Exhibit 10.21
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FIRST AMENDMENT TO LOAN AGREEMENT
Dated as of August 18, 1997
Between
BA PARKWAY ASSOCIATES II, L.P., MCV VENTURE, LLC
AND
CAPSTAR AP PARTNERS, L.P.
as Borrower
and
LEHMAN BROTHERS HOLDINGS INC.,
DOING BUSINESS AS LEHMAN CAPITAL,
A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.
as Lender
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FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of August 18, 1997
(as amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AMENDMENT"), between LEHMAN BROTHERS HOLDINGS INC., DOING BUSINESS
AS LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC., a Delaware
corporation having an address at Three World Financial Center, New York, New
York 10285 ("LENDER") and BA PARKWAY ASSOCIATES II, L.P., a Delaware limited
partnership, MCV VENTURE, LLC, a Kentucky limited liability company, and CAPSTAR
AP PARTNERS, L.P., a Delaware limited partnership, having an address at 1010
Wisconsin Avenue, N.W., Washington, D.C. 20007 (collectively, "BORROWER").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Lender has made a loan (the "LOAN") to BA Parkway Associates
II, L.P. ("PARKWAY") in the principal sum of up to One Hundred Million and
No/100 Dollars ($100,000,000), or so much thereof as may be advanced pursuant to
the terms and provisions of that certain Loan Agreement dated as of August 12,
1997 between BA Parkway II, L.P. and Lender (the "LOAN AGREEMENT"), which Loan
is evidenced by that certain Promissory Note dated August 12, 1997 made by BA
Parkway II, L.P. to Lender (the "NOTE");
WHEREAS, Borrower has requested that Lender make a subsequent advance
of the proceeds of the Loan in the amount of Forty-Five Million Seven Hundred
Fifty Thousand and No/100 Dollars ($45,750,000) (the "SUBSEQUENT ADVANCE");
WHEREAS, in connection with the Subsequent Advance, Lender and
Borrower wish to modify certain terms of the Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the covenants, agreements, representations
and warranties set forth in this Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby covenant, agree, represent and warrant as follows:
SECTION 1. PRINCIPAL BALANCE.
Lender and Borrower hereby acknowledge that the total amount of the
proceeds of the Loan advanced by Lender to Borrower pursuant to the terms and
provisions of the Loan Agreement and the outstanding principal balance of the
Loan, as of the date hereof (including the Subsequent Advance) is Fifty-Two
Million Seven Hundred Fifty Thousand and No/100 Dollars ($52,750,000).
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SECTION 2. DEFINITIONS.
All capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Loan Agreement.
SECTION 3. ASSUMPTION OF LOAN AND LOAN AGREEMENT.
MCV Venture, LLC hereby assumes all of the obligations of an
Individual Borrower under the Loan Agreement and shall hereafter constitute an
Individual Borrower under the Loan Agreement; provided, however that the
obligations of MCV Venture, LLC thereunder and hereunder shall be limited to the
Lexington Obligations as set forth in Section 3.2(jj) thereof. CapStar AP
Partners, L.P., hereby assumes all of the obligations of an Individual Borrower
under the Loan Agreement and the other Loan Documents, subject to the provisions
of Section 3.2(jj) of the Loan Agreement, and shall hereafter constitute an
Individual Borrower thereunder.
SECTION 4. MODIFICATION OF LOAN TERMS AND LOAN AGREEMENT.
The terms and provisions of the Loan Agreement are hereby amended and
modified as follows:
(a) BORROWER. The definition of "Borrower" as set forth in Section
1.1 of the Loan Agreement is hereby amended and restated in its entirety to read
and provide as follows:
"BORROWER" shall mean collectively, BA Parkway Associates II, L.P.,
MCV Venture, LLC, and CapStar AP Partners, L.P., together with any
Additional Borrower, and their respective successors and assigns.
(b) LEXINGTON NOTE. Section 1.1 of the Loan Agreement is hereby
amended to include the following definition immediately after the defined term
"Lender":
"LEXINGTON NOTE" shall mean that certain Promissory Note dated August
___, 1997 made by MCV Venture, LLC to Lender in the original principal
amount of Twenty-Four Million and No/100 Dollars ($24,000,000), as the same
may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
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(c) DEFINITION OF NOTE. The definition of "Note" as set forth in
Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety
to read and provide as follows:
"NOTE" shall mean, collectively, the Promissory Note and the Lexington
Note; provided, however, that all references to the "Note" contained in any
Loan Document other than this Agreement shall be deemed to refer solely to
the Promissory Note.
(d) PLEDGE AGREEMENTS. The defined term "Loan Documents" set forth
in Section 1.1 of the Loan Agreement is hereby amended to include that certain
Pledge and Security Agreement dated as of August ___, 1997 made by MCV Venture,
LLC to Lender and that certain Pledge and Security Agreement dated as of August
___, 1997 made by CapStar AP Partners, L.P. to Lender, as each may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
(e) PROMISSORY NOTE. Section 1.1 of the Loan Agreement is hereby
amended to include the following definition immediately after the defined term
"Promus":
"PROMISSORY NOTE" shall mean that certain Amended and Restated
Promissory Note dated August ___, 1997 made by BA Parkway Associates II,
L.P. and CapStar AP Partners, L.P. to Lender in the original principal
amount of Seventy-Six Million and No/100 Dollars ($76,000,000) or such
portion thereof as may be advanced pursuant to this Agreement, as the same
may be amended, assumed, restated, replaced, supplemented or otherwise
modified from time to time.
(f) SPREAD. The definition of "Spread" as set forth in Section 1.1
of the Loan Agreement is hereby amended and restated in its entirety to read and
provide as follows:
"SPREAD" shall have the meaning set forth in the Promissory Note with
respect to the portion of the Loan evidenced by the Promissory Note and the
meaning set forth in the Lexington Note with respect to the portion of the
Loan evidenced by the Lexington Note.
(g) THE NOTE. Section 2.1.3 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
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SECTION 2.1.3. THE NOTE. The Loan shall be evidenced by the
Promissory Note and the Lexington Note, in the total principal amount of
the Loan. The Note shall be entitled to the benefit of this Agreement and
(a) the Promissory Note shall be secured by the Mortgages, the Assignments
of Leases and the other Loan Documents other than such documents relating
to the Lexington Property and (b) the Lexington Note shall be secured by
the Mortgage, the Assignment of Leases and the other Loan Documents
relating to the Lexington Property.
(h) DETERMINATION OF INTEREST RATE. Section 2.5.2(b) of the Loan
Agreement is hereby amended and restated in its entirety as follows:
(b) Interest shall be charged and payable on the outstanding
principal amount of the Loan at a rate PER ANNUM equal to the Applicable
Interest Rate, but in no event to exceed the maximum rate permitted under
applicable law. Subject to the terms and conditions of this SECTION 2.5.2,
the Loan shall be a Eurodollar Loan and Borrower shall pay interest on the
outstanding principal amount of the Loan at LIBOR plus the Spread for the
applicable Interest Period. Any change in the rate of interest hereunder
due to a change in the Applicable Interest Rate shall become effective as
of the opening of business on the first day on which such change in the
Applicable Interest Rate shall become effective. Each determination by
Lender of the Applicable Interest Rate shall become effective. Each
determination by Lender of the Applicable Interest Rate shall be conclusive
and binding for all purposes, absent manifest error.
(i) ASSUMPTION AND MODIFICATION OF EXISTING LOAN DOCUMENTS. Section
3.2(c)(i) of the Loan Agreement is hereby amended so that the word "Note"
contained in clause (A) is replaced with the phrase "Promissory Note".
(j) EVENT OF DEFAULT. Section 8.1(a)(xi) is hereby amended and
restated in its entirety as follows:
(xi) (A) if Promus shall not have executed and delivered to
Parkway the License Agreement that Parkway has executed and delivered to
Promus for execution and a copy of such fully executed License Agreement
shall not have been delivered to Lender prior to the expiration of the
interim period during which Parkway is authorized to continue to operate
the Individual Property known as the Embassy Suites Hotel, Philadelphia,
Pennsylvania as an Embassy Suites Hotel as described in that certain letter
dated August 12, 1997 from Promus to Lender, as such interim period may be
extended from time to time in writing by Promus, (B) if Doubletree Hotel
Systems, Inc. and CapStar AP Partners, L.P. shall not have executed and
delivered a License Agreement in the form previously submitted to Lender
for review and approval and a copy of such fully executed License Agreement
shall not have been delivered to Lender prior
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to the expiration of the interim period during which CapStar AP, LLC is
authorized to continue to operate the Individual Property known as the
Doubletree Hotel, Austin, Texas as a DoubleTree Hotel as described in that
certain letter dated August 14, 1997 from DoubleTree Hotels Corporation to
Lender, as such interim period may be extended from time to time in writing
by DoubleTree Hotels Corporation, or (C) if a default by Borrower has
occurred under any Franchise Agreement and continues beyond any applicable
cure period and such default permits the Franchisor thereunder to terminate
such Franchise Agreement;
(k) SCHEDULES. SCHEDULES I-VII of the Loan Agreement are hereby
amended and restated in their entirety to respectively read and provide as set
forth on SCHEDULES I-VII hereto.
SECTION 5. DEBT SERVICE RESERVE FUND.
A portion of the Subsequent Advance in the amount of One Million Seven
Hundred Fifty Thousand and No/100 Dollars ($1,750,000) (the "DEBT SERVICE
RESERVE FUND") shall be retained by Lender and deposited in an account (the
"DEBT SERVICE ESCROW ACCOUNT") under the sole dominion and control of Lender.
Borrower hereby pledges, assigns and grants a first priority security interest
in the Debt Service Reserve Fund as additional security for the payment of all
sums due under the Loan and the performance of all other terms, conditions, and
provisions, of the Loan Documents on Borrower's part to be paid and performed.
Upon the occurrence of an Event of Default, Lender may apply such sums then
present in the Debt Service Escrow Account to the payment of the Debt in any
order in its sole discretion. Borrower shall have the right to the release of
the funds on deposit upon the satisfaction of the following conditions
precedent:
(i) RELEASE REQUEST. Lender shall have received a written request
from Borrower for the release of the entire Debt Service Reserve Fund no less
than fifteen (15) days prior to the date of the requested release and in no
event shall a request for the release of the Debt Service Reserve Fund be made
later than thirty (30) days prior to the Outside Closing Date.
(ii) REPRESENTATIONS AND WARRANTIES; DEFAULTS. The representations
and warranties of Borrower contained in the Loan Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the
date of the release of the Debt Service Fund and, as of such date, no Default or
Event of Default shall have occurred and be continuing and Borrower shall be in
compliance in all material respects with all terms and conditions set forth in
the Loan Agreement and in each Loan Document on Borrower's part to be observed
or performed. Lender shall have received an Officer's Certificate confirming
the foregoing, such certificate to be in form and substance satisfactory to
Lender.
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(iii) DEBT SERVICE COVERAGE RATIO AND LTV RATIO. The Debt Service
Coverage Ratio with respect to the Loan, including the Debt Service Reserve
Fund, projected by Lender for the twelve (12) month period immediately following
the date of the release of the Debt Service Reserve Fund shall be no less than
1.15 and the LTV Ratio as of the date of the release of the Debt Service Reserve
Fund shall be no more than sixty-five percent (65%).
(iv) MATERIAL ADVERSE CHANGE. The income and expenses of each
Individual Property, the financial statements of Borrower, the occupancy
rate, Leases and rent roll with respect to each Individual Property and all
other features of the Loan shall be as represented to Lender and all
documents and communications delivered to Lender in order to induce Lender to
make the Loan shall be without material adverse change and Lender shall have
received an Officer's Certificate as to the foregoing. No portion of any
Individual Property shall have been damaged and not repaired to Lender's
satisfaction unless a reserve or other provision for repair of such damage
satisfactory to Lender has been established or made. No portion of any
Individual Property shall have been taken in condemnation or other similar
proceeding. No condemnation or other similar proceeding shall be pending
that may materially and adversely affect any Individual Property or for which
reserves or other provisions for restoration of the affected Individual
Property satisfactory to Lender in its sole discretion have not been
established. No structural change in the physical condition or any portion
of any Individual Property shall have occurred since the date of the related
structural engineering report delivered to Lender other than alterations to
an Individual Property approved by Lender. No Individual Borrower, general or
limited partners or members of any Individual Borrower or other Person
directly or indirectly in control of, or controlled by, any Individual
Borrower (other than a Non-CapStar Person with respect to which a
nonconsolidation opinion reasonably satisfactory to Lender has been delivered
to Lender), or tenants under any Leases deemed by Lender to be material to
the security for the Loan or guarantors of any such Leases shall be the
subject of any bankruptcy, reorganization or insolvency proceeding. No
Individual Borrower or general or limited partner or member of any Individual
Borrower (other than a Non-CapStar Person with respect to which a
nonconsolidation opinion reasonably satisfactory to Lender has been delivered
to Lender) shall be in default under any loan or financing provided to such
Individual Borrower, general or limited partner or member, other than
defaults under equipment lease financings or resulting from the failure to
pay trade payables, which financings or trade payables are being disputed in
good faith and do not exceed One Hundred Thousand and No/100 Dollars
($100,000) in the aggregate. No asbestos or other hazardous substances shall
have been discovered at any Individual Property other than as disclosed in
the related Phase I environmental report delivered to Lender and, if
applicable, Phase II environmental report delivered to Lender, unless
provisions for the remediation of such asbestos or other hazardous substances
satisfactory to Lender in its sole discretion have been made.
Prior to the release of the Debt Service Reserve Fund pursuant to this
SECTION 5, the Debt Service Reserve Fund shall not be included in the
outstanding principal balance of the
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Loan for purposes of calculating the Debt Service Coverage Ratio or the LTV
Ratio, other than as set forth in clause (iii) above.
SECTION 6. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
(b) NO FURTHER MODIFICATION. Except as modified and amended by this
Amendment, the Loan and the Loan Agreement, the Note and the other Loan
Documents shall remain unmodified and in full force and effect.
(c) COUNTERPARTS. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BA PARKWAY ASSOCIATES II, L.P.
By: CapStar PA, Inc.
By: /s/ John E. Plunket
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Name: John E. Plunket
Title: Vice President
MCV VENTURE, LLC
By: CapStar Lexington, Inc.
By: /s/ John E. Plunket
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Name: John E. Plunket
Title: Vice President
CAPSTAR AP PARTNERS, L.P.
By: CapStar Austin, Inc.
By: /s/ John E. Plunket
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Name: John E. Plunket
Title: Vice President
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LEHMAN BROTHERS HOLDINGS INC.,
DOING BUSINESS AS LEHMAN CAPITAL, A DIVISION
OF LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Michael Mazzei
----------------------------
Name: Michael Mazzei
Title: Managing Director
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SCHEDULE I
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RELEASE AMOUNTS
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Property RELEASE AMOUNT
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EMBASSY SUITES HOTEL $8,750,000
1776 BENJAMIN FRANKLIN PARKWAY
PHILADELPHIA, PENNSYLVANIA
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THE VINE CENTER $24,000,000
(RADISSON PLAZA HOTEL)
369 WEST VINE STREET
LEXINGTON, KENTUCKY
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DOUBLETREE HOTEL $20,000,000
6505 IH-35 NORTH
AUSTIN, TEXAS
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I-1
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SCHEDULE II
REQUIRED REPAIRS
II-1
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SCHEDULE III
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INTENTIONALLY OMITTED
III-1
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SCHEDULE IV
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RENT ROLLS
IV-1
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SCHEDULE V
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LIST OF FRANCHISE AGREEMENTS
1. Embassy Suites License Agreement between Promus Hotels, Inc., as
licensor, and BA Parkway Associates II, L.P., as licensee, with
respect to Embassy Suites Hotel at 1776 Benjamin Franklin Parkway,
Philadelphia, Pennsylvania.
2. Franchise Agreement between Radisson Hotels International, Inc.
(formerly Carlson Hospitality Group, Inc.) and MCV Venture dated
October 19, 1988, as amended by First Amendment to License Agreement
dated October 1, 1994, as assigned to and assumed by MCV Venture LLC
by Assignment and Assumption of License Agreement dated February 28,
1997, with respect to the Radisson Plaza Hotel at 369 West Vine
Street, Lexington, Kentucky.
3. License Agreement between Doubletree Hotel Systems, Inc., as
licensor, and CapStar AP Partners, L.P., as licensee, with respect to
the Doubletree Hotel at 6505 IH-35 North, Austin, Texas.
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SCHEDULE VI
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LIST OF MANAGEMENT AGREEMENTS
1. Hotel Management Agreement dated as of August 12, 1997 between BA
Parkway Associates II, L.P. and CapStar Management Company, L.P., with
respect to the Individual Property known as the Embassy Suites Hotel,
Philadelphia, Pennsylvania.
2. Property Management and Leasing Agreement dated October 19, 1988
between MCV Venture (predecessor in interest to MCV Venture, LLC) and
The Webb Companies, as amended by that certain First Amendment to
Property Management and Leasing Agreement dated February 17, 1997
between MCV Venture and The Webb Companies and as further amended by
that certain Second Amendment to Property Management and Leasing
Agreement dated August 14, 1997 between MCV Venture, LLC and The Webb
Companies, with respect to the Individual Property known as the Vine
Center, Lexington, Kentucky.
3. Hotel Management Agreement dated as of August 7, 1997 between MCV
Venture, LLC and CapStar Management Company, L.P. with respect to the
Individual Property known as the Vine Center, Lexington, Kentucky.
4. Hotel Management Agreement dated as of August 14, 1997 between
CapStar AP Partners, L.P. and CapStar Management Company, L.P. with
respect to the Individual Property known as the Doubletree Hotel,
Austin, Texas.
VI-1
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SCHEDULE VII
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LITIGATION
VII-1