant Relationship. The parties hereto
--------------------------------
specifically acknowledge and agree that, notwithstanding any other provision
contained in this Lease (including the provisions for payment of Percentage
Rent), it is the intent of the parties that their relationship hereunder is and
shall at all times be that of Landlord and Tenant and not that of partners,
joint venturers, lender and borrower, agent, or any other relationship other
than that of Landlord and Tenant.
Section 22.29 Relationship with Groundlessors. With respect to any ground
-------------------------------
lease concerning any portion of the Premises which terminates by its terms prior
to the end of the Term of this Lease, Landlord shall cooperate with Tenant in
negotiating with the subject ground lessor (i) to extend the term
54
<PAGE>
of said ground lease so as to have its term terminate no earlier than the last
day of the Term, or (ii) to persuade the ground lessor to enter into a separate
ground lease directly with Tenant following the termination of said ground
lease.
Section 22.30 Limited Liability of Landlord. Notwithstanding any
-----------------------------
provisions hereof, none of the obligations of Landlord under or contemplated by
this Lease shall be an obligation of any officer, director, shareholder, limited
partner, general partner, or owner of Landlord, or any of their respective
officers, directors, shareholders, limited partners, general partners, or
owners, or successors or assigns. Landlord shall be the only person or entity
liable with respect to such obligations. Tenant hereby irrevocably waives any
right it may have against any such officer, director, shareholder, general
partner or limited partner, owner, successor or assign identified above as a
result of the performance of the provisions under or contemplated by this Lease.
This provision shall survive any termination of this Lease.
EXECUTED as of the date first written above.
TENANT: LANDLORD:
RED LION HOTELS, INC., RLH PARTNERSHIP, L.P.,
a Delaware corporation a Delaware limited partnership
By: /s/ Anupam Narayan By: /s/ David J. Johnson
------------------- ---------------------
Its: Vice President & Treasurer Its: Executive Vice President
--------------------------- -------------------------
ATTEST:
By:
----------------------------
[Assistant] Secretary
55
<PAGE>
STATE OF _______________ )
) ss.
COUNTY OF _______________ )
On this ____ day of ______________, 1995, before me personally
appeared _________________________, to me personally known to be the
______________________ of RED LION HOTELS, INC., the Delaware corporation that
executed the within and foregoing instrument, and acknowledged said instrument
to be the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath stated that (s)he was authorized to
execute said instrument and that the seal affixed, if any, is the corporate seal
of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal
the day and year first above written.
--------------------------------------------
[Seal or Stamp] Notary Public in and for the State of
, residing at
--------------- ---------------
Printed Name:
-------------------------------
My appointment expires:
---------------------
56
<PAGE>
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On this ____ day of ______________, 1995, before me personally
appeared _________________________, the ______________________ of Red Lion G.P.,
Inc., a Delaware corporation and the Managing General Partner in RLH
PARTNERSHIP, L.P., the Delaware limited partnership that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation and partnership, for the uses and
purposes therein mentioned, and on oath stated that (s)he was authorized to
execute said instrument on behalf of said corporation and that said corporation
was authorized to do so on behalf of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
--------------------------------------------
[Seal or Stamp] Notary Public in and for the State of
, residing at
--------------- ---------------
Printed Name:
-------------------------------
My appointment expires:
---------------------
57
<PAGE>
EXHIBIT A
LEGAL DESCRIPTIONS OF PROPERTIES
See Attached
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sonoma/Rohnert Park, CA)
-----------------------
The land is located in the State of California, County of Sonoma,
City of Rohnert Park, and is described as follows:
Beginning at the most Easterly corner of Lot 137, as shown upon the Map of
Mountain Shadows Subdivision, Unit No. 1, filed in Book 257 of Maps, pages
16, 17, 18, 19 and 20, Sonoma County Records; thence from said point of
beginning South 62 degrees 28' 00" East 86.00 feet to a 3/4" iron pipe
set, tagged LS 2757; thence North 34 degrees 09' 17" East 295.09 feet to a
3/4" iron pipe set, tagged LS 2757; thence North 38 degrees 42' 59" East
497.31 feet to a 3/4" iron pipe set tagged LS 2757; thence North 20
degrees 53' 59" West 455.44 feet to a 3/4" iron pipe set, tagged LS 2757;
thence North 38 degrees 49' 36" West 70.75 feet to a 3/4" iron pipe set,
tagged LS 2757; thence South 86 degrees 31' 13" West 418.79 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 76 degrees 36' 01" West 12.44
feet to a 3/4" iron pipe set, tagged LS 2757; thence South 3 degrees 05'
00" West 412.47 feet to a 3/4" iron pipe set tagged LS 2757; thence North
86 degrees 55' 00" West 5.00 feet to a 3/4" iron pipe set, tagged LS 2757;
thence South 3 degrees 05' 00" West 100.00 feet to a 3/4" iron pipe set,
tagged LS 2757; thence North 86 degrees 55' 00" West 6.00 feet to a 3/4"
iron pipe set tagged LS 2757; thence South 3 degrees 05' 00" West 42.00
feet to a 3/4" iron pipe set, tagged LS 2757; thence South 86 degrees 55'
00" East 6.00 feet to a 3/4" iron pipe set, tagged LS 2757; thence South 3
degrees 05' 00" West 61.00 feet to a 3/4" iron pipe set, tagged LS 2757;
thence South 86 degrees 55' 00" East 5.00 feet to a 3/4" iron pipe set,
tagged LS 2757; thence South 3 degrees 05' 00" West 265.20 feet to a 3/4"
iron pipe set, tagged LS 2757; thence South 6 degrees 35' 00" West 92.00
feet to a 3/4" iron pipe set, tagged LS 2757, said point being the
Northeast corner of the aforementioned Lot 137, Mountain Shadows
Subdivision, Unit No. 1, thence along the Northeasterly lot line of said
Lot 137, South 62 degrees 28' 00" East 160.00 feet to the point of
beginning of the herein above described tract of land.
A.P. No.: 160-010-23
1
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sacramento Inn, CA)
------------------
THAT CERTAIN REAL PROPERTY SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SACRAMENTO, CITY OF SACRAMENTO, DESCRIBED AS FOLLOWS:
PARCEL 1:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF
SURVEYS, MAP NO. 94, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY BOUNDARY OF THAT CERTAIN 7.32 ACRE
TRACT OF LAND DESCRIBED IN THE DEED DATED JULY 8, 1952, EXECUTED BY ROBERT
SWANSTON, JR. AND LILLIAN SWANSTON, HIS WIFE, TO STATE OF CALIFORNIA, RECORDED
IN BOOK 2280 OF OFFICIAL RECORDS AT PAGE 331, RECORDS OF SAID COUNTY, FROM WHICH
SAID POINT OF BEGINNING, THE SOUTHEAST CORNER OF SAID SECTION 15 BEARS SOUTH 11
degrees 19'10" EAST 285.00 FEET, SOUTH 25 degrees 12' EAST 167.93 FEET, SOUTH 47
degrees 28' EAST 102.09 FEET, SOUTH 55 degrees 51'10" EAST 454.55 FEET, SOUTH 30
degrees 19'50" WEST 50 FEET TO A POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC
ROAD 60.00 FEET IN WIDTH, SAID POINT BEING ON THE NORTHEASTERLY LINE OF PROPERTY
ACQUIRED BY STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF
CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET
AL, A CERTIFIED COPY THEREOF, RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 1769 OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH
59 degrees 40'10" EAST 3653.94 FEET ALONG SAID CENTER LINE AND THE NORTHEASTERLY
LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE CENTER LINE OF ETHAN
WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH, AND NORTH 01 degrees 46'30" WEST 18.54
FEET ALONG THE CENTER LINE TO THE SOUTHEAST CORNER OF SAID SECTION 15; THENCE
FROM SAID POINT OF BEGINNING ALONG THE NORTHEASTERLY AND EASTERLY BOUNDARY OF
SAID 7.32 ACRE TRACT THE FOLLOWING THREE COURSES AND DISTANCES: NORTH 11 degrees
19'10" WEST 234.97 FEET; THENCE CURVING TO THE RIGHT ON AN ARC OF 550.00 FOOT
RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING NORTH 10 degrees 41'50" EAST
412.36 FEET; AND THENCE NORTH 31 degrees 39'40" EAST 268.77 FEET; THENCE SOUTH
34 degrees 01'30" EAST 740.62 FEET; THENCE SOUTH 41 degrees 46'30" WEST 355.20
FEET; THENCE NORTH 87 degrees 38'40" WEST 349.58 FEET TO THE POINT OF BEGINNING.
2
<PAGE>
EXCEPTING THEREFROM ANY PORTION THEREOF WHICH MAY BE WITHIN THE FOLLOWING:
BEGINNING AT A POINT IN SECTION 15 FROM WHICH THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS THE FOLLOWING EIGHT (8) COURSES AND DISTANCES: NORTH 89
degrees09' WEST 323.88 FEET; SOUTH 11 degrees 19'10" EAST 345.57 FEET; SOUTH 25
degrees 12'00" EAST 167.93 FEET; SOUTH 47 degrees 28'00" EAST 102.09 FEET; AND
SOUTH 55 degrees 51'10" EAST 454.55 FEET; SOUTH 30 degrees 19'50" WEST 50.00
FEET TO A POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET IN
WIDTH, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THAT CERTAIN PROPERTY
ACQUIRED BY THE STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF
CONDEMNATION IN THE MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET
AL, A CERTIFIED COPY THEREOF, RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 1769 OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH
59 degrees 40'10" EAST 3652.94 FEET ALONG SAID CENTER LINE AND THE NORTHEASTERLY
LINE OF SAID STATE OF CALIFORNIA PROPERTY TO A POINT ON THE CENTER LINE OF ETHAN
WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH AND NORTH 01 degrees 46'30" WEST 18.54
FEET ALONG SAID CENTER LINE TO THE SAID SOUTHEAST CORNER OF SAID SECTION 15;
THENCE FROM SAID POINT OF BEGINNING SOUTH 89 degrees 09'00" EAST 81.28 FEET;
THENCE NORTH 02 degrees 07'40" WEST 87.21 FEET; THENCE NORTH 39 degrees 35'00"
EAST 233.43 FEET; THENCE SOUTH 34 degrees 01'30" EAST 248.78 FEET; THENCE SOUTH
50 degrees 42'00" WEST 321.00 FEET; THENCE NORTH 39 degrees 18'00" WEST 185.64
FEET TO THE POINT OF BEGINNING.
ALSO EXCEPTING THEREFROM THAT PORTION WHICH LIES WEST AND NORTH OF THE LINE
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT THAT BEARS SOUTH 89 degrees 30'32" EAST 211.29 FEET FROM
THE SOUTHWEST CORNER OF LOT 7, SAID BLOCK F, SAID POINT IS ALSO 113.00 FEET
SOUTHEASTERLY, MEASURED AT RIGHT ANGLES FROM THE "B 3" LINE AT ENGINEER'S
STATION "B 3" 180+70.59 OF THE DEPARTMENT OF PUBLIC WORKS' 1959 SURVEY BETWEEN
800 FEET SOUTHWEST OF ARDEN WAY AND 0.3 MILE NORTHEAST OF EL CAMINO AVENUE, ROAD
III-SAC-3-B (THE CALIFORNIA STATE ZONE II COORDINATES FOR SAID POINT ARE X=2,
163,073.395 AND Y=343,140.590); THENCE FROM SAID POINT OF BEGINNING PARALLEL TO
SAID "B 3" LINE SOUTH 40 degrees 45'28" WEST 730.59 FEET; THENCE SOUTH 30
degrees 16'27" WEST 258.31 FEET; THENCE ALONG A CURVE TO THE LEFT WITH A RADIUS
OF 500 FEET, THROUGH AN ANGLE OF 40 degrees 01'46", AN ARC LENGTH OF 349.32 FEET
THE CHORD OF WHICH CURVE BEARS SOUTH 10 degrees 37'23" WEST 342.26 FEET TO A
POINT IN THE EXISTING STATE HIGHWAY RIGHT OF WAY AS ACQUIRED BY DEED RECORDED
JUNE 28, 1943, IN BOOK 1009, AT PAGE 357 OF OFFICIAL RECORDS, SACRAMENTO COUNTY.
3
<PAGE>
PARCEL 1-A:
- - - -----------
A NON-EXCLUSIVE EASEMENT FOR PRIVATE STREET PURPOSES, TO BE APPURTENANT TO
PARCEL NO. 1, ABOVE DESCRIBED, ON, OVER AND ACROSS A STRIP OF LAND OF THE
UNIFORM WIDTH OF 50.00 FEET, THE WESTERN LINE OF SAID STRIP OF LAND BEING
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE ABOVE DESCRIBED PARCEL NO. 1; THENCE
FROM SAID POINT OF BEGINNING ALONG THE EASTERN LINE OF THE ABOVE REFERRED TO
7.32 ACRE TRACT OF LAND DESCRIBED IN THE DEED RECORDED IN BOOK 2280 OF OFFICIAL
RECORDS AT PAGE 331, SOUTH 11 degrees 19'10" EAST 285.00 FEET; THENCE ALONG THE
ARC OF A CURVE TO THE LEFT WITH A RADIUS OF 350.00 FEET, THE CHORD OF WHICH
BEARS SOUTH 25 degrees 12' EAST 167.93 FEET TO THE WESTERN LINE OF THE PROPERTY
DESCRIBED IN THE DEED FROM HERATY & GANNON TO SEARS, ROEBUCK & CO., RECORDED MAY
5, 1955, IN BOOK 2825 OF OFFICIAL RECORDS AT PAGE 200, THE EASTERN LINE OF SAID
50 FOOT STRIP TO BE EXTENDED OR SHORTENED SO AS TO EXTEND, FROM THE SOUTHERN
LINE OF PARCEL NO. 1, ABOVE DESCRIBED IN DEED TO SEARS, ROEBUCK & CO., RECORDED
IN BOOK 2825 OF OFFICIAL RECORDS AT PAGE 200.
PARCEL 1-B:
- - - -----------
NON-EXCLUSIVE EASEMENTS FOR VEHICULAR ACCESS AS DESCRIBED IN EXHIBIT "B" AS
ATTACHED TO THAT CERTAIN INSTRUMENT ENTITLED "EASEMENT AGREEMENT", RECORDED
APRIL 26, 1989, IN BOOK 8904-26, PAGE 2537, OFFICIAL RECORDS, DESCRIBED AS
FOLLOWS:
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE SACRAMENTO COUNTY RECORDER IN BOOK A OF SURVEYS, MAP NO. 94, DESCRIBED AS
FOLLOWS:
A STRIP OF LAND 40.00 FEET WIDE, THE CENTERLINE OF SAID STRIP BEGINNING AT A
POINT ON THE NORTHERLY LINE OF ARDEN WAY, A PUBLIC ROAD, AS SAID ROAD IS SHOWN
ON THE PLAT OF SURVEY ENTITLED "A PORTION OF SECTIONS 15, 64 AND 65 OF RANCHO
DEL PASO", RECORDED IN THE OFFICE OF THE SACRAMENTO COUNTY RECORDER IN BOOK 9 OF
SURVEYS, MAP NO. 22, FROM WHICH POINT OF BEGINNING THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS SOUTH 30 degrees 19'50" WEST 30.00 FEET TO A POINT ON THE
CENTERLINE OF ARDEN WAY, AND ALONG SAID CENTERLINE SOUTH 59 degrees 40'10" WEST
3,583.93 FEET TO A POINT ON THE CENTERLINE OF ETHAN WAY, A PUBLIC ROAD 60.00
FEET IN WIDTH, AND NORTH 01 degrees 46'30" WEST 18.54 FEET ALONG SAID CENTERLINE
TO SAID SOUTHEAST CORNER; THENCE FROM SAID POINT OF BEGINNING NORTH
4
<PAGE>
30 degrees 19'50" EAST 103.00 FEET; THENCE NORTH 59 degrees 40'10" WEST 616.57
FEET MORE OR LESS TO A POINT ON THE WESTERLY BOUNDARY OF PARCEL I AS SAID PARCEL
IS SHOWN ON "RECORD OF SURVEY, PORTION OF SECTIONS 15 AND 66, RANCHO DEL PASO",
RECORDED IN THE OFFICE OF THE SACRAMENTO COUNTY RECORDER IN BOOK 21 OF SURVEYS,
MAP NO. 13.
PARCEL 2:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK A OF SURVEYS, MAP NO. 94,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN SAID SECTION 15 FROM WHICH THE SOUTHEAST CORNER OF SAID
SECTION 15 BEARS THE FOLLOWING EIGHT (8) COURSES AND DISTANCES: NORTH 89 degrees
09' WEST 323.88 FEET; SOUTH 11 degrees 19'10" EAST 345.57 FEET; SOUTH 25 degrees
12'00" EAST 167.93 FEET; SOUTH 47 degrees 28'00" EAST 102.09 FEET; AND SOUTH 55
degrees 51'10" EAST 454.55 FEET; SOUTH 30 degrees 19'50" WEST 50.00 FEET TO A
POINT ON THE CENTER LINE OF ARDEN WAY, A PUBLIC ROAD 60.00 FEET IN WIDTH, SAID
POINT BEING ON THE NORTHEASTERLY LINE OF THAT CERTAIN PROPERTY ACQUIRED BY THE
STATE OF CALIFORNIA, AS DESCRIBED IN THE FINAL DECREE OF CONDEMNATION IN THE
MATTER OF THE STATE OF CALIFORNIA VS. ROBERT SWANSTON, ET AL, A CERTIFIED COPY
THEREOF RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY IN BOOK 1780
OF OFFICIAL RECORDS AT PAGE 470, ET SEQ., SOUTH 59 degrees 40'10" EAST 3653.94
FEET ALONG SAID CENTER LINE AND THE NORTHEASTERLY LINE OF SAID STATE OF
CALIFORNIA PROPERTY TO A POINT ON THE CENTER LINE OF ETHAN WAY, A PUBLIC ROAD
60.00 FEET IN WIDTH AND NORTH 01 degrees 46'30" WEST 18.54 FEET ALONG SAID
CENTER LINE TO SAID SOUTHEAST CORNER OF SAID SECTION 15; THENCE FROM SAID POINT
OF BEGINNING SOUTH 89 degrees 09'00" EAST 81.28 FEET; THENCE NORTH 02 degrees
07'40" WEST 87.21 FEET; THENCE NORTH 39 degrees 35'00" EAST 233.43 FEET; THENCE
SOUTH 34 degrees 01'30" EAST 248.78 FEET; THENCE SOUTH 50 degrees 42'00" WEST
321.00 FEET; THENCE NORTH 39 degrees 18'00" WEST 185.64 FEET TO THE POINT OF
BEGINNING.
EXCEPTING THEREFROM ALL THAT PORTION OF "PARCEL H", AS SAID PARCEL IS SHOWN ON
THAT CERTAIN RECORD OF SURVEY ENTITLED "PORTION OF SECTIONS 15 AND 66, RANCHO
DEL PASO", RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK
21 OF SURVEYS, MAP NO. 13, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID "PARCEL H"; THENCE FROM SAID POINT
OF BEGINNING ALONG THE NORTHEASTERLY LINE OF SAID "PARCEL H" NORTH 34 degrees
01'30" WEST 166.69 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THAT CERTAIN
50.00 FOOT ROAD
5
<PAGE>
EASEMENT DESCRIBED IN THAT CERTAIN DEED RECORDED IN THE OFFICE OF THE SAID
RECORDER IN BOOK 2825 OF OFFICIAL RECORDS, PAGE 202, SAID EASEMENT BEING
DESIGNATED (EASEMENT NO. 5) ON SAID RECORD OF SURVEY; THENCE ALONG THE
SOUTHEASTERLY AND EASTERLY LINE OF SAID 50.00 FOOT ROAD EASEMENT THE FOLLOWING
THREE (3) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST 33.71 FEET;
(2) CURVING TO THE LEFT ON AN ARC OF 68.33 FOOT RADIUS, SAID ARC BEING SUBTENDED
BY A CHORD BEARING SOUTH 04 degrees 29'00" EAST 112.20 FEET AND (3) SOUTH 59
degrees 40'10" EAST 78.79 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF SAID
"PARCEL H"; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID "PARCEL H" NORTH 50
degrees 42'00" EAST 55.02 FEET TO THE POINT OF BEGINNING.
PARCEL 3:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE "MAP OF SURVEYS AND SUBDIVISION
OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF
SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED IN
THE DEED DATED JANUARY 30, 1959, EXECUTED BY WILLIAM G. GANNON AND CLARA D.
GANNON TO PHILIP G. HERATY, RECORDED FEBRUARY 24, 1959, IN THE OFFICE OF SAID
RECORDER IN BOOK 3708 OF OFFICIAL RECORDS AT PAGE 35; THENCE FROM SAID POINT OF
BEGINNING ALONG THE BOUNDARY LINE OF SAID HERATY PROPERTY THE FOLLOWING TWO
COURSES AND DISTANCES: NORTH 50 degrees 42'00" EAST 220.00 FEET AND SOUTH 34
degrees 01'30" EAST 81.33 FEET; THENCE NORTH 55 degrees 58'30" EAST 74.00 FEET;
THENCE NORTH 34 degrees 01'30" WEST 226.71 FEET; THENCE SOUTH 50 degrees 42'00"
WEST 294.31 FEET TO A POINT ON THE EASTERLY LINE OF THAT CERTAIN 11.893 ACRE
TRACT OF LAND DESCRIBED IN THE DOCUMENT RECORDED IN THE OFFICE OF SAID RECORDER
IN BOOK 3294 OF OFFICIAL RECORDS, AT PAGE 91; THENCE ALONG SAID EASTERLY LINE
SOUTH 34 degrees 01'30" EAST 138.55 FEET TO THE POINT OF BEGINNING.
PARCEL 4:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE OFFICIAL "MAP OF SURVEY AND
SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP NO. 94,
RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHWESTERN LINE OF PROPERTY DESCRIBED IN THE DEED
FROM PHILIP F. HERATY, ET UX, TO WILLIAM G. GANNON, ET UX, DATED JULY 17, 1958
AND RECORDED JULY 18, 1958, IN BOOK 3550 OF OFFICIAL RECORDS AT PAGE 255, SAID
POINT BEING
6
<PAGE>
LOCATED SOUTH 50 degrees 42' WEST 323.47 FEET FROM THE MOST WESTERN CORNER OF
LOT 548, AS SHOWN ON THE OFFICIAL "PLAT OF SWANSTON ESTATES UNIT NO. 5",
RECORDED MAY 29, 1958, IN BOOK 49 OF MAPS, MAP NO. 13; THENCE FROM SAID POINT OF
BEGINNING SOUTH 50 degrees 42' WEST 220.00 FEET TO A POINT ON THE NORTHEASTERN
LINE OF PROPERTY DESCRIBED IN THE LEASE EXECUTED BY HERATY & GANNON, A CO-
PARTNERSHIP, AS LESSOR, AND SACRAMENTO, INN, INC., A CORPORATION, AS LESSEE,
DATED JANUARY 10, 1957, AND RECORDED MAY 3, 1957, IN BOOK 3294 OF OFFICIAL
RECORDS AT PAGE 30; THENCE ALONG THE NORTHEASTERN LINE OF SAID SACRAMENTO INN,
INC., A PROPERTY NORTH 34 degrees 01'30" WEST 200.00 FEET; THENCE NORTH 50
degrees 42' EAST 220.00 FEET; THENCE SOUTH 34 degrees 01'30" EAST 200.00 FEET TO
THE POINT OF BEGINNING.
PARCEL 5:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE OFFICIAL "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN
BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF LOT 540, AS SHOWN ON THE "PLAT OF SWANSTON
ESTATES UNIT NO. 5", RECORDED MAY 29, 1958, IN BOOK 49 OF MAPS, MAP NO. 13;
THENCE FROM SAID POINT OF BEGINNING ALONG THE WESTERLY BOUNDARY OF SAID SWANSTON
ESTATES UNIT NO. 5, THE FOLLOWING THREE COURSES AND DISTANCES; SOUTH 00 degrees
57'30" EAST 144.50 FEET, SOUTH 21 degrees 00'02" WEST 99.05 FEET AND SOUTH 50
degrees 42'00" WEST 234.00 FEET; THENCE CONTINUING SOUTH 50 degrees 42'00" WEST
323.47 FEET; THENCE NORTH 34 degrees 01'30" WEST 200.00 FEET; THENCE SOUTH 50
degrees 43'00" WEST 220.00 FEET; THENCE NORTH 34 degrees 01'30" WEST 275.85 FEET
TO A POINT ON THE SOUTHEASTERLY LINE OF A ROADWAY; THENCE NORTH 31 degrees
38'20" EAST 93.47 FEET AND NORTH 39 degrees 17'30" EAST 512.87 FEET; THENCE
NORTH 89 degrees 02'30" EAST 43.20 FEET; THENCE CURVING TO THE RIGHT ON AN ARC
OF 143.42 FEET RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62
degrees 51'35" EAST 135.10 FEET; THENCE CURVING TO THE LEFT ON AN ARC OF 195.42
FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62 degrees 51'35"
EAST 184.08 FEET AND THENCE NORTH 89 degrees 02'30" EAST 200.00 FEET TO THE
POINT OF BEGINNING.
EXCEPTING THEREFROM ALL THAT PORTION OF SECTION 15, AS SHOWN ON THE "MAP OF
SURVEYS AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN BOOK A OF SURVEYS, MAP
NO. 94, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED IN
THE DEED DATED JANUARY 30, 1959, EXECUTED BY WILLIAM G. GANNON AND CLARA D.
GANNON TO PHILIP F. HERATY,
7
<PAGE>
RECORDED FEBRUARY 24, 1959, IN THE OFFICE OF THE SAID RECORDER IN BOOK 3708 OF
OFFICIAL RECORDS, AT PAGE 35; THENCE FROM SAID POINT OF BEGINNING ALONG THE
BOUNDARY LINE OF SAID HERATY PROPERTY THE FOLLOWING TWO COURSES AND DISTANCES;
NORTH 50 degrees 42'00" EAST 220.00 FEET AND SOUTH 34 degrees 01'30" EAST 81.33
FEET; THENCE NORTH 55 degrees 58'30" EAST 74.00 FEET; THENCE NORTH 34 degrees
01'30" WEST 226.71 FEET; THENCE SOUTH 50 degrees 42'00" WEST 294.31 FEET TO A
POINT ON THE EASTERLY LINE OF THAT CERTAIN 11.893 ACRE TRACT OF LAND DESCRIBED
IN THE DOCUMENTS RECORDED IN THE OFFICE OF THE SAID RECORDER IN BOOK 3294 OF
OFFICIAL RECORDS AT PAGE 91; THENCE ALONG SAID EASTERLY LINE SOUTH 34 degrees
01'30" EAST 138.55 FEET TO THE POINT OF BEGINNING.
FURTHER EXCEPTING THEREFROM ALL THAT PORTION OF "PARCEL A" AND "PARCEL B" AS
SAID PARCELS ARE SHOWN ON THAT CERTAIN RECORD OF SURVEY ENTITLED "PORTION OF
SECTION 15 & 66 RANCHO DEL PASO", RECORDED IN THE OFFICE OF THE RECORDER OF
SACRAMENTO COUNTY IN BOOK 21 OF SURVEYS, MAP NO. 13, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID "PARCEL A" SAID CORNER ALSO BEING THE
NORTHWEST CORNER OF LOT 540 AS SAID LOT IS SHOWN ON THE OFFICIAL "PLAT OF
SWANSTON ESTATES UNIT NO. 5", RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 49
OF MAPS, MAP NO. 13; THENCE FROM SAID POINT OF BEGINNING ALONG THE EAST BOUNDARY
OF SAID "PARCEL A" AND THE WEST BOUNDARY OF SAID SWANSTON ESTATES UNIT NO. 5,
THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 00 degrees 57'30" EAST
144.50 FEET AND (2) SOUTH 21 degrees 02'00" WEST 55.00 FEET; THENCE SOUTH 89
degrees 02'30" WEST 347.04 FEET; THENCE NORTH 50 degrees 42'30" WEST 360.41 FEET
TO A POINT ON THE NORTHWESTERLY BOUNDARY OF SAID "PARCEL B"; THENCE ALONG THE
NORTHWESTERLY BOUNDARY OF SAID "PARCEL B" NORTH 39 degrees 17'30" EAST 148.00
FEET TO THE NORTHWEST CORNER OF SAID "PARCEL B"; THENCE ALONG THE NORTH BOUNDARY
OF SAID "PARCEL A" AND "PARCEL B" THE FOLLOWING FOUR (4) COURSES AND DISTANCES:
(1) NORTH 89 degrees 02'30" EAST 65.52 FEET; (2) CURVING TO THE RIGHT ON AN ARC
OF 143.42 FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62
degrees 51'35" EAST 135.10 FEET; (3) CURVING TO THE LEFT ON AN ARC OF 195.42
FOOT RADIUS, SAID ARC BEING SUBTENDED BY A CHORD BEARING SOUTH 62 degrees 51'35"
EAST 184.08 FEET AND (4) NORTH 89 degrees 02'30" EAST 200.00 FEET TO THE POINT
OF BEGINNING.
ALSO EXCEPTING THEREFROM ALL THAT PORTION OF THE ABOVE DESCRIBED PROPERTY LYING
WITHIN ANY PUBLIC ROAD.
8
<PAGE>
PARCEL 6:
- - - ---------
ALL THAT PORTION OF SECTION 15, AS SAID SECTION IS SHOWN AND SO DESIGNATED ON
THE OFFICIAL "MAP OF SURVEY AND SUBDIVISION OF RANCHO DEL PASO", RECORDED IN
BOOK A OF SURVEYS, MAP NO. 94, RECORDS OF SACRAMENTO COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT FROM WHICH THE MOST SOUTHERLY CORNER OF LOT 548, AS SAID
LOT IS SHOWN AND SO DESIGNATED ON THE OFFICIAL "PLAT OF SWANSTON ESTATES UNIT
NO. 5", RECORDED IN THE OFFICE OF THE RECORDER OF SACRAMENTO COUNTY, IN BOOK 49
OF MAPS, MAP NO. 13, SAID CORNER BEING A POINT ON THE NORTHWESTERLY LINE OF
ROYALE ROAD, AS SHOWN ON SAID SWANSTON ESTATES UNIT NO. 5, BEARS NORTH 50
degrees 42' EAST 311.47 FEET; THENCE FROM SAID POINT OF BEGINNING SOUTH 50
degrees 42' WEST 250.00 FEET; THENCE NORTH 34 degrees 01'30" WEST 195.83 FEET;
THENCE NORTH 50 degrees 42' EAST 232.00 FEET; THENCE SOUTH 39 degrees 18' EAST
195.00 FEET TO THE POINT OF BEGINNING.
PARCEL 7:
- - - ---------
ALL THAT PORTION OF PARCEL H AS SAID PARCEL IS SHOWN ON THE RECORD OF SURVEY
ENTITLED "PORTION OF SECTIONS 15 & 66 RANCHO DEL PASO", RECORDED IN THE OFFICE
OF THE RECORDER OF SACRAMENTO COUNTY IN BOOK 21 OF SURVEYS, MAP NO. 13,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID PARCEL H; THENCE FROM SAID POINT
OF BEGINNING ALONG THE SOUTHEASTERLY BOUNDARY OF SAID PARCEL H NORTH 30 degrees
19'50" EAST 96.82 FEET; THENCE CONTINUING ALONG THE SOUTHEASTERLY BOUNDARY OF
SAID PARCEL H NORTH 50 degrees 42'00" EAST 677.21 FEET TO THE MOST EASTERLY
CORNER OF SAID PARCEL H; THENCE ALONG THE BOUNDARY OF SAID PARCEL H NORTH 34
degrees 01'30" WEST 166.69 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THAT
CERTAIN 50.00 FOOT ROAD EASEMENT DESCRIBED IN THE DOCUMENT RECORDED IN THE
OFFICE OF SAID RECORDER IN BOOK 3497 OF OFFICIAL RECORDS, AT PAGE 131; THENCE
ALONG THE SOUTHEASTERLY AND EASTERLY LINE OF SAID 50.00 FOOT ROAD EASEMENT THE
FOLLOWING THREE (3) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST
33.71 FEET; (2) CURVING TO THE LEFT ON AN ARC OF 68.33 FOOT RADIUS, SAID ARC
BEING SUBTENDED BY A CHORD BEARING SOUTH 04 degrees 09'00" EAST 112.20 FEET AND
(3) SOUTH 59 degrees 40'10" EAST 36.12 FEET TO A POINT ON THE SOUTHEASTERLY LINE
OF THAT CERTAIN 1.549 ACRE TRACT OF LAND DESCRIBED AS PARCEL NO. 2 IN THE DEED
RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 7608-31 OF OFFICIAL RECORDS, AT
PAGE 1333; THENCE ALONG THE BOUNDARY OF SAID 1.589 ACRE TRACT OF LAND THE
FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 50 degrees 42'00" WEST 247.43
FEET TO THE MOST SOUTHERLY CORNER OF SAID
9
<PAGE>
1.549 ACRE TRACT OF LAND AND (2) NORTH 39 degrees 13'00" WEST 110.85 FEET TO A
POINT ON THE SOUTHEASTERLY LINE OF THAT CERTAIN 8.001 ACRE TRACT OF LAND
DESCRIBED AS PARCEL NO. 1 IN THE DEED RECORDED IN THE OFFICE OF SAID RECORDER IN
BOOK 7608-31 OF OFFICIAL RECORDS AT PAGE 1333; THENCE ALONG THE BOUNDARY OF SAID
8.001 ACRE TRACT OF LAND THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH
41 degrees 46'30" WEST 15.04 FEET TO THE MOST SOUTHERLY CORNER OF SAID 8.001
ACRE TRACT OF LAND AND (2) NORTH 87 degrees 38'40" WEST 350.40 FEET TO A POINT
ON THE NORTHEASTERLY BOUNDARY OF THAT CERTAIN 7.32 ACRE TRACT OF LAND DESCRIBED
IN THE DEED RECORDED IN THE OFFICE OF SAID RECORDER IN BOOK 2280 OF OFFICIAL
RECORDS AT PAGE 331; SAID POINT ALSO BEING LOCATED ON THE WESTERLY LINE OF SAID
PARCEL H; THENCE ALONG SAID NORTH-EASTERLY BOUNDARY AND SAID WESTERLY LINE THE
FOLLOWING TWO (2) COURSES AND DISTANCES: (1) SOUTH 11 degrees 19'00" EAST 286.27
FEET AND (2) CURVING TO THE LEFT ON AN ARC OF 350.00 FOOT RADIUS, SAID ARC BEING
SUBTENDED BY A CHORD BEARING SOUTH 25 degrees 33'54" EAST 167.10 FEET TO THE
POINT OF BEGINNING.
NON-EXCLUSIVE EASEMENTS FOR RIGHT-OF-WAY FOR INGRESS AND EGRESS AND MUTUAL
PARKING AS DESCRIBED IN "ARTICLE I" OF THAT CERTAIN INSTRUMENT ENTITLED "GRANTS
OF EASEMENTS, COVENANTS AND AGREEMENT FOR MAINTENANCE OF PARKING AREA", RECORDED
JULY 28, 1967, IN BOOK 6707-28, PAGE 645, OFFICIAL RECORDS.
10
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: San Diego, CA)
-------------
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL 1:
- - - ---------
PARCEL 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP NO. 15912, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
DIEGO COUNTY, ON DECEMBER 19, 1989
PARCEL 2:
- - - ---------
A NON-EXCLUSIVE AND EXCLUSIVE UTILITY, FIRE AND SERVICE CORRIDOR, AND HOTEL
COURTYARD EASEMENTS WHICH ARE ALL PERPETUAL AND IRREVOCABLE, ENCUMBERING LOTS 2
THROUGH 4 OF HAZARD CENTER, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE
OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11949, FILED IN THE OFFICE OF THE
COUNTY RECORDER OF SAN DIEGO COUNTY ON NOVEMBER 10, 1987, ALL AS MORE
PARTICULARLY DESCRIBED IN ARTICLE 2, PARAGRAPHS 2.6, 2.7 AND 2.8 OF THE
CONSTRUCTION OPERATION AND RECIPROCAL EASEMENT AGREEMENT, EXECUTED BY AND
BETWEEN R. E. HAZARD CONTRACTING CO., A CALIFORNIA CORPORATION, CROW-HAZARD
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND RL ACQUISITION COMPANY, A
CALIFORNIA LIMITED PARTNERSHIP, RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF
OFFICIAL RECORDS.
THE EASEMENT HEREIN DESCRIBED ARE HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREINDESCRIBED.
PARCEL 3:
- - - ---------
AN EXCLUSIVE PARKING EASEMENT, TEMPORARY ADDITIONAL EXCLUSIVE PARKING, A NON-
EXCLUSIVE PARKING EASEMENT, AND NON-EXCLUSIVE ACCESS EASEMENT, WHICH ARE ALL
PERPETUAL AND IRREVOCABLE, ENCUMBERING LOTS 2 THROUGH 4 OF HAZARD CENTER, IN THE
CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF NO. 11949, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY ON NOVEMBER 10, 1987, ALL AS MORE PARTICULARLY DESCRIBED IN ARTICLE 2,
PARAGRAPHS 2.2, 2.3, 2.4 AND 2.5 OF THE CONSTRUCTION, OPERATION AND RECIPROCAL
EASEMENT AGREEMENT, EXECUTED BY AND BETWEEN R. E. HAZARD CONTRACTING
11
<PAGE>
CO., A CALIFORNIA CORPORATION; CROW-HAZARD ASSOCIATES, A CALIFORNIA GENERAL
PARTNERSHIP AND RL ACQUISITION COMPANY, A CALIFORNIA LIMITED PARTNERSHIP,
RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF OFFICIAL RECORDS.
THE EASEMENTS HEREIN DESCRIBED ARE HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREINDESCRIBED.
PARCEL 4:
- - - ---------
AN EXCLUSIVE PARKING GARAGE CONNECTION EASEMENT ENCUMBERING LOT 2 OF HAZARD
CENTER, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 11949, FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY, ON NOVEMBER 10, 1987, AS MORE PARTICULARLY DESCRIBED IN THE
CONSTRUCTION, OPERATION AND RECIPROCAL EASEMENT AGREEMENT EXECUTED BY AND
BETWEEN R. E. HAZARD CONTRACTING CO., A CALIFORNIA CORPORATION; CROW-HAZARD
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND RED LION, A CALIFORNIA LIMITED
PARTNERSHIP (FORMERLY KNOWN AS RL ACQUISITION COMPANY, A CALIFORNIA LIMITED
PARTNERSHIP), RECORDED MAY 19, 1988 AS FILE NO. 88-234744 OF OFFICIAL RECORDS.
THE EASEMENT HEREIN DESCRIBED IS HEREBY DECLARED TO BE APPURTENANT TO AND FOR
THE USE AND BENEFIT OF THE PRESENT AND FUTURE OWNERS OF ALL OR ANY PORTION OF
PARCEL 1 HEREIN DESCRIBED.
12
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Durango, CO)
-----------
Situated in the County of La Plata, State of Colorado, to-wit:
Lot 1A in RED LION INN RESUBDIVISION, according to the plat thereof filed for
record July 1, 1993 under Reception No. 649036.
Tax Parcel Numbers: 5665-301-00048
5665-301-00120
5665-301-00129
13
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Boise Downtowner, ID)
--------------------
The land is situated in the State of Idaho, County of Ada, and is described as
follows:
PARCEL A:
PARCEL I:
All of Lots 1 and 2 in Block 40 and all of Block 41 of FAIRVIEW ADDITION,
according to the official plat thereof, filed in Book 2 of Plats at Page 73,
Official Records of Ada County, Idaho, and all of Block 40-A CITIZENS RIGHT-OF-
WAY, according to the official plat thereof, filed in Block 7 of Plats at Page
341, and a portion of Lots 1 and 2 in Block 10 and all of Lots 11, 12, 13 and 14
in Block 9 of McCARTY'S SECOND ADDITION, according to the official plat thereof,
filed in Book 2 of Plats at Page 85, Official Records, and the vacated streets
and alley included within the boundaries thereof, more particularly described as
follows:
Beginning at the intersection of the Easterly boundary of 22nd Street and
Northerly boundary of Fairview Avenue, being the Southwest corner of Block
41 of FAIRVIEW ADDITION, said point being THE TRUE POINT OF BEGINNING;
thence
North 0 degrees 00'00" East 350.16 feet along the Easterly boundary of said 22nd
street to a point on the Southerly boundary of Main Street; thence
North 89 degrees 59'20" East 157.99(8) feet along the said Southerly boundary of
Main Street to a point; thence
South 89 degrees 50'40" East 157.98(151.50) feet along the said Southerly
boundary of Main Street to a point; thence
South 54 degrees 50'40" East 57.50 feet along the said Southerly boundary of
Main Street to a point; thence
South 1 degrees 57'20" West 192.00 feet to a point, said point being the
Southeast corner of said Lot 14 in Block 9 of said McCARTY'S SECOND
ADDITION; thence
North 88 degrees 02'40" West 230.08 feet to a point; thence
South 2 degrees 53'20" West 136.32 feet to a point on the Northerly boundary of
said Fairview Avenue; thence
North 88 degrees 13'50" West 113.20 feet along the said Northerly boundary of
said Fairview Avenue to the POINT OF BEGINNING.
PARCEL II:
Lots 9 and 10 in Block 9 of McCARTY'S SECOND ADDITION, according to the official
plat thereof, filed in Book 2 of Plats at Page 85, Official Records.
EXCEPT THEREFROM that portion of said Lot 10, more particularly described as
follows:
14
<PAGE>
Commencing at the Northwest corner of said Lot 10, said point being the TRUE
POINT OF BEGINNING; thence
South 88 degrees 02'40" East 20.00 feet along the Northerly boundary of said Lot
10 to a point; thence
South 46 degrees 57'20" West 28.28 feet to a point on the Westerly boundary of
said Lot 10; thence
North 1 degrees 57'20" East 20.00 feet along the said Westerly boundary of said
Lot 10 to the POINT OF BEGINNING.
ALSO EXCEPT a parcel of land for public right-of-way being a portion of Lots 9
and 10 of Block 9 of McCARTY'S SECOND ADDITION, a subdivision according to the
official plat thereof, filed in Book 2 of Plats at Page 85, lying in the
Southeast quarter of Section 4, Township 3 North, Range 2 East, Boise Meridian,
Ada County Idaho, and more particularly described as follows:
Beginning at a lead plug and tack marking the Northwest corner of Lot 2 of Block
40 of FAIRVIEW ADDITION, a subdivision, according to the official plat
thereof, filed in Book 2 of Plats at Page 73, Official Records; thence
South 0 degrees 00'00" West 350.16 feet along the Westerly boundaries of said
Lot 2 of Block 40 of FAIRVIEW ADDITION, Block 40-A CITIZEN'S RIGHT-OF-WAY,
a subdivision, according to the official plat thereof, filed in Book 7 of
Plats at Page 341, and Block 41 of said FAIRVIEW ADDITION, which is also
the Easterly right-of-way line 22nd Street, to a point marking the
Southwest corner of the said Block 41 of FAIRVIEW ADDITION; thence
South 88 degrees 13'50" East 190.58 feet along the Southerly boundary of the
said Block 41 of FAIRVIEW ADDITION, Block 40-A of Citizens Right-of-Way,
the adjacent alley to the said Lot 10 of Block 9, McCARTY'S SECOND
ADDITION, all of Lot 10 and a portion of Lot 9 of Block 9 of McCARTY'S
SECOND ADDITION, which is also the Northerly right-of-way line of Fairview
Avenue, to a point, also said point being the REAL POINT OF BEGINNING;
thence continuing
South 88 degrees 13'50" East 30.0 feet along the said Southerly boundaries of
Lots 10 and 9 of Block 9 of McCARTY'S SECOND ADDITION to a point; thence
North 1 degrees 57'20" East 99.95 feet along a line 25.00 feet Westerly of and
parallel with the Easterly boundary of the said Lot 9 of Block 9 of
McCARTY'S SECOND ADDITION to a iron pin; thence
North 46 degrees 57'20" East 28.28 feet to an iron pin on the Northerly boundary
line of the said Lot 9 of Block 9 of McCARTY'S SECOND ADDITION; thence
North 88 degrees 02'40" West 50.00 feet along the said Northerly boundary of Lot
9 and the Northerly boundary of the said Lot 10 of Block 9 of McCARTY'S
SECOND ADDITION to a iron pin; thence
South 1 degrees 57'20" West 120.05 feet along line 5.00 feet Westerly of and
parallel with Easterly boundary of the said Lot 10 of Block 9 of McCARTY'S
SECOND ADDITION to THE REAL POINT OF BEGINNING.
15
<PAGE>
PARCEL III:
The East 150 feet of Lot 1 in Block 38 and all of Block 39 of FAIRVIEW ADDITION,
according to the official plat thereof, filed in Book 2 of Plats at Page 73 and
the East 150 feet of Block 38-A of CITIZEN'S RIGHT-OF-WAY, according to the
official plat thereof, filed in Book 7 of Plats at Page 341, Official Records,
of Ada County, Idaho.
PARCEL IV:
Lots 15 and 16 of Block 9 of McCARTY'S SECOND ADDITION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho and that portion of 18th Street, now vacated, described as
follows: Beginning at the Northeast corner of said Lot 16; thence West 100 feet;
thence
North 69.88 feet; thence
Southeast 119.28 feet; thence
South 4.86 feet to THE POINT OF BEGINNING.
PARCEL V:
A parcel of land being all of the alley lying Westerly of and adjacent with the
Westerly boundary of Lot 10 of Block 9 and a portion of the 16.00 foot alley
lying Northerly of and adjacent with said Lot 10 of Block 9 of McCARTY'S SECOND
ADDITION, a subdivision according to the official plat thereof, filed in Book 2
of Plats at Page 85, lying in the Southeast quarter of Section 4, Township 3
North, Range 2 East, Boise Meridian, Ada County Idaho, more particularly
described as follows:
Beginning at a lead plug and tack marking the Northwest corner of Lot 2 of Block
40 of FAIRVIEW ADDITION, a subdivision, according to the official plat
thereof, filed in Book 2 of Plats at Page 73, Official Records; thence
South 0 degrees 00'00" West 350.16 feet along the Westerly boundaries of said
Lot 2 of Block 40 of FAIRVIEW ADDITION, Block 40-A CITIZEN'S RIGHT-OF-WAY,
a subdivision, according to the official plat thereof, filed in Book 7 of
Plats at Page 341, and Block 41 of said FAIRVIEW ADDITION, which is also
the Easterly right-of-way line 22nd Street, to a point marking the
Southwest corner of the said Block 41 of FAIRVIEW ADDITION; thence
South 88 degrees 13'50" East 145.58 feet along the Southerly boundaries of said
Block 41 of FAIRVIEW ADDITION and Block 40-A of CITIZENS RIGHT-OF-WAY and
adjacent alley to said Lot 10 of Block 9 OF McCARTY'S SECOND ADDITION
which is also the Northerly right-of-way line of FAIRVIEW AVENUE, to a
point marking the Southwest corner of the said Lot 10 of Block 9 of
McCARTY'S SECOND ADDITION, also said point being the REAL POINT OF
BEGINNING; thence
North 1 degrees 57'20" East 100.20 feet along the Westerly boundary of the said
Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to an iron pin; thence
North 46 degrees 57'20" East 26.28 feet to an iron pin on the Northerly boundary
of the said Lot 10 of Block 9 of McCARTY'S SECOND ADDITION; thence
16
<PAGE>
South 88 degrees 02'40" East 25.00 feet along the said Northerly boundary of the
said Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to an iron pin; thence
North 1 degrees 57'20" East 16.0 feet along a line Westerly of and parallel with
the Westerly boundary extended of the said Lot 9 in Block 9 of McCARTY'S
SECOND ADDITION to an iron pin on the Northerly boundary of the said 16-
foot alley; thence
North 88 degrees 02'40" West 75.16 feet along the said Northerly boundary of the
said 16-foot alley to an iron pin on the Westerly boundary of the said
McCARTY'S SECOND ADDITION; thence
South 2 degrees 53'20" West 136.32 feet along the said Westerly boundary of
McCARTY'S SECOND ADDITION, which is also the Westerly boundary of the said
adjacent alley to Lot 10 of Block 9 of McCARTY'S SECOND ADDITION, to a
point marking the Southwest corner of the said adjacent alley to Lot 10 of
Block 9 of McCARTY'S SECOND ADDITION; thence
South 88 degrees 13'50" East 32.38 feet along the said Southerly boundary of the
adjacent alley to Lot 10 of Block 9 of McCARTY'S SECOND ADDITION to the
REAL POINT OF BEGINNING.
PARCEL VI:
Lots 7 and 8 in Block 9 of McCARTY's SECOND ADDITION, according to the official
plat thereof, filed in Book 2 of Plats at Page 85, Official Records of Ada
County, Idaho.
As to leasehold estate in:
PARCEL B:
Lots 3, 4, 5, 6 and 17 in BLock 9 of McCARTY'S SECOND ADDITION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho, and Lots 18 and 19 in Block 9, EXCEPT the hereinafter
described:
A parcel of land being on the Westerly side of the center line of Boise One-Way
Couplet, Project No. U-3021 (21) Highway Survey, as shown on the plans thereof
now on file in the office of the Department of Highways of the State of Idaho,
and being a portion of Lot 18 in Block 9 of McCARTY'S SECOND ADDITION, according
to the official plat thereof, filed in Book 2 of Plats at Page 85, Official
Records of Ada County, Idaho, described as follows:
Beginning at the Northeast corner of Lot 18 in Block 9 of said McCARTY'S SECOND
ADDITION; thence
Southerly along the Easterly boundary line of said Lot 18 a distance of 12.2
feet to a point that bears
North 87 degrees 54'04" West, 58.74 feet from Station 80456.72 of Boise, One Way
Couplet, Project No. U-3021 (21) Highway Survey; thence Northwesterly
along a 140.50 foot radius curve left 35.94 feet to a point that bears
17
<PAGE>
South 35 degrees 10'41" West 42.38 feet from Station 79462.58 of said Highway
Survey; thence Northerly 3.0 feet, more or less, to a point in the
Northeasterly line of said Lot 18 that bears
South 35 degrees 10'41" West 40.00 feet from Station 79460.90 of said Highway
Survey; thence Southeasterly along the Northeasterly line of said Lot 18
to the PLACE OF BEGINNING.
AND
All of Lot 19, Block 9 of McCARTY'S SECOND SUBDIVISION, according to the
official plat thereof, filed in Book 2 of Plats at Page 85, Official Records of
Ada County, Idaho.
EXCEPTING THEREFROM a parcel of land being on both sides of the centerline of
Boise One-Way Couplet, Project No. U-3021 (21) Highway Survey as shown on the
plans thereof now on file in the office of the Department of Highways of the
State of Idaho and being a portion of Lot 19 in Block 9 of MCCARTY'S SECOND
SUBDIVISION, according to the official plat thereof, filed in Book 2 of Plats at
Page 85, Official Records of Ada County, Idaho, described as follows:
Beginning at the East corner of Lot 19 in Block 9 of said MCCARTY'S SECOND
ADDITION; thence
Westerly along the South boundary line of said Lot 19, a distance of 95.44 feet
to the Southwest corner thereof; thence
North 62 degrees 17'36" East 23.12 feet to a point that bears North 87 degrees
54'04" West 38.67 feet from Station 80194.74 of Boise, One-Way Couplet,
Project No. U-3021 (21) Highway Survey; thence
Northwesterly along a 140.50 foot radius curve left 55.10 feet to a point in the
Westerly line of said Lot 19 that bears
North 87 degrees 54'04" West, 58.74 feet from Station 80+56.73 of said Highway
Survey; thence
Northerly along said Westerly line 12.7 feet, to the Northwesterly corner of
said Lot 19; thence
Southeasterly along the Northeasterly boundary line of said Lot 19 to the REAL
POINT OF BEGINNING.
Tax Parcel Numbers: R2734252191
R2734252200
R2734252210
R5538940984
R5538940940
R5538941120
Also described as follows pursuant to Survey dated May 13, 1994 and revised July
17, 1995:
18
<PAGE>
Parcel 1:
The east 150.00 feet of Lot 1 Block 38 and all of Block 39 of the FAIRVIEW
ADDITION according to the official plat thereof filed in the office of the Ada
County Recorder in Book 2 of Plats at Page 73, and the east 150.00 feet of Block
38-A of CITIZEN'S RIGHT OF WAY, according to the official plat thereof, filed in
Book 7 of Plats at Page 341, being more particularly described as follows:
BEGINNING at a 5/8 inch iron pin at the northeasterly corner of said Block 39,
being the point of intersection of the southerly sideline of West Main Street
with the westerly sideline of North 22nd Street; thence,
1.) S.00 degrees 00'00"E., 165.60 feet along the westerly sideline of
said 22nd Street to a 5/8 inch iron pin; thence,
2.) N.89 degrees 00'42"W., 150.02 feet along the southerly line of said
Lot 1 Block 38 to a 5/8 inch iron pin; thence,
3.) N.00 degrees 00'00"W., 162.98 feet along a line parallel with and
150.00 feet west of the westerly sideline of 22nd Street to a 5/8
inch iron pin; thence,
4.) N.89 degrees 59'20"E., 150.00 feet along the southerly sideline of
said West Main Street to the POINT OF BEGINNING;
said Parcel 1 containing 0.5657 acres of land, and being the same parcel as
described as Parcel III in Instrument No. 8564000, Deed of Trust and Assignment
of Leases and Rents.
Parcel 2:
All of Lots 1 and 2 of Block 40 and all of Block 41 of the FAIRVIEW ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 73; all of Block 40-A of CITIZEN'S RIGHT OF
WAY according to the official plat thereof filed in Book 7 of Plats at Page 341;
portions of Lots 1 and 2 of Block 10 and a portion of Lot 10 and all of Lots 11,
12, 13, 14, 15 and 16 of Block 9 of McCARTY'S 2ND ADDITION, according to the
official plat thereof filed in Book 2 of Plats at Page 85; and certain vacated
portions of streets and alleys shown on said plat and included within the
following more particularly described Parcel 2: BEGINNING at the point of
intersection of the easterly sideline of North 22nd with the northerly sideline
of Fairview Avenue, said point being the southwesterly corner of said Block 41
of the FAIRVIEW ADDITION; thence,
1.) N.00 degrees 00'00"W., 350.18 feet along the easterly sideline of
said North 22nd Street, being along the westerly lines of said Block
41, Block 40-A of said CITIZEN'S RIGHT OF WAY and Block 40 of said
FAIRVIEW
19
<PAGE>
ADDITION to the point of intersection of said easterly sideline of
North 22nd Street with the southerly sideline of West Main Street;
thence,
2.) N.89 degrees 59'20"E., 157.98 feet along the southerly sideline of
West Main Street, being along the northerly line of Lots 1 and 2 of
Block 40 FAIRVIEW ADDITION and along the northerly terminus of a
vacated portion of 19th Street to a point in the westerly line of Lot
2 Block 10 of said McCARTY'S 2ND ADDITION; thence,
3.) S.89 degrees 50'40"E., 151.50 feet along said sideline of West Main
Street to a point in the northeasterly line of Lot 1 of said Block
10; thence,
4.) S.54 degrees 50'40"E., 185.34 feet along said sideline, being along
the northeasterly line of said Lot 1, and along the easterly terminus
of vacated 18th Street to a point in the northerly line of Lot 17
Block 9 of said McCARTY'S 2ND ADDITION; thence,
5.) N.88 degrees 02'40"W., 6.97 feet along the northerly line of said Lot
17 to the northwesterly corner thereof; thence,
6.) S.01 degrees 57'20"W., 122.00 feet along the westerly line of said
Lot 17 to the southwesterly corner of said Lot 17 Block 9; thence,
7.) N.88 degrees 02'40"W., 255.00 feet along the southerly lines of Lots
16, 15, 14, 13, 12 and 11 to a point; thence,
8.) S.01 degrees 57'20"W., 136.05 feet along the easterly terminus of the
vacated portion of a 16 foot wide alley and along a line parallel
with and 5.00 feet westerly of the easterly line of Lot 10 Block 9 to
a point in the southerly line of said Lot 10, being the northerly
sideline of West Fairview Avenue; thence,
9.) N.88 degrees 13'50"W., 190.48 feet along the southerly lines of said
Lot 10 Block 9, the vacated portion of 19th Street, Lot 40-A of
CITIZEN'S RIGHT OF WAY and Block 41 of the FAIRVIEW ADDITION, being
along the northerly sideline of West Fairview Avenue, to the POINT OF
BEGINNING,
said Parcel 2 containing 2.7328 acres, more or less and being the same land as
contained in Parcel No.s I, II, IV and V as described in Instrument No.8564000,
Deed of Trust and Assignment of Leases and Rents.
20
<PAGE>
Parcel 3:
All of Lots 7 and 8 and a portion of Lot 9, of Block 9, McCARTY'S 2ND ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 85, and being more particularly described as
follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
A.) S.88 degrees 13'50"E., 220.48 feet along the southerly lines of said Block
41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the vacated
portion of 19th Street, and Lots 10 and 9 of Block 9 of said McCARTY'S 2ND
ADDITION to a point 25 feet easterly of the westerly line of said Lot 9,
being the POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 99.95 feet along a line parallel with and
25.00 feet easterly of the westerly line of said Lot 9; thence,
2.) N.46 degrees 57'20"E., 28.28 feet to a point in the northerly line of
said Lot 9; thence,
3) S.88 degrees 02'40"E., 105.00 feet along the northerly lines of Lots
9, 8 and 7 to the northeasterly corner of said Lot 7; thence,
4.) S.01 degrees 57'20"W., 119.55 feet along the easterly line of said
Lot 7 to a point in the northerly sideline of West Fairview Avenue;
thence,
5.) N.88 degrees 13'50"W., 125.00 feet along said sideline to the POINT
OF BEGINNING,
said Parcel 3 containing 0.5474 acres, more or less, and being the same land as
contained in Parcel VI and a portion of Parcel II as described in Instrument No.
8564000, Deed of Trust and Assignment of Leases and Rents.
Parcel 4:
All of Lot 17 and portions of Lots 18 and 19, Block 9, McCARTY'S 2ND ADDITION,
according to the official plat thereof filed in the office of the Ada County
Recorder in Book 2 of Plats at Page 85, and being more particularly described as
follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
21
<PAGE>
A.) S.88 degrees 13'50"E., 190.48 feet along the southerly lines of said Block
41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the vacated
portion of 19th Street, and Lot 10, Block 9 of said McCARTY'S 2ND ADDITION
to a point 5.00 feet west of the easterly line of said Lot 10; thence,
B.) N.01 degrees 57'20"E., 136.05 feet along a line parallel with and 5.00
feet westerly of the easterly line of said Lot 10 to a point in the
southerly line of Lot 11 Block 9; thence,
C.) S.88 degrees 02'40"E., 255.00 feet along the southerly lines of Lots 11,
12, 13, 14, 15 and 16 to the southwesterly corner of said Lot 17 and the
POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 122.00 feet along the westerly line of said
Lot 17 to the northwesterly corner of same; thence,
2.) S.88 degrees 02'40"E., 6.97 feet along the northerly line of said Lot
17 to the point of intersection of same with the southerly sideline
of West Main Street; thence,
3.) S.54 degrees 50'40"E., 81.62 feet along said sideline of West Main
Street to a point in the westerly sideline of West Grove Street, also
known as the Boise One-Way Couplet, according to the plans of Project
No. U-3021 (21) on file with the Idaho Department of Transportation,
District 3; thence,
4.) S.01 degrees 01'48"W., 2.88 feet (formerly 3.0 feet more or less)
along said westerly sideline of West Grove Street to a point on a
non-tangent curve; thence,
5.) southeasterly along said sideline along a curve to the right having a
radius of 140.50 feet, an arc length of 79.12 feet, a central angle
of 32 degrees 16'38", a chord bearing of S.32 degrees 44'09"E., and a
chord distance of 78.07 feet, crossing through Lots 18 and 19 of said
Block 9 to an angle point in said sideline; thence,
6.) S.64 degrees 33'28"W., 22.25 feet (formerly S.62 degrees 17'36"W.,
23.12) along said sideline to the southeasterly corner of said Lot 18
Block 9; thence,
7.) N.88 degrees 02'40"W., 100.00 feet along the southerly lines of Lots
18 and 17 of Block 9 to the POINT OF BEGINNING,
said Parcel 4 containing 0.2233 acres, more or less, and being the same land as
contained in a portion of Parcel B as described in Instrument No. 8564000, Deed
of Trust and and Assignment of Leases and Rents.
22
<PAGE>
Parcel 5:
All of Lots 3, 4, 5 and 6 of Block 9, McCARTY'S 2ND ADDITION, according to the
official plat thereof filed in the office of the Ada County Recorder in Book 2
of Plats at Page 85, and being more particularly described as follows:
commencing at the point of intersection of the easterly sideline of North 22nd
Street with the northerly sideline of Fairview Avenue, said point being the
southwesterly corner of Block 41 of the FAIRVIEW ADDITION according to the
official plat thereof filed in Book 2 of Plats at page 73; thence,
A.) S.88 degrees 13'50"E., 345.48 feet along the southerly lines of said Block
41 FAIRVIEW ADDITION, Block 40-A of Citizen's Right of Way, the vacated
portion of 19th Street, and Lots 10, 9, 8 and 7 of Block 9 of said
McCARTY'S 2ND ADDITION to the southwesterly corner of Lot 6 Block 9 and
the POINT OF BEGINNING; thence,
1.) N.01 degrees 57'20"E., 119.55 feet along the westerly line of said
Lot 6 to the northwesterly corner of same; thence,
3.) S.88 degrees 02'40"E., 200.00 feet along the northerly lines of Lots
6, 5, 4 and 3 to the northeasterly corner of Lot 3 Block 9; thence,
4.) S.01 degrees 57'20"W., 118.90 feet along the easterly line of said
Lot 3 to a point in the northerly sideline of West Fairview Avenue;
thence,
5.) N.88 degrees 13'50"W., 200.00 feet along said sideline to the POINT
OF BEGINNING,
said Parcel 5 containing 0.5487 acres of land, and being the same land as
contained in a portion of Parcel B as described in Instrument No. 8564000, Deed
of Trust and Assignment of Leases and Rents.
23
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Missoula, MT)
Situated in the City of Missoula, Missoula County, Montana, to-wit:
Lots 3, 4 and the East 10 feet of Lot 17, all of Lots 18, 19 and 20, in Block 49
of W.J. McCormick's Addition, in the City of Missoula, Missoula County, Montana,
according to the official recorded plat thereof, together with the vacated
alley.
Lots 1, 2, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and the West 20 feet of Lot
17 in Block 49 of W.J. McCormick's Addition, in the City of Missoula, Missoula
County, Montana, according to the official recorded plat thereof, together with
the vacated alley and the East one-half of vacated Blanche Street lying between
Pine Street and Broadway Street.
Recording reference: Book 271 of Micro Records at page 1613.
Tax Parcel Number: 1864500
24
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Astoria, OR)
PARCEL NO. 1:
- - - ------------
A parcel of land situated in the Northwest quarter of the Southwest
quarter of Section 7, Township 8 North, Range 9 West, Willamette Meridian, City
of Astoria, Clatsop County, Oregon, more particularly described as follows:
Beginning at a point which bears North 56 degrees 53' East a distance of
24 feet from the Southeasterly corner of that certain tract of land conveyed to
Henry J. Barbey et ux by deed recorded in Book 198, page 240, Deed Records,
Clatsop County, Oregon;
thence North 56 degrees 53' East 385.0 feet;
thence North 24 degrees 30' West 132.0 feet;
thence South 56 degrees 53' West 385.0 feet;
thence South 24 degrees 36' East 132.0 feet to the point of beginning;
Together with the following non-exclusive easement for ingress and egress
over the following described property;
A parcel of land in the Northwest quarter of the Southwest quarter of
Section 7, Township 8 North, Range 9 West, Willamette Meridian in Clatsop
County, Oregon described as follows:
Beginning at the Southeasterly corner of that certain tract of land
conveyed by Henry J. Barbey and Ethel G. Barbey to Barbey Packing Corp. as
recorded in Book 198, page 240, Clatsop County Records of Deeds, said point
being also on the Northerly right of way line of Spokane, Portland and Seattle
Railroad;
thence North 56 degrees 53' East along said Northerly right of way a
distance of 710.93 feet to the Westerly line of Industry Street;
thence North 24 degrees 30' West a distance of 15.0 feet;
thence South 56 degrees 53' West a distance of 710.93 feet to a point of
intersection with the Easterly line of said Barbey tract;
thence South 24 degrees 30' East along the Easterly line of the Barbey
tract a distance of 15.0 feet to the point of beginning.
PARCEL NO. 2:
- - - ------------
A tract of land being part of Parcel No. 1 as described in Volume 198,
page 240 of the Clatsop County Deeds and Records, and bounds as follows:
Beginning at a one-half inch iron pipe, said iron pipe being North
24 degrees 30' West 238.35 feet from the Southwest corner of said Parcel No. 1;
thence North 24 degrees 30' West 246.10 feet to a one-half inch iron pipe;
thence North 65 degrees 30' East 200.00 feet to a one-half inch iron pipe;
thence South 24 degrees 30' East 373.52 feet to a one-half inch iron pipe;
thence South 67 degrees 44' West 45.66 feet to a one-half inch iron pipe;
thence North 82 degrees 07' West 80.56 feet to a one-half inch iron pipe;
thence North 70 degrees 30' West 119.85 feet to the point of beginning;
Situated in the City of Astoria, County of Clatsop, State of Oregon;
Together with the right to connect to the extension of Port Road for the
purposes of ingress and/or egress as set forth in that certain easement granted
by the Port of
<PAGE>
Astoria, a municipal corporation, to Barbey Packing Corporation dated September
27, 1971, recorded September 27, 1971 in Book 353, page 565, Film Records.
PARCEL NO. 3:
- - - ------------
Beginning at an iron pipe which bears North 56 degrees 53' East a distance
of 202.26 feet from the Southwest corner of Parcel No. 1 as described in deed
recorded in Volume 198, page 240, Deed Records, Clatsop County, Oregon;
thence North 24 degrees 30' West 380.0 feet to a point on the East line of
the Barbey Tract as described in Volume 198, page 240, Deed Records, Clatsop
County, Oregon;
thence North 65 degrees 30' East 46.0 feet;
thence South 24 degrees 30' East 248.0 feet to a point;
thence South 56 degrees 53' West 22.0 feet;
thence South 24 degrees 30' East 132.0 feet;
thence South 56 degrees 53' West 24.0 feet to the point of beginning.
PARCEL NO. 4:
- - - ------------
Beginning at a point on the West line of Parcel No. 1 as described by deed
recorded in Book 198, page 240, Clatsop County Deed Records, said point being
North 24 degrees 30' West, a distance of 464 feet from the Southwest corner of
said Parcel No. 1;
thence North 24 degrees 30' West a distance of 72.5 feet;
thence North 65 degrees 30' East a distance of 253 feet;
thence South 24 degrees 30' East a distance of 145.25 feet;
thence South 65 degrees 30' West a distance of 72.5 feet;
thence North 24 degrees 30' West a distance of 72.75 feet:
thence South 65 degrees 30' West a distance of 180.5 feet to the point of
beginning, all situated in the City of Astoria, County of Clatsop, State of
Oregon. NOTE: Parcel No. 4 overlaps with Parcels No. 2 and No. 3.
PARCEL NO. 5:
- - - ------------
All that portion of the following tract of land and uplands lying
Northerly of the North line of the right of way of the S. P. & S. Railway
Company described as follows:
Beginning at a point on the South bank of the Columbia River on the
meander line of the Samuel C. Smith D.L.C. in Clatsop County, Oregon, 30.23
chains Westerly according to said meander line of the Northeast corner of said
claim; and running
thence North 65 degrees 30' East 300 feet;
thence North 24 degrees 30' West to the ordinary low tide line;
thence Westerly along the line of ordinary low tide to the East line of
the Henry J. Barbey tract, that is, a tract of land accordingly as described in
that certain deed recorded at page 353, Volume 123 of Records of Deeds in the
Office of the County Clerk of Clatsop County, Oregon;
thence South 24 degrees 30' East to a point on the meander line of the
Samuel C. Smith D.L.C. which point is South 47' 00' West a distance of 400 feet
from the point of beginning;
thence North 47 degrees 00' East a distance of 400 feet to the point of
beginning, all being situate in Section 7, Township 8 North, Range 9 West,
Willamette Meridian, Clatsop County, Oregon.
<PAGE>
EXCEPTING THEREFROM the following:
A parcel of land situated in the Northwest quarter of the Southwest
quarter of Section 7, Township 8 North, Range 9 West, Willamette Meridian, City
of Astoria, Clatsop County, Oregon, more particularly described as follows:
Beginning at a point which bears North 56 degrees 53' East a distance of
24 feet from the Southeasterly corner of that certain tract of land conveyed to
Henry J. Barbey, et ux, by deed recorded in Book 198, page 240, Deed Records,
Clatsop County, Oregon;
thence North 56 degrees 53' East 385.0 feet;
thence North 24 degrees 30' West 132.0 feet;
thence South 56 degrees 53' West 385.0 feet;
thence South 24 degrees 36' East 132.0 feet to the point of beginning;
Together with the following non-exclusive easement for ingress and egress
over the following described property;
A parcel of land in the Northwest quarter of the Southwest quarter of
Section 7, Township 8 North, Range 9 West, Willamette Meridian, Clatsop County,
Oregon, described as follows:
Beginning at the Southeasterly corner of that certain tract of land
conveyed by Henry J. Barbey and Ethel G. Barbey to Barbey Packing Corp. as
recorded in Book 198, page 240, Clatsop County Records of Deeds, said point
being also on the Northerly right of way line of Spokane, Portland and Seattle
Railroad;
thence North 56 degrees 53' East along said Northerly right of way a
distance of 710.93 feet to the Westerly line of Industry Street;
thence North 24 degrees 30' West a distance of 15.0 feet;
thence South 56 degrees 53' West a distance of 710.93 feet to a point of
intersection with the Easterly line of said Barbey tract;
thence South 24 degrees 30' East along the Easterly line of the Barbey
tract a distance of 15.0 feet to the point of beginning.
ALSO EXCEPTING THEREFROM:
Beginning at an iron pipe which bears North 58 degrees 53' East a distance
of 202.26 feet from the Southwest corner of Parcel No. 1 as described in deed
recorded in Volume 198, Page 240, Deed Records, Clatsop County, Oregon;
thence North 24 degrees 30' West 380.0 feet to a point on the East line of
the Barbey tract as described in Volume 198, Page 240, Deed Records, Clatsop
County, Oregon;
thence North 65 degrees 30' East 46.0 feet;
thence South 24 degrees 30' East 248.0 feet to a point;
thence South 56 degrees 53' West 22.0 feet;
thence South 24 degrees 30' East 132.0 feet;
thence South 56 degrees 53' West 24.0 feet to the point of beginning.
ALSO EXCEPTING THEREFROM:
Beginning at a point on the West line of Parcel No. 1 as described by deed
recorded in Book 198, Page 240, Clatsop County Deed Records, said point being
North 24 degrees 30' West, a distance of 464 feet from the Southwest corner of
said Parcel No. 1; thence North 24 degrees30' West a distance of 72.5 feet;
thence North 65 degrees 30' East a distance of 253 feet;
thence South 24 degrees 30' East a distance of 145.25 feet;
thence South 65 degrees 30' West a distance of 72.5 feet;
<PAGE>
thence North 24 degrees 30' West a distance of 72.75 feet;
thence South 65 degrees 30' West a distance of 180.5 feet to the point of
beginning, all situated in the City of Astoria, County of Clatsop, State of
Oregon.
PARCEL NO. 6:
- - - ------------
That parcel of land bounded on the North by the South line of Industry
Street, on the East by the West line of Basin Street, on the South by the North
right-of-way line of the Spokane, Portland & Seattle (now Burlington Northern)
Railway, and on the West by a line 200 feet, more or less, distant from the West
line of Basin Street and running parallel thereto. All being situate in the City
of Astoria, County of Clatsop, State of Oregon.
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Bend-North, OR)
Lots 1 through 12 in Block 3 of WIESTORIA, City of Bend, Deschutes County,
Oregon, TOGETHER WITH that portion of a vacated alley which inured thereto upon
the vacation thereof, by ORDINANCE NO. 850, recorded July 8, 1971 in Book 176 at
page 956 of Deschutes County Deed Records.
Tax Parcel Number: 1-001 17 12 33 BB 02101 and 1-001 17 12 33 BB 02100
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Coos Bay, OR)
Being a portion of Blocks 35 and 36, of Nasburg's Addition along with a portion
of Blocks 36, 32, 63 and 62, of Bennett's Addition to Coos Bay. Including that
portion of vacated 4th, 5th and 6th Street and 7th Court.
More particularly described as follows:
Beginning at the Southwest corner of Block 35, Nasburg's Addition to Coos Bay;
thence 00 degrees 00' 20" West a distance of 171.17 feet; thence North 60
degrees 30' 00" East a distance of 591.96 feet to a point located on the
Westerly line of U.S. Highway 101; thence along said Westerly line along a curve
to the left having a radius of 1949.86 feet and a central angle of 1 degree 36'
18" a distance of 54.62 feet (whose long chord bears South 40 degrees 18' 48"
East 54.62 feet); thence along a spiral curve to the left having a centerline
length of 300.00 feet and an S value of 4 degrees 30' (whose long chord bears
South 42 degrees 24' 10" East 303.05 feet); thence South 43 degrees 54' 35" East
a distance of 241.83 feet to the beginning of a curve; thence along a curve to
the right having a radius of 13.50 feet and a central angle of 133 degrees 54'
00" a distance of 31.54 feet (whose long chord bears South 23 degrees 02' 25"
West 24.84 feet); thence South 89 degrees 59' 25" West a distance of 471.94
feet; thence North 00 degrees 04' 35" East a distance of 99.97 feet; thence
South 89 degrees 59' 25" West a distance of 242.89 feet, thence South 00 degrees
04' 35" West a distance of 99.97 feet; thence South 89 degrees 59' 25" West a
distance of 197.97 feet, to the point of beginning.
Tax Parcel Number: 251326BB500
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Eugene, OR)
PARCEL 1:
- - - --------
A parcel of land lying within Section 29, Township 17 South, Range 3 West of the
Willamette Meridian, in Lane County, Oregon: Beginning at the concrete monument
designated as Station "A" in County Survey Number 1781, said survey being filed
in Volume 5, Page 41 of County Surveys for Lane County, Oregon, said Station "A"
being East 13.34 chains of the Southeast corner of the Charles W. Young Donation
Land Claim No. 53, Township 17 South, Range 3 West of the Willamette Meridian,
according to said survey; thence South 0 degrees 10'20" East, 957.88 feet along
the West line of said survey to a point, said point being the TRUE POINT OF
BEGINNING; running thence South 0 degrees 10'20" East 382.89 feet along the West
line of said survey to the North line of the Eugene-Springfield Highway; thence
North 77 degrees 37'30" West, 620.02 feet along the North line of said highway;
thence North 1 degrees 31' West 68.07 feet along the North line of said highway
to a point on the Southeasterly line of Coburg Road; thence North 55 degrees
29'21" East 340.90 feet along the Southeasterly line of Coburg Road to a point;
thence South 35 degrees 03'40" East 206.36 feet; thence North 54 degrees 56'20"
East 210.00 feet; thence North 35 degrees 03'40" West 4.31 feet; thence North 48
degrees 03'20" East 50.29 feet to the TRUE POINT OF BEGINNING, all in the City
of Eugene, Lane County, Oregon.
PARCEL 2:
- - - --------
Beginning at a point on the Easterly right of way line of County Road No. 431,
said point being 1142.75 feet North and 181.36 feet West of the Southwest corner
of County Survey No. 1781 in Section 29, Township 17 South, Range 3 West of the
Willamette Meridian; running thence South 34 degrees 32' East 204.46 feet to the
true point of beginning; thence South 55 degrees 28' West 180 feet; thence South
34 degrees 32' East 30 feet; thence North 55 degrees 28' East 180 feet; thence
North 34 degrees 32' West 30 feet to the true point of beginning, in Lane
County, Oregon.
Tax Parcel Number: 170329/000500
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Medford, OR)
The land is situated in the State of Oregon, County of Jackson and is described
as follows:
PARCEL 1:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 28 degrees 43'00" West
273.83 feet, along the Easterly line of North Riverside Avenue, to the center
line of the Northerly wall of the Denison Building for the true point of
beginning; thence continue North 27 degrees 43'00" West 100.00 feet, along said
Easterly line of North Riverside Avenue; thence North 66 degrees 08'20" East
106.08 feet (Record North 66 degrees 08'30" East); thence South 27 degrees
43'00" East 100.00 feet to an intersection of the outside line of the Easterly
wall of the Denison Building with the projection of center line of the Northerly
wall of said Denison Building; thence South 60 degrees 08'30" West 106.08 feet
along the center line and the projection thereof, of the Northerly wall of said
Denison Building, to the true point of beginning. EXCEPTING THEREFROM all that
portion of the Northerly wall of the Denison Building lying Northerly of the
centerline of said wall, including all footings and foundations thereof,
together with the land upon which or underneath which said wall and footings
stand, the centerline of said Northerly wall of the Denison Building being
situated as follows: Beginning at a point on the Easterly line of Riverside
Avenue in the City of Medford, Jackson County, Oregon, said point being North 27
degrees 43' West 224.06 feet from the intersection of said Easterly line of
Riverside Avenue with the Northerly line of East Main Street (said intersection
being also North 34 degrees 12' East 68.0 feet from the intersection of the
Westerly line of Riverside Avenue with the center line of East Main Street);
thence along said Easterly line of Riverside Avenue, North 27 degrees 43' West
49.42 feet to the centerline of Northerly wall of the Denison Building.
PARCEL 2:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 43'00" West
273.83 feet along the Easterly line of North Riverside Avenue to the center line
of the Northerly wall of the Denison Building; thence North 66 degrees 08'30"
East 106.08 feet along the center line and the projection thereof the Northerly
wall of said Denison Building, to an intersection with the outside line of the
Easterly wall of said Denison Building, for the true point of beginning; thence
North 27 degrees 43'00" West 100.00 feet; thence South 66 degrees 08'20" West
(Record South 66 degrees 08'30" West) 106.08 feet to the Easterly line of North
Riverside Avenue; thence North 27 degrees 43'00" West 50.00 feet along the
Easterly line of North Riverside Avenue; thence North 61 degrees 49'00" East
105.84 feet; thence North 27 degrees 43'00" West 111.09 feet; thence North 67
degrees 45'00" East 23.68 feet to a 1 inch galvanized iron pipe; thence North 68
degrees 45'00" East 100.30 feet to a 1 inch galvanized iron pipe; thence North
60"58'42" East 144.73 feet (Record North 61 degrees 00'00" East 144.75 feet);
thence North 14 degrees 30'00" West 60.15 feet (Record 60.13 feet); thence North
80 degrees 00'00" East 83.08 feet to intersect the Westerly right
<PAGE>
of way line of Interstate Highway No. 5; thence along said Westerly right of way
line as follows: South 13 degrees 49'50" East 401.71 feet to intersect the
center line of channel of Bear Creek, and South 4 degrees 22'00" East 177.04
feet along center line of channel of said Bear Creek, to the Northerly line of
East Main Street in the City of Medford, Oregon; thence South 76 degrees 27'23"
West 51.38 feet (Record South 76 degrees 32'35" West 51.41 feet) along said
Northerly line of East Main Street; thence North 17 degrees 28'00" West 138.30
feet; thence South 66 degrees 17'00" West 171.30 feet to the Southeast corner of
the Niedermeyer Building; thence North 23 degrees 29'30" West 49.98 feet along
the outside line of the Easterly wall of said Niedermeyer Building, to the
center line of the Northerly wall of said Niedermeyer Building; thence South 66
degrees 10'00" West 1.92 feet along the center line of said Northerly wall of
said Niedermeyer Building, to a point of intersection with the projected outside
line of the Easterly wall of the Denison Building; thence North 27 degrees
37'10" West 49.81 feet along the outside line of the Easterly wall of said
Denison Building, to the center line of the Northerly wall of said Denison
Building, the true point of beginning. EXCEPTING THEREFROM all that part of said
wall between the Niedermeyer and Denison Buildings extending Easterly from the
said Denison Building.
PARCEL 3:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 43'00" West
273.83 feet along the Easterly line of north Riverside Avenue to the center line
of the Northerly wall of the Denison Building; thence continue North 27 degrees
43'00" West 150.00 feet, along said Easterly line of North Riverside Avenue, to
the true point of beginning; thence continue North 27 degrees 43'00" West 122.08
feet, along said Easterly line of North Riverside Avenue, to a 1 inch iron pipe
at the Northwest corner of "Adkins Tract"; thence North 67 degrees 45'00" East
106.32 feet; thence South 27 degrees 43'00" East 111.09 feet; thence South 61
degrees 49'00" West 105.84 feet to the true point of beginning.
PARCEL 4:
Commencing at a concrete monument with bronze disk located at the intersection
of the center line of North Riverside Avenue with the center line of East Fourth
Street in the City of Medford, Jackson County, Oregon; thence along said East
Fourth Street center line North 71 degrees 03'20" East 30.00 feet; thence
parallel with the monumented center line of North Riverside Avenue, South 18
degrees 40'45" East 298.27 feet to a 5/8 inch iron pin for the true point of
beginning; thence continue South 18 degrees 40'45" East 78.32 feet; thence South
16 degrees 02'20" East 165.00 feet to the Northwest corner of the "Adkins
Tract"; thence to and along the Northwesterly boundary of that parcel described
in Volume 537, Page 13, Jackson County, Oregon, Deed Records, North 67 degrees
50'30" East (record North 67 degrees 45'00" East) 130.05 feet; thence along said
parcel boundary North 68 degrees 51'40" East (record North 68 degrees 45'00"
East) 100.27 feet; thence along said parcel boundary North 61 degrees 05'30"
East (Record North 61 degrees 00'00" East) 144.75 feet; thence along the
Southwesterly boundary of said parcel, North 14 degrees 24'30" West 60.13 feet
(Record North 14 degrees 30'00" West 60.15 feet); thence along the Northwesterly
boundary of said parcel, North 80 degrees 05'30" East, 83.11 feet (record North
80 degrees 00'00" East 83.08 feet) to intersect the Southwesterly right of way
line of Interstate Highway No. 5; thence along said highway line North 13
degrees 44' West 110.98 feet; thence along the Southwesterly boundary of the
tract described in Final Judgment rendered November 2,
<PAGE>
1953, in the Circuit Court of Oregon for Jackson County, under Case No. 53-188-E
and recorded in Volume 115, Page 347, of the Circuit Court Journal, North
27 degrees 42' West 312.02 feet to the Southeasterly boundary of East Fourth
Street; thence along said street boundary, South 71 degrees 03'20" West 213.37
feet to the most Northerly corner of that tract described in Volume 579, Page
429, said Deed Records; thence along the Northeasterly boundary of said tract,
South 18 degrees 56'40" East 154.75 feet to the most Easterly corner thereof;
thence along the Southeasterly boundary of said tract, South 77 degrees 58' West
57.86 feet; thence along the Southeasterly boundary of said tract South
76 degrees 53'50" West 17.03 feet; thence South 18 degrees 40'45" East 112.80
feet; thence South 71 degrees 19'15" West 125 feet to the true point of
beginning.
PARCEL 5:
Commencing at the Northeast corner of Riverside Avenue and East Main Street in
the City of Medford, Jackson County, Oregon; thence North 27 degrees 36'40" West
(record North 27 degrees 33'00" West) 545.91 feet along the easterly line of
North Riverside Avenue to a 1 inch pipe at the Northwest corner of "Adkins
Tract"; thence North 16 degrees 40'45" West along said Easterly line 165.59
feet; thence North 18 degrees 40'45" West along said Easterly line 203.25 feet
to the true point of beginning; thence South 18 degrees 40'45" East along said
Easterly line 125.00 feet; thence North 71 degrees 19'15" East, at right angles
to the said Easterly line of North Riverside Avenue, 125.00 feet; thence North
18 degrees 40'45" West parallel with the said Easterly line to a point on the
South line of tract described in Volume 579, Page 427, Jackson County, Oregon,
Deed Records; thence South 76 degrees 53'50" West along said line to the true
point of beginning.
Tax Parcel Numbers: 371W30BB 9900, 371W30BB 10000, 371W30BB 10100,
371W30BB 10300, and 371W30BB 10301
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Pendleton, OR)
TRACT I:
- - - -------
Lot 2, Block 5, REES ADDITION to City of Pendleton, Umatilla County, Oregon;
ALSO Block 3, REES ADDITION to City of Pendleton, Umatilla County, Oregon,
EXCEPTING THEREFROM that portion thereof under lease to Atlantic Richfield
Corporation and described as following:
Beginning at the Southeast corner of said Block 3, located in the South half
of Section 11, Township 2 North, Range 32 East of the Willamette Meridian,
Umatilla County, Oregon; thence South 78 degrees 28'20" West a distance of 250
feet to a point; thence Northerly a distance of 130 feet, more or less, to a
point on the North line of said Block 3, which bears South 87 degrees 18'10"
West a distance of 216 feet from the Northeast corner of said Block 3; thence
North 87 degrees 18'10" East a distance of 216 feet to the Northeast corner of
said Block 3; thence Southerly along the Easterly line of said Block 3 a
distance of 90.36 feet to the point of beginning.
TRACT II:
- - - --------
Lot 1, Block 5, REES ADDITION to City of Pendleton, Umatilla County, Oregon.
Tax Parcel Numbers: 112270-00600
112271-00700
112274-00800
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Salt Lake City, Utah)
BEGINNING at a point which is North 200.00 feet from the Southwest corner of
Block 58, Plat "A", Salt Lake City Survey, and running thence North 302.83 feet;
thence East 244.55 feet; thence South 302.83 feet; thence West 244.55 feet to
the point of BEGINNING.
TOGETHER WITH the rights contained in that certain Revocable Permit executed by
Salt Lake City Corporation, recorded August 9, 1983 as Entry No. 3829041 in Book
5481 at page 1600 of Official Records, as modified and superseded by that
certain Lease Agreement to Occupy Public Property by and between Salt Lake City
Corporation, a municipal corporation, as lessor, and Red Lion, a California
Limited Partnership, as lessee, dated May 17, 1988. The Lease Agreement was
renewed for an additional five years through May 16, 1998, pursuant to Notice of
Renewal of Lease Agreement to Occupy Public Property dated November 6, 1992.
ALSO TOGETHER WITH all rights, privileges, conditions, etc., as set forth in
that certain Reciprocal Easement and Maintenance Agreement with Conditions,
Covenants and Restrictions recorded March 20, 1981 as Entry No. 3566733 in Book
5250 at pages 640 through 737 of Official Records; as amended by that certain
Amendment to Reciprocal Easement and Maintenance Agreement with Conditions,
Covenants and Restrictions recorded February 19, 1988 as Entry No. 4587998, in
Book 6005, at Page 591 of Official Records.
ALSO TOGETHER WITH all rights, privileges, conditions, etc., as set forth in
that certain Cross Easement recorded December 31, 1987 as Entry No. 456856 in
Book 5993 at page 448 of Official Records.
Tax Parcel Number: 1501 280 050
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Kelso, WA)
IN THE COUNTY OF COWLITZ, STATE OF WASHINGTON
PARCEL A:
A tract of land in Sections 26 and 35, Township 8 North, Range 2 West of the
Willamette Meridian, lying Easterly of the Easterly right of way line of
Frontage Road No. 1, as proposed, and lying Westerly of the center line of the
existing drainage slough, being more particularly described as follows:
BEGINNING at a point on the line between Sections 26 and 35, where the same
intersects the center line of said drainage slough, said point being North
88 degrees 57' West a distance of 1,889.02 feet from the Southeast corner of
Section 26; thence South 37 degrees 38' East along the center line of said
drainage slough a distance of 415.51 feet;
thence North 88 degrees 57' West parallel with the section line between Sections
26 and 35, a distance of 645.63 feet, more or less, to the Easterly right of way
line of proposed Frontage Road No. 1;
thence North 8 degrees 16' East along the Easterly right of way of said proposed
Frontage Road a distance of 280.31 feet to a point that is North 88 degrees 04'
East a distance of 127.60 feet from a concrete post set to mark the Easterly
right of way of existing Interstate Highway No. 5 at Engineer's Station 510+00;
thence continuing North 8 degrees 16' East along the Easterly line of the
proposed Frontage Road a distance of 360.19 feet to the point of curvature of a
curve to the right;
thence along said curve having a radius of 400.00 feet, through a central angle
of 3 degrees 36' 54", an arc distance of 25.24 feet to a point that is a
distance of 216.55 feet North 88 degrees 04' East from the Easterly right of way
line of present Interstate Highway No. 5;
thence North 88 degrees 04' East a distance of 208.98 feet to the center line of
the aforementioned slough;
thence along the center line of said slough South 18 degrees 45' West a distance
of 78.60 feet;
thence South 17 degrees 39' East a distance of 230.80 feet;
thence South 37 degrees 38' East along the center line of said slough a distance
of 68.37 feet to the point of beginning.
TOGETHER WITH an easement for ingress and egress, 25 feet in width, lying South
of and abutting the Westerly extension of the North line of the above described
tract, and extending from the Easterly right of way line of Primary State
Highway No. 1 to the Westerly line of said premises.
TOGETHER WITH a non-exclusive right of way and easement over the following:
A tract of land in Section 26, Township 8 North, Range 2 West of the Willamette
Meridian, described as follows:
<PAGE>
BEGINNING at a point on the Easterly right of way line of Primary State Highway
No. 1 North 1 degrees 56' West a distance of 314.1 feet and West 2389.6 feet
from the Southeast corner of Section 26;
thence along said right of way North 1 degrees 56' West a distance of 28.7 feet
to a point at right angles to center line Station 514+07.5 of said highway;
thence along said right of way North 3 degrees 51' 30" West a distance of 195.8
feet to a point on a radial line from center line station 516+00 and marked by a
concrete post;
thence along said right of way on a curve to the right having a radius of 381.26
feet for 75.5 feet to the center line of the box culvert under said highway and
also the center line of a ditch that bears North 76 degrees 00' East;
thence along said right of way on a curve to the right having a radius of 381.26
feet for 110.0 feet;
thence Southerly to a point which is Easterly of said highway right of way line
25 feet on the center line of said ditch that bears North 76 degrees 00' East;
thence Southerly on a line that is parallel to and 25 feet Easterly of said
highway right of way line to the point of intersection with a line that bears
North 88 degrees 04' East from the point of beginning;
thence Westerly along said line to the point of beginning.
EXCEPTING THEREFROM those portions conveyed to the Department of Highways by
deed recorded under Auditor's File Nos. 787154 and 787155.
PARCEL B:
BEGINNING 1476.4 feet North 1 degrees 38' East and 1882.7 feet North 88 degrees
22' West from the Southeast corner of said Section 26, Township 8 North, Range 2
West, Willamette Meridian, Cowlitz County, Washington, said point being the
Northeast corner of a 5.5 acre tract of land described in Volume 620, Page 571,
Cowlitz County, Washington, deed records;
thence along the center of a ditch South 4 degrees 00' East 369.2 feet;
thence South 28 degrees 55' West 262.06 feet to a point 50.00 feet distant at
right angles to State Highway centerline FR RD NO. (1) 29+32.79 P.C.;
thence continuing parallel to the FR RD NO. (1) centerline South 30 degrees 15'
59" West 278.17 feet to a point 50.00 feet distant at right angles to centerline
station FR RD NO. (1) 26+54.62 P.T.;
thence continuing parallel to the FR RD NO. (1) centerline along a curve left
having a radius of 950.00 feet (the long chord of which bears South 24 degrees
34' 58" West 188.17 feet) 188.48 feet to the true point of beginning;
thence continuing parallel to the FR RD NO. (1) centerline along a curve having
a radius of 950.00 feet (the long chord of which bears South 15 degrees 43' 57"
West 104.95 feet) 105.00 feet;
thence North 89 degrees 42' East 224.88 feet to the center of an old river
channel;
thence North 20 degrees 32' East along the center of said channel 105.00 feet;
thence North 89 degrees 38' 21" West 233.27 feet to the true point of beginning.
Tax Parcel Numbers:2-4021-1 and 2-4023-01
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Sea-Tac, WA )
---------------
THE LAND IS SITUATED IN THE STATE OF WASHINGTON, COUNTY OF KING
AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT OF INTERSECTION OF THE EAST LINE OF THE NORTHEAST QUARTER
OF THE SOUTHEAST QUARTER OF SAID SECTION 33, WITH THE NORTH LINE OF SOUTH 188TH
STREET, AS ESTABLISHED BY DEEDS RECORDED UNDER RECORDING NOS. 2522597 AND
5350935;
THENCE ALONG THE EAST LINE OF SAID NORTHEAST QUARTER, NORTH 3 DEGREES 04'29"
EAST 230.00 FEET TO THE TRUE POINT OF BEGINNING.
THENCE PARALLEL WITH SAID NORTH LINE, NORTH 88 DEGREES 10'06" WEST 177.36 FEET;
THENCE SOUTH 12 DEGREES 54'07" WEST 234.31 FEET TO SAID NORTH LINE;
THENCE ALONG THE NORTH LINE OF SAID SOUTH 188TH STREET, NORTH 88 DEGREES 10'06"
WEST 495.05 FEET TO THE EASTERLY LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY 99) AS
ESTABLISHED IN KING COUNTY SUPERIOR COURT CAUSE NO. 181371;
THENCE ALONG SAID EASTERLY LINE, NORTH 1 DEGREES 42'50" WEST 1,252.79 FEET TO
THE NORTH LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID NORTH LINE, SOUTH 88 DEGREES 37'38" EAST 817.18 FEET TO THE
EAST LINE OF SAID NORTHEAST QUARTER;
THENCE ALONG SAID EAST LINE, SOUTH 3 DEGREES 04'29" WEST 1,027.23 FEET TO THE
TRUE POINT OF BEGINNING;
EXCEPT THOSE PORTIONS CONVEYED TO KING COUNTY FOR ROAD PURPOSES BY DEEDS
RECORDED JUNE 8, 1982 UNDER RECORDING NOS. 8206080659 AND 8206080664;
ALSO EXCEPT THE FOLLOWING DESCRIBED PARCEL OF LAND;
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY
NO. 99) AS ESTABLISHED IN KING COUNTY SUPERIOR COURT NO. 181371; WITH THE NORTH
LINE OF SOUTH 188TH STREET AS ESTABLISHED BY DEEDS RECORDED UNDER RECORDING NOS.
2522597 AND 5350935;
<PAGE>
THENCE NORTH 01 DEGREES 42'50" WEST ALONG SAID EAST LINE OF STATE ROAD NO. 1, A
DISTANCE OF 1,053.40 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING NORTH 01 DEGREES 42'50" WEST, ALONG SAID EAST LINE OF STATE
ROAD NO. 1, A DISTANCE OF 199.39 FEET TO THE NORTH LINE OF SAID NORTHEAST
QUARTER;
THENCE SOUTH 88 DEGREES 37'38" EAST, ALONG SAID NORTH LINE, A DISTANCE OF 220.00
FEET;
THENCE SOUTH 17 DEGREES 50'30" WEST, A DISTANCE OF 208.17 FEET;
THENCE NORTH 88 DEGREES 25'22" WEST, A DISTANCE OF 150.25 FEET TO THE TRUE POINT
OF BEGINNING;
ALSO EXCEPT THE FOLLOWING DESCRIBED PARCEL OF LAND:
THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 33,
TOWNSHIP 23 NORTH, RANGE 4 EAST W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST LINE OF STATE ROAD NO. 1 (U.S. HIGHWAY
NO. 99) AS ESTABLISHED IN KING COUNTY SUPERIOR COURT CAUSE NO. 181371, WITH THE
NORTH LINE OF SOUTH 188TH STREET, AS ESTABLISHED BY DEEDS RECORDED UNDER
RECORDING NOS. 2522597 AND 5350935;
THENCE NORTH 01 DEGREES 55'06" WEST ALONG SAID EAST LINE OF STATE ROAD NO. 1, A
DISTANCE OF 818.40 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING NORTH 01 DEGREES 55'06" WEST ALONG SAID EAST LINE OF STATE
ROAD NO. 1, A DISTANCE OF 235.00 FEET;
THENCE SOUTH 88 DEGREES 37'38" EAST, A DISTANCE OF 150.25 FEET;
THENCE SOUTH 01 DEGREES 55'06" EAST A DISTANCE OF 171.04 FEET;
THENCE SOUTH 67 DEGREES 49'54" WEST, A DISTANCE OF 159.88 FEET TO THE TRUE POINT
OF BEGINNING.
PARCEL B:
LOT 1, KING COUNTY SHORT PLAT NO. 477027, AS RECORDED UNDER KING COUNTY
RECORDING NO. 7802270909.
PARCEL C:
THAT PORTION OF LOT 7, BLOCK 1, BOW VISTA NO. 4, ACCORDING TO THE PLAT THEREOF
RECORDED IN VOLUME 57 OF PLATS, PAGE 1, RECORDS OF KING COUNTY, WASHINGTON, AND
THAT PORTION OF LOT 1, BLOCK 3, BOW VISTA NO. 2, ACCORDING TO THE PLAT THEREOF
RECORDED IN VOLUME 53 OF PLATS, PAGES 46 AND 47, RECORDS OF KING COUNTY,
WASHINGTON, LYING NORTHWESTERLY OF A LINE DRAWN BETWEEN THE SOUTHWEST CORNER OF
SAID LOT 7 AND THE NORTHEAST CORNER OF SAID LOT 1, THE BEARING AND DISTANCE OF
SAID LINE BEING NORTH 42 DEGREES 53'49" EAST FOR 210.04 FEET.
<PAGE>
ALL SITUATE IN THE COUNTY OF KING, STATE OF WASHINGTON.
TAX PARCEL NUMBERS: 332304-9207-00 AND 342304-9234-09
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Vancouver/Inn at the Quay, WA)
-----------------------------
PARCEL A
- - - --------
THAT CERTAIN PORTION OF THE AMOS SHORT DONATION LAND CLAIM, AND ABUTTING TIDE
LAND LOCATED IN SECTION 27, TOWNSHIP 2 NORTH, RANGE 1 EAST OF THE WILLAMETTE
MERIDIAN, IN THE COUNTY OF CLARK, STATE OF WASHINGTON, BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WEST LINE OF COLUMBIA STREET THAT IS SOUTH 0 DEGREES
44'45" WEST 43.00 FEET FROM THE INTERSECTION OF THE NORTHERLY LINE OF THE PUBLIC
LEVEE WITH THE WEST LINE OF SAID STREET RUNNING THENCE SOUTH 0 DEGREES 44'45"
WEST 396.81 FEET TO THE INNER HARBOR LINE; THENCE NORTH 64 DEGREES 25'39" WEST,
ALONG SAID LINE 508.35 FEET; THENCE NORTH 25 DEGREES 34'21" EAST 77.37 FEET;
THENCE SOUTH 68 DEGREES 52'14" EAST 91.22 FEET; THENCE NORTH 29 DEGREES 11' EAST
229.00 FEET; THENCE SOUTH 75 DEGREES 44'12" EAST 241.01 FEET TO THE POINT OF
BEGINNING. EXCEPTING, HOWEVER, A STRIP OF LAND 30 FEET WIDE TO BE USED AS ACCESS
ROAD PURPOSES, BEING 15 FEET ON EITHER SIDE OF THE FOLLOWING DESCRIBED CENTER
LINE: BEGINNING AT A POINT ON THE WEST LINE OF SAID COLUMBIA STREET THAT IS
SOUTH 0 DEGREES 44'45" WEST 92.53 FEET FROM THE NORTHERLY LINE OF THE
AFOREMENTIONED LEVEE; THENCE SOUTHWESTERLY ALONG THE ARC OF A CURVE TO THE
RIGHT, HAVING A RADIUS OF 165.02 FEET; THROUGH A CENTRAL ANGLE OF 41 DEGREES
57'58" AN ARC DISTANCE OF 120.87 FEET; THENCE SOUTH 78 DEGREES 32'58" WEST
104.05 FEET; THENCE ALONG THE ARC OF A CURVE TO THE RIGHT, HAVING A RADIUS OF
288.43 FEET THROUGH A CENTRAL ANGLE OF 27 DEGREES 13'22," AN ARC LENGTH OF
137.46 FEET TO THE WESTERLY LINE OF THE ABOVE DESCRIBED PROPERTY, AND THE
TERMINUS OF SAID LINE.
PARCEL B
- - - --------
BEGINNING AT THE POINT OF INTERSECTION OF THE EAST LINE OF COLUMBIA STREET AND
THE INNER HARBOR LINE, SAID POINT BEING NORTH 93.05 FEET AND WEST 510.8 FEET
FROM THE SOUTHEAST CORNER OF THE AMOS SHORT DONATION LAND CLAIM; THENCE NORTH
64 DEGREES 25'39" WEST 170.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH
25 DEGREES 34'21" WEST 150.00 FEET TO THE OUTER HARBOR LINE; THENCE NORTH
64 DEGREES 25'39" WEST ALONG SAID OUTER HARBOR LINE 426.50 FEET; THENCE NORTH
25 DEGREES 34'21" EAST 150.00 FEET TO THE AFOREMENTIONED INNER HARBOR LINE;
THENCE SOUTH 64 DEGREES 25'39" EAST 426.50 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL C
- - - --------
<PAGE>
BEGINNING AT A POINT ON THE WEST LINE OF COLUMBIA STREET THAT IS SOUTH 0 DEGREES
44'45" WEST 43.00 FEET FROM THE INTERSECTION OF SAID WEST LINE WITH THE
NORTHERLY LINE OF THE PUBLIC LEVEE SHOWN ON THE PLAT OF THE TOWN OF VANCOUVER,
RECORDED IN VOLUME "B" OF PLATS, PAGE 40, IN CLARK COUNTY, WASHINGTON; THENCE
CONTINUING SOUTH 0 DEGREES 44'45" WEST 396.81 FEET TO THE INNER HARBOR LINE;
THENCE NORTH 64 DEGREES 25'39" WEST ALONG SAID LINE 508.35 FEET; THENCE NORTH
25 DEGREES 34'21" EAST 77.37 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH
68 DEGREES 52'14" EAST 91.22 FEET; THENCE NORTH 29 DEGREES 11'00" EAST 229.00
FEET; THENCE NORTH 75 DEGREES 44'12" WEST 107.46 FEET; THENCE SOUTH 25 DEGREES
34'21" WEST 214.54 FEET TO THE AFORESAID TRUE POINT OF BEGINNING.
PARCEL D
- - - --------
THE SOUTH HALF OF LOTS 1, 2, 3 AND 4 AND THE WEST 25 FEET OF THE NORTH HALF OF
LOT 4, ALL OF LOTS 5, 6, 7 AND 8 IN BLOCK 17, PLAT OF THE CITY OF VANCOUVER
(COMMONLY KNOWN AS WEST VANCOUVER) ACCORDING TO THE PLAT THEREOF APPEARING IN
BOOK "A" OF GENERAL RECORDS, AT PAGE 84.
TOGETHER WITH TRACTS 27 AND 28 OF VANCOUVER TIDELANDS AS SHOWN ON THE PLAT OF
STATE LAND COMMISSION APPROVED MAY 8, 1906.
EXCEPTING FROM THE ABOVE DESCRIBED PROPERTY THAT PORTION TAKEN BY THE UNITED
STATES OF AMERICA FOR THE SHIPYARD ACCESS ROAD, PURSUANT TO SUPERIOR COURT CAUSE
NO. 24115, AND EXCEPTING THAT PORTION TAKEN BY THE STATE OF WASHINGTON FOR THE
INTERSTATE BRIDGE APPROACHES, PURSUANT TO SUPERIOR COURT CAUSE NO. 32160.
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
(Property: Wenatchee, WA)
Situated in the County of Chelan, State of Washington, described as follows:
Lots 1, 2, 3 and 4, Block 11, SUBURBAN HOME ADDITION TO WENATCHEE, Chelan
County, Washington, according to the plat thereof recorded in Volume 1 of Plats,
Page 22, EXCEPT the Southerly 76.9 feet of said Lots 3 and 4.
Tax Parcel Number: 23-20-34-860080
<PAGE>
EXHIBIT B
LEASE ALLOCATION
<TABLE>
<CAPTION>
================================================================================
ALLOCATED PERCENTAGE OF
PROPERTY AMOUNT OF TOTAL BASE BASE REVENUE
BASE RENT RENT
- - - --------------------------------------------------------------------------------
<S> <C> <C>
Astoria 181,115 1.21%
- - - --------------------------------------------------------------------------------
Bend North 144,820 0.97%
- - - --------------------------------------------------------------------------------
Boise 404,423 2.70%
- - - --------------------------------------------------------------------------------
Coos Bay 118,450 0.79%
- - - --------------------------------------------------------------------------------
Durango 860,668 5.74%
- - - --------------------------------------------------------------------------------
Eugene 417,660 2.78%
- - - --------------------------------------------------------------------------------
Kelso 360,342 2.40%
- - - --------------------------------------------------------------------------------
Medford 578,378 3.86%
- - - --------------------------------------------------------------------------------
Missoula 145,220 0.97%
- - - --------------------------------------------------------------------------------
Pendleton 434,170 2.89%
- - - --------------------------------------------------------------------------------
Rohnert Park/Sonoma 733,106 4.89%
- - - --------------------------------------------------------------------------------
Sacramento 1,352,228 9.01%
- - - --------------------------------------------------------------------------------
Salt Lake 2,687,691 17.92%
- - - --------------------------------------------------------------------------------
San Diego 1,122,198 7.48%
- - - --------------------------------------------------------------------------------
Seatac 4,503,580 30.02%
- - - --------------------------------------------------------------------------------
Vancouver 586,220 3.91%
- - - --------------------------------------------------------------------------------
Wenatchee 369,731 2.46%
- - - --------------------------------------------------------------------------------
TOTALS 15,000,000 100.00%
================================================================================
</TABLE>
<PAGE>
EXHIBIT 1.1(C)
RLH PARTNERSHIP, L.P. CONTRIBUTION AGREEMENT
This RLH Partnership, L.P. Contribution Agreement, dated as of August 1,
1995 (this "Agreement") is by and between RLH Partnership, L.P., a Delaware
limited partnership ("Newpart"), and Red Lion, a California Limited Partnership
(the "Partnership").
RECITALS
--------
WHEREAS, as part of a plan of reorganization, the Partnership intends to
transfer certain of its hotel properties, and certain of the liabilities
associated with those hotels, to a wholly owned subsidiary, Newpart, pursuant to
this Agreement.
WHEREAS, Newpart will lease those certain hotel properties to Red Lion
Hotels, Inc., a Delaware corporation ("RLI"), pursuant to the Master Lease and
RLI will guarantee certain of the Real Property Leases.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows.
ARTICLE 1 - DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings:
"Books and Records" shall mean all books, ledgers, files, reports, plans,
-----------------
drawings and operating records of every kind maintained by the Partnership
pertaining to the Newpart Property and the Newpart Liabilities.
"Closing Date" shall mean the date of the closing of the Offering or such
------------
other date as the Partnership and Newpart shall mutually agree upon.
"Escrow Agent" shall mean First American Title Insurance Company.
------------
"FF&E" shall have the meaning assigned in the Master Lease.
----
"Fixed Asset Supplies" shall have the meaning assigned in the Master Lease.
--------------------
"Fixtures" shall have the meaning assigned in the Master Lease.
--------
1
<PAGE>
"Furnishings" shall have the meaning assigned in the Master Lease.
-----------
"Improvements" shall have the meaning assigned in the Master Lease.
------------
"Inventories" shall have the meaning assigned in the Master Lease;
-----------
"Leased Real Property" shall mean all leased real property related to the
--------------------
Newpart Hotels, as described in the Real Property Leases.
"Liabilities" shall mean all liabilities, obligations, commitments, claims,
-----------
actions, demands, losses, damages, judgments, interests, penalties, costs and
expenses of any nature, absolute, accrued, contingent or otherwise, known or
unknown, whether matured or unmatured.
"Master Lease" shall mean the Lease by and between RLI and Newpart.
------------
"Newpart" means RLH Partnership, L.P., a Delaware limited partnership, and
-------
its successors and assigns.
"Newpart Hotels" means each of the Partnership's hotel properties set forth
--------------
on Schedule 1.1(a).
"Newpart Liabilities" shall mean (a) all the indebtedness secured by the
-------------------
Newpart Property, other than indebtedness for which amounts have been deposited
with the Escrow Agent by the Closing Date for repayment of such indebtedness by
the Partnership, (b) all Liabilities under the Real Property Leases and the
Personal Property Leases, (c) the receivable from Newpart representing amounts
due to the Partnership for fees and expenses relating to Newpart paid by the
Partnership before the Closing Date and (d) all other Liabilities as of the
Closing Date required to be paid or satisfied by RLI pursuant to the Master
Lease.
"Newpart Property" shall mean all of the Partnership's right, title and
----------------
interest, as of the Closing, in the following assets and property of the
Partnership:
(a) the Premises;
(b) the Real Property Leases and Personal Property Leases;
(c) all FF&E located at the Premises;
(d) all Fixed Asset Supplies located at the Premises;
(e) all Operating Equipment located at the Premises;
2
<PAGE>
(f) all Inventories located at the Premises;
(g) all Permits;
(h) all rights under or pursuant to all warranties, representations and
guarantees relating to the construction, improvement, alteration and repair of
the Premises and all architectural and engineering plans, drawings and
specifications related thereto; and
(i) all Books and Records.
"Offering" means the proposed initial public offering of the Common
--------
Stock of RLI.
"Operating Equipment" shall have the meaning assigned in the Master Lease;
-------------------
"Owned Real Property" shall mean the real property owned in fee by the
-------------------
Partnership related to the Newpart Hotels.
"Permits" shall mean all of the Partnership's transferable licenses,
-------
permits, franchises, approvals, authorizations, consents or orders of, or
filings with, any governmental authority, whether foreign, federal, state or
local, or any other person related to the Newpart Hotels which are required to
be held by Newpart in connection with the transactions contemplated hereby and
by the Master Lease.
"Personal Property Leases" shall mean any agreement to which the
------------------------
Partnership is a party for the lease of FF&E, Fixed Asset Supplies, Operating
Equipment or Inventories which are included in the Newpart Property.
"Premises" shall mean all of the Owned Real Property and Leased Real
--------
Property and Improvements associated with each of the Newpart Hotels.
"Person" shall mean any person or entity, whether an individual,
------
trustee, corporation, general partnership, limited partnership, trust,
unincorporated organization, business association, firm, joint venture,
governmental agency or authority.
"Real Property Leases" shall mean the leases for the Leased Real
--------------------
Property as set forth on Schedule 1.1(b).
"Title Company" shall mean First American Title Insurance Company.
-------------
3
<PAGE>
1.2 Other Defined Terms. The following terms shall have the meanings
-------------------
defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Claim Notice 8.2
Closing 3.1
Dispute Notice 8.2
Indemnified Party 8.2
Indemnitor 8.2
Partnership Preamble
RLI Recitals
Transfer Fees 2.3
</TABLE>
ARTICLE 2 - CONTRIBUTION OF ASSETS
2.1 Transfer of Newpart Property. Upon the terms and subject to the
----------------------------
conditions contained herein, at the Closing, the Partnership will contribute,
convey, transfer, assign, and deliver to Newpart, as a contribution to capital,
and Newpart will acquire from the Partnership, all of the Partnership's right,
title and interest in and to, the Newpart Property.
2.2 Assumption of Liabilities. Upon the terms and subject to the
-------------------------
conditions contained herein, at the Closing, Newpart shall assume the Newpart
Liabilities.
2.3 Closing Costs; Transfer Taxes and Fees. Newpart shall be
--------------------------------------
responsible for any documentary transfer taxes and any sales, use or other taxes
(and any deficiency, interest or penalty asserted with respect thereto), escrow
fees, including fees and charges of Escrow Agent, any recording or filing fees,
and any costs and fees of title searches or insurance premiums for title
insurance on the Owned Real Property or the Leased Real Property (collectively
"Transfer Fees"), incurred in transferring and conveying the Newpart Property
hereunder, and shall promptly reimburse the Partnership for any Transfer Fees
incurred by it. Newpart shall pay all costs of applying for new permits and
obtaining the transfer of existing Permits. In addition, Newpart shall be
responsible for and shall pay all Transfer Fees or other fees or expenses
incurred in connection with obtaining or perfecting its title in the Newpart
Property after the Closing, and shall reimburse the Partnership for any such
fees or expenses incurred by it.
ARTICLE 3 - CLOSING
3.1 Closing. The Closing of the transactions contemplated herein
-------
(the "Closing") shall be held at 8:00 a.m. local time on the Closing Date at the
offices
4
<PAGE>
of Latham & Watkins, 633 West Fifth Street, Los Angeles, California, unless the
parties hereto otherwise agree.
3.2 Deliveries at Closing.
---------------------
(a) By the Partnership. On or prior to the Closing Date, the
------------------
Partnership shall execute and deliver, for recordation and/or delivery:
(i) to the Escrow Agent, escrow instructions substantially in the
form attached hereto as Exhibit 3.2(a)(i);
(ii) to the Escrow Agent, one or more recordable deeds conveying
fee simple title to all Owned Real Property included in the Newpart Property to
Newpart;
(iii) to the Escrow Agent, one or more recordable assignments
conveying all of the Partnership's interest in the Real Property Leases;
(iv) to Newpart, one or more assignments conveying all of the
Partnership's interest in the Personal Property Leases;
(v) to Newpart, one or more bills of sale conveying in the
aggregate all of the Partnership's owned personal property included in the
Newpart Property;
(vi) to Newpart and/or the Escrow Agent, such other instruments
as shall be requested by Newpart and/or the Escrow Agent to vest in Newpart
title in and to the Newpart Property in accordance with the provisions hereof.
(b) By Newpart. On the Closing Date, Newpart shall execute and
----------
deliver, for recordation and/or delivery:
(i) to the Escrow Agent, escrow instructions substantially in the
form attached hereto as Exhibit 3.2(a)(i);
(ii) to the Escrow Agent, one or more recordable assumptions
assuming all of the Partnership's interest in the Real Property Leases;
(iii) to the Partnership, one or more assumptions assuming all
of the Newpart Liabilities;
(iv) to the Partnership, such other instruments as shall be
requested by the Partnership to evidence Newpart's assumption of the Newpart
Liabilities in accordance with the provisions hereof.
5
<PAGE>
3.3 Actions by Escrow Agent. On the Closing Date, Escrow Agent shall:
-----------------------
(a) Recording. Cause the deeds (with documentary transfer tax
---------
information to be affixed by separate affidavit or other method whereby the same
shall not become a part of the Official Records) and the assignments and
assumptions of Real Property Leases to be recorded in the Official Records of
the appropriate counties in which the Owned Real Property and the Leased Real
Property is located.
(b) Title Policy. Direct the Title Company to issue and deliver the
------------
binding commitment to issue the title insurance described in Section 6.4,
effective as of the Closing Date.
3.4 Form of Instruments. To the extent that a form of any document
-------------------
to be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
satisfactory to the Partnership and Newpart.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Partnership. The Partnership
---------------------------------------------
represents and warrants to Newpart as follows:
(a) Authorization. The Partnership has the requisite partnership
-------------
power and authority and has taken all partnership action necessary to execute
and deliver this Agreement, to consummate the transactions contemplated
hereunder and to perform its obligations hereunder. This Agreement has been duly
executed and delivered by the Partnership and constitutes the legal, valid and
binding obligation of the Partnership enforceable against the Partnership in
accordance with its terms.
4.2 Representations, Warranties and Acknowledgements of Newpart.
-----------------------------------------------------------
Newpart represents and warrants to the Partnership as follows:
(a) Authority. Newpart has the requisite partnership power and
---------
authority and has taken all partnership action necessary to execute and deliver
this Agreement, to consummate the transactions contemplated hereunder and to
perform its obligations hereunder. This Agreement has been duly executed and
delivered by Newpart and constitutes the legal, valid and binding obligation of
Newpart enforceable against Newpart in accordance with its terms.
(b) Newpart Property Transferred "As Is". Newpart acknowledges that
------------------------------------
each of the assets to be transferred hereunder shall be transferred "as is" with
all faults and without representation, express or implied, that the same are
merchantable or fit for a particular purpose; that the Partnership is
transferring whatever title it may have in and to such assets without any
representation or warranty, express or implied, with respect to its
6
<PAGE>
title to such assets or its contractual ability to do the same; and that each of
the interests to be transferred hereunder pursuant to a Real Property Lease or a
Personal Property Lease shall be transferred without representation or warranty
that Newpart shall receive such interest free of claims by any third party or
with any right to the quiet enjoyment of any such interest.
ARTICLE 5 - CONDITIONS TO THE PARTNERSHIP'S OBLIGATIONS
5.1 Conditions Precedent. The obligations of the Partnership to
--------------------
consummate the transactions provided for hereby are subject, in the discretion
of the Partnership, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by the Partnership:
(a) Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of Newpart contained in this Agreement shall be true and correct
in all material respects at and as of the date of this Agreement and at and as
of the Closing Date, except as and to the extent that the facts and conditions
upon which such representations and warranties are based are expressly required
or permitted to be changed by the terms hereof, and Newpart shall have performed
and satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
(b) Deliveries. Newpart shall have executed and delivered all
----------
documents and other items under Section 3.2(b).
(c) No Proceedings, Litigation or Laws. No action, proceeding or
----------------------------------
claim by any governmental authority or other person shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby and which could reasonably be expected to (a) materially
affect the right or ability of Newpart to own, operate, possess or transfer the
Newpart Property after the Closing, or (b) materially damage the Partnership if
the transactions contemplated hereunder are consummated.
(d) RLI Contribution Agreement. Concurrently with the execution
--------------------------
hereof, RLI and the Partnership shall have executed and delivered a contribution
agreement dated as of the date hereof.
5.2 Conditions Subsequent. The obligations of the Partnership to
---------------------
consummate the transactions provided for herein are subject, in the discretion
of the Partnership, to the satisfaction, on or prior to one day following the
Closing Date, of each of the following conditions, any of which may be waived by
the Partnership:
(a) Offering. The Offering shall have closed.
--------
7
<PAGE>
ARTICLE 6 - CONDITIONS TO NEWPART'S OBLIGATIONS
The obligations of Newpart to consummate the transactions provided for
hereby are subject, in the discretion of Newpart, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Newpart:
6.1 Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of the Partnership contained in this Agreement shall be true and
correct in all material respects at and as of the date of this Agreement and at
and as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof, and the
Partnership shall have performed and satisfied all agreements and covenants
required hereby to be performed by it prior to or on the Closing Date.
6.2 No Proceedings, Litigation or Laws. No action, proceeding or
----------------------------------
claim by any governmental authority or other person shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby and which could reasonably be expected to (a) materially
affect the right or ability of Newpart to own, operate, possess, lease pursuant
to the Master Lease or transfer the Newpart Property after the Closing, or (b)
materially damage Newpart if the transactions contemplated hereunder are
consummated.
6.3 Conveyancing Documents. The Partnership shall have executed and
----------------------
delivered each of documents and other items described in Section 3.2(a) hereof.
6.4 Title Policy. Newpart shall have received an owner's policy or
------------
policies of title insurance insuring fee title to the Partnership's Owned Real
Property or written commitment to issue the same, in form and substance
satisfactory to Newpart, and shall have received a leasehold policy or policies
of title insurance insuring the Partnership's leasehold interest in the Leased
Real Property, in form and substance satisfactory to Newpart.
ARTICLE 7 - INDEMNIFICATION
7.1 By Newpart. Newpart, as of the Closing Date, shall indemnify and
----------
save and hold harmless the Partnership, and each of its limited partners,
general partners, owners, subsidiaries and affiliates, and each of their
respective officers, directors, employees, shareholders, partners, agent,
representatives and advisors and any of the foregoing's successors and assigns
(each an "Indemnified Party") from and against the Newpart Liabilities and any
and all Liabilities incurred in connection with, arising out of, resulting from
or incident to the breach of any representation, warranty or covenant of Newpart
contained herein.
8
<PAGE>
7.2 Indemnification Procedures. If an Indemnified Party seeks
--------------------------
indemnification hereunder it shall give Newpart (the "Indemnitor") a notice (a
"Claim Notice") describing in reasonable detail the facts giving rise to any
claims for indemnification hereunder and the amount or the method of computation
of the amount of such claim, and a reference to the provision of this Agreement
or any agreement, document or instrument executed pursuant hereto or in
connection herewith upon which such claim is based, provided that failure to
give such notice shall not relieve the Indemnitor of its obligations hereunder.
Indemnitor shall have thirty (30) days after the giving of any Claim Notice
pursuant hereto to (i) agree to the amount or method of determination set forth
in the Claim Notice and to pay such amount to Indemnified Party in immediately
available funds to the extent not previously advanced pursuant to Section 7.4
hereof, or (ii) to provide Indemnified Party with notice that it disagrees with
the amount or method of determination set forth in the Claim Notice (the
"Dispute Notice"). Within fifteen (15) days after the giving of the Dispute
Notice, a representative of Indemnitor and a representative of Indemnified Party
shall negotiate in a bona fide attempt to resolve the matter. In the event that
the controversy is not resolved within thirty (30) days of the giving of the
Dispute Notice, the parties shall be free to pursue whatever remedies are
available to them at law or equity.
7.3 Third Person Claims. If a claim by a third person is made
-------------------
against an Indemnified Party, and if such party intends to seek indemnity with
respect thereto under this Article 7, such Indemnified Party shall promptly
notify the Indemnitor in writing of such claims, setting forth such claims in
reasonable detail. Indemnitor shall have ten (10) days after receipt of such
notice to elect to undertake, conduct and control, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with it in connection therewith; provided that
the Indemnified Party may participate in such settlement or defense through
counsel chosen by such Indemnified Party; and provided further that if in the
reasonable judgment of the Indemnified Party, there exists a conflict between
the Indemnified Party and the Indemnitor, Indemnitor shall bear all costs and
expenses of Indemnified Party's separate counsel of choice. So long as the
Indemnitor is reasonably contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim without the consent of
the Indemnitor. If the Indemnitor does not notify the Indemnified Party within
ten (10) days after receipt of the Indemnified Party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to contest, settle or compromise the
claim and shall be entitled to indemnification for all fees, costs and expenses
incurred in connection therewith. The Indemnitor shall not, except with the
consent of each Indemnified Party, enter into any settlement that does not
include as an unconditional term thereof the giving by the person or persons
asserting such claim to all Indemnified Parties of unconditional release from
all liability with respect to such claim or consent to entry of any judgment.
The Indemnitor shall not be liable for damages relating to any settlement
entered into without the consent of such Indemnitor.
7.4 Advance of Damages. Notwithstanding anything to the contrary,
------------------
the Indemnitor shall advance to any Indemnified Party, all funds necessary to
pay when due all
9
<PAGE>
damages associated with the Newpart Liabilities and all other Liabilities for
which indemnification is provided pursuant to Section 7.1 ("Damages"), provided
that if the Indemnitor disputes its obligation to indemnify the Indemnified
Party with respect to such Damages, the Indemnified Party shall provide an
undertaking to reimburse the Indemnitor for such amounts if it is later
determined in a final nonappealable order by a court of competent jurisdiction
that the Indemnified Party was not entitled to indemnification under this
Agreement.
ARTICLE 8 - MISCELLANEOUS
8.1 Termination.
-----------
(a) Failure of Condition. If any condition precedent to the
--------------------
Partnership's obligations hereunder is not satisfied by the Closing Date and
such condition is not waived by the Partnership, the Partnership may terminate
this Agreement at its option by written notice to Newpart. If any condition
precedent to Newpart's obligations hereunder is not satisfied by the Closing
Date and such condition is not waived by Newpart, Newpart may terminate this
Agreement at its option by written notice to the Partnership. In the event that
a condition precedent to its obligations is not satisfied, nothing contained
herein shall be deemed to require either party to terminate this Agreement
rather than to waive such condition precedent and proceed with the Closing.
(b) Effect of Termination. In the event of a termination of this
---------------------
Agreement by either party as provided in subparagraph (a) above, this Agreement
shall thereafter become void and have no effect and neither party shall have any
liability hereunder to the other party, except that nothing herein shall relieve
either party from liability for any breach of this Agreement which occurs prior
to such termination.
8.2 Entire Agreement; Amendments and Waivers. This Agreement,
----------------------------------------
together with all exhibits and schedules hereto constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
8.3 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
8.4 Governing Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws of the
State of Washington
10
<PAGE>
applicable to contracts entered into and wholly to be performed in Washington by
Washington residents (without reference to its choice of law provisions).
8.5 Multiple Counterparts. This Agreement may be executed in one or
---------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6 Captions and References. The captions or headings of the
-----------------------
Articles and Sections herein are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
8.7 Limited Liability. Notwithstanding any provisions hereof, none
-----------------
of the obligations of the Partnership or Newpart under or contemplated by this
Agreement shall be an obligation of any officer, director, shareholder, limited
partner, general partner, or owner of the Partnership or Newpart, or any of
their respective officers, directors, shareholders, limited partners, general
partners, or owners, or successors or assigns. The Partnership and Newpart
shall be the only persons or entities liable with respect to such obligations.
Each of the Partnership and Newpart hereby irrevocably waives any right it may
have against any such officer, director, shareholder, general partner or limited
partner, owner, successor or assign identified above as a result of the
performance of the provisions under or contemplated by this Agreement. This
provision shall survive any termination of this Agreement.
8.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent permitted by
law, such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument.
8.9 Books and Records. From and after the Closing, Newpart shall
-----------------
make available to the Partnership, its agents and employees the Books and
Records (and the assistance of Newpart's employees responsible for such Books
and Records) during regular business hours. Newpart shall maintain and preserve
all such Books and Records for a period of ten years after the Closing.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
RLH Partnership, L.P., a Delaware
limited partnership
By: Red Lion G.P., Inc., its general
partner
By:
-----------------------------------------
Name: Beth A. Ugoretz
Title: Vice President
Red Lion, a California Limited Partnership
By RLA-GP, Inc., a Delaware corporation
Its General Partner
By:
-----------------------------------------------
Name: David J. Johnson
Title: Executive Vice President
12
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of August 1, 1995, is
made and entered into by and between Red Lion Hotels, Inc., a Delaware
corporation (the "Company"), and Red Lion, a California Limited Partnership (the
"Partnership").
1. Background. As of the date hereof, the Company has issued
----------
20,900,000 shares of its common stock, $.01 par value per share (the "Common
Stock"), to the Partnership.
2. Definitions. As used in this Agreement, the following
-----------
capitalized terms shall have the following respective meanings:
Exchange Act - The Securities Exchange Act of 1934, as amended from
time to time.
Holder - Any party hereto (other than the Company) and any holder of
Registrable Securities who agrees in writing to be bound by the provisions
of this Agreement.
Person - Any individual, partnership, joint venture, limited liability
company, corporation, trust, unincorporated organization or government or
any department or agency thereof.
Registrable Securities - Any Common Stock issued or issuable to the
Partnership and any Common Stock which may be issued or distributed in
respect of such Common Stock by way of stock dividend or stock split or
other distribution, recapitalization or reclassification. As to any
particular Registrable Securities, once issued such Securities shall cease
to be Registrable Securities when (i) a registration statement with respect
to the sale of such Securities shall have become effective under the
Securities Act and such Securities shall have been disposed of in
accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 or 144A (or any successor
provisions) under the Securities Act, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of them
under the Securities Act or any state securities or blue sky law then in
force, or (iv) the Partnership shall have delivered the notice set forth in
Section 8(c).
Registration Expenses - Any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i)
all SEC and stock exchange or National Association of Securities Dealers,
Inc. registration and filing
<PAGE>
fees, (ii) all fees and expenses of complying with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) all fees and
expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to clause (viii) of Section
5, (v) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements of
one counsel selected by the Holders of a majority of the Registrable
Securities being registered to represent all Holders of the Registrable
Securities being registered in connection with each such registration, and
(vii) any fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, including liability insurance if the
Company so desires or if the underwriters so require, and the reasonable
fees and expenses of any special experts retained in connection with the
requested registration, but excluding underwriting discounts and
commissions and transfer taxes, if any.
Securities Act - The Securities Act of 1933, as amended from time to
time.
SEC - The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
3. Incidental Registrations.
------------------------
(a) Right to Include Registrable Securities. If the Company at
---------------------------------------
any time after the date hereof proposes to register its Common Stock under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, pursuant to a registration statement on which it is permissible
to register Registrable Securities for sale to the public under the Securities
Act, it will each such time give prompt written notice to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 3. Upon the written request of any such Holder made within
15 days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder), the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the Holders thereof; provided, that (i) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), and (ii) if such registration involves an underwritten offering, all
Holders of Registrable Securities requesting to be included in the Company's
registration must sell their Registrable Securities to the underwriters selected
by the Company on the same terms and conditions as
2
<PAGE>
apply to the Company, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 3(a) involves an underwritten public offering, any Holder of
Registrable Securities requesting to be included in such registration may elect,
in writing prior to the effective date of the registration statement filed in
connection with such registration, not to register such securities in connection
with such registration.
(b) Expenses. The Company will pay all Registration Expenses in
--------
connection with each registration of Registrable Securities requested pursuant
to this Section 3.
(c) Priority in Incidental Registrations. If a registration
------------------------------------
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the amount of
securities requested to be included in such registration exceeds the amount
which can be sold in such offering, so as to be likely to have an adverse effect
on such offering as contemplated by the Company (including the price at which
the Company proposes to sell such securities), then the Company will include in
such registration (i) first, 100% of the securities the Company or the person
initiating the registration statement proposes to sell, (ii) second, to the
extent of the amount of securities requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the amount of securities which the persons
have requested to be included in such registration, such amount to be allocated
pro rata among all persons requesting to have Common Stock included in the
registration statement on the basis of the relative number of shares of Common
Stock then held by each such person, provided, that any Common Stock thereby
allocated to any such person that exceeds such person's request will be
reallocated among the remaining requesting persons in like manner.
4. Registration on Request.
-----------------------
(a) Request by Holders. Upon the written request of any Holder or
------------------
Holders requesting that the Company effect the registration under the Securities
Act of all or part of such Holder's or Holders' Registrable Securities and
specifying the intended method of disposition thereof, the Company will promptly
give written notice of such requested registration to all other Holders of
Registrable Securities, and thereupon will, as expeditiously as possible, use
its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Holder or Holders; and
(ii) all other Registrable Securities which the Company has been
requested to register by any other Holder thereof by written request given
to the Company within 15 days after the giving of such written notice by
the Company (which request shall specify the intended method of disposition
of such Registrable
3
<PAGE>
Securities), so as to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to
be registered.
(b) Registration Statement Form. If any registration requested
---------------------------
pursuant to this Section 4 which is proposed by the Company to be effected by
the filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) shall be in connection with an underwritten
public offering, and if the managing underwriter shall advise the Company in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in
--------
connection with the first six registrations of Registrable Securities pursuant
to this Section 4 upon the written request of any of the Holders. All expenses
for any subsequent registrations of Registrable Securities pursuant to this
Section 4 shall be paid pro rata by the Company and all other Persons (including
the Holders) participating in such registration on the basis of the relative
number of shares of Common Stock of each such Person included in such
registration.
(d) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 4 will not be deemed to have been effected unless it
has become effective; provided, that if, within 180 days after it has become
effective, the offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected.
(e) Selection of Underwriters. If a requested registration
-------------------------
pursuant to this Section 4 involves an underwritten offering, the Company shall
have the right to select the investment banker or bankers and managers to
administer the offering; provided, however, that such investment banker or
bankers and managers shall be satisfactory to Holders of a majority of the
Registrable Securities which are held by Holders and which the Company has been
requested to register.
(f) Priority in Requested Registrations. If a requested
-----------------------------------
registration pursuant to this Section 4 involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering without a significant
adverse effect on the price, timing or distribution of the securities offered,
the Company will include in such registration only the Registrable Securities
requested to be included in such registration. In the event that the number of
Registrable Securities requested to be included in such registration exceeds the
number which, in the opinion of such managing underwriter, can be sold without a
significant adverse effect on the price, timing or distribution of the
securities offered, the number of such Registrable Securities to be included in
such registration shall be allocated pro rata among all requesting Holders on
the basis of the relative number of shares of Registrable Securities then held
by each such
4
<PAGE>
Holder (provided that any shares thereby allocated to any such Holder that
exceed such Holder's request shall be reallocated among the remaining requesting
Holders in like manner). In the event that the number of Registrable Securities
requested to be included in such registration is less than the number which, in
the opinion of the managing underwriter, can be sold without a significant
adverse effect on the price, timing or distribution of the securities offered,
the Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of the underwriter,
can be sold without a significant adverse effect on the price, timing or
distribution of the securities offered.
(g) Additional Rights. If the Company at any time grants to any
-----------------
other holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 4,
the terms of this Section 4 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
5. Registration Procedures. If and whenever the Company is
-----------------------
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Agreement,
the Company will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the end of the
period within which a request for registration may be given to the Company,
file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective; provided, however, that the Company may discontinue any
registration of its securities which is being effected pursuant to Section
3 at any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
for a period not in excess of 180 days and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance
with the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement; provided, that before filing a
registration statement or prospectus, or any amendments or supplements
thereto, the Company will furnish to one counsel selected by the Holders of
a majority of the Registrable Securities covered by such registration
statement to represent all Holders of Registrable Securities covered by
such registration statement, copies of all documents proposed to be filed,
which documents will be subject to the review of such counsel;
5
<PAGE>
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this clause (iv), it
would not be obligated to be so qualified, to subject itself to taxation in
any such jurisdiction, or to consent to general service of process in any
such jurisdiction;
(v) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of any such Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) of this Section 5, of the
Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such seller, prepare
and furnish to such seller a reasonable number of copies of an amended or
supplemented prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;
6
<PAGE>
(viii) use its best efforts to list such Registrable Securities on
any securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is
then permitted under the rules of such exchange, and to provide a transfer
agent and registrar for such Registrable Securities covered by such
registration statement not later than the effective date of such
registration statement;
(ix) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as
sellers of a majority of such Registrable Securities or the underwriters,
if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of
the type customarily covered by "cold comfort" letters as the seller or
sellers of a majority of such Registrable Securities shall reasonably
request; and
(xi) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vi) of this Section 5, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 5 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 5 and including the date when each seller of Registrable
7
<PAGE>
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5.
6. Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act pursuant
to Section 3 or 4, the Company will, and it hereby does, indemnify and hold
harmless, to the extent permitted by law, the seller of any Registrable
Securities covered by such registration statement, each affiliate of such seller
and their respective directors and officers or general and limited partners (and
the directors, officers, affiliates and controlling Persons thereof), each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses to which such Indemnified Party may
become subject under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof, whether or not such Indemnified Party is a party thereto) arise
out of or are based upon (a) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto, or
(b) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and the Company will reimburse
such Indemnified Party for any legal or any other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be liable
to any Indemnified Party in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or amendment
or supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information with respect to such
seller furnished to the Company by such seller for use in the preparation
thereof; and provided, further, that the Company will not be liable to any
Person who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within the
meaning of the Securities Act, under the indemnity agreement in this Section
6(a) with respect to any preliminary prospectus or the final prospectus or the
final prospectus as amended or supplemented, as the case may be, to the extent
that any such loss, claim, damage or liability of such underwriter or
controlling Person results from the fact that such underwriter sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein) or of the final prospectus as then
amended or supplemented (including any documents incorporated by reference
therein), whichever is most recent, if the Company has previously furnished
copies thereof to such underwriter. Such indemnity shall remain in full force
and
8
<PAGE>
effect regardless of any investigation made by or on behalf of such seller or
any Indemnified Party and shall survive the transfer of such securities by such
seller.
(b) Indemnification by the Seller. The Company may require, as a
-----------------------------
condition to including any Registrable Securities in any registration statement
filed in accordance with Section 5 herein, that the Company shall have received
an undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 6) the Company and all other prospective sellers or any underwriter, as
the case may be, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information with respect to such
seller or underwriter furnished to the Company by such seller or underwriter for
use in the preparation of such registration statement, preliminary, final or
summary prospectus or amendment or supplement, or a document incorporated by
reference into any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any of the prospective sellers, or any of their respective affiliates,
directors, officers or controlling Persons and shall survive the transfer of
such securities by such seller.
(c) Notices of Claims, Etc. Promptly after receipt by an
----------------------
Indemnified Party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 6, such Indemnified Party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of the
Indemnified Party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnified Party, unless in such Indemnified Party's reasonable
judgment a conflict of interest between such Indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the indemnifying party to such Indemnified Party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof, the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided
------------
for in the preceding clauses (a) and (b) is unavailable to an indemnified party
or insufficient to
9
<PAGE>
hold it harmless as contemplated by the preceding clauses (a) and (b), then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnified party and the indemnifying party, but also the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations, provided that no selling Holder shall be
required to contribute in an amount greater than the dollar amount of the
proceeds received by such selling Holder with respect to the sale of any
securities. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding subdivisions of this Section 6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this
---------------
Section 6 shall be in addition to any liability which any party may otherwise
have to any other party.
7. Rule 144. The Company covenants that it will file the reports
--------
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 7, the Company may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
8. Miscellaneous.
-------------
(a) Holdback Agreement. If any such registration shall be in
------------------
connection with an underwritten public offering, each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or 180 days (or such lesser
period as the managing underwriters may permit) after the
10
<PAGE>
effective date of such registration, and the Company hereby also so agrees and
agrees to cause each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company (at any time other than in a public offering)
to so agree.
(b) Amendments and Waivers. This Agreement may be amended and the
----------------------
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 8(b), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(c) Successors, Assigns and Transferees. This Agreement shall be
-----------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions contained herein; provided that such
subsequent Holder shall not be entitled to such benefits if the Partnership, in
connection with a transfer of Registrable Securities, provides the Company with
written notice that such transferred Registrable Securities are no longer deemed
to be Registrable Securities.
(d) Notices. All notices and other communications provided for
-------
hereunder shall be in writing and shall be sent by first class mail, telecopier
or hand delivery:
(i) if to the Company, to:
Red Lion Hotels, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: President
Telecopy No. (360) 693-1739
with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Peter F. Kerman, Esq.
Telecopy No. (415) 395-8095
11
<PAGE>
(ii) if to the Partnership, to:
RLA-GP, Inc.
4001 Main Street
Vancouver, WA 98663
Attention: President
Telecopy No. (360) 693-1739
with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Peter F. Kerman, Esq.
Telecopy No. (415) 395-8095
(iii) if to any other Holder of Registrable Securities, to the
address of such other Holder as shown in the books and records
of the Company, or to such other address as any of the above
shall have designated in writing to all of the other above.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, or (3) when telecopied, receipt acknowledged.
(e) Descriptive Headings. The headings in this Agreement are for
--------------------
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(f) Severability. In the event that any one or more of the
------------
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
12
<PAGE>
(h) Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of New York
applicable to contracts made and to be performed therein. The parties to this
Agreement hereby agree to submit to the jurisdiction of the courts of the State
of New York in any action or proceeding arising out of or relating to this
Agreement.
(i) Specific Performance. The parties hereto acknowledge and
--------------------
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, it is agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States or
any state thereof, in addition to any other remedy to which they may be entitled
at law or equity.
13
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
RED LION HOTELS, INC.
By: /s/ David J. Johnson
-----------------------------------------------------
David J. Johnson
President and Chief Executive Officer
RED LION, A CALIFORNIA LIMITED PARTNERSHIP
By: RLA-GP, Inc.
Its General Partner
By: /s/ David J. Johnson
-----------------------------------------------------
David J. Johnson
Executive Vice President
14
<PAGE>
EXHIBIT 1.1(E)
SERVICE AGREEMENT
This Agreement is made and entered into as of August 1, 1995 by and
among Red Lion Hotels, Inc., a Delaware corporation ("RLI"), Red Lion, a
California Limited Partnership ("Historical Red Lion") and the undersigned
affiliates of Historical Red Lion (the "Affiliates" and together with Historical
Red Lion, "Red Lion").
RECITALS
--------
WHEREAS, pursuant to the Contribution Agreement of even date herewith
by and between Historical Red Lion and RLI, Historical Red Lion will retain
certain interests in the hotels described in Exhibit A hereto (the "Retained
Hotels");
WHEREAS, pursuant to the RLH Partnership, L.P. Contribution Agreement
of even date herewith between Historical Red Lion and RLH Partnership, L.P., a
Delaware limited partnership ("Newpart"), Historical Red Lion will transfer to
Newpart certain interests in the Retained Hotels;
WHEREAS, Red Lion desires that RLI provide certain services to Red
Lion with respect to the Retained Hotels and RLI desires to provide such
services upon the terms set forth below; and
WHEREAS, Historical Red Lion and the Affiliates desire to provide for
the manner in which payment for such services are allocated among themselves.
AGREEMENT
---------
NOW, THEREFORE, in acknowledgement of the foregoing recitals and in
consideration of the mutual agreements expressed herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows.
1. General Support Services.
------------------------
Subject to the terms of this Agreement, from and after the date
hereof, RLI shall provide to Red Lion administrative, accounting, tax,
budgeting, computer systems, legal, environmental and certain other support
services relating to the Retained Hotels and Red Lion consistent with the
standards prevailing in and with the same degree of care as the hotels owned or
managed by RLI and certain corporation and partnership administrative services
relating to maintenance, tax reporting and accounting for Red Lion
(collectively, the "Support Services").
1
<PAGE>
2. Fees.
----
From and after the date hereof, as payment for the Support Services,
RLI shall receive an annual fee (the "Fee"). For the calendar year 1995, the
Fee shall equal Three Hundred Fifty Thousand Dollars ($350,000) and be payable
in two equal payments on or before the last business day of September and
December 1995. Commencing in calendar year 1996 and continuing for each
calendar year during the term of this Agreement, the Fee shall equal the Fee for
the immediately preceding calendar year plus three percent (3%) of such Fee
payable in four equal payments on or before the last business day of each March,
June, September and December. Historical Red Lion shall have the absolute right
to allocate among itself and the Affiliates the payment of fees due under this
Agreement and the Affiliates hereby agree to any such allocation.
Notwithstanding any such allocation or anything herein to the contrary,
Historical Red Lion and the Affiliates shall be jointly and severally liable for
the payment of the fees due under this Agreement.
3. Termination.
-----------
This Agreement shall remain in full force and effect until (i) the
parties hereto agree to terminate this Agreement or (i) 30 days after prior
written notice has been received by RLI from Red Lion of its intent to terminate
this Agreement.
4. Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties.
5. Amendment.
---------
This Agreement may be amended only by a written agreement signed by
the parties; provided, however, that an affiliate of Historical Red Lion may
hereafter become a party to this Agreement by executing a counterpart of this
Agreement and sending the same to RLI at its executive offices, whereupon such
affiliate will be deemed an Affiliate under this Agreement and, accordingly,
will be bound by and entitled to receive the benefits of this Agreement.
6. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.
7. Specific Performance.
--------------------
RLI and Red Lion agree that monetary damages would not be adequate
compensation for any loss incurred by Red Lion by reason of a breach of the
provisions of
2
<PAGE>
this Agreement by RLI. Therefore, Red Lion shall be entitled to specific
performance of the provisions of this Agreement and RLI hereby waives the claim
or defense that there exists an adequate remedy at law to redress the
nonperformance or other breach of this Agreement.
8. Agreement to Perform Necessary Acts.
-----------------------------------
Each party agrees to perform any further acts and to execute and
deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement.
9. Conditions to Transfer.
----------------------
If RLI agrees to provide the services described herein to any
transferee or assignee of any or all of the Retained Hotels (other than an
affiliate of Historical Red Lion as to which RLI shall have no right to consent)
such transferee or assignee must, as a condition to such transfer or assignment,
execute such documents as may be requested by RLI in order to confirm the
agreement of such assignee or transferee to be bound by all of the terms and
provisions of this Agreement as though an original signatory hereto and to
assume all obligations of the transferor or assignor hereof.
10. Invalid Provision.
-----------------
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions, and this Agreement shall be
construed in all respects as if the invalid or unenforceable provision were
omitted.
11. No Waiver of Breach.
-------------------
No failure by Red Lion to insist upon the strict performance of any
covenant, agreement, term or provision of this Agreement, or to exercise any
right or remedy consequent upon a breach thereof, shall constitute a waiver of
any such breach or subsequent breach of such covenant, agreement, term or
provision. No waiver of any breach shall affect or alter this Agreement and
this Agreement shall remain in full force and effect.
12. Entire Agreement.
----------------
This instrument evidences the entire agreement of the parties with
respect to the matters covered herein, and supersedes all prior oral or written
agreements or other understandings.
13. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"RLI" Red Lion Hotels, Inc., a Delaware corporation
__________________________
By: Beth A. Ugoretz
Its: Senior Vice President
"Historical Red Lion" Red Lion, a California Limited Partnership
By: RLA-GP, Inc., a Delaware corporation
Its: General Partner
_____________________________
By: David J. Johnson
Its: Executive Vice President
"Affiliate" Red Lion G.P., Inc., a Delaware corporation
______________________________
By: Beth A. Ugoretz
Its: Vice President
"Affiliate" RLH Partnership, L.P., a Delaware limited partnership
By: Red Lion G.P., Inc., a Delaware corporation
Its: General Partner
_____________________________
By: Beth A. Ugoretz
Its: Vice President
4
<PAGE>
EXHIBIT A: RETAINED HOTELS
Red Lion's Sacramento Inn
1401 Arden Way
Sacramento, California 95815
Red Lion Hotel, Sonoma County
One Red Lion Hotel Drive
Rohnert Park, California 94928
Red Lion Hotel
7450 Hazard Center Drive
San Diego, California 92108
Red Lion Inn
501 Camino Del Rio
Durango, Colorado 81301
Red Lion Hotel, Boise Downtowner
1800 Fairview
Boise, Idaho 83702
Red Lion Inn
700 West Broadway
Missoula, Montana 59802
Red Lion Inn
400 Industry Street
Astoria, Oregon 97103
Red Lion Inn/North
1415 N.E. Third Street
Bend, Oregon 97701
Red Lion Inn
1313 North Bayshore Drive
Coos Bay, Oregon 97420
Red Lion Inn
205 Coburg Road
Eugene, Oregon 97401
A-1
<PAGE>
Red Lion Inn
200 North Riverside
Medford, Oregon 97501
Red Lion Inn
304 S.E. Nye Avenue
Pendleton, Oregon 97801
Red Lion Hotel Salt Lake
255 South West Temple
Salt Lake City, Utah 84101
Red Lion Inn
510 Kelso Drive
Kelso, Washington 98626
Red Lion Hotel, Seattle Airport
18740 Pacific Highway South
Seattle, Washington 98188
Red Lion Inn At The Quay
100 Columbia Street
Vancouver, Washington 98660
Red Lion Inn
1225 North Wenatchee Avenue
Wenatchee, Washington 98801
A-2
<PAGE>
Exhibit 3.2 (a)(i)
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
July 31, 1995
First American Title Insurance Company
114 E. Fifth Street
Santa Ana, California 92701
Attention: Mr. Thomas Zowarka
Re: Red Lion Hotels, Inc.;
RLH Partnership, L.P.
Escrow No. N954072-Z
----------------------
Ladies and Gentlemen:
This firm represents Red Lion, a California Limited Partnership ("Red
Lion"), Red Lion Hotels, Inc., a newly formed Delaware corporation ("RLI"), and
RLH Partnership, L.P., a newly formed Delaware limited partnership ("Newpart"),
in connection with an overall corporate restructuring of Red Lion, the
transactions associated with which (collectively, the "Restructuring") are more
fully described in that certain Funds Transfer Memorandum regarding the
Corporate Restructuring of Red Lion and Affiliates attached hereto as Exhibit A
("Funds Transfer Memorandum"). The Closing of the Restructuring ("Closing")
shall take place on August 1, 1995 beginning at 6 a.m. P.D.T. and shall be
completed specifically in accordance with the Funds Transfer Memorandum.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given them in the Funds Transfer Memorandum.
A. General
-------
As part of the Restructuring and pursuant to two separate Contribution
Agreements dated as of July 31, 1995, each by and between Red Lion, as
transferor and Newpart and RLI, respectively, as transferees, certain real
property, among other matters, will be transferred to each of Newpart and RLI,
all as
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 2
more particularly described in said Contribution Agreements. Each such
Contribution Agreement shall be referred to herein as the "Newpart Contribution
Agreement" or the "RLI Contribution Agreement," respectively.
In addition, as part of the Restructuring, each of RLI and Newpart
will borrow funds pursuant to two separate credit agreements each dated as of
July 31, 1995 and each by and among Various Lending Institutions, Credit
Lyonnais New York Branch, as Administrative Agent, and Newpart and RLI
respectively. Each such Credit Agreement shall be referred to herein as the
"Newpart Credit Agreement" or the "RLI Credit Agreement," respectively.
In connection with the Restructuring, Red Lion, RLI and Newpart have
requested, and you have established, an "Escrow," known as Escrow Number
N954072-Z, with First American Title Insurance Company ("FATCO"), the monetary
matters of which shall be handled through an Escrow Account, established in the
name of FATCO and administrated by Tom Zowarka ("Escrow Agent"), with funds to
be held at Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New York, New
York 10081, account no. 910-2-744803 ("Escrow Account").
This letter shall constitute the Escrow Instructions from each of Red
Lion, RLI and Newpart in connection with the above-described Escrow. You should
be receiving separate instructions from representatives of each of the
Administrative Agent, Credit Lyonnais, for each of the lending groups under each
of the Newpart Credit Agreement and RLI Credit Agreement ("New Lenders"), as
well as instructions from certain existing lenders ("Existing Lenders") to Red
Lion who anticipate repayment of certain existing indebtedness. Additionally
you may receive certain express instructions from or on behalf of Red Lion
Properties, Inc., a Delaware corporation ("RLP"), and/or Glendale Red Lion
Hotel, a California limited partnership (collectively the "Other Red Lion
Instructions") and/or The Yasuda Trust & Banking Co., Ltd., Los Angeles Agency
("Yasuda Trust"). You have agreed to comply with each and all of said
instructions and to notify the undersigned immediately if any of said
instructions conflict with, or are inconsistent with, the transactions
contemplated herein, including without limitation your commitment to issue the
title policies described in paragraphs C.3 and D.3 and 4 herein, or in the
instructions received from any of the New Lenders, the Exchange Lenders or the
Existing Lenders.
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 3
B. Exchange Properties.
-------------------
Red Lion and RLP have executed an Exchange Agreement dated as of July
27, 1995 ("Exchange Agreement"). Capitalized terms used in this Section B and
not otherwise defined herein shall have the meanings given them in the Exchange
Agreement.
Pursuant to the Exchange Agreement, the Red Lion Property and the RLP
Property (as such terms are defined in the Exchange Agreement) shall be
transferred in a transaction qualifying as a tax-free exchange under Section
1031 of the Internal Revenue Code of 1986, as amended. To effectuate the
transfers in connection with the tax-free exchange, you shall receive delivery
of all of the executed original documents listed on Schedule 1 to Exhibit B
(collectively, the "Exchange Properties Transfer Documents").
Upon Closing, you are hereby authorized and directed to commence
immediately to record and/or file the Exchange Properties Transfer Documents in
the appropriate county recorder's offices, in the states as shown on the
documents, each in the exact order shown on Schedule 1 to Exhibit B. Upon
Closing, you are authorized to deliver the originals of said documents
transferring the Red Lion Property to RLI and the originals of said documents
transferring the RLP Property to Red Lion in accordance with the Exchange
Agreement. You are hereby advised that with respect to this exchange
transaction, Red Lion and RLP have jointly determined that all transfers are
exempt from documentary transfer taxes, if any, under the laws of the states
where the Red Lion Property and RLP Property are located.
C. Newpart (Retained Properties)
-----------------------------
1. Newpart Contribution Agreement.
------------------------------
Pursuant to the Newpart Contribution Agreement, the Retained
Properties (as defined in the Funds Transfer Memorandum and listed on Schedule
C1(a) hereto) shall be transferred, subject to certain existing indebtedness, to
Newpart. To effectuate this transfer, you shall receive delivery of all of the
executed original documents listed on Schedule 1(b) to Exhibit C (collectively,
the "Retained Properties Transfer Documents").
Upon Closing, you are hereby authorized and directed to commence
immediately to record and/or file the Retained Properties Transfer Documents in
the appropriate county recorder's offices, in the states as shown on the
documents, each
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 4
in the exact order shown on Schedule 1 to Exhibit C. Upon Closing, you are also
authorized to deliver the originals of said documents to Newpart in accordance
with the Newpart Contribution Agreement. You are hereby advised that with
respect to this transaction the transferee and transferor have jointly
determined that all transfers are exempt from documentary transfer taxes in
California pursuant to Revenue and Taxation Code 11923(d) and you are hereby
instructed and authorized to add any information required to evidence said
exemption to the deeds and other transfer documents, if any such additional
information is so required. You are also authorized to do likewise in any other
states which required analogous declarations with respect to any comparable
transfer tax exemptions. With respect to the recordation of the grant deed for
the Durango, Colorado property, a transfer tax will be due as shown in the
documentation provided to you and you are hereby requested to advance payment of
said sum on behalf of Newpart at the time of recordation. You are also hereby
requested to advance and pay on behalf of Newpart any and all recordation and/or
filing fees in connection with the Memorandum of Lease.
2. Newpart Credit Agreement.
------------------------
Pursuant to the Newpart Credit Agreement you shall receive the
delivery of all of the executed original documents shown in the Lender's
Instructions (as hereinafter defined) and pertaining to the Retained Properties
(collectively, the "Retained Properties Security Documents") together with
recordation escrow instructions from White & Case, as counsel to the
Administrative Agent, a copy of which is attached hereto in Exhibit C (Schedule
2) ("Lender's Instructions").
Upon Closing, you are hereby authorized and directed to commence
immediately to record and/or file the Retained Properties Security Documents in
the appropriate county recorders' offices, in the states (and/or secretary of
states' offices) as shown on the documents, each in the order shown in Lender's
Instructions, after recordation of the Retained Properties Transfer Documents,
-----
including without limitation the Memorandum of Lease for each Retained Property.
3. Newpart Title Insurance Policies.
--------------------------------
Pursuant to the Newpart Contribution Agreement, certain owner's,
leasehold owner's, and related lender's title insurance policies are to be
issued in respect of the Retained Properties. You, on behalf of FATCO,
representatives of Newpart and RLI, and representatives of Credit Lyonnais, as
Administrative Agent for
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 5
the New Lenders, have previously agreed on markups of preliminary title reports
for the Retained Properties to serve as commitments for such title insurance
policies (the "RP Title Insurance Commitments"). The RP Title Insurance
Commitments are attached hereto as Schedule 3 to Exhibit C.
Upon Closing, you are hereby authorized and directed to issue title
insurance policies to the insured parties, in the liability amounts, with the
agreed endorsements, subject only to the agreed title exceptions, and otherwise
in form and substance, in each case, as set forth in the RP Title Insurance
Commitments.
D. RLI (Transferred Properties)
----------------------------
1. RLI Contribution Agreement.
--------------------------
Pursuant to the RLI Contribution Agreement, the Transferred Properties
(as defined in the Funds Transfer Memorandum and listed on Schedule D1(a)
hereto) shall be transferred to RLI. To effectuate this transfer, you shall
receive delivery of all of the executed original documents listed on Schedule 1
to Exhibit D (collectively, the "Transferred Properties Transfer Documents").
Upon Closing, you are hereby authorized and directed to commence
immediately to record and/or file the Transferred Properties Transfer Documents
in the appropriate county recorders' offices, in the states as shown on the
documents, each in the exact order shown on Schedule 1 to Exhibit D. Upon
Closing, you are also authorized to deliver the originals of said documents to
RLI in accordance with the RLI Contribution Agreement. You are hereby advised
that with respect to this transaction the transferee and transferor have jointly
determined that such transfers are exempt from documentary transfer taxes in
California pursuant to Revenue and Taxation Code 11923(d) and you are hereby
instructed and authorized to add any information required to evidence said
exemption to the deeds and other transfer documents, if any such additional
information is so required. You are also authorized to do likewise in any other
states which required analogous declarations with respect to any comparable
transfer tax exemptions.
2. RLI Credit Agreement.
--------------------
Pursuant to the RLI Credit Agreement you shall receive the delivery of
all of the executed original documents shown in the Lender's Instructions and
pertaining to the Transferred Properties (collectively, the "Transferred
Properties Security
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 6
Documents") together with recordation/escrow instructions from White & Case, as
counsel to the Administrative Agent, a copy of which is attached hereto in
Exhibit D.
Upon Closing, you are hereby authorized and directed to commence
immediately to record and/or file the Transferred Properties Security Documents
in the appropriate county recorders' offices, in the states (and/or secretary of
states' offices) as shown on the documents, each in the order shown in the
Lender's Instructions.
3. Title Policies.
--------------
Pursuant to the RLI Contribution Agreement, certain owner's, leasehold
owner's, and related lender's title insurance policies are to be issued in
respect of the Transferred Properties. You, on behalf of FATCO, representatives
of RLI, and representatives of Credit Lyonnais, as Administrative Agent for the
New Lenders, have previously agreed on markups of preliminary title reports for
the Transferred Properties to serve as commitments for such title insurance
policies (the "TP Title Insurance Commitments"). The TP Title Insurance
Commitments are attached hereto as Schedule 3 to Exhibit D.
Upon Closing, you are hereby authorized and directed to issue title
insurance policies to the insured parties, in the liability amounts, with the
agreed endorsements, subject only to the agreed title exceptions, and otherwise
in form and substance, in each case, as set forth in the TP Title Insurance
Commitments.
4. Loans to Joint Ventures/RLP.
---------------------------
In connection with the Restructuring, RLI is making certain loans to
some of the joint ventures, particularly, and RLP in which it will be an
investor (whether by assignment of its joint venture or partnership interest, or
as a shareholder.) The documents evidencing this debt will be delivered outside
of escrow, but FATCO will be receiving the security documents shown on Schedule
4(a) to Exhibit D the ("Intercompany Loan Security Documents".) Upon Closing,
you are hereby authorized and directed to commence immediately to record and/or
file the Intercompany Loan Security Documents in the appropriate county
recorders' offices, in the states as shown on the documents. Upon Closing, you
are hereby authorized and directed to issue the title insurance policies to the
insured parties in the liability amounts, with the agreed endorsements, subject
only to the agreed title exceptions, and otherwise in form and substance, in
each
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 7
case, as set forth in the Title Insurance Comments as shown on Schedule 4(b) to
Exhibit D.
E. Funds Flow/Closing
------------------
With respect to monetary matters, you have established the Escrow
Account at Chase Manhattan Bank, N.A. which will contain the subaccounts
described in Section VI of the Funds Transfer Memorandum. You shall receive
funds in the Escrow Account in accordance with the Funds Transfer Memorandum.
Prior to the Closing Date, you shall also have received the RP Demand Letters,
the TP Demand Letters and the Exchange Demands (each as defined in Article VII
of the Funds Flow Memorandum). Upon receipt of the funds in the Escrow Account,
you shall confirm orally at the Closing that you are holding sufficient funds in
the Escrow Account to satisfy all of the requirements of all of the RP Demand
Letters, the TP Demand Letters, and the Exchange Demands as well as any and all
requirements described in the Other Red Lion Instructions. You shall also
confirm orally that you are in a position to commit to insure in accordance with
the RP Title Insurance Commitments, the TP Title Insurance Commitments and the
JV Loan Title Commitments, and that you can commit to issue the Glendale
Endorsement (as defined in Section F hereof). You shall be prepared to, and
immediately upon Closing, shall transfer, by federal fund wire transfers, the
amounts described in paragraph C7 (Schedule 4) and paragraph C17 (Schedule 6, 7
and 8) of Article VIII of the Funds Transfer Memorandum, to each of the RP
Lenders, TP Lenders, Exchange Lenders, and Lenders of the Specified Joint
Venture Debt, each pursuant to specific wire transfer instructions set forth in
the Schedules 4, 6, 7, and 8 respectively of the Funds Transfer Memorandum.
With respect to all funds deposited in and/or disbursed from the Escrow Account,
you shall follow exactly the instructions of Section C of Article IX of the
Funds Transfer Memorandum.
F. Glendale Red Lion Hotel. With respect to certain property owned by
-----------------------
Glendale Red Lion Hotel, a California Limited Partnership, ("Glendale
Partnership"), the Glendale Partnership has entered into that certain consent
and waiver dated July 26, 1995 ("Glendale Consent") by and among the Glendale
Partnership, Red Lion, RLI and The Yasuda Trust. The Glendale Consent calls for
certain documents to be delivered at the Closing as more specifically listed on
Exhibit F (collectively, the "Glendale Documents"). The Glendale Documents have
been, or will be, delivered to you on or before Closing. You have reviewed the
Glendale Documents and at the Closing you will commit to issue to Yasuda Trust
the CLTA Endorsement No. 110.5 described in Section
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 8
4.4 of the Third Loan Modification Agreement ("Glendale Endorsement").
Immediately after Closing you will deliver the Glendale Documents and the
Glendale Endorsement in accordance with and to the parties indicated on,
Schedule 2 to Exhibit H.
G. Accommodation Recordings
------------------------
In addition to the Retained Properties Transfer Documents, the
Retained Properties Security Documents, the Transferred Properties Transfer
Documents, the Transferred Properties Security Documents, the Exchange
Documents, the Intercompany Loan Security Documents and the Glendale Documents,
there have been or will be delivered to you the original documents shown on
Exhibit G ("Accommodation Documents"). The Accommodation Documents are to be
recorded in the applicable location as specified on Exhibit G.
Each of the undersigned understands and acknowledges that in
connection with the Accommodation Documents (i) FATCO is acting in the capacity
of messengers only, without consideration, and are not responsible for the
correctness of the form, content or execution of the Accommodation Documents and
that FATCO is hereby released of any and all liability in connection with same,
(ii) FATCO assumes no responsibility or liability for any inconvenience or loss
which might be sustained due to any delay in recordation of the Accommodation
Documents, (iii) there shall be no liability and/or responsibility for payment
of any consideration by FATCO to any party, as this service is performed as an
accommodation only, and (iv) "FATCO" shall include First American Title
Insurance Company and any of its subsidiary companies.
H. Post Closing
------------
1. Notification.
------------
(a) Closing. Upon the oral confirmation given at the Closing
-------
referred to in paragraph E hereof, you shall also call the individuals listed on
Schedule 1 to Exhibit H.
(b) Recording. Upon verification that the Retained Properties
---------
Transfer Documents, Retained Properties Security Documents, the Transferred
Properties Transfer Documents, the Transferred Properties Security Documents,
the Exchange Documents, the Intercompany Loan Security Documents and the
Glendale Documents have been so recorded or filed, you shall immediately notify
those parties listed on Schedule 1 (Notification Instructions) to Exhibit H.
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 9
2. Delivery of Documents.
---------------------
Within 30 days after Closing, originals and copies of the Title
Policies, Transfer Documents, Security Documents, Exchange Documents,
Intercompany Loan Security Documents, Glendale Documents and the Accommodation
Documents, each indicating recordation information and numbers where applicable
should be delivered to the parties as shown on Schedule 2 to Exhibit H.
I. Additional Instructions
-----------------------
1. Failure to Close.
----------------
If you are unable to comply with these instructions because the
Closing does not take place on or before August 1 at 5 p.m. P.D.T., then upon
the written demand of the undersigned or any authorized representative of Red
Lion, FATCO shall return all documents deposited with it to the party depositing
the same, and any and all funds then remaining in the Escrow Account shall be
immediately returned to the depositor of the same.
2. Investment of Funds.
-------------------
In the event any funds remain in the Escrow Account after 1 p.m.
(P.D.T.) on August 1, said funds shall be invested in accordance with the oral
instructions of Mr. Narayan, which instructions shall be confirmed in writing
within 2 hours of being given to you.
<PAGE>
First American Title Insurance Company
July 31, 1995
Page 10
Each of the parties referenced herein is relying upon your full
compliance with these Escrow Instructions in order to effectuate the Closing.
If you are unable to comply with these instructions, please notify the
undersigned immediately. Please evidence your agreement to comply with these
instructions in the space provided below.
Very truly yours,
Martha B. Jordan
of LATHAM & WATKINS
Enclosures
THE FOREGOING INSTRUCTIONS ARE ACCEPTED
AND AGREED THIS ____ DAY OF JULY, 1995.
First American Title Insurance Company,
Escrow Agent
By:
-----------------------------------
Tom Zowarka,
Vice President
<PAGE>
Exhibit 10.6
THE 1995 EQUITY PARTICIPATION PLAN
OF
RED LION HOTELS, INC.
Red Lion Hotels, Inc., a Delaware corporation, has adopted The 1995 Equity
Participation Plan of Red Lion Hotels, Inc. (the "Plan"), effective July 26,
1995, for the benefit of its eligible employees, consultants, and directors.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors, key Employees, and
consultants to further the growth, development and financial success of the
Company by personally benefiting through the ownership of Company stock and/or
rights which recognize such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors, key Employees, and consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.
ARTICLE 1.
----------
DEFINITIONS
1.1 General. Wherever the following terms are used in this Plan they
-------
shall have the meaning specified below, unless the context clearly indicates
otherwise.
1.2 Award Limit. "Award Limit" shall mean one million (1,000,000)
-----------
shares of Common Stock.
1.3 Board. "Board" shall mean the Board of Directors of the Company.
-----
1.4 Code. "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
1.5 Committee. "Committee" shall mean the Compensation Committee of the
---------
Board, or a subcommittee of the Board, appointed as provided in Section 9.1.
1.6 Common Stock. "Common Stock" shall mean the common stock of the
------------
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any warrants, options or
other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
1.7 Company. "Company" shall mean Red Lion Hotels, Inc., a Delaware
-------
corporation.
<PAGE>
1.8 Deferred Stock. "Deferred Stock" shall mean Common Stock awarded
--------------
under Article VII of this Plan.
1.9 Director. "Director" shall mean a member of the Board.
--------
1.10 Dividend Equivalent. "Dividend Equivalent" shall mean a right to
-------------------
receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article VII of this Plan.
1.11 Employee. "Employee" shall mean any officer or other employee (as
--------
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is a Subsidiary.
1.12 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
------------
of 1934, as amended.
1.13 Fair Market Value. "Fair Market Value" of a share of Common Stock
-----------------
as of a given date shall be (i) the mean between the highest and lowest selling
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on such date, or if shares were not
traded on such date, then on the closest preceding date on which a trade
occurred, or (ii) if Common Stock is not traded on an exchange, the mean between
the closing representative bid and asked prices for the Common Stock on such
date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Committee
acting in good faith.
1.14 Grantee. "Grantee" shall mean an Employee or consultant granted a
-------
Performance Award, Dividend Equivalent, Stock Payment or Stock Appreciation
Right, or an award of Deferred Stock, under this Plan.
1.15 Incentive Stock Option. "Incentive Stock Option" shall mean an
----------------------
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.
1.16 Independent Director. "Independent Director" shall mean a member of
--------------------
the Board who is neither (a) an Employee of the Company nor (b) a partner,
officer or employee of KKR Associates (Delaware) or any partnership controlled
by KKR Associates (Delaware).
1.17 Non-Qualified Stock Option. "Non-Qualified Stock Option" shall mean
--------------------------
an Option which is not designated as an Incentive Stock Option by the Committee.
1.18 Option. "Option" shall mean a stock option granted under Article
------
III of this Plan. An Option granted under this Plan shall, as determined by the
Committee, be either a Non-Qualified Stock Option or an Incentive Stock Option;
provided, however, that Options granted to Independent Directors and consultants
- - - -------- -------
shall be Non-Qualified Stock Options.
1.19 Optionee. "Optionee" shall mean an Employee, consultant, or
--------
Independent Director granted an Option under this Plan.
2
<PAGE>
1.20 Performance Award. "Performance Award" shall mean a cash bonus,
-----------------
stock bonus or other performance or incentive award that is paid in cash, Common
Stock or a combination of both, awarded under Article VII of this Plan.
1.21 Plan. "Plan" shall mean The 1995 Equity Participation Plan of Red
----
Lion Hotels, Inc.
1.22 QDRO. "QDRO" shall mean any qualified domestic relations order as
----
defined by the Code or Title I of the Employee Retirement Income Security Act,
of 1974, as amended, or the rules and regulations thereunder.
1.23 Restricted Stock. "Restricted Stock" shall mean Common Stock
----------------
awarded under Article VI of this Plan.
1.24 Restricted Stockholder. "Restricted Stockholder" shall mean an
----------------------
Employee or consultant granted an award of Restricted Stock under Article VI of
this Plan.
1.25 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under
----------
the Exchange Act, as such Rule may be amended from time to time.
1.26 Stock Appreciation Right. "Stock Appreciation Right" shall mean a
------------------------
stock appreciation right granted under Article VIII of this Plan.
1.27 Stock Payment. "Stock Payment" shall mean (i) a payment in the form
-------------
of shares of Common Stock, or (ii) an option or other right to purchase shares
of Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
or consultant in cash, awarded under Article VII of this Plan.
1.28 Subsidiary. "Subsidiary" shall mean any corporation in an unbroken
----------
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50 percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
1.29 Termination of Directorship. "Termination of Directorship" shall
---------------------------
mean the time when an Optionee who is an Independent Director ceases to be a
Director for any reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The Board, in its
sole and absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Directorship.
1.30 Termination of Employment. "Termination of Employment" shall mean
-------------------------
the time when the employee-employer relationship between the Optionee, Grantee
or Restricted Stockholder and the Company or any Subsidiary is terminated for
any reason, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i)
terminations where there is a simultaneous reemployment, continuing employment
or retention as a consultant of an Optionee, Grantee or Restricted Stockholder
by the Company or any Subsidiary, (ii) at the discretion of the Committee,
terminations which result in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The
3
<PAGE>
Committee, in its absolute discretion, shall determine the effect of all matters
and questions relating to Termination of Employment, including, but not by way
of limitation, the question of whether a Termination of Employment resulted from
a discharge for good cause, and all questions of whether particular leaves of
absence constitute Terminations of Employment; provided, however, that, with
-------- -------
respect to Incentive Stock Options, a leave of absence, change in status from an
employee to an independent contractor or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that, such leave of absence, change in status or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section. Notwithstanding
any other provision of this Plan, the Company or any Subsidiary has an absolute
and unrestricted right to terminate an Employee's employment at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
ARTICLE II
----------
SHARES SUBJECT TO PLAN
2.1. SHARES SUBJECT TO PLAN
----------------------
(a) The shares of stock subject to Options, awards of Restricted Stock,
Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be Common Stock, initially shares of
the Company's Common Stock, par value $.01 per share. The aggregate number of
such shares which may be issued upon exercise of such options or rights or upon
any such awards under the Plan shall not exceed three million three hundred
thousand (3,300,000). The shares of Common Stock issuable upon exercise of such
options or rights or upon any such awards may be either previously authorized
but unissued shares or treasury shares.
(b) The maximum number of shares which may be subject to Options or Stock
Appreciation Rights granted under the Plan to any individual in any calendar
year shall not exceed the Award Limit. To the extent required by Section 162(m)
of the Code, shares subject to Options which are cancelled continue to be
counted against the Award Limit and if, after grant of an Option, the price of
shares subject to such Option is reduced, the transaction is treated as a
cancellation of the Option and a grant of a new Option and both the Option
deemed to be canceled and the Option deemed to be granted are counted against
the Award Limit. Furthermore, to the extent required by Section 162(m) of the
Code, if, after grant of a Stock Appreciation Right, the base amount on which
stock appreciation is calculated is reduced to reflect a reduction in the Fair
Market Value of the Company's Common Stock, the transaction is treated as a
cancellation of the Stock Appreciation Right and a grant of a new Stock
Appreciation Right and both the Stock Appreciation Right deemed to be canceled
and the Stock Appreciation Right deemed to be granted are counted against the
Award Limit.
2.2. Unexercised Options and Other Rights. If any Option, or other
------------------------------------
right to acquire shares of Common Stock under any other award under this Plan,
expires or is cancelled without having been fully exercised, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration or cancellation may again
be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1.
4
<PAGE>
ARTICLE III
-----------
GRANTING OF OPTIONS
3.1. Eligibility. Subject to the Award Limit, any Employee,
-----------
consultant, or Independent Director selected by the Committee pursuant to
Section 3.4(a)(i) shall be eligible to be granted an Option.
3.2. Disqualification for Stock Ownership. No person may be granted
------------------------------------
an Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary unless such Incentive Stock Option conforms to
the applicable provisions of Section 422 of the Code.
3.3. Qualification of Incentive Stock Options. No Incentive Stock
----------------------------------------
Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code. No Incentive Stock
Option shall be granted to any person who is not an Employee.
3.4. Granting of Options
-------------------
(a) The Committee shall from time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and
select from among the key Employees, consultants, or Independent Directors
(including Employees, consultants, or Independent Directors who have
previously received Options or other awards under this Plan) such of them
as in its opinion should be granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the selected key Employees,
consultants, or Independent Directors;
(iii) Determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options and whether such Options are
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and conditions
-------- -------
of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be
limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code.
(b) Upon the selection of a key Employee, consultant, or
Independent Director to be granted an Option, the Committee shall instruct the
Secretary of the Company to issue the Option and may impose such conditions on
the grant of the Option as it deems appropriate. Without limiting the generality
of the preceding sentence, the Committee may, in its discretion and on such
terms as it deems appropriate, require as a condition on the grant of an Option
to an Employee, consultant, or Independent Director that the Employee,
consultant, or Independent Director surrender for cancellation some or all of
the unexercised Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments or other rights which have been previously
5
<PAGE>
granted to him under this Plan or otherwise. An Option, the grant of which is
conditioned upon such surrender, may have an option price lower (or higher) than
the exercise price of such surrendered Option or other award, may cover the same
(or a lesser or greater) number of shares as such surrendered Option or other
award, may contain such other terms as the Committee deems appropriate, and
shall be exercisable in accordance with its terms, without regard to the number
of shares, price, exercise period or any other term or condition of such
surrendered Option or other award.
(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a written
----------------
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan. Stock
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
4.2 Option Price. The price per share of the shares subject to each
------------
Option shall be set by the Committee; provided, however, that such price shall
-------- -------
be no less than the par value of a share of Common Stock, and (i) in the case of
Options intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code such price shall be no less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted,
and (ii) in the case of Incentive Stock Options such price shall not be less
than the greater of: (a) 100% of the Fair Market Value of a share of Common
Stock on the date the Option is granted, or (b) 110% of the fair market value of
a share of Common Stock on the date such Option is granted in the case of an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary.
4.3 Option Term. The term of an Option shall be set by the
-----------
Committee in its discretion; provided, however, that, in the case of Incentive
-------- -------
Stock Options, the term shall not be more than ten (10) years from the date the
Incentive Stock Option is granted, or five (5) years from such date if the
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary.
4.4 Option Vesting.
--------------
(a) The period during which the right to exercise an Option in whole
or in part vests in the Optionee shall be set by the Committee, and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that unless
-------- -------
otherwise determined by the Committee, no Option granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
have elapsed from (but excluding) the date
6
<PAGE>
on which the Option was granted. Subject to the preceding sentence, at any time
after grant of an Option, the Committee may, in its sole discretion and subject
to whatever terms and conditions it selects, accelerate the period during which
an Option vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment, Termination of Directorship, or termination of a consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee either in the Stock Option Agreement or in a
resolution adopted following the grant of the Option; provided that the
Committee may determine that the Option may be exercised subsequent to
Termination of Employment, Termination of Directorship, or termination of
consultancy without cause, or following a change in control of the Company, or
because of the Optionee's retirement, death or disability, or otherwise.
(c) To the extent that the aggregate Fair Market Value of stock
with respect to which "incentive stock options" (within the meaning of Section
422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
4.5 Consideration. In consideration of the granting of an Option,
-------------
the Optionee shall agree, in the written Stock Option Agreement, to remain in
the employ of (or to consult for or to serve as an Independent Director of, as
applicable) the Company or any Subsidiary for a period of at least one year
after the Option is granted (or until the next annual meeting of stockholders of
the Company, in the case of an Independent Director). Nothing in this Plan or in
any Stock Option Agreement hereunder shall confer upon any Optionee any right to
continue in the employ of, or as a consultant for, the Company or any
Subsidiary, or as a director of the Company, or shall interfere with or restrict
in any way the rights of the Company and any Subsidiary, which are hereby
expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised in
----------------
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
5.2 Manner of Exercise. All or a portion of an exercisable Option
------------------
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or the Secretary's office:
(a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
7
<PAGE>
(b) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee may, in its
absolute discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to
Section 10.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, at the discretion of the Committee, the terms of the Option may (i)
allow a delay in payment up to thirty (30) days from the date the Option, or
portion thereof, is exercised; (ii) allow payment, in whole or in part, through
the delivery of shares of Common Stock owned by the Optionee, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof;
(iii) allow payment, in whole or in part, through the surrender of shares of
Common Stock then issuable upon exercise of the Option having a Fair Market
Value on the date of Option exercise equal to the aggregate exercise price of
the Option or exercised portion thereof; (iv) allow payment, in whole or in
part, through the delivery of property of any kind which constitutes good and
valuable consideration; (v) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee, or (vi) allow
payment through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv) and (v). In the case of a promissory note, the
Committee may also prescribe the form of such note and the security to be given
for such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or other
extension of credit is prohibited by law.
5.3 Conditions to Issuance of Stock Certificates. The Company
--------------------------------------------
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body which the Committee shall, in its absolute discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience; and
8
<PAGE>
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
5.4 Rights as Stockholders. The holders of Options shall not be,
----------------------
nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
5.5 Ownership and Transfer Restrictions. The Committee, in its
-----------------------------------
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares. The Committee may require the Employee to give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of granting such
Option to such Employee or (ii) one year after the transfer of such shares to
such Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Award of Restricted Stock
-------------------------
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the key Employees or consultants
(including Employees or consultants who have previously received other
awards under this Plan) such of them as in its opinion should be
awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with this
Plan.
(b) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; provided, however, that such purchase
-------- -------
price shall be no less than the par value of the Common Stock to be purchased.
In all cases, legal consideration shall be required for each issuance of
Restricted Stock.
(c) Upon the selection of a key Employee or consultant to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
6.2 Restricted Stock Agreement. Restricted Stock shall be issued
--------------------------
only pursuant to a written Restricted Stock Agreement, which shall be executed
by the selected key Employee or consultant and an authorized officer of the
Company and which shall contain such terms and conditions as the Committee shall
determine, consistent with this Plan.
6.3 Consideration. As consideration for the issuance of Restricted
-------------
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock
9
<PAGE>
Agreement, to remain in the employ of, or to consult for, the Company or any
Subsidiary for a period of at least one year after the Restricted Stock is
issued. Nothing in this Plan or in any Restricted Stock Agreement hereunder
shall confer on any Restricted Stockholder any right to continue in the employ
of, or consult for, the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Restricted Stockholder at any time
for any reason whatsoever, with or without good cause.
6.4 Rights as Stockholders. Upon delivery of the shares of
----------------------
Restricted Stock to the escrow holder pursuant to Section 6.7, the Restricted
Stockholder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the restrictions
in the Restricted Stockholder's Restricted Stock Agreement, including the right
to receive all dividends and other distributions paid or made with respect to
the shares; provided, however, that in the discretion of the Committee, any
-------- -------
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 6.5.
6.5 Restriction. All shares of Restricted Stock issued under this
-----------
Plan (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
-------- -------
that unless otherwise determined by the Committee, no share of Restricted Stock
granted to a person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six months have elapsed from
(but excluding) the date on which the Restricted Stock was issued, and provided,
--------
further, that by a resolution adopted after the Restricted Stock is issued, the
- - - -------
Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted Stock Agreement. Restricted Stock may not be sold or encumbered until
all restrictions are terminated or expire. Unless provided otherwise by the
Committee, if no consideration was paid by the Restricted Stockholder upon
issuance, a Restricted Stockholder's rights in unvested Restricted Stock shall
lapse upon Termination of Employment or, if applicable, upon the termination of
the Restricted Stockholder's consulting relationship with the Company.
6.6 Repurchase of Restricted Stock. The Committee shall provide in
------------------------------
the terms of each individual Restricted Stock Agreement that the Company shall
have the right to repurchase from the Restricted Stockholder the Restricted
Stock then subject to restrictions under the Restricted Stock Agreement
immediately upon a Termination of Employment or, if applicable, upon a
termination of any consulting relationship between the Restricted Stockholder
and the Company, at a cash price per share equal to the price paid by the
Restricted Stockholder for such Restricted Stock; provided, however, that
-------- -------
provision may be made that no such right of repurchase shall exist in the event
of a Termination of Employment or termination of consultancy without cause, or
following a change in control of the Company or because of the Restricted
Stockholder's retirement, death or disability, or otherwise.
6.7 Escrow. The Secretary of the Company or such other escrow
------
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.
10
<PAGE>
6.8 Legend. In order to enforce the restrictions imposed upon
------
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.
ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 Performance Awards. Any key Employee or consultant selected by
------------------
the Committee may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria determined appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee, or may
be based upon the appreciation in the market value, book value, net profits or
other measure of the value of a specified number of shares of Common Stock over
a fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee or
consultant.
7.2 Dividend Equivalents. Any key Employee or consultant selected
--------------------
by the Committee may be granted Dividend Equivalents based on the dividends
declared on Common Stock, to be credited as of dividend payment dates, during
the period between the date an Option, Stock Appreciation Right, Deferred Stock
or Performance Award is granted, and the date such Option, Stock Appreciation
Right, Deferred Stock or Performance Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents shall be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.
7.3 Stock Payments. Any key Employee or consultant selected by the
--------------
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. The number of shares shall be determined by the Committee and
may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee on the date such Stock Payment is made
or on any date thereafter.
7.4 Deferred Stock. Any key Employee or consultant selected by the
--------------
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying the award has been issued.
11
<PAGE>
7.5 Performance Award Agreement, Dividend Equivalent Agreement,
-----------------------------------------------------------
Deferred Stock Agreement, Stock Payment Agreement. Each Performance Award,
- - - -------------------------------------------------
Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall be
evidenced by a written agreement, which shall be executed by the Grantee and an
authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
7.6 Term. The term of a Performance Award, Dividend Equivalent,
----
award of Deferred Stock and/or Stock Payment shall be set by the Committee in
its discretion.
7.7 Exercise Upon Termination of Employment. A Performance Award,
---------------------------------------
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
only while the Grantee is an Employee or consultant; provided that the Committee
may determine that the Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment may be exercised subsequent to Termination of
Employment or termination of consultancy without cause, or following a change in
control of the Company, or because of the Grantee's retirement, death or
disability, or otherwise.
7.8 Payment on Exercise. Payment of the amount determined under
-------------------
Section 7.1 or 7.2 above shall be in cash, in Common Stock or a combination of
both, as determined by the Committee. To the extent any payment under this
Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.3.
7.9 Consideration. In consideration of the granting of a
-------------
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary for a period of at
least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted. Nothing in this Plan or in any
agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. Subject to the Award Limit,
----------------------------------
a Stock Appreciation Right may be granted to any key Employee or consultant
selected by the Committee. A Stock Appreciation Right may be granted (i) in
connection and simultaneously with the grant of an Option, (ii) with respect to
a previously granted Option, or (iii) independent of an Option. A Stock
Appreciation Right shall be subject to such terms and conditions not
inconsistent with this Plan as the Committee shall impose, and shall be
evidenced by a written Stock Appreciation Right Agreement, which shall be
executed by the Grantee and an authorized officer of the Company. The Committee,
in its discretion, may determine whether a Stock Appreciation Right is to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code and Stock Appreciation Right Agreements evidencing Stock
Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of a Stock Appreciation Right to an Employee
or consultant that the Employee or consultant surrender for cancellation some or
all of the unexercised
12
<PAGE>
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, or other rights
which have been previously granted to him under this Plan or otherwise. A Stock
Appreciation Right, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
8.2 Coupled Stock Appreciation Rights
---------------------------------
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
(b) A CSAR may be granted to the Grantee for no more than the number
of shares subject to the simultaneously or previously granted Option to which it
is coupled.
(c) A CSAR shall entitle the Grantee (or other person entitled to
exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.
8.3 Independent Stock Appreciation Rights
-------------------------------------
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that, unless otherwise determined by the
------------------
Committee, no ISAR granted to a person subject to Section 16 of the Exchange Act
shall be exercisable until at least six months have elapsed from (but excluding)
the date on which the ISAR was granted. The exercise price per share of Common
Stock subject to each ISAR shall be set by the Committee. An ISAR is exercisable
only while the Grantee is an Employee or consultant; provided that the Committee
may determine that the ISAR may be exercised subsequent to Termination of
Employment or termination of consultancy without cause, or following a change in
control of the Company, or because of the Grantee's retirement, death or
disability, or otherwise.
(b) An ISAR shall entitle the Grantee (or other person entitled to
exercise the ISAR pursuant to this Plan) to exercise all or a specified portion
of the ISAR (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Common Stock on the date of exercise of the ISAR by
the number of shares of Common Stock with respect to which the ISAR shall have
been exercised, subject to any limitations the Committee may impose.
13
<PAGE>
8.4 Payment and Limitations on Exercise.
-----------------------------------
(a) Payment of the amount determined under Section 8.2(c) and 8.3(b)
above shall be in cash, in Common Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 5.3
hereinabove pertaining to Options.
(b) Grantees of Stock Appreciation Rights who are subject to
Section 16 of the Exchange Act may, in the discretion of the Committee, be
required to comply with any timing or other restrictions under Rule 16b-3
applicable to the settlement or exercise of a Stock Appreciation Right.
8.5 Consideration. In consideration of the granting of a Stock
-------------
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary for a period of at least one year after the Stock Appreciation
Right is granted. Nothing in this Plan or in any Stock Appreciation Right
Agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.
ARTICLE IX
ADMINISTRATION
9.1 Compensation Committee. The Compensation Committee (or a
----------------------
subcommittee of the Board assuming the functions of the Committee under this
Plan) shall consist of two or more Directors appointed by and holding office at
the pleasure of the Board, each of whom is both a "disinterested person" as
defined by Rule 16b-3 and, if Options and Stock Appreciation Rights granted
under the Plan are intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, an "outside director" as defined
under Section 162(m) of the Code. Appointment of Committee members shall be
effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.
9.2 Duties and Powers of Committee. It shall be the duty of the
------------------------------
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. In its absolute discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the Committee
under this Plan except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee.
14
<PAGE>
9.3 Majority Rule. The Committee shall act by a majority of its
-------------
members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
9.4 Compensation; Professional Assistance; Good Faith Actions.
---------------------------------------------------------
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, the Company and all other interested persons.
No members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Not Transferable. Options, Restricted Stock awards, Deferred
----------------
Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution, unless and until such rights or awards have been exercised, or
the shares underlying such rights or awards have been issued, and all
restrictions applicable to such shares have lapsed. No Option, Restricted Stock
award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted Stockholder or his or her successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided
however, that this Section 10.1 shall not prevent (i) transfers by will or by
the applicable laws of descent and distribution, (ii) the designation by the
Optionee or Grantee of a beneficiary to exercise the Optionee's Option or other
right or award (or any portion thereof) granted under the Plan after the
Optionee's or Grantee's death, or (iii) transfers to an Optionee's Grantee's or
Restricted Stockholder's alternate payee pursuant to a QDRO.
During the lifetime of the Optionee or Grantee, only the Optionee, or
an alternate payee under a QDRO, may exercise an Option or other right or award
(or any portion thereof) granted to the Optionee or Grantee under the Plan.
After the death of the Optionee or Grantee, any exercisable portion of an Option
or other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by the Optionee's or Grantee's personal representative
or by any person empowered to do so under the deceased Optionee's or Grantee's
beneficiary designation, will or under the then applicable laws of descent and
distribution.
15
<PAGE>
10.2 Amendment, Suspension or Termination of this Plan. This Plan
-------------------------------------------------
shall terminate on the date of the annual meeting of the Board immediately
following the tenth anniversary of the Board's adoption of this Plan. This Plan
may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Committee. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Committee, no action of the Committee may, except as
provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Committee may be taken that would otherwise require
stockholder approval as a matter of applicable law, regulation or rule. No
amendment, suspension or termination of this Plan shall, without the consent of
the holder of Options, Restricted Stock awards, Deferred Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, alter or impair any rights or obligations under any Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments theretofore granted
or awarded, unless the award itself otherwise expressly so provides. No Options,
Restricted Stock, Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments may be granted or awarded during any
period of suspension or after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the first to occur of
the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved
by the Company's stockholders under Section 10.5.
10.3 Changes in Common Stock or Assets of the Company. In the event
------------------------------------------------
that the outstanding shares of Common Stock are hereafter changed into or
exchanged for cash or a different number or kind of shares or other securities
of the Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock
dividend, or combination of shares, appropriate adjustments shall be made by the
Committee in the number and kind of shares for which Options, Restricted Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents,
Deferred Stock awards or Stock Payments may be granted, including adjustments of
the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued and of the Award limit described in Section 1.2.
In the event of such a change or exchange, other than for shares or
securities of another corporation or by reason of reorganization, the Committee
shall also make an appropriate and equitable adjustment in the number and kind
of shares as to which all outstanding Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, or portions thereof
then unexercised, shall be exercisable and in the number and kind of shares of
outstanding Restricted Stock or Deferred Stock. Such adjustment shall be made
with the intent that after the change or exchange of shares, each Optionee's and
each Grantee's and each Restricted Stockholder's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment may include a necessary or appropriate corresponding
adjustment in Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment exercise price, but shall be made without change in
the total price applicable to the Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent or Stock Payment, or the unexercised portion thereof
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices).
16
<PAGE>
Where an adjustment of the type described above is made to an
Incentive Stock Option under this Section, the adjustment will be made in a
manner which will not be considered a "modification" under the provisions of
subsection 424(h)(3) of the Code.
Notwithstanding the foregoing, in the event of such a reorganization,
merger, consolidation, recapitalization, reclassification, stock splitup, stock
dividend or combination, or other adjustment or event which results in shares of
Common Stock being exchanged for or converted into cash, securities or other
property, the Company will have the right to terminate this Plan as of the date
of the exchange or conversion, in which case all options, rights and other
awards under this Plan shall become the right to receive such cash, securities
or other property, net of any applicable exercise price.
In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Committee may in its discretion
make an appropriate and equitable adjustment to the Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment exercise price to
reflect such diminution.
10.4 Merger of the Company. In the event of the merger or
---------------------
consolidation of the Company with or into another corporation, the exchange of
all or substantially all of the assets of the Company for the securities of
another corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company:
(a) At the discretion of the Committee, the terms of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment may provide that it cannot be exercised after such event.
(b) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that,
for a specified period of time prior to such event, such Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in this Plan or in the provisions of such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment.
(c) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that
upon such event, such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment shall be assumed by the successor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices.
(d) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide either by the terms of a Restricted Stock
award or Deferred Stock award or by a resolution adopted prior to the occurrence
of such event that, for a specified period of time prior to such event, the
restrictions imposed under a Restricted Stock Agreement or a Deferred Stock
Agreement upon some or all shares of Restricted Stock or Deferred Stock may be
terminated, and, in the case of
17
<PAGE>
Restricted Stock, some or all shares of such Restricted Stock may cease to be
subject to repurchase under Section 6.6 after such event.
10.5 Approval of Plan by Stockholders. This Plan will be submitted
--------------------------------
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be granted
and Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be cancelled and become null
and void.
10.6 Tax Withholding. The Company shall be entitled to require
---------------
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting or exercise
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. The Committee may in
its discretion and in satisfaction of the foregoing requirement allow such
Optionee, Grantee or Restricted Stockholder to elect to have the Company
withhold shares of Common Stock (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.
10.7 Loans. The Committee may, in its discretion, extend one or
-----
more loans to key Employees in connection with the exercise or receipt of an
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted under this Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee.
10.8 Limitations Applicable to Section 16 Persons and
------------------------------------------------
Performance-Based Compensation. Notwithstanding any other provision of this
- - - ------------------------------
Plan, any Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment granted, or Restricted Stock or Deferred Stock
awarded, to a key Employee or Director who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule, and this Plan shall be deemed amended to the
extent necessary to conform to such limitations. Furthermore, notwithstanding
any other provision of this Plan, any Option or Stock Appreciation Right
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section 162(m)
of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the
extent necessary to conform to such requirements.
10.9 Effect of Plan Upon Options and Compensation Plans. The
--------------------------------------------------
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees of the Company or any Subsidiary or
(ii) to
18
<PAGE>
grant or assume options or other rights otherwise than under this Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
10.10 Compliance with Laws. This Plan, the granting and vesting of
--------------------
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
10.11 Titles. Titles are provided herein for convenience only and
------
are not to serve as a basis for interpretation or construction of this Plan.
10.12 Governing Law. This Plan and any agreements hereunder shall be
-------------
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Red Lion Hotels, Inc. on July 26, 1995.
Executed on this 26th day of July, 1995.
/s/ Beth A. Ugoretz
--------------------------------------
Beth A. Ugoretz
Secretary
19
<PAGE>
Exhibit 10.9
Supplemental Retirement Income Agreement
----------------------------------------
This Supplemental Retirement Income Agreement ("Agreement") by and between
Red Lion, a California Limited Partnership (the "Company"), and David J. Johnson
("Executive") is entered into by the Company and Executive effective as of the
consummation of the offering to the public of the Common Stock (the "Offering")
of Red Lion Hotels, Inc..
The Company is owned by RLA-GP, Inc., a Delaware corporation, RLAC Corp.,
a Delaware corporation, KKR Associates, a Delaware limited partnership ("KKR
Delaware"), and Tod E. McClaskey.
Executive is the Company's chief executive officer and has been employed by
the Company since September, 1991.
The Company is entering into this Agreement in order to provide Executive
with supplemental retirement income in consideration of the valuable service he
has provided to the Company.
It is hereby agreed that:
1. Certain Definitions.
-------------------
The following terms shall have the following meanings for all purposes of
this Agreement:
(a) "Accelerated Payment Date" -- the first to occur of (i) the Asset
Disposition Date, (ii) the fifth anniversary of the date of this Agreement or
(iii) 30 days after the date of Executive's death.
(b) "Asset Disposition Date" -- the first date upon which the Company shall
have sold, distributed or otherwise disposed of its interest in all or
substantially all of its assets, other than in connection with the contribution
of substantially all of its assets and business to Red Lion Hotels, Inc. and not
taking into account the Company's interest in any stock or other debt or equity
security of Red Lion Hotels, Inc.
(c) "Executive's Beneficiary" -- the person or persons identified by
Executive in the last written instrument making such an identification that
Executive may have delivered to the Company or, in the absence of any such
written instrument, Executive's estate.
(d) "Lump Sum Value of the Benefit" -- the present value of the
Supplemental Retirement Benefit determined as of the date upon which Executive
would attain fifty-five years of age, assuming 6% interest, compounded annually.
(e) "Red Lion Hotels, Inc." -- Red Lion Hotels, Inc., a Delaware
Corporation.
<PAGE>
(f) "Supplemental Retirement Benefit" -- an annual retirement benefit of
$166,091 payable to Executive and Executive's Beneficiary as provided in this
Agreement for twenty-two (22) years, without additional interest.
2. Supplemental Retirement Benefit.
-------------------------------
The Company hereby agrees to pay Executive the Supplemental Retirement
Benefit, commencing on the date upon which Executive would attain fifty-five
(55) years of age. In the event of Executive's death before he has received full
payment of the Supplemental Retirement Benefit, the remaining payments with
respect to the Supplemental Retirement Benefit shall be made to Executive's
Beneficiary.
3. Accrual and Vesting of Supplemental Retirement Benefit.
------------------------------------------------------
Executive's interest in the Supplemental Retirement Benefit is fully
accrued and vested as of the date of this Agreement and shall not be subject to
forfeiture in any event.
4. Normal Form of Supplemental Retirement Benefit.
----------------------------------------------
Unless Executive elects otherwise pursuant to Section 5 of this
Agreement, the Supplemental Retirement Benefit shall be paid to Executive or
Executive's Beneficiary in twenty-two equal annual installments, commencing on
the date upon which Executive would attain fifty-five (55) years of age.
5. Executive's Elections.
---------------------
(a) Within ninety (90) days after the date of this Agreement,
Executive may elect, in writing, to be paid the Lump Sum Value of the Benefit,
in a lump sum payment and without actuarial reduction, upon the Accelerated
Payment Date.
(b) At any time after the date of this Agreement, in addition to the
election which Executive may make under Section 5(a) of this Agreement,
Executive may elect one time, in writing, to either revoke any election he has
made under Section 5(a) or to elect to be paid the Lump Sum Value of the Benefit
in a lump sum or in monthly, quarterly or annual installments over such period
of years as Executive may elect, commencing on any date after the Accelerated
Payment Date; provided, however, that any such election shall be made at least
90 days before the date upon which the payment of the Lump Sum Value of the
Benefit or the Supplemental Retirement Benefit, as the case may be, would
otherwise commence. If Executive elects to defer the commencement of the
receipt of the Lump Sum Value of the Benefit or the Supplemental Retirement
Benefit, as the case may be, to a date after the Accelerated Payment Date, the
Company shall credit interest on the unpaid amount of the Lump Sum Value of the
Benefit at the rate which Credit Lyonnais, New York Branch, establishes from
time to time as its reference rate for short term commercial loans in U.S.
dollars, as such rate may change from time to time, plus 1%, compounded
annually, from and after the Accelerated Payment Date.
2
<PAGE>
6. Assumption by Red Lion, Inc.
----------------------------
The Company and Executive contemplate that the Company will assign this
Agreement to Red Lion, Inc. in connection with the formation of that corporation
and that Red Lion, Inc. will assume all of the Company's obligations under this
Agreement as of the date of such assignment. The Company and Executive agree
that upon any such assignment and assumption of this Agreement, the Company
shall have no further responsibilities or obligations under this Agreement.
7. General Provisions.
------------------
(a) The Company's obligations under this Agreement shall be unfunded
and unsecured, and nothing contained herein shall be construed to provide for
assets to be held in trust or escrow or any other form of segregation of the
Company's assets for the benefit of Executive, Executive's Beneficiary, or any
other person. To the extent that Executive (or Executive's Beneficiary) or any
other person have or acquires a right to receive benefits under this Agreement,
such rights shall be no greater than the right of an unsecured general creditor
of the Company.
(b) To the maximum extent permitted by law, no benefit or right to a
benefit of Executive or Executive's Beneficiary shall be subject to the debts,
contracts or engagements of Executive or Executive's Beneficiary, or shall be
taken in execution by levy, attachment or garnishment, nor shall Executive or
Executive's Beneficiary have any right to alienate, anticipate, commute, pledge,
encumber or assign any benefit or right to benefit hereunder.
(c) The Company shall have the right from time to time and at any
time to assign any of its rights or obligations hereunder to any person under
reasonable terms and circumstances, which will not prejudice Executive's rights
or reasonable expectations hereunder.
(d) This Agreement shall be binding upon and inure to the benefit of
the permitted successors and assigns of the parties hereto.
(e) Notwithstanding any contrary provision contained in this
Agreement, any payments to which Executive or Executive's Beneficiary may become
entitled hereunder shall be subject to the then applicable federal, state and
local income tax withholding obligations of the Company or any successor in
interest.
(f) No general partner (including the Managing General Partner of the
Company and any successor general partner) and no limited partner of the Company
shall have any personal liability for the performance of any of the Company's
obligations hereunder or with respect to any act or omission to act of the
Managing General Partner in connection with this Agreement. Any liability or
obligation of the Company arising hereunder shall be limited to and satisfied
only out of the assets of the Company.
3
<PAGE>
(g) The terms of this Agreement may be amended, modified,
supplemented, or otherwise altered only by an agreement, in writing, executed by
the Company and Executive.
(h) This Agreement shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the parties have executed this Agreement on July 26,
1995.
RED LION, A CALIFORNIA LIMITED PARTNERSHIP
By: RLA-GP, INC., a Delaware corporation
Its: General Partner
/s/ Beth A. Ugoretz
-------------------
Beth A. Ugoretz
Vice President
/s/ David J. Johnson
---------------------
David J. Johnson
4
<PAGE>
Exhibit 10.10
RED LION HOTELS, INC.
MANAGEMENT BONUS PLAN
(EFFECTIVE JULY 26, 1995)
1. PURPOSE
-------
The purpose of the Red Lion Hotels, Inc. Bonus Plan (the "Bonus Plan") is
to motivate and reward eligible employees for good performance by making a
portion of their cash compensation dependent on the financial performance
results of Red Lion Hotels, Inc. (the "Company"), their positions at the
Company and their achievement of individual performance objectives. The
Bonus Plan is intended to provide for the payment of bonuses which are not
subject to the limitations on deductible compensation under Section 162(m)
of the Internal Revenue Code of 1986, as amended, and the regulations and
interpretations promulgated thereunder (the "Code"). If the Company
becomes a "publicly held corporation", as defined by Section 162(m)(2) of
the Code, the Bonus Plan is intended to qualify under Proposed Treasury
Regulation Section 1.162-27(f), which would provide that bonuses paid under
the Bonus Plan will not be subject to Section 162(m) during the reliance
period specified therein.
2. COVERED INDIVIDUALS
-------------------
The individuals who are eligible to receive bonus payments under the Bonus
Plan shall be the management pridemembers of the Company, as designated by
the Bonus Committee (the "Committee") from time to time.
3. THE BONUS COMMITTEE
-------------------
The Bonus Committee shall consist of two or more persons who are appointed
by the Board of Directors of the Company. The Bonus Committee shall have
the sole discretion and authority to administer and interpret the Bonus
Plan.
4. AMOUNT OF BONUSES
-----------------
Bonus payments shall be made in cash and shall be based upon the Company's
achievement of financial performance objectives, each covered individual's
position with the Company and each covered individual's achievement of
individual performance objectives, as determined by the Bonus Committee
with respect to any performance period in accordance with the Management
Bonus Plan Specifications (the "Specifications"), which may be amended and
revised by the Bonus Committee from time to time, in its sole discretion;
provided that the Bonus Committee shall not amend or revise the
Specifications the result of which is to raise or increase any performance
objectives which are applicable to any pending performance period.
<PAGE>
5. PAYMENT OF BONUSES
------------------
The employment and service requirements which must be fulfilled in order
for covered individuals to receive bonus payments under the Bonus Plan with
respect to any performance period shall be set forth in the Specifications.
6. AMENDMENT AND TERMINATION
-------------------------
The Company reserves the right to amend or terminate the Bonus Plan at any
time. Bonus Plan amendments shall require stockholder approval only to the
extent required by applicable law.
2
<PAGE>
Exhibit 10.11
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated August 1, 1995, is made by and between Red Lion
Hotels, Inc., a Delaware corporation hereinafter referred to as "Company," and
David J. Johnson, an employee of the Company or Subsidiary of the Company,
hereinafter referred to as "Optionee":
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Non-Qualified Option provided for herein to the
Optionee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1 - Board
- - - ----------- -----
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
- - - ----------- ----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
- - - ----------- ---------
"Committee" shall mean the Compensation Committee of the Board, or a
subcommittee of the Board, appointed as provided in Section 9.1 of the Plan.
<PAGE>
Section 1.4 - Common Stock
- - - ----------- ------------
"Common Stock" shall mean the common stock of the Company, par value $.01
per share, and any equity security of the Company issued or authorized to be
issued in the future, but excluding any warrants, options or other rights to
purchase Common Stock. Debt securities of the Company convertible into Common
Stock shall be deemed equity securities of the Company.
Section 1.5 - Company
- - - ----------- -------
"Company" shall mean Red Lion Hotels, Inc., a Delaware corporation.
Section 1.6 - Director
- - - ----------- --------
"Director" shall mean a member of the Board.
Section 1.7 - Employee
- - - ----------- --------
"Employee" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.
Section 1.8 - Exchange Act
- - - ----------- ------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.9 - Fair Market Value
- - - ----------- -----------------
"Fair Market Value" of a share of Common Stock as of a given date shall be
(i) the mean between the highest and lowest selling price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any, on such date, or if shares were not traded on such date, then
on the closest preceding date on which a trade occurred, or (ii) if Common Stock
is not traded on an exchange, the mean between the closing representative bid
and asked prices for the Common Stock on such date as reported by NASDAQ or, if
NASDAQ is not then in existence, by its successor quotation system; or (iii) if
Common Stock is not publicly traded, the Fair Market Value of a share of Common
Stock as established by the Committee acting in good faith.
Section 1.10 - Option
- - - ------------ ------
"Option" shall mean a non-qualified stock option granted under this
Agreement and Article III of the Plan.
<PAGE>
Section 1.11 - Optionee
- - - ------------ --------
"Optionee" shall mean an Employee granted an Option under this Agreement
and the Plan.
Section 1.12 - Plan
- - - ------------ ----
"Plan" shall mean The 1995 Equity Participation Plan of Red Lion Hotels,
Inc.
Section 1.13 - QDRO
- - - ------------ ----
"QDRO" shall mean any qualified domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder.
Section 1.14 - Rule 16b-3
- - - ------------ ----------
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended from time to time.
Section 1.15 - Secretary
- - - ------------ ---------
"Secretary" shall mean the Secretary of the Company.
Section 1.16 - Securities Act
- - - ------------ --------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.17 - Subsidiary
- - - ------------ ----------
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.18 - Termination of Employment
- - - ------------ -------------------------
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Optionee and the Company or any Subsidiary is
terminated for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) terminations where there is a simultaneous reemployment,
continuing employment of an Optionee by the Company or any Subsidiary, (ii) at
the discretion of the Committee, terminations which result in a temporary
severance of the employee-employer relationship, and (iii) at the discretion of
the Committee, terminations which are followed by the simultaneous establishment
of a consulting relationship by the Company or a Subsidiary with the former
3
<PAGE>
employee. The Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Employment, including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for cause, and all questions of whether
particular leaves of absence constitute Terminations of Employment.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate an Employee's employment at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
ARTICLE II
GRANT OF OPTION
---------------
Section 2.1 - Grant of Option
- - - ----------- ---------------
For good and valuable consideration, the sufficiency of which is hereby
acknowledged, on the date hereof the Company irrevocably grants to the Optionee
the option to purchase any part or all of an aggregate of 870,833 shares of its
$.01 par value Common Stock upon the terms and conditions set forth in this
Agreement.
Section 2.2 - Purchase Price
- - - ----------- --------------
The purchase price of the shares of stock covered by the Option shall be
$19.00 per share without commission or other charge.
Section 2.3 - Consideration to Company
- - - ----------- ------------------------
In consideration of the granting of this Option by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is granted. Nothing in the Plan or this Agreement shall confer upon any
Optionee any right to continue in the employ of the Company or any Subsidiary,
or as a director of the Company, or shall interfere with or restrict in any way
the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge the Optionee at any time for any reason whatsoever, with
or without cause.
Section 2.4 - Adjustments in Option
- - - ----------- ---------------------
(a) In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock splitup, stock dividend or combination of shares, the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares as to which the Option, or portions thereof then
4
<PAGE>
unexercised, shall be exercisable, to the end that after such event the
Optionee's proportionate interest shall be maintained as before the occurrence
of such event. Such adjustment in the Option may include any necessary
corresponding adjustment in the Option price per share, but shall be made
without change in the total price applicable to the unexercised portion of the
Option (except for any change in the aggregate price resulting from rounding-off
of share quantities or prices). Any such adjustment made by the Committee shall
be final and binding upon the Optionee, the Company and all other interested
persons.
(b) Notwithstanding the foregoing, in the event of such a reorganization,
merger, consolidation, recapitalization, reclassification, stock splitup, stock
dividend or combination, or other adjustment or event which results in shares of
Common Stock being exchanged for or converted into cash, securities or other
property, the Company will have the right to terminate the Plan as of the date
of the exchange or conversion, in which case all options, rights and other
awards under this Option shall become the right to receive such cash, securities
or other property, net of any applicable exercise price.
(c) In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Board may in its discretion make
an appropriate and equitable adjustment to the Option to reflect such
diminution.
ARTICLE III
PERIOD OF EXERCISABILITY
------------------------
Section 3.1 - Commencement of Exercisability
- - - ----------- ------------------------------
(a) Subject to Section 5.6, the Option shall become exercisable in three
(3) cumulative installments as follows:
(i) The first installment shall consist of sixty percent (60%)
of the shares covered by the Option and shall become exercisable on the
date of this Agreement.
(ii) The second installment shall consist of twenty percent (20%)
of the shares covered by the Option and shall become exercisable on
September 30, 1995.
(iii) The third installment shall consist of twenty percent (20%)
of the shares covered by the Option and shall become exercisable on
September 30, 1996.
(b) Notwithstanding Section 3.1(a), one hundred percent (100%) of the
shares covered by the Option shall become immediately exercisable upon (i) the
death of the Optionee while he is an employee of the Company, (ii) the
Optionee's Termination of
5
<PAGE>
Employment by reason of the Optionee's total and permanent disability or (iii)
the sale by Red Lion, a California limited partnership, or the distribution to
its partners, of all of the Common Stock held by Red Lion, a California limited
partnership.
(c) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable, except as may be otherwise
provided by the Committee.
Section 3.2 - Duration of Exercisability
- - - ----------- --------------------------
The installments provided for in Section 3.1 are cumulative. Each
such installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 - Expiration of Option
- - - ----------- --------------------
The Option may not be exercised to any extent by anyone after the
first to occur of the following events:
(a) The expiration of ten (10) years from the date the Option was
granted; or
(b) One hundred twenty (120) days after the Optionee's Termination of
Employment, unless such Termination of Employment results from the Optionee's
death, total and permanent disability or retirement in accordance with the
Company's retirement policies or after age fifty five (55) if the Optionee has
completed five (5) years of employment with the Company, provided, however, that
the Committee, in its sole discretion and not subject to the consent of the
Optionee, may elect to waive the foregoing provision at any time prior to the
Optionee's exercise of the Option by advising the Optionee that this subsection
(b) shall be deleted in its entirety from this Agreement; or
(c) The expiration of one (1) year from the date of the Optionee's
Termination of Employment by reason of the Optionee's total and permanent
disability or the Optionee's retirement in accordance with the Company's
retirement policies or after age fifty five (55) if the Optionee has completed
five (5) years of employment with the Company; or
(d) The expiration of one (1) year from the date of the Optionee's
death; or
(e) The effective date of either the merger or consolidation of the
Company with or into another corporation, the exchange of all or substantially
all of the assets of the Company for the securities of another corporation, the
acquisition by another corporation or person of all or substantially all of the
Company's assets or eighty percent (80%) or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company,
unless the Committee waives this provision in connection with such transaction.
At least twenty (20) days prior to the effective date of such merger,
consolidation, exchange, acquisition, liquidation or dissolution, the Committee
shall give the Optionee notice of such
6
<PAGE>
event if the Option has then neither been fully exercised nor become
unexercisable under this Section 3.3.
Section 3.4 - Acceleration of Exercisability
- - - ----------- ------------------------------
In the event of the merger or consolidation of the Company with or
into another corporation, the exchange of all or substantially all of the assets
of the Company for the securities of another corporation, the acquisition by
another corporation or person of all or substantially all of the Company's
assets or eighty percent (80%) or more of the Company's then outstanding voting
stock, or the liquidation or dissolution of the Company, the Committee may, in
its absolute discretion and upon such terms and conditions as it deems
appropriate, provide by resolution, adopted prior to such event and incorporated
in the notice referred to in Section 3.3(f), that at some time prior to the
effective date of such event this Option shall be exercisable as to all the
shares covered hereby, notwithstanding that this Option may not yet have become
fully exercisable under Section 3.1(a); provided, however, that this
acceleration of exercisability shall not take place if:
(a) This Option becomes unexercisable under Section 3.3 prior to said
effective date; or
(b) In connection with such an event, provision is made for an
assumption of this Option or a substitution therefor of a new option by an
employer corporation or a parent or subsidiary of such corporation; and
provided, further, that nothing in this Section 3.4 shall make this Option
exercisable if it is otherwise unexercisable by reason of Section 5.6.
The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with such acceleration of exercisability, including, but not by way of
limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction.
None of the foregoing discretionary terms of this Section shall be
permitted to the extent that such discretion would be inconsistent with the
requirements of Rule 16b-3.
ARTICLE IV
EXERCISE OF OPTION
------------------
Section 4.1 - Person Eligible to Exercise
- - - ----------- ---------------------------
During the lifetime of the Optionee, only the Optionee, or an
alternate payee under a QDRO, may exercise the Option or any portion thereof.
After the death of the Optionee, any exercisable portion of the Option may,
prior to the time when the Option
7
<PAGE>
becomes unexercisable under Section 3.3, be exercised by a beneficiary
designated by the Optionee, the Optionee's personal representative or by any
person empowered to do so under the Optionee's will or under the then applicable
laws of descent and distribution.
Section 4.2 - Partial Exercise
- - - ----------- ----------------
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.3; provided, however, that each partial exercise shall be for not less than
one hundred (100) shares (or the minimum installment set forth in Section 3.1,
if a smaller number of shares) and shall be for whole shares only.
Section 4.3 - Manner of Exercise
- - - ----------- ------------------
The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or the Secretary's office of all of the
following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee or the Board; and
(b) (i) Full payment (in cash) for the shares with respect to which
such Option or portion is exercised;
(ii) With the consent of the Committee, payment may be delayed for
up to thirty (30) days from the date the Option, or portion thereof, is
exercised; or
(iii) With the consent of the Committee, (A) shares of the
Company's Common Stock owned by the Optionee duly endorsed for transfer to
the Company or (B) shares of the Company's Common Stock issuable to the
Optionee upon exercise of the Option, with a Fair Market Value on the date
of Option exercise equal to the aggregate purchase price of the shares with
respect to which such Option or portion is exercised; or
(iv) With the consent of the Committee, property of any kind which
constitutes good and valuable consideration; or
(v) With the consent of the Committee, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code or successor provision)
and payable upon such terms as may be prescribed by the Committee or the
Board. The Committee may also prescribe the form of such note and the
security to be given for such note. The Option may not be exercised,
however, by delivery of a promissory note or by a loan from the Company
when or where such loan or other extension of credit is prohibited by law;
or
8
<PAGE>
(vi) With the consent of the Committee, any combination of the
consideration provided in the foregoing subparagraphs (iii), (iv) and (v);
and
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee or the Board, signed by the Optionee or other
person then entitled to exercise such Option or portion, stating that the shares
of stock are being acquired for the Optionee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion will indemnify the Company against
and hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above. The
Committee may, in its absolute discretion, take whatever additional actions it
deems appropriate to insure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting
the generality of the foregoing, the Committee may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Securities Act, and may issue stop-
transfer orders covering such shares. Share certificates evidencing stock
issued on exercise of this Option shall bear an appropriate legend referring to
the provisions of this subsection (c) and the agreements herein. The written
representation and agreement referred to in the first sentence of this
subsection (c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the Securities Act, and
such registration is then effective in respect of such shares; and
(d) Full payment to the Company (or other employer corporation) of
all amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; with the consent of the Committee, (i)
shares of the Company's Common Stock owned by the Optionee duly endorsed for
transfer, or (ii) shares of the Company's Common Stock issuable to the Optionee
upon exercise of the Option, having a Fair Market Value at the date of Option
exercise equal to the sums required to be withheld, may be used to make all or
part of such payment; and
(e) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4 - Conditions to Issuance of Stock Certificates
- - - ----------- --------------------------------------------
The shares of stock deliverable upon the exercise of the Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
9
<PAGE>
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee or Board shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee or Board shall, in its
absolute discretion, determine to be necessary or advisable; and
(d) The receipt by the Company of full payment for such shares,
including payment of all amounts which, under federal, state or local tax law,
it is required to withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may from time to time establish
for reasons of administrative convenience.
Section 4.5 - Rights as Shareholder
- - - ----------- ---------------------
The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
----------------
Section 5.1 - Administration
- - - ----------- --------------
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the
Optionee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Option. In
its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under this Plan except
with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.
10
<PAGE>
Section 5.2 - Option Not Transferable
- - - ----------- -----------------------
Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee or the
Optionee's successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent (i) transfers by will or by the applicable laws of descent and
distribution, (ii) the designation by the Optionee of a beneficiary to exercise
the Optionee's Option or other rights under this Agreement after the Optionee's
death, or (iii) transfers pursuant to a QDRO.
Section 5.3 - Shares to Be Reserved
- - - ----------- ---------------------
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
Section 5.4 - Notices
- - - ----------- -------
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to the Optionee at the
address given beneath the Optionee's signature hereto. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to that party. Any notice which is required to
be given to the Optionee shall, if the Optionee is then deceased, be given to
the Optionee's personal representative if such representative has previously
informed the Company of such representative's status and address by written
notice under this Section 5.4. Any notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5 - Titles
- - - ----------- ------
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
Section 5.6 - Shareholder Approval
- - - ----------- --------------------
The Plan will be submitted for approval by the Company's shareholders
within twelve (12) months after the date the Plan was initially adopted by the
Board. This Option may not be exercised to any extent by anyone prior to the
time when the Plan is approved by the shareholders, and if such approval has not
been obtained by the end of said twelve-month period, this Option shall
thereupon be cancelled and become null and void.
11
<PAGE>
Section 5.7 - Construction
- - - ----------- ------------
This Agreement shall be administered, interpreted and enforced under
the laws of the State of Delaware.
Section 5.8 - Conformity to Securities Laws
- - - ----------- -----------------------------
The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
Section 5.9 - Amendments, etc.
- - - ----------- ----------------
Except as provided by Section 3.3(b), this Agreement may not be
modified, amended, or terminated except by an instrument in writing, signed by
the Optionee or such other person as may be permitted to exercise the Option
pursuant to Section 4.1 and by a duly authorized representative of the Company.
12
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
RED LION HOTELS, INC.
By /s/ Anupam Narayan
-------------------
Vice President
By /s/ Beth A. Ugoretz
-------------------
Secretary
/s/ David J. Johnson
- - - ----------------------------
Optionee
- - - ----------------------------
- - - ----------------------------
Address
Optionee's Taxpayer
Identification Number:
- - - ----------------------------
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 71,166
<SECURITIES> 0
<RECEIVABLES> 38,117
<ALLOWANCES> (232)
<INVENTORY> 6,173
<CURRENT-ASSETS> 121,882
<PP&E> 332,529
<DEPRECIATION> (3,695)
<TOTAL-ASSETS> 516,913
<CURRENT-LIABILITIES> 61,466
<BONDS> 0
<COMMON> 313
0
0
<OTHER-SE> 223,901
<TOTAL-LIABILITY-AND-EQUITY> 516,913
<SALES> 92,695
<TOTAL-REVENUES> 92,695
<CGS> 0
<TOTAL-COSTS> 86,189
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,658
<INCOME-PRETAX> 1,094
<INCOME-TAX> (8,287)
<INCOME-CONTINUING> 9,336
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,336
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
