Exhibit 10.4
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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
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TABLE OF CONTENTS
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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)
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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)
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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)
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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)
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 :
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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.
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1.01 Commitments. (A) Subject to and upon the terms and conditions
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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
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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
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (x) prior to the Syndication Date, Revolving Loans may only
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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
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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
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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
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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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spective RF Percentages, provided that all interest payable on such Swingline
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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
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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
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than five Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
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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.
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(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
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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
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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.
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1.05 Notes. (a) The Borrower's obligation to pay the principal of,
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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
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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
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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
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(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
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Loans shall be made by the Banks pro rata on the basis of their Term Commitments
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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
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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.
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(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
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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
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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-
(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-
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-
-10-
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-
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-
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.
-13-
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
-14-
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
-15-
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-
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;
-17-
(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
-18-
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).
-19-
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.
--------
-20-
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
-21-
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
-22-
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
-23-
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-
-24-
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
-25-
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-
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
-27-
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
-28-
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");
-29-
(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
-30-
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:
-31-
(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
-32-
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.
-33-
(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
-34-
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.
-35-
(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
-36-
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
-37-
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
-38-
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-
-39-
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
-40-
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
-41-
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
-42-
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
-43-
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
-44-
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.
-45-
(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
-46-
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
-47-
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,
-48-
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
-49-
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
-50-
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
-51-
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
-52-
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
-53-
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
-54-
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-
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;
-56-
(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;
-57-
(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
-58-
(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
-59-
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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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;
-61-
(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
-62-
(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.
-63-
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:
Period Ratio
------ -----
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
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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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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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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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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"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
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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
--------
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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-
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-
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-
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-
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
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
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
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