Exhibit 10(3)
TRANCHE B
CREDIT AGREEMENT
Dated as of June 7, 1995
among
EMBASSY SUITES, INC.,
as Initial Borrower,
PROMUS HOTELS, INC.,
as the Subsequent Borrower,
CERTAIN SUBSIDIARIES AND RELATED PARTIES
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N.A. (CAROLINAS),
as Agent
TABLE OF CONTENTS
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Page No.
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SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . 26
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . 26
2.1 Committed Revolving Loans . . . . . . . . . . . . . . . . . . . 26
2.2 [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . 29
2.3 [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . 29
2.4 Competitive Loan Subfacility . . . . . . . . . . . . . . . . . 29
2.5 Extension of Termination Date . . . . . . . . . . . . . . . . . 32
2.6 Amortization of Loans Outstanding at the Termination Date . . . 32
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES . . . . . . . . 33
3.1 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2 Extension and Conversion . . . . . . . . . . . . . . . . . . . 33
3.3 Reductions In Commitments and Prepayments . . . . . . . . . . . 34
3.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . 37
3.6 Inability To Determine Interest Rate . . . . . . . . . . . . . 38
3.7 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.8 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . 39
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.11 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . 43
3.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . 44
3.13 Place and Manner of Payments . . . . . . . . . . . . . . . . . 45
3.14 [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . 46
3.15 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . 46
3.16 Change of Lending Office . . . . . . . . . . . . . . . . . . . 46
SECTION 4 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1 The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2 Obligations Unconditional . . . . . . . . . . . . . . . . . . . 47
4.3 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.4 Certain Additional Waivers . . . . . . . . . . . . . . . . . . 48
4.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.6 Continuing Guarantee . . . . . . . . . . . . . . . . . . . . . 49
4.7 Discharge of Guarantor . . . . . . . . . . . . . . . . . . . . 49
SECTION 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.1 Conditions to Initial Extensions of Credit . . . . . . . . . . 49
5.2 Conditions to Assignment to Hotel Inc., Release of Embassy Suites
and Promus Co. and Initial Extensions of Credit to Hotel Inc. . 51
5.3 Each Extension of Credit . . . . . . . . . . . . . . . . . . . 53
SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 54
6.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . 54
6.2 No Change; Solvent . . . . . . . . . . . . . . . . . . . . . . 56
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6.3 Corporate and Partnership Existence; Compliance with Law . . . 56
6.4 Corporate and Partnership Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . 57
6.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . 57
6.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 58
6.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . 58
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . 58
6.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.14 Investment Company Act; Other Regulations . . . . . . . . . . . 59
6.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . 60
6.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 62
7.1 Information Covenants. . . . . . . . . . . . . . . . . . . . . 62
7.2 Preservation of Existence and Franchises . . . . . . . . . . . 64
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 64
7.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . 64
7.5 Payment of Taxes and Other Indebtedness . . . . . . . . . . . . 64
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.7 Maintenance of Property . . . . . . . . . . . . . . . . . . . . 65
7.8 Performance of Obligations . . . . . . . . . . . . . . . . . . 65
7.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 65
7.10 Audits/Inspections . . . . . . . . . . . . . . . . . . . . . . 65
7.11 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . 65
7.12 Additional Credit Parties . . . . . . . . . . . . . . . . . . . 66
SECTION 8 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 67
8.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.3 Nature of Business . . . . . . . . . . . . . . . . . . . . . . 70
8.4 Consolidation, Merger, Sale or Purchase of Assets . . . . . . . 70
8.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.6 Prepayments of Indebtedness . . . . . . . . . . . . . . . . . . 73
8.7 Transactions with Affiliates . . . . . . . . . . . . . . . . . 73
8.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.9 No Dividend Restrictions . . . . . . . . . . . . . . . . . . . 74
SECTION 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 74
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 74
9.2 Acceleration; Remedies . . . . . . . . . . . . . . . . . . . . 77
SECTION 10 AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 78
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 79
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . 79
10.4 Reliance on Communications . . . . . . . . . . . . . . . . . . 79
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 80
10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . 80
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 81
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10.8 Agent in its Individual Capacity . . . . . . . . . . . . . . . 81
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.2 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . 83
11.3 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . 84
11.4 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . 87
11.5 Payment of Expenses, etc . . . . . . . . . . . . . . . . . . . 88
11.6 Amendments, Waivers and Consents . . . . . . . . . . . . . . . 89
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.10 Governing Law; Submission to Jurisdiction; Venue . . . . . . . 90
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.12 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.14 Knowledge Standard . . . . . . . . . . . . . . . . . . . . . . 91
11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 91
11.16 Agent's and Lender's Covenant . . . . . . . . . . . . . . . . . 92
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TRANCHE B
CREDIT AGREEMENT
THIS TRANCHE B CREDIT AGREEMENT dated as of June 7, 1995 (as amended,
modified and extended from time to time, the "Credit Agreement" and sometimes,
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this "Credit Agreement"), is by and among EMBASSY SUITES, INC., a Delaware
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corporation as the initial Borrower, and PROMUS HOTELS, INC., a Delaware
corporation, as assignee and subsequent Borrower upon satisfaction of the
conditions set forth in Section 5.2 (the applicable Borrower hereunder being
referred to as the "Borrower"), THE PROMUS COMPANIES INCORPORATED, a Delaware
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corporation as an initial guarantor subject to release upon satisfaction of the
conditions set forth in Section 5.2, and PROMUS HOTEL CORPORATION, a Delaware
corporation as a guarantor (such applicable parent company guarantor hereunder
being referred to as the "Parent Company") and those certain Subsidiaries and
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related parties identified as "Guarantors" on the signature pages hereto and
such other Subsidiaries as may from time to time become a Guarantor hereunder
(together with the applicable Parent Company, the "Guarantors"), the several
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lenders identified on the signature pages hereto and such other lenders as may
from time to time become a party hereto (the "Lenders") and NATIONSBANK, N.A.
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(CAROLINAS), as agent for the Lenders (in such capacity, the "Agent").
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W I T N E S S E T H
WHEREAS, Embassy Suites, Inc. ("Embassy Suites") and its parent company,
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The Promus Companies Incorporated ("Promus Co."), have proposed a reorganization
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of their corporate structure as more particularly described in the Proxy
Statement (the "Reorganization") whereby, among other things, (i) certain hotel
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related assets and liabilities will be transferred to Promus Hotels, Inc.
("Hotel Inc."), a newly formed and wholly-owned subsidiary of Promus Hotel
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Corporation ("Hotel Corp."), a newly formed and wholly-owned subsidiary of
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Embassy Suites, (ii) Embassy Suites will enter into the Tranche A Credit
Agreement and this Tranche B Credit Agreement (hereafter the Tranche A Credit
Agreement and the Tranche B Credit Agreement may be referred to collectively as
the "Hotel Facility") and make initial borrowings hereunder and/or thereunder,
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(iii) Embassy Suites will assign to Hotel Inc. and Hotel Inc. will assume from
Embassy Suites the Hotel Facility, and Embassy Suites and Promus Co. will be
released from liability as the initial Borrower and an initial guarantor,
respectively, under the Hotel Facility as provided herein and in the Tranche A
Credit Agreement, (iv) Embassy Suites will dividend the stock of Hotel Corp. to
Promus Co. which will dividend such stock to its public shareholders (the
"Distribution");
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WHEREAS, Embassy Suites has requested that the Lenders provide a
$350,000,000 Hotel Facility consisting of a
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$300,000,000 five year revolving credit facility under the Tranche A Credit
Agreement and a $50,000,000 364-day revolving credit facility under this Tranche
B Credit Agreement for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested Hotel Facility
available on the terms and conditions set forth herein and in the Tranche A
Credit Agreement.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
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1.1 Definitions. As used herein, the following terms shall have the
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meanings herein specified unless the context otherwise requires. Defined terms
herein shall include in the singular number the plural and in the plural number
the singular:
"Additional Credit Party" means each Person that becomes a Guarantor
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after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other Person
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directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to
control an entity if such Person possesses, directly or indirectly, the
power (i) to vote 10% or more of the securities or other ownership
interests having ordinary voting power for the election of directors of
such corporation or the members of the managing body of such Person or (ii)
to direct or cause direction of the management and policies of such
corporation or other entity, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means NationsBank, N.A. (Carolinas) and any successors and
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permitted assigns in such capacity.
"Agent's Fee Letter" means the letter agreement dated as of March 1,
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1995 among NationsBank, N.A. (Carolinas), NationsBanc Capital Markets,
Inc., Promus Co. and Embassy Suites, as amended, modified, supplemented or
replaced from time to time.
"Agent's Fees" means such term as defined in Section 3.4(c).
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2
"Applicable Percentage" means, for any day, the rate per annum set
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forth below opposite the applicable Level Period then in effect, it being
understood that the Applicable Percentage for (i) Base Rate Loans shall be
the percentage set forth under the column "Base Rate Margin",
(ii) Eurodollar Loans shall be the percentage set forth under the column
"Eurodollar Margin" and (iii) the Commitment Fee shall be the percentage
set forth under the column "Commitment Fee":
Level Base Eurodoll Commitme
Period Rate ar nt
Margin Margin Fee
Level I Period 0% .275% .100%
Level II Period 0% .325% .125%
Level III Period 0% .400% .150%
Level IV Period 0% .550% .200%
Level V Period 0% .6875% .3125%
In the event the applicable Level Period is determined by reference to
clause (i) of the definitions of "Level I Period", "Level II Period",
"Level III Period", "Level IV Period" and "Level V Period", the Applicable
Percentage shall be adjusted for all purposes as soon as reasonably
practicable, but in no event later than 5 days, after the date of receipt
by the Agent of notice of a change in the applicable debt rating. In the
event the applicable Level Period is determined by reference to clause (ii)
of the definitions of "Level I Period", "Level II Period", "Level III
Period", "Level IV Period" and "Level V Period", the Applicable Percentage
shall be adjusted for all purposes quarterly as soon as reasonably
practicable, but not later than 5 days, after the date of receipt by the
Agent of the quarterly financial information in accordance with the
provisions of Section 7.1(b) together with a calculation by the Borrower of
the Leverage Ratio for the period ending on the last day of the most recent
fiscal quarter.
"Assignment and Assumption" means the assignment of the obligations of
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Embassy Suites hereunder by Embassy Suites and the assumption of such
obligations by Hotel Inc. pursuant to the terms of Section 11.3(b).
"Audobon Woods" means such term as defined in the Proxy Statement.
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"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
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States Code, as amended, modified, succeeded or replaced from time to time.
"Base Rate" means, for any day, the rate per annum (rounded upwards,
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if necessary, to the nearest whole
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multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate
in effect on such day plus 1/2 of 1% or (b) the Prime Rate in effect on
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such day. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable
after due inquiry to ascertain the Federal Funds Rate for any reason,
including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (a) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or
the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate determined
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by reference to the Base Rate.
"Borrower" means, prior to the time of effectiveness of the Assignment
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and Assumption, Embassy Suites, and after the time of effectiveness of the
Assignment and Assumption, Hotel Inc.
"Business" means such term as defined in Section 6.17(a).
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"Business Day" means a day other than a Saturday, Sunday or other day
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on which commercial banks in Charlotte, North Carolina and New York, New
York are authorized or required by law to close, except that, when used in
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connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in U.S. dollar deposits in London,
England and New York, New York.
"Capital Expenditures" means all expenditures for property, plant and
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equipment which in accordance with GAAP would be so classified on a
Statement of Cash Flows (or Statement of Sources and Uses).
"Capital Lease" means any lease of property, real or personal, the
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obligations with respect to which are required to be capitalized on a
balance sheet of the lessee in accordance with GAAP.
"Closing Date" means the date of the occurrence of the Distribution,
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but not in any event later than 90 days after the date of this Credit
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
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to time.
"Commitment" means the Revolving Commitment.
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"Commitment Fee" means such term as defined in Section 3.4(a).
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"Commitment Percentage" means the Revolving Commitment Percentage.
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"Committed Revolving Loans" means such term as defined in Section 2.1.
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"Committed Revolving Note" or "Committed Revolving Notes" means the
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promissory notes of the Borrower in favor of each of the Lenders evidencing
the Committed Revolving Loans provided pursuant to Section 2.1(e),
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, supplemented, extended, renewed or replaced from time
to time.
"Commonly Controlled Entity" means an entity, whether or not
--------------------------
incorporated, which is under common control with the Borrower within the
meaning of Section 4001(a)(14)(B) of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414(b), (c) or (m) of the Code.
"Competitive Bid" means an offer by a Lender to make a Competitive
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Loan pursuant to the terms of Section 2.4(c).
"Competitive Bid Rate" means, as to any Competitive Bid made by a
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Lender in accordance with the provisions of Section 2.4, the fixed rate of
interest offered by the Lender making the Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
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Competitive Bids in accordance with the provisions of Section 2.4(b), a
form of which is attached as Schedule 2.4(b)-1.
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"Competitive Bid Request Fee" means the administrative fee payable to
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the Agent, if any, in connection with a Competitive Bid Request as provided
in the Agent's Fee Letter.
"Competitive Loan" means a loan made by a Lender pursuant to the
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provisions of Section 2.4.
"Competitive Loan Lenders" means, at any time, those Lenders which
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have Competitive Loans outstanding.
"Competitive Loan Maximum Amount" means such term as defined in
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Section 2.4(a).
"Competitive Loan Note" or "Competitive Loan Notes" means the
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promissory notes of the Borrower in favor of each of the Lenders evidencing
the Competitive Loans, if any, provided pursuant to Section 2.4(h),
individually or
5
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time.
"Consolidated Adjusted EBITDA" means, for any period, the amount equal
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to (i) the sum of Consolidated Net Income for such period plus Consolidated
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Interest Expense for such period to the extent deducted in the calculation
of Consolidated Net Income plus all provisions for any Federal, state or
----
other income taxes plus depreciation and amortization, in each case for the
----
Parent Company and its Subsidiaries on a consolidated basis, but excluding
in each case the portion of such components attributable to Joint Ventures,
determined in accordance with GAAP plus (ii) all cash distributions from
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Joint Ventures received by the Parent Company, the Borrower or any of their
respective Subsidiaries for such period. For the portion of any such
period which is prior to the Closing Date, Consolidated Adjusted EBITDA
shall be calculated with respect to the Hotel Inc. Business.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of
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Consolidated Net Income Available for Fixed Charges to Consolidated Fixed
Charges.
"Consolidated Fixed Charges" means, for any period, without
--------------------------
duplication, the sum of (i) all Rentals (other than Rentals on Capitalized
Leases) payable during such period, (ii) the cash portion of Consolidated
Interest Expense during such period, (iii) the cash payment portion of
current maturities of Funded Debt, and (iv) all cash Dividends paid in such
period, in each case for the Parent Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP. For the portion of
any such period which is prior to the Closing Date, Consolidated Fixed
Charges shall be calculated with respect to the Hotel Inc. Business.
"Consolidated Funded Debt" means Funded Debt of the Parent Company and
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its Subsidiaries on a consolidated basis determined in accordance with
GAAP.
"Consolidated Interest Expense" means, for any period, all interest
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expense, including the amortization of debt discount and premium and the
interest component under Capital Leases for the Parent Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP.
For the portion of any such period which is prior to the Closing Date,
Consolidated Interest Expense shall be calculated with respect to the Hotel
Inc. Business based upon an annualization of actual interest expense for
the portion of such period elapsed since the Closing Date.
"Consolidated Legal Entity Assets" means, for any Person and its
--------------------------------
Subsidiaries as of any date of determination,
6
the total assets of such Person and its Subsidiaries on a consolidated
basis as reflected in the most recent tax return of such Person.
"Consolidated Legal Entity EBITDA" means, for any Person and its
--------------------------------
Subsidiaries as of any date of determination, the sum of (i) net income
(excluding for purposes hereof extraordinary gains or losses and any taxes
on such excluded gains and any tax deductions or credits on account of any
such excluded losses), plus (ii) interest expense (including the
----
amortization of debt discount and premium and the interest component under
Capital Leases), plus (iii) Federal, state or other income taxes, plus (iv)
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depreciation and amortization, in each case for such Person and its
Subsidiaries on a consolidated basis as reflected in the most recent tax
return of such Person and for the period covered by such tax return.
"Consolidated Legal Entity Gross Revenues" means, for any Person and
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its Subsidiaries as of any date of determination, the gross revenues of
such Person and its Subsidiaries on a consolidated basis as reflected in
the most recent tax return of such Person and for the period covered by
such tax return.
"Consolidated Net Income" means, for any period, the net income of the
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Parent Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP, but excluding for purposes hereof extraordinary gains
or losses, and any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses. For the portion of any
such period which is prior to the Closing Date, Consolidated Net Income
shall be calculated with respect to the Hotel Inc. Business.
"Consolidated Net Income Available for Fixed Charges" means, for any
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period, the sum of Consolidated Adjusted EBITDA minus Capital Expenditures
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made or incurred (excluding, for purposes hereof, up to $27,000,000 of
Capital Expenditures for Audobon Woods during fiscal year 1995) plus
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Rentals, in each case for the Parent Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP. For the portion of
any such period which is prior to the Closing Date, Consolidated Net Income
Available for Fixed Charges shall be calculated with respect to the Hotel
Inc. Business.
"Consolidated Net Worth" means total stockholders' equity for the
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Parent Company and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
material security issued by such Person or of any material agreement,
instrument or other undertaking
7
to which such Person is a party or by which it or any of its property is
bound.
"Credit Date" means (i) the date of each request for Extension of
-----------
Credit pursuant to a Notice of Borrowing or a Notice of Conversion, in the
case of Committed Revolving Loans, and a Competitive Bid Request, in the
case of Competitive Loans, and (ii) the date of any such Extension of
Credit relating thereto.
"Credit Documents" means this Credit Agreement, the Notes, the Pledge
----------------
Agreement, the Assignment and Assumption, any Joinder Agreement and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
------------
"Credit Party Obligations" means, without duplication, all of the
------------------------
obligations of the Borrower and the other Credit Parties to the Lenders and
the Agent, whenever arising, under this Credit Agreement, the Notes or any
of the other Credit Documents to which the Borrower or any other Credit
Party is a party.
"Currency Protection Agreement" shall mean any foreign exchange
-----------------------------
contract, currency swap agreement or other financial agreement or
arrangement designed to protect against fluctuations in currency values.
"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at such time
-----------------
(a) has failed to make a Loan or fund a Participation Interest required
pursuant to the term of this Credit Agreement, (b) has failed to pay to the
Agent or any Lender an amount owed by such Lender pursuant to the terms of
this Credit Agreement or (c) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or to a receiver, trustee
or similar official.
"Disapproving Lenders" means such term as defined in Section 2.5.
--------------------
"Disqualified Stock" means any capital stock which, by its terms (or
------------------
by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part
on, or prior to, or is exchangeable for debt securities of the Parent
Company or
8
any of its Subsidiaries prior to, the first anniversary of the Termination
Date under the Tranche A Credit Agreement.
"Distribution" means such term as defined in the Recitals hereto.
------------
"Dividends" means any payment, distribution or dividend (other than a
---------
dividend or distribution payable solely in stock of the Person making such
payment, distribution or dividend) on, or any payment on account of the
purchase, redemption or retirement of, or any other distribution in respect
of, any shares of any class of stock or other ownership interest in a
Person (including any such payment or distribution in cash or in property
or obligations).
"Dollars" and "$" means dollars in lawful currency of the United
------- -
States of America.
"Effective Date of Assignment" means such term as defined in Section
----------------------------
11.3(b).
"Eligible Assignee" means (A) (i) a commercial bank organized under
-----------------
the laws of the United States or any state thereof and (ii) a commercial
bank organized under the laws of any other country, or a political
subdivision thereof, provided that (a) such bank is acting through a branch
or agency located in the United States or (b) such bank is organized under
the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country, in
each case (under clauses (i) and (ii) above) that is reasonably acceptable
to the Agent and the Borrower and (B) any Lender or its parent company or
any affiliate of such Lender which is at least 50% owned by such Lender or
its parent company. It shall be deemed reasonable for the Borrower to
refuse to accept as an "Eligible Assignee" any entity the inclusion of
which as a Lender hereunder would be reasonably likely to increase amounts
payable by the Borrower under Sections 3.5, 3.8, 3.9 or 3.10 or give rise
to the circumstances described in Section 3.6.
"Eligible Participant" means any entity satisfying the requirements
--------------------
set forth in the first sentence of the definition of "Eligible Assignee"
other than the requirement for Borrower's approval.
"Embassy Suites" means Embassy Suites, Inc., a Delaware corporation
--------------
and the initial Borrower under this Credit Agreement subject to release
upon satisfaction of the conditions set out in Section 5.2.
"Environmental Laws" shall mean any and all lawful and applicable
------------------
Federal, state, local and foreign statutes, laws, regulations, ordinances,
codes, rules, judgments, orders, decrees, permits, licenses or other
governmental
9
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"Equity Transaction" means (i) the issuance by the Borrower or any of
------------------
its Subsidiaries of new shares of its capital stock, unless such new shares
are being issued in exchange for an ownership interest in another Person or
in exchange for substantially all of the assets of another Person in
connection with an acquisition permitted by Section 8.4(c), (ii) an
issuance by the Borrower or any of its Subsidiaries of any shares of its
capital stock pursuant to the exercise of options or warrants and (iii) an
issuance by the Borrower or any of its Subsidiaries of any shares of its
capital stock pursuant to the conversion of any debt securities (including
without limitation any Subordinated Debt) to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Eurodollar Loan" means any Loan bearing interest at a rate determined
---------------
by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
---------------
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to
the following formula:
Eurodollar Rate = Interbank Offered Rate
----------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any Interest Period, the
-----------------------------
average daily percentage (expressed as a decimal) which is in effect from
time to time during such Interest Period under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as such
regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency liabilities as that term is defined in Regulation D
(or against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is determined),
whether or not any Lender has any Eurocurrency liabilities subject to such
reserve requirement at that time. Eurodollar Loans shall be
10
deemed to constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without benefits of credits for proration,
exceptions or offsets that may be available from time to time to a Lender.
The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
----------------
"Excluded Taxes" means such term as is defined in Section 3.9(a).
--------------
"Extension of Credit" means, as to any Lender, the making of a Loan by
-------------------
such Lender.
"Federal Funds Rate" means, for any day, the rate of interest per
------------------
annum (rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,
provided that (A) if such day is not a Business Day, the Federal Funds Rate
--------
for such day shall be such rate on such transactions on the next preceding
Business Day and (B) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to the Agent on such day on such transactions as
determined by the Agent.
"Form 10" means the registration statement on Form 10 filed with and
-------
declared effective by the Securities and Exchange Commission in respect of
the Distribution.
"Former Plan" means any employee benefit plan in respect of which the
-----------
Borrower or a Commonly Controlled Entity has engaged in a transaction
described in Section 4069 or Section 4212(c) of ERISA and with respect to
which transaction the Borrower or Commonly Controlled Entity, as
applicable, has as its principal purpose the evasion of liability described
in such sections.
"Funded Debt" shall mean, with respect to any Person, without
-----------
duplication, (i) all indebtedness of such Person for borrowed money, (ii)
all purchase money indebtedness of such Person, including, without
limitation, the principal portion of all obligations of such Person under
Capital Leases and (iii) the amount of any Qualified Stock; provided that,
--------
"Funded Debt" shall not include indebtedness owing under or in connection
-----------
with Joint Ventures to the extent such indebtedness is Non-Recourse
Indebtedness. The Funded Debt of any Person shall include the Funded Debt
of any partnership or joint venture in which such Person is a
11
general partner (except as set forth in the preceding proviso).
"GAAP" means generally accepted accounting principles in the United
----
States.
"Governmental Authority" means any Federal, state, local or foreign
----------------------
court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantor" means Promus Co. as an initial Guarantor subject to
---------
release upon satisfaction of the conditions set out in Section 5.2 and each
of the other Persons identified as a "Guarantor" on the signature pages
hereto, and each other Additional Credit Party, together with their
successors and permitted assigns.
"Guaranty Obligations" means, with respect to any Person, without
--------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including,
without limitation, any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including,
without limitation, keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The
amount of any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
"Hotel Corp." means Promus Hotel Corporation, a Delaware corporation
-----------
and a Guarantor under this Credit Agreement upon satisfaction of the
conditions set out in Section 5.2.
"Hotel Facility" means such term as defined in the Recitals hereto.
--------------
"Hotel Inc." means Promus Hotels, Inc., a Delaware corporation and the
----------
subsequent Borrower under this Credit Agreement upon satisfaction of the
conditions set out in Section 5.2.
12
"Hotel Inc. Assignment and Assumption Agreement" means the Assignment,
----------------------------------------------
Assumption and Release Agreement among Embassy Suites, Hotel Inc. and the
Agent, substantially in the form of Schedule 11.3(b).
----------------
"Hotel Inc. Business" means the "Hotel Business" described under the
-------------------
subheading "PHC Business and Properties" under the heading "The
Distribution" in the Proxy Statement.
"Indebtedness" of any Person shall mean, without duplication, (i) all
------------
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered
into in the ordinary course of business), (iv) all obligations, including,
without limitation, intercompany items, of such Person issued or assumed as
the deferred purchase price of Property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business)
which would appear as liabilities on a balance sheet of such Person, (v)
all obligations of such Person under take-or-pay arrangements or under
commodities agreements, (vi) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds or
production from, Property owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed, (vii) all Guaranty
Obligations of such Person, (viii) the principal portion of all obligations
of such Person under Capital Leases, (ix) all obligations of such Person in
respect of interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements, (x) the maximum amount
of all letters of credit issued or bankers' acceptances facilities created
for the account of such Person and, without duplication, all drafts drawn
thereunder (to the extent unreimbursed), and (xi) the amount of any
Disqualified Stock. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner (except to the extent any such Indebtedness is Non-Recourse
Indebtedness).
"Insolvency" means with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of Section
4245(b)(i) of ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
---------
13
"Interbank Offered Rate" means, with respect to any Eurodollar Loan
----------------------
for the Interest Period applicable thereto, (i) the interest rate per annum
for deposits in Dollars for a maturity most nearly comparable to such
Interest Period which appears on page 3740 or 3750, as applicable, of the
Dow Jones Telerate Screen as of 11:00 A.M. (Charlotte, North Carolina time)
on the day that is two (2) Business Days prior to the first day of such
Interest Period or (ii) if such a rate does not appear on page 3750 of the
Dow Jones Telerate Screen an interest rate per annum (rounded to the next
1/1000th of 1%) equal to the rate at which deposits in Dollars
approximately equal in principal amount to the Eurodollar Loan of the
Agent, in its capacity as a Lender, included in such Eurodollar Loan, and
for a maturity comparable to such Interest Period are offered to the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 A.M. (London time) on the
date that is two (2) Business Days prior to the first day of such Interest
Period. If no such offers or quotes are generally available for such
amount, then the Agent shall be entitled to determine the Eurodollar Rate
by estimating in its reasonable judgment the per annum rate (as described
above) that would be applicable if such quote or offers were generally
available.
"Intercompany Indebtedness" means any Indebtedness of the Parent
-------------------------
Company, the Borrower or any of their respective Subsidiaries which is
owing to another of such Persons.
"Interest Payment Date" means (i) as to any Base Rate Loan, the last
---------------------
day of each March, June, September and December, the date of repayment of
principal of such Loan and the Termination Date, (ii) as to any Eurodollar
Loan or any Competitive Loan, the last day of each Interest Period for such
Loan and the Termination Date or the Term Loan Maturity Date, if applicable
and in addition where the applicable Interest Period is more than 3 months,
then also on the date 3 months from the beginning of the Interest Period,
and each 3 months thereafter. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case of Eurodollar
------ ----
Loans where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day.
"Interest Period" means (i) with respect to any Eurodollar Loan, a
---------------
period of one, two, three or six months' duration, as the Borrower may
elect, commencing in each case on the date of the borrowing (including
extensions and conversions) and (ii) with respect to any Competitive Loan,
a period beginning on the date of borrowing and ending on the date
specified in the respective Competitive Bid whereby the offer to make such
Competitive Loan was extended, which
14
shall be not less than 7 days nor more than 180 days' duration; provided,
--------
however, (A) if any Interest Period would end on a day which is not a
-------
Business Day, such Interest Period shall be extended to the next succeeding
Business Day (except that in the case of Eurodollar Loans, where the next
succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (B) no Interest Period shall extend
beyond the Termination Date or if the Borrower has elected to amortize the
payment of the principal balance of Committed Revolving Loans and
Competitive Loans outstanding as of the Termination Date, in accordance
with the provisions of Section 2.6, then no Interest Period may extend
beyond a Term Loan Amortization Date (including the Term Loan Maturity
Date) unless the portion of Term Loans consisting of Base Rate Loans
together with the Eurodollar Loans and Competitive Loans with Interest
Periods expiring prior to or concurrently with the date such Term Loan
Amortization Date is due, is at least equal to the amount of such principal
amortization payment due on such date; and (C) in the case of Eurodollar
Loans, where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall, subject to clause (A) above,
end on the last Business Day of such calendar month.
"Interest Rate Protection Agreement" means any interest rate swap
----------------------------------
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect against fluctuations in interest rates.
"Investment", in any Person, shall mean any loan or advance to such
----------
Person, any purchase or other acquisition of any capital stock, warrants,
rights, options, obligations or other securities of such Person, or any
capital contribution to such Person or any other similar investment in such
Person.
"Joinder Agreement" means a Joinder Agreement substantially in the
-----------------
form of Schedule 7.12 hereto, executed and delivered by an Additional
-------------
Credit Party in accordance with the provisions of Section 7.12.
"Joint Venture" means any corporation, general or limited partnership
-------------
or limited liability company in which the Parent Company, the Borrower or
any of their respective Subsidiaries is a shareholder, partner or member
which is not a Subsidiary of the Parent Company or the Borrower.
"Lenders" means each of the Persons identified as a "Lender" on the
-------
signature pages hereto, and each Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
15
"Level I Period" means a period during which (i) the Parent Company
--------------
and its consolidated Subsidiaries have an actual or implied senior
unsecured long-term debt rating (without third party credit enhancement) of
"BBB+" or better by S&P or "Baa1" or better by Moody's, or (ii) the
Leverage Ratio for the period of four consecutive fiscal quarters ending on
the last day of the most recent fiscal quarter shall be less than 1.25:1.0.
"Level II Period" means a period during which a Level I Period does
---------------
not exist and (i) the Parent Company and its consolidated Subsidiaries have
an actual or implied senior unsecured long-term debt rating (without third
party credit enhancement) of "BBB" or better by S&P or "Baa2" or better by
Moody's, or (ii) the Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the most recent fiscal quarter
shall be less than 1.75:1.0 but greater than or equal to 1.25:1.0.
"Level III Period" means a period during which neither a Level I
----------------
Period nor a Level II Period shall exist and (i) the Parent Company and its
consolidated Subsidiaries have an actual or implied senior unsecured long-
term debt rating (without third party credit enhancement) of "BBB-" or
better by S&P or "Baa3" or better by Moody's, or (ii) the Leverage Ratio
for the period of four consecutive fiscal quarters ending on the last day
of the most recent fiscal quarter shall be less than 2.25:1.0 but greater
than or equal to 1.75:1.0.
"Level IV Period" means a period during which none of a Level I
---------------
Period, a Level II Period nor a Level III Period shall exist and (i) the
Parent Company and its consolidated Subsidiaries have an actual or implied
senior unsecured long-term debt rating (without third party credit
enhancement) of "BB+" or better by S&P or "Ba1" or better by Moody's, or
(ii) the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the most recent fiscal quarter shall be less than
2.75:1.0 but greater than or equal to 2.25:1.0.
"Level V Period" means a period during which none of a Level I Period,
--------------
a Level II Period, a Level III Period nor a Level IV Period shall exist and
(i) the Parent Company and its consolidated Subsidiaries have an actual or
implied senior unsecured long-term debt rating (without third party credit
enhancement) of "BB" or worse by S&P or "Ba2" or worse by Moody's, or (ii)
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the most recent fiscal quarter shall be greater
than or equal to 2.75:1.0.
"Leverage Ratio" means, for any period, the ratio of Consolidated
--------------
Funded Debt as of the end of such period to Consolidated Adjusted EBITDA
for such period.
16
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the
Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means a Committed Revolving Loan and/or a
---- -----
Competitive Loan, as appropriate.
"Material Adverse Effect" shall mean a material adverse effect on (i)
-----------------------
the financial condition, operations, business or prospects of the Parent
Company, the Borrower and their Subsidiaries taken as a whole, (ii) the
ability of the Borrower and the Guarantors taken as a whole to perform any
material obligation under the Credit Documents or (iii) the material rights
and remedies of the Agent and the Lenders under the Credit Documents.
"Material Asset Sale" means the sale, lease or other disposition of an
-------------------
asset (other than non-hotel property or assets sold, leased or disposed of
in the normal course of business) which either (i) together with all other
such sales, leases or other dispositions of assets in the then current
calendar year has a net book value in excess of ten percent (10%) of the
consolidated assets of the Parent Company and its Subsidiaries at such
time, or (ii) together with all other such sales, leases or other
dispositions of assets since the Closing Date has a net book value in
excess of twenty-five percent (25%) of the consolidated assets of the
Parent Company and its Subsidiaries at such time; provided, however, that
-------- -------
leases with a term of ten (10) years or less or which demise less than 100%
of the subject asset shall not constitute leases of assets for purposes of
this subparagraph. An Investment shall not constitute a "disposition" for
purposes of this definition.
"Material Environmental Amount" means any amount payable by the Parent
-----------------------------
Company, the Borrower or their Subsidiaries not subject to payment or
reimbursement by another Person in respect of or under any Environmental
Law for remedial costs, compliance costs, compensatory damages, punitive
damages, fines, penalties or any combination thereof, that has a Material
Adverse Effect.
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
17
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.
"NationsBank" means NationsBank, N.A. (Carolinas) and its successors.
-----------
"Net Sale Proceeds" means for any Material Asset Sale, the gross cash
-----------------
proceeds (including any cash received by way of deferred payment pursuant
to a promissory note receivable or otherwise, but only as and when
received) received from such Material Asset Sale, net of reasonable
transaction costs and payments of unassumed liabilities relating to the
asset sold at the time of, or within sixty (60) days after, the date of
such Material Asset Sale and the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness
owing under the Hotel Facility) which is secured by the respective assets
which were sold.
"Non-Excluded Taxes" means such term as defined in Section 3.9(a).
------------------
"Non-Guarantor Subsidiaries" means such term as defined in Section
--------------------------
7.12.
"Non-Investment Grade" means debt or equity interests which are not
--------------------
rated by S&P or Moody's or have a rating of less than "BBB-" by S&P or
"Baa3" by Moody's.
"Non-Recourse Indebtedness" means Indebtedness with respect to which
-------------------------
recourse for payment is limited to specific assets encumbered by a Lien
securing such Indebtedness; provided, however, that personal recourse of a
-------- -------
holder of Indebtedness against any obligor with respect thereto for fraud,
misrepresentation, misapplication of cash, waste and other circumstances
customarily excluded from non-recourse provisions in non-recourse financing
of real estate shall not, by itself, prevent any Indebtedness from being
characterized as Non-Recourse Indebtedness.
"Note" or "Notes" means the Committed Revolving Notes and/or the
---- -----
Competitive Notes, collectively, separately or individually, as
appropriate.
"Notice of Borrowing" means the written notice of borrowing as
-------------------
referenced and defined in Section 2.1(b)(i).
18
"Notice of Conversion/Extension" means the written notice of extension
------------------------------
or conversion as referenced and defined in Section 3.2.
"Obligations" means the Loans.
-----------
"PBGC" means the Pension Benefit Guaranty Corporation established
----
under ERISA, and any successor thereto.
"Parent Company" means, prior to the time of effectiveness of the
--------------
Assignment and Assumption, Promus Co., and after the time of effectiveness
of the Assignment and Assumption, Hotel Corp.
"Participation Interest" means the purchase by a Lender of a
----------------------
participation interest in Committed Revolving Loans as provided in Section
3.12.
"Permitted Liens" shall mean:
---------------
(i) Liens in favor of the Agent on behalf of the Lenders
hereunder and under the Tranche A Credit Agreement;
(ii) Liens (other than Liens created or imposed by the PBGC
under ERISA) for taxes, assessments or governmental charges or levies
not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, provided that such
--------
Liens secure only amounts not yet due and payable or, if due and
payable, are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure, sale or loss on account
thereof);
(iv) Liens (other than Liens created or imposed by the PBGC
under 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, bids, leases,
operating, reciprocal easement or similar agreements, government
contracts, performance and
19
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) in respect of which the Parent
Company or any of its Subsidiaries shall in good faith be prosecuting
an appeal or proceedings for review in respect of which there shall
have been secured a subsisting stay of execution pending such appeal
or proceeding;
(vi) easements, rights-of-way, restrictions (including
zoning restrictions and operating, reciprocal easement or similar
agreements), and minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect,
impairing the use of the encumbered Property for its intended
purposes;
(vii) Liens on Property securing purchase money Indebtedness
(including Capital Leases) to the extent permitted under Section
8.1(c), provided that any such Lien attaches to such Property
--------
concurrently with or within 90 days after the acquisition thereof;
(viii) leases or subleases granted to others not interfering
in any material respect with the business of the Borrower or any of
its Subsidiaries;
(ix) any interest or title of a lessor (including Liens and
underlying leases to which such lessor or its property may be subject)
under, and Liens arising from Uniform Commercial Code financing
statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by this Credit
Agreement;
(x) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.5;
(xi) Liens on assets at the time such assets are acquired in
accordance with Section 8.4(a) or 8.4(c), including continuations or
renewals thereof in connection with the extension, renewal, refunding
or refinancing of the Indebtedness
20
secured thereby; provided that such Liens are not created in
--------
contemplation of such acquisition;
(xii) Liens on assets of any Person at the time such Person
becomes a Subsidiary in accordance with Section 8.4(a) or 8.5,
including continuations or renewals thereof in connection with the
extension, renewal, refunding or refinancing of the Indebtedness
secured thereby; provided that such Liens are not created in
--------
contemplation of such Person becoming a Subsidiary;
(xiii) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions;
(xiv) Liens existing as of the Closing Date and set forth on
Schedule 8.2, including continuations or renewals thereof in
------------
connection with the extension, renewal, refunding or refinancing of
the Indebtedness secured thereby to the extent permitted under Section
8.1; provided that no such Lien shall at any time be extended to or
--------
cover any property of the Parent Company, the Borrower or any of their
respective Subsidiaries other than the property subject thereto on the
Closing Date, except by virtue of an after acquired property provision
set forth in the current documentation of such Liens;
(xv) Liens securing Non-Recourse Indebtedness of any
Specified Subsidiaries permitted pursuant to Section 8.1(k) hereof so
long as such Liens only encumber the hotel properties owned by the
Specified Subsidiary being developed or financed with such Non-
Recourse Indebtedness, including any real property and furniture,
fixtures and equipment related thereto, it being understood and agreed
that such assets of such Specified Subsidiary also may secure Non-
Recourse Indebtedness incurred by other Subsidiaries or Joint Ventures
pursuant to Section 8.1(k);
(xvi) Liens securing any Interest Rate Protection Agreements
or Currency Protection Agreements entered into, in either case, with a
Lender or an Affiliate of a Lender hereunder, permitted by Section
8.1(d), which obligations may be equally and ratably secured with the
Obligations;
(xviii) Liens on the Parent Company's, the Borrower's or any of
their respective Subsidiaries' equity interest in any Specified
Subsidiary or Joint Venture so long as such Liens only secure
Indebtedness of such Specified Subsidiary or Joint Venture, it being
understood and agreed that such equity interests in any Specified
Subsidiaries or Joint Ventures also may secure Indebtedness incurred
by other Specified Subsidiaries or Joint Ventures permitted under
Section 8.1; and
(xix) Liens not otherwise permitted hereunder securing
amounts in an aggregate principal amount not to exceed $10,000,000 at
any one time outstanding.
21
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan as defined in Section 3(3) of
----
ERISA which is not a Multiemployer Plan and in respect of which the
Borrower or a Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.
"Plan Reorganization" means with respect to any Multiemployer Plan,
-------------------
the condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Pledge Agreement" means the Pledge Agreement substantially in the
----------------
form of Schedule 5.1(a) attached hereto, dated as of the Closing Date and
---------------
executed and delivered by Hotel Corp., Hotel Inc. and certain other Credit
Parties existing after the Assignment and Assumption, in favor of the
Agent, for the benefit of the Lenders, to secure their obligations under
the Credit Documents, as amended, modified, extended, renewed or replaced
from time to time.
"Prime Rate" means the per annum rate of interest established and
----------
announced from time to time by the Agent at its principal office in
Charlotte, North Carolina as its Prime Rate. Any change in the interest
rate resulting from a change in the Prime Rate shall become effective as of
12:01 a.m. of the Business Day on which each change in the Prime Rate is
announced by the Agent. The Prime Rate is a reference rate used by the
Agent in determining interest rates on certain loans and is not intended to
be the lowest rate of interest charged on any extension of credit to any
debtor.
"Pro Forma Basis" shall mean, with respect to any transaction, that
---------------
such transaction shall be deemed to have occurred as of the first day of
the four fiscal-quarter period ending as of the last day of the fiscal
quarter most recently ended preceding the date of such transaction with
respect to which the Agent has received annual or quarterly financial
information, accompanied by an officer's certificate, in accordance with
the provisions of Section 7.1. As used herein, "transaction" shall mean
any merger or consolidation as referred to in Section 8.4(a) and 8.4(c).
"Projections" means such term as is defined in Section 6.1(c).
-----------
"Promus Co." means The Promus Companies Incorporated, a Delaware
----------
corporation and an initial Guarantor under this Credit Agreement subject to
release upon satisfaction of the conditions set out in Section 5.2.
22
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Proxy Statement" means the Proxy Statement dated April 25, 1995 of
---------------
Promus Co. describing the Distribution and mailed to the shareholders of
Promus Co. for purposes of its May 26, 1995 shareholders meeting.
"Qualified Stock" means any capital stock which, by its terms (or by
---------------
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder thereof, in whole or in part on,
or on or after, or is exchangeable for debt securities of the Parent
Company or any of its Subsidiaries on or after, the first anniversary of
the Termination Date under the Tranche A Credit Agreement.
"Regulation D, G, T, U, or X" means Regulation D, G, T, U or X,
---------------------------
respectively, 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.
"Rentals" means, as of the date of determination, all fixed payments
-------
(including as such all payments which the lessee is obligated to make to
the lessor on termination of the lease or surrender of the property)
payable by a Person as lessee or sublessee under a lease of real or
personal property, but shall be exclusive of any amounts required to be
paid (whether designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross rents.
"Reorganization" means such term as defined in the Recitals.
--------------
"Reorganization Agreement" means the Distribution Agreement between
------------------------
Embassy Suites and Hotel Inc., as more particularly described in the Proxy
Statement.
"Reorganization Documents" means, collectively, the Reorganization
------------------------
Agreement and the Tax Sharing Agreement, the Trademark Assignment Agreement
and the Employee Benefits Allocation Agreement, as such terms are defined
in the Proxy Statement.
"Reportable Event" means a "reportable event" as defined in Section
----------------
4043(b) of ERISA with respect to which the notice requirements to the PBGC
have not been waived.
23
"Required Lenders" means Lenders holding in the aggregate at least
----------------
fifty-one percent (51%) of the Commitments, or if the aggregate Commitments
have been terminated, Lenders in the aggregate holding at least fifty-one
(51%) of the principal amount of Obligations then outstanding; provided,
--------
however, that if any Lender shall be a Defaulting Lender at such time then
-------
there shall be excluded from the determination of Required Lenders the
amount of such Defaulting Lender's Commitments or Obligations, as
appropriate.
"Requirements of Law" means, as to any Person, the certificate of
-------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its material property
or assets.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment of such Lender to make Committed Revolving Loans in an aggregate
principal amount at any time outstanding up to such Lender's Revolving
Committed Amount as specified in Schedule 2.1(a), as such amount may be
---------------
reduced from time to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means, for each Lender, a fraction
-------------------------------
(expressed as a percentage) the numerator of which is the Revolving
Commitment of such Lender at such time and the denominator of which is the
Revolving Committed Amount at such time, provided that if the Revolving
--------
Commitment Percentage of any Lender is to be determined after the Revolving
Committed Amount has been terminated, then the Revolving Commitment
Percentage of such Lender shall be determined immediately prior (and
without giving effect) to such termination.
"Revolving Committed Amount" means (i) prior to the Termination Date,
--------------------------
collectively, the aggregate amount of all of the Revolving Commitments as
referenced in Section 2.1(a) and, individually, the amount of each Lender's
Revolving Commitment as specified in Schedule 2.1(a) and (ii) on or after
---------------
the Termination Date, as provided in Section 2.6(a).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
---
Hill, Inc., or any successor or assignee of the business of such division
in the business of rating securities.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA.
"Solvent" and "Solvency" means with respect to any Person on a
------- --------
particular date, the condition that on such
24
date, (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the
assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become
absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (d) such Person is
not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small amount of capital.
"Specified Subsidiary" means any Subsidiary of the Borrower so long as
--------------------
such Subsidiary has no material assets other than the hotel property to be
developed and financed with Non-Recourse Indebtedness incurred pursuant to
Section 8.1(k).
"Subject Properties" means such term as defined in Section 6.17(a).
------------------
"Subordinated Debt" means such term as defined in Section 8.6.
-----------------
"Subsidiary" means, as to any Person, (a) 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, 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 (b) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries has more than 50% of the equity interest at
any time and in which such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
such partnership, association, joint venture or other entity, whether
through the ownership of equity interests, by contract or otherwise.
Unless otherwise specified, any reference to a Subsidiary is intended as a
reference to a Subsidiary of the Borrower.
"Term Loan Amortization Date" means such term as defined in Section
---------------------------
2.6(a).
"Term Loan Maturity Date" means such term as defined in Section
-----------------------
2.6(a).
"Term Loans" means such term as defined in Section 2.6(a).
----------
25
"Termination Date" means such term as defined in Section 2.1(a).
----------------
"Third Party Investment Basket Amount" means such term as defined in
------------------------------------
Section 8.1(1).
"Threshold Requirement" means such term as defined in Section 7.12.
---------------------
"Tranche A Credit Agreement" means that Tranche A Credit Agreement
--------------------------
dated as of the date hereof among Embassy Suites, Promus Co., certain
subsidiaries as now or hereafter may become a party thereto, the lenders
named therein and party thereto and NationsBank, N.A. (Carolinas), as
Agent, as amended, modified, extended, renewed or restated from time to
time.
"Tranche B Credit Agreement" means this Credit Agreement.
--------------------------
"Underfunding" means an excess of all accrued benefits under a Plan
------------
(based on those assumptions used to fund such Plan), determined as of the
most recent annual valuation date, over the value of the assets of such
Plan allocable to such accrued benefits.
"Wholly Owned Subsidiary" means, as to any Person, any Subsidiary 100%
-----------------------
of whose voting stock or other equity interests and control is at the time
owned by such Person directly or indirectly through other Wholly Owned
Subsidiaries.
1.2 Computation of Time Periods. For purposes of computation of periods
---------------------------
of time hereunder, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding."
1.3 Accounting Terms. The financial statements to be furnished by the
----------------
Borrower 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
Agent); provided, that, except as otherwise specifically provided herein, all
--------
computations determining compliance with Section 7.11 shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements delivered to the Agent on or before the Closing Date.
26
SECTION 2
CREDIT FACILITIES
-----------------
2.1 Committed Revolving Loans.
-------------------------
(a) Revolving Commitment. Subject to the terms and conditions hereof
--------------------
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make revolving credit loans ("Committed
---------
Revolving Loans") to the Borrower from time to time from the Closing Date
---------------
until the day 364 days after the date hereof, or such earlier date as the
Revolving Commitments shall have been terminated as provided herein (such
date, as extended, if extended from time to time in the sole discretion of
the Lenders as provided herein, hereinafter being referred to as the
"Termination Date") for the purposes hereinafter set forth; provided,
---------------- --------
however, that (i) with regard to each Lender individually, such Lender's
-------
share of outstanding Committed Revolving Loans (other than Committed
Revolving Loans made for the purpose of repaying Competitive Loans but not
yet so applied) shall not exceed such Lender's Revolving Committed Amount,
and (ii) with regard to the Lenders collectively, the sum of the aggregate
amount of outstanding Committed Revolving Loans (other than Committed
Revolving Loans made for the purpose of repaying Competitive Loans but not
yet so applied) plus the aggregate amount of Competitive Loans (other than
----
Competitive Loans made for the purpose of repaying Committed Revolving
Loans but not yet so applied) shall not exceed FIFTY MILLION DOLLARS
($50,000,000) (as such aggregate maximum amount may be reduced from time to
time, the "Revolving Committed Amount"). Committed Revolving Loans may
--------------------------
consist of Base Rate Loans or Eurodollar Loans, or a combination thereof,
as the Borrower may request, and may be repaid, prepaid and reborrowed in
accordance with the provisions hereof; provided, however, that no more than
-------- -------
ten (10) Eurodollar Loans shall be outstanding hereunder at any time. For
purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same
date and have the same duration, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined at
the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period.
(b) Committed Revolving Loan Borrowings.
-----------------------------------
(i) Notice of Borrowing. The Borrower shall request a
-------------------
Committed Revolving Loan borrowing by written notice (or
telephone notice promptly confirmed in writing) to the Agent not
later than 11:00 A.M. (Charlotte, North Carolina time) on the
Business Day of the requested borrowing in the case of Base Rate
Loans, and on the third Business
27
Day prior to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Committed Revolving Loan is
requested, (B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be borrowed, and
(D) whether the borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if Eurodollar Loans are
requested, the Interest Period(s) therefor. A form of Notice of
Borrowing (a "Notice of Borrowing") is attached as Schedule 2.1(b)(i).
------------------- ------------------
If the Borrower shall fail to specify in any such Notice of Borrowing
(I) an applicable Interest Period in the case of a Eurodollar Loan,
then such notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Committed Revolving Loan
requested, then such notice shall be deemed to be a request for a Base
Rate Loan hereunder. Promptly upon receipt of each Notice of
Borrowing, the Agent shall give notice to each Lender of the contents
thereof and each such Lender's Revolving Commitment Percentage
thereof.
(ii) Minimum Amounts. Each Committed Revolving Loan
---------------
borrowing shall be in a minimum aggregate amount of $5,000,000
and integral multiples of $1,000,000 in excess thereof (or the
remaining available amount of the Revolving Commitment, if less,
provided, however, no Eurodollar Loan shall be permitted for a
-------- -------
principal amount less than $5,000,000).
(iii) Advances. Each Lender will make its Revolving
--------
Commitment Percentage of each Committed Revolving Loan borrowing
available to the Agent for the account of the Borrower at the
office of the Agent specified in Schedule 11.1, or at such other
-------------
office as the Agent may designate in writing, by 10:00 A.M.
(Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars (or by 1:00 P.M.
(Charlotte, North Carolina time) on such date if the applicable
Notice of Borrowing is received on the same date) and in funds
immediately available to the Agent. Such borrowing will then be
made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.
(c) Repayment. The principal amount of all Committed Revolving Loans
---------
shall be due and payable in full on the
28
Termination Date except as otherwise provided in Section 2.6.
(d) Interest. Subject to the provisions of Section 3.1, Committed
--------
Revolving Loans shall bear interest at a per annum rate equal to:
(i) Base Rate Loans. During such periods as Committed
---------------
Revolving Loans shall be comprised of Base Rate Loans, the sum of
the Base Rate plus the Applicable Percentage; and
----
(ii) Eurodollar Loans. During such periods as Committed
----------------
Revolving Loans shall be comprised of Eurodollar Loans, the sum
of the Eurodollar Rate plus the Applicable Percentage.
----
Interest on Committed Revolving Loans shall be payable in arrears on each
Interest Payment Date.
(e) Committed Revolving Notes. The Committed Revolving Loans made by
-------------------------
each Lender shall be evidenced by a duly executed promissory note of the
Borrower to each Lender substantially in the form of Schedule 2.1(e).
---------------
2.2 [Intentionally Left Blank].
2.3 [Intentionally Left Blank].
2.4 Competitive Loan Subfacility.
----------------------------
(a) Competitive Loans. Subject to the terms and conditions and
-----------------
relying upon the representations and warranties herein set forth, from such
time as the Borrower shall have attained, and for so long as the Borrower
shall maintain, a senior unsecured long-term debt rating of "BBB-" or
better by S&P or "Baa3" or better by Moody's, the Borrower may, from time
to time from the Closing Date until the Termination Date, request and each
Lender may, in its sole discretion, agree to make, Competitive Loans to the
Borrower; provided, however, (i) the aggregate amount of Competitive Loans
-------- -------
shall not at any time exceed the lesser of FIFTY MILLION DOLLARS
------
($50,000,000) or the Revolving Committed Amount (the "Competitive Loan
----------------
Maximum Amount"), and (ii) the sum of the aggregate amount of Committed
--------------
Revolving Loans (other than Committed Revolving Loans made for the purpose
of repaying Competitive Loans but not yet so applied) plus the aggregate
----
amount of Competitive Loans (other than Competitive Loans made for the
purpose of repaying Committed Revolving Loans but not yet so applied) shall
not at any time exceed the aggregate Revolving Committed Amount. Each
Competitive Loan shall be not less than $5,000,000 in the aggregate and
integral multiples of $1,000,000 in excess thereof (or the remaining
available portion of the Competitive Loan Maximum Amount, if less).
29
Competitive Loans may be repaid and reborrowed in accordance with the
provisions hereof.
(b) Competitive Bid Requests. The Borrower may solicit Competitive
------------------------
Bids by delivery of a Competitive Bid Request substantially in the form of
Schedule 2.4(b)-1 to the Agent by 12:00 Noon (Charlotte, North Carolina
-----------------
time) on a Business Day not less than two (2) nor more than ten (10)
Business Days prior to the date of a requested Competitive Loan borrowing.
A Competitive Bid Request shall specify (i) the date of the requested
Competitive Loan borrowing (which shall be a Business Day), (ii) the amount
of the requested Competitive Loan borrowing and (iii) the applicable
Interest Periods requested and shall be accompanied by payment of the
Competitive Bid Request Fee, if any. The Agent shall promptly notify the
Lenders of its receipt of a Competitive Bid Request and the contents
thereof and invite the Lenders to submit Competitive Bids in response
thereto. A form of such notice is provided in Schedule 2.4(b)-2. No more
-----------------
than three Competitive Bid Requests (e.g., the Borrower may request
Competitive Bids for no more than three different Interest Periods at a
time) shall be submitted at any one time and Competitive Bid Requests may
be made no more frequently than once every ten (10) Business Days.
(c) Competitive Bid Procedure. Each Lender may, in its sole
-------------------------
discretion, make one or more Competitive Bids to the Borrower in response
to a Competitive Bid Request. Each Competitive Bid must be received by the
Agent not later than 10:00 A.M. (Charlotte, North Carolina time) on the
proposed date of a Competitive Loan borrowing; provided, however, that
-------- -------
should the Agent, in its capacity as a Lender, desire to submit a
Competitive Bid it shall notify the Borrower of its Competitive Bid and the
terms thereof not later than 9:30 A.M. (Charlotte, North Carolina time) on
the proposed date of a Competitive Loan borrowing. A Lender may offer to
make all or part of the requested Competitive Loan borrowing and may submit
multiple Competitive Bids in response to a Competitive Bid Request. The
Competitive Bid shall specify (i) the particular Competitive Bid Request as
to which the Competitive Bid is submitted, (ii) the minimum (which shall be
not less than $1,000,000 and integral multiples of $500,000 in excess
thereof) and maximum principal amounts of the requested Competitive Loan or
Loans as to which the Lender is willing to make, and (iii) the applicable
interest rate or rates and Interest Period or Periods therefor. A form of
such Competitive Bid is provided in Schedule 2.4(c). A Competitive Bid
---------------
submitted by a Lender in accordance with the provisions hereof shall be
irrevocable (absent manifest error). The Agent shall promptly notify the
Borrower of all Competitive Bids made and the terms thereof. The Agent
shall send a copy of each of the Competitive Bids to the Borrower for its
records as soon as practicable.
30
(d) Acceptance of Competitive Bids. The Borrower may, in its sole
------------------------------
and absolute discretion, subject only to the provisions of this subsection
(d), accept or refuse any Competitive Bid offered to it. To accept a
Competitive Bid, the Borrower shall give written notification (or telephone
notice promptly confirmed in writing) of its acceptance of any or all such
Competitive Bids to the Agent by 11:00 A.M. (Charlotte, North Carolina
time) on the proposed date of a Competitive Loan advance; provided,
--------
however, (i) the failure by the Borrower to give timely notice of its
-------
acceptance of a Competitive Bid shall be deemed to be a refusal thereof,
(ii) the Borrower may accept Competitive Bids only in ascending order of
rates, (iii) the aggregate amount of Competitive Bids accepted by the
Borrower shall not exceed the principal amount specified in the Competitive
Bid Request, (iv) the Borrower may accept a portion of a Competitive Bid in
the event, and to the extent, acceptance of the entire amount thereof would
cause the Borrower to exceed the principal amount specified in the
Competitive Bid Request, subject however to the minimum amounts provided
herein (and provided that where two or more such Lenders may submit such a
Competitive Bid at the same such Competitive Bid Rate, then pro rata
between or among such Lenders) and (v) no bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal
amount of $1,000,000 and integral multiples of $500,000 in excess thereof,
except that where a portion of a Competitive Bid is accepted in accordance
with the provisions of subsection (iv) hereof, then in a minimum principal
amount of $100,000 and integral multiples thereof (but not in any event
less than the minimum amount specified in the Competitive Bid), and in
calculating the pro rata allocation of acceptances of portions of multiple
bids at a particular Competitive Bid Rate pursuant to subsection (iv)
hereof, the amounts shall be rounded to integral multiples of $100,000 in a
manner which shall be in the discretion of the Borrower. A notice of
acceptance of a Competitive Bid given by the Borrower in accordance with
the provisions hereof shall be irrevocable. The Agent shall, not later
than 12:00 Noon (Charlotte, North Carolina time) on the proposed date of a
Competitive Loan borrowing, notify each bidding Lender whether or not its
Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate), and each successful bidder will thereupon become
bound, subject to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been accepted.
(e) Funding of Competitive Loans. Each Lender which is to make a
----------------------------
Competitive Loan shall make its Competitive Loan borrowing available to the
Agent for the account of the Borrower at the office of the Agent specified
in Schedule 11.1, or at such other office as the Agent may designate in
-------------
writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date
specified in the Competitive Bid Request in Dollars and in funds
immediately available to the Agent. Such
31
borrowing will then be made available to the Borrower by crediting the
account of the Borrower on the books of such office with the aggregate of
the amount made available to the Agent by the Competitive Loan Lenders and
in like funds as received by the Agent.
(f) Maturity of Competitive Loans. Each Competitive Loan shall
-----------------------------
mature and be due and payable in full on the last day of the Interest
Period applicable thereto. Unless the Borrower shall give notice to the
Agent otherwise, the Borrower shall be deemed to have requested a Committed
Revolving Loan borrowing in the amount of the maturing Competitive Loan,
the proceeds of which will be used to repay such Competitive Loan.
(g) Interest on Competitive Loans. Subject to the provisions of
-----------------------------
Section 3.1, Competitive Loans shall bear interest in each case at the
Competitive Bid Rate applicable thereto. Interest on Competitive Loans
shall be payable in arrears on each Interest Payment Date.
(h) Competitive Loan Notes. The Competitive Loans shall be evidenced
----------------------
by a duly executed promissory note of the Borrower to each Lender in an
original principal amount equal to the Competitive Loan Maximum Amount and
substantially in the form of Schedule 2.4(h).
---------------
2.5 Extension of Termination Date. The Borrower may, within 90 days prior
-----------------------------
to the Termination Date, by notice to the Agent, make written request of the
Lenders to extend the Termination Date for an additional period of 364 days.
The Agent will give prompt notice to each of the Lenders of its receipt of any
such request for extension of the Termination Date. Each Lender shall make a
determination not later than 30 days prior to the then applicable Termination
Date as to whether or not it will agree to extend the Termination Date as
requested; provided, however, that failure by any Lender to make a timely
-------- -------
response to the Borrower's request for extension of the Termination Date shall
be deemed to constitute a refusal by the Lender to extend the Termination Date.
If, in response to a request for an extension of the Termination Date, one or
more Lenders shall fail to agree to the requested extension (the "Disapproving
------------
Lenders"), then the Borrower may, at its own expense with the assistance of the
- -------
Agent, make arrangements for a Replacement Lender in accordance with Section
3.15 to acquire, in whole or in part, the Obligations and Commitments of the
Disapproving Lenders.
2.6 Amortization of Loans Outstanding at the Termination Date.
---------------------------------------------------------
(a) Election to Amortize. The Borrower shall have the option to pay all
--------------------
or a portion of the outstanding principal balance of the Committed Revolving
Loans and Competitive Loans outstanding as of the Termination Date in eight (8)
equal consecutive quarterly installments on the last day of each March,
32
June, September and December commencing with the first of such dates to occur
after the Termination Date (each such date referred to herein as a "Term Loan
---------
Amortization Date" and the last such date referred to herein as the "Term Loan
- ----------------- ---------
Maturity Date"). The Borrower may exercise such option by giving written notice
- -------------
to the Agent at least fifteen (15) days prior to the Termination Date. If the
Agent does not receive such notification within the time period specified in the
preceding sentence, the principal amount of all Committed Revolving Loans and
Competitive Loans shall be due and payable on the Termination Date. All
Committed Revolving Loans and Competitive Loans remaining outstanding after the
Termination Date in accordance with the terms of this Section 2.6 shall be
referred to collectively as the "Term Loans". The Term Loans may be comprised
----------
of Base Rate Loans, Eurodollar Loans and Competitive Loans as the Borrower may
elect in accordance with the provisions hereof. Amounts repaid or prepaid on
the Term Loans may not be reborrowed by the Borrower. For purposes of this
Credit Agreement, where the Borrower shall elect to amortize amounts outstanding
under the Committed Revolving Loans and the Competitive Loans in accordance
herewith, then on and after the Termination Date, references herein to the
"Revolving Committed Amount" shall mean the aggregate principal amount of the
--------------------------
Term Loans as of the Termination Date less all payments made or required to be
----
made with respect to the Term Loans hereunder, whether scheduled amortization
payment, voluntary or optional prepayment, mandatory prepayment or otherwise.
(b) Interest on Term Loans. It is the intention of the parties hereto
----------------------
that the Term Loans bear interest on the same terms as apply to Committed
Revolving Loans and Competitive Loans prior to the Termination Date. In
furtherance thereof, the parties hereto agree that upon and after the occurrence
of the Termination Date and the Borrower's election to amortize the payment of
the outstanding principal balance of the Term Loans, the Borrower shall continue
to have all of the same rights as it had prior to the Termination Date to (i)
obtain Committed Revolving Loans under Section 2.1, (ii) obtain Competitive
Loans under Section 2.4 and (iii) extend and/or convert Committed Revolving
Loans under Section 3.2, in each case subject to the limitations of Section 2.6
(a).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------
3.1 Default Rate. Overdue principal and, to the extent permitted by law,
------------
overdue interest in respect of each Loan and any other overdue amount payable
hereunder or under the other Credit Documents shall bear interest, payable on
demand, at a per annum rate 2% greater than the rate which would otherwise be
applicable (or if no rate is applicable, whether in respect of interest, fees or
other amounts, then 2% greater than the Base Rate).
33
3.2 Extension and Conversion. The Borrower shall have the option, on any
------------------------
Business Day, to extend existing Committed Revolving Loans into a subsequent
permissible Interest Period or to convert Committed Revolving Loans of one type
into Committed Revolving Loans of another type; provided, however, that (i)
--------
except as provided in Section 3.7, Eurodollar Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto, (ii)
Eurodollar Loans may be extended, and Base Rate Loans may be converted into
Eurodollar Loans, only if no Default or Event of Default is in existence on the
date of extension or conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be subject to the terms of the definition of "Interest
--------
Period" set forth in Section 1.1 and shall be in such minimum amounts as
- ------
provided in Section 2.1(b)(ii), (iv) no more than ten (10) separate Eurodollar
Loans shall be outstanding hereunder at any one time and (v) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Competitive Loans may not be extended or converted pursuant to this
Section 3.2. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion (or telephone notice
promptly confirmed in writing) to the Agent prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of, in the case of the conversion of a
Eurodollar Loan into a Base Rate Loan, and on the third Business Day prior to,
in the case of the extension of a Eurodollar Loan as, or conversion of a Base
Rate Loan into, a Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or conversion, the
Committed Revolving Loans to be so extended or converted, the types of Committed
Revolving Loans into which such Committed Revolving Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect thereto.
Multiple Eurodollar Loans with Interest Periods ending on the same date may be
combined and extended as one Eurodollar Loan, and a single Eurodollar Loan may
be extended as multiple Eurodollar Loans. Each request for extension of, or
conversion into, Eurodollar Loans, shall constitute a representation and
warranty by the Borrower of the matters specified in Section 5.3(b), (c), (d)
and (e). In the event the Borrower fails to request extension or conversion of
any Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Loans shall be
automatically converted into Base Rate Loans at the end of their Interest
Period. The Agent shall give each Lender notice as promptly as practicable of
any such proposed extension or conversion affecting any Loan.
3.3 Reductions In Commitments and Prepayments.
-----------------------------------------
(a) Voluntary Reduction of Commitments. The Borrower may from time
----------------------------------
to time permanently reduce the Revolving Committed Amount in whole or in
part (in each such case in a minimum aggregate amount of $5,000,000 and
integral
34
multiples of $1,000,000 in excess thereof) upon three (3) Business Days'
prior written notice to the Agent.
(b) Mandatory Reduction of Commitments. On each date after the
----------------------------------
Closing Date upon which the Parent Company, the Borrower or any of their
respective Wholly Owned Subsidiaries receives proceeds from any Material
Asset Sale, the Revolving Committed Amount shall be reduced by an amount
equal to 100% of the Net Sale Proceeds thereof. Notwithstanding anything
contained herein to the contrary, reductions on account of Material Asset
Sales shall be applied (i) prior to the Termination Date, first to the
Revolving Committed Amount under the Tranche A Credit Agreement until such
Revolving Committed Amount is reduced to zero and terminated, and then to
the Revolving Committed Amount hereunder and (ii) after the Termination
Date, first to the Term Loans outstanding hereunder, if any, to Base Rate
Loans, Eurodollar Loans and Competitive Loans as the Borrower may specify,
or if the Borrower shall fail to specify then in the order provided in
Section 3.3(f), with any such payments being also applied to (and serving
to reduce) principal amortization payments due under Section 2.6(a) in
direct order of installment maturity, and then to the Revolving Committed
Amount under the Tranche A Credit Agreement.
(c) [Intentionally Left Blank].
(d) Termination of Individual Lender Commitment. In the event of
-------------------------------------------
certain refusals by a Lender to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement which
have been approved by the Required Lenders as provided in Section 11.6(b),
the Borrower shall have the right, upon three (3) Business Days' prior
written notice to the Agent, to terminate the Commitments of such Lender,
so long as (i) all Loans, together with accrued and unpaid interest, fees
and all other amounts owing to such Lender are repaid, and (ii) the amount
of Commitments (including for purposes hereof Commitments hereunder and
under the Tranche A Credit Agreement) terminated pursuant to this Section
3.3(d), after giving effect to termination of the Commitments of any such
non-consenting Lender, shall not exceed $70,000,000 in the aggregate. At
such time as any such termination shall become effective in accordance with
the terms hereof, such Lender shall no longer constitute a "Lender" for
purposes of this Agreement, except with respect to indemnifications under
this Agreement which shall survive as to such repaid Lender.
(e) Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole or in part from time to time without premium or
penalty; provided, however, that (i) Competitive Loans and Committed
-------- -------
Revolving Loans which are Eurodollar Loans may only be prepaid on three
Business Days'
35
prior written notice to the Agent and any prepayment of such Competitive
Loans or Eurodollar Loans will be subject to Section 3.10; and (ii) each
such partial prepayment of Loans shall be in the minimum principal amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof for
all Competitive Loans and Committed Revolving Loans.
(f) Mandatory Prepayments. If at any time (i) the sum of the
---------------------
aggregate amount of outstanding Committed Revolving Loans (other than
Committed Revolving Loans made for the purpose of repaying Competitive
Loans but not yet so applied) plus the aggregate amount of Competitive
----
Loans (other than Competitive Loans made for the purpose of repaying
Committed Revolving Loans but not yet so applied) shall exceed the
aggregate Revolving Committed Amount; or (ii) the aggregate amount of
Competitive Loans shall exceed the Competitive Loan Maximum Amount, the
Borrower shall immediately make payment on the Loans in an amount
sufficient to eliminate such excess. In the case of a mandatory prepayment
required on account of subsection (ii) above, the amount required to be
prepaid hereunder shall serve to temporarily reduce the Revolving Committed
Amount (for purposes of borrowing availability hereunder, but not for
purposes of computation of fees) by the amount of the payment required
until such time as the situation described in subsection (ii) above shall
no longer exist. Payments required to be made hereunder shall be applied
to Committed Revolving Loans or Competitive Loans, as appropriate, and with
respect to the types of Loans, first to Base Rate Loans and then to
Eurodollar Loans in direct order of their Interest Period maturities. To
the extent that the Borrower is required to make a mandatory prepayment of
the Loans which is required to be applied to Competitive Loans or to
Committed Revolving Loans which are Eurodollar Loans (following the
operation of the immediately preceding sentence) on a date other than the
last day of an Interest Period applicable thereto, at the option of the
Borrower, the Agent shall hold the amount of such prepayment in an account
in the Agent's sole dominion and control. The Agent shall invest the
amounts held by it in such account as directed by the Borrower. On the
last day of the Interest Period relating to the next-maturing Competitive
Loans or to Committed Revolving Loans which are Eurodollar Loans, as
appropriate, the Agent shall apply the amounts held by it in such account
to the prepayment of such maturing Loan and the Agent shall notify the
Borrower of the application of such amounts. Upon the direction of the
Borrower, the Agent shall apply any earnings on amounts held in such
account to the payment of accrued interest on such Loans or shall release
such earnings to the Borrower.
(g) Prepayment of Loans of Individual Lender. In the event of
----------------------------------------
certain refusals by a Lender to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement which
have been approved by the
36
Required Lenders as provided in Section 11.6(b), the Borrower shall have
the right, upon three (3) Business Days' prior written notice to the Agent,
to repay all Loans, together with accrued and unpaid interest, fees and all
other amounts owing to such Lender, each in accordance with said Section
11.6(b) so long as (A) the Commitments of such Lender are terminated
concurrently with such repayment in accordance with, and to the extent
permitted under, the provisions of Section 3.3(d), and (B) the consents
required by Section 11.6(b) in connection with such repayment have been
obtained.
(h) Notice. The Borrower will provide notice to the Agent of any
------
prepayment by 11:00 A.M. (Charlotte, North Carolina time) on the day prior
to the date of prepayment. Amounts paid on the Loans under subsection (e)
and (f)(i) hereof may be reborrowed in accordance with the provisions
hereof.
3.4 Fees.
----
(a) Commitment Fee. In consideration of the Commitments by the
--------------
Lenders hereunder, the Borrower agrees to pay to the Agent for the ratable
benefit of the Lenders a commitment fee (the "Commitment Fee") equal to the
--------------
Applicable Percentage per annum on (i) prior to the Termination Date, the
aggregate Revolving Committed Amount in effect from time to time for the
applicable period and (ii) after the Termination Date, the Term Loans
outstanding from time to time during the applicable period. The Commitment
Fee shall accrue from the date hereof and shall be payable quarterly in
arrears on the 15th day following the end of each calendar quarter and on
the Termination Date or, if the Borrower has elected to amortize payment of
the principal balance of Committed Revolving Loans and Competitive Loans
outstanding as of the Termination Date in accordance with the provisions of
Section 2.6(a), then the Term Loan Maturity Date, as appropriate.
(b) [Intentionally Left Blank].
(c) Administrative Fees. The Borrower agrees to pay to the Agent,
-------------------
for its own account, the administrative and other fees referred to in the
Agent's Fee Letter (the "Agent's Fees").
------------
(d) Competitive Bid Request Fee. The Borrower shall make payment to
---------------------------
the Agent of the applicable Competitive Bid Request Fee, if any,
concurrently with delivery of such Competitive Bid Request (whether or not
any Competitive Bid is offered by a Lender, accepted by the Borrower or
extended by the offering Lender pursuant thereto).
3.5 Capital Adequacy. If, after the date hereof, any Lender has
----------------
determined that the adoption after the date hereof of
37
any applicable law, rule or regulation regarding capital adequacy, or any change
therein after the date hereof, or any change in the interpretation or
administration thereof after the date hereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any request or
directive arising after the date hereof regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or will have the effect of reducing the rate of return on such
Lender's or its parent company's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Lender or
its parent company could have achieved but for such adoption or change (taking
into consideration such Lender's policies with respect to capital adequacy),
then, upon notice from such Lender, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender and its parent
company for such reduction; provided, however, that a Lender shall not be
-------- -------
entitled to avail itself of the benefit of this Section 3.5 to the extent that
any such reduction in return was incurred more than ninety (90) days prior to
the time it gives notice to the Borrower of the relevant circumstances. In
determining the additional amount payable under this Section 3.5, each Lender
will act reasonably and in good faith and will use averaging and attribution
methods which are reasonable, provided, that such Lender's determination of
--------
compensation owing under this Section 3.5 shall, absent manifest error, be final
and conclusive and binding on all parties hereto. Each Lender, upon determining
that any additional amounts will be payable pursuant to this Section 3.5, will
give prompt written notice thereof to the Borrower, through the Agent, which
notice shall show the basis for calculation of such additional amounts.
3.6 Inability To Determine Interest Rate. If prior to the first day of
------------------------------------
any Interest Period, the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower absent manifest error) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period, the Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans and (y) any Loans that were to
have been converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans. Until
such notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made or continued as such, nor shall the Borrower have the right to convert
Base Rate Loans to Eurodollar Loans. This Section 3.6 shall not apply to
Competitive Loans.
3.7 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring
38
after the Closing Date shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Credit Agreement, (a) such Lender shall
promptly give written notice of such circumstances to the Borrower and the Agent
(which notice shall be withdrawn whenever such circumstances no longer exist),
(b) the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
such Lender to make or maintain Eurodollar Loans, such Lender shall then have a
commitment only to make a Base Rate Loan when a Eurodollar Loan is requested and
(c) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if any, as
may be required pursuant to subsection 3.10. Notwithstanding the foregoing, to
the extent a circumstance described above relates to a Eurodollar Loan then
being requested by the Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion, the Borrower shall have the option to rescind such Notice of
Borrowing or Notice of Conversion as to all Lenders by giving notice (in writing
or by telephone confirmed in writing) to the Agent of such rescission on the
date on which the Lender affected by such circumstances gives notice thereof as
described above. This Section 3.7 shall not apply to Competitive Loans.
3.8 Requirements of Law. If the adoption of or any change in any
-------------------
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
(i) shall subject such Lender to any tax of any kind whatsoever with
respect to any Eurodollar Loans made by it or its obligation to make
Eurodollar Loans, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by
subsection 3.9 (including Non-Excluded Taxes imposed solely by reason of
any failure of such Lender to comply with its obligations under subsection
3.9(b)) and Excluded Taxes;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
39
(iii) shall impose on such Lender any other condition (excluding any
tax of any kind) whatsoever;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Lender, through the Agent, in accordance herewith, the
Borrower shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable, provided that, in any such case, the Borrower may elect to convert
--------
the Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving
the Agent at least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 3.10; provided,
--------
further, however, that a Lender shall not be entitled to avail itself of the
- ------- -------
benefit of this Section 3.8 to the extent that any such additional amounts were
incurred more than ninety (90) days prior to the time it gives notice to the
Borrower as provided in the next sentence. If any Lender becomes entitled to
claim any additional amounts pursuant to this Section, it shall provide prompt
notice thereof to the Borrower, through the Agent, certifying (x) that one of
the events described in this Section has occurred and describing in reasonable
detail the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender, through the Agent, to the Borrower shall be conclusive
in the absence of manifest error. This Section 3.8 shall not apply to
Competitive Loans.
3.9 Taxes. (a) Except as provided below in this subsection (a), all
-----
payments made by the Borrower under this Credit Agreement and any Notes shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding taxes
measured by or imposed upon the overall net income or profits of any Lender or
its applicable lending office, or any branch or affiliate thereof, and all
franchise taxes, branch taxes, taxes on doing business or taxes on the overall
capital or net worth of any Lender or its applicable lending office, or any
branch or affiliate thereof, in each case imposed in lieu of net income taxes,
imposed: (i) by the jurisdiction under the laws of which such Lender, applicable
lending office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between
40
the jurisdiction imposing such tax and such Lender, applicable lending office,
branch or affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or received payment
under or enforced, this Credit Agreement or any Notes (such excluded taxes being
herein referred to as "Excluded Taxes"). If any such non-excluded taxes,
--------------
levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
----
Excluded Taxes") are required to be withheld from any amounts payable to the
- --------------
Agent or any Lender hereunder or under any Notes, the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Credit Agreement and any Notes, provided, however, that the Borrower shall
-------- -------
be entitled to deduct and withhold any Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of subsection (b) below.
Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as
possible thereafter, the Borrower shall send to the Agent for its own account or
for the account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may become payable
by the Agent or any Lender as a result of any such failure. The agreements in
this subsection (a) shall survive the termination of this Credit Agreement and
the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X)(i) on or before the date of any payment by the Borrower
under this Credit Agreement or the Notes to such Lender, deliver to
the Borrower and the Agent (A) two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and its Notes without
deduction or withholding of any United States federal income taxes and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two further
copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after
the occurrence of
41
any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, (i)
represent to the Borrower (for the benefit of the Borrower and
the Agent) that it is not a bank within the meaning of Section
881(c)(3)(A) of the Code, (ii) agree to furnish to the Borrower
on or before the date of any payment by the Borrower, with a copy
to the Agent (A) a certificate substantially in the form of
Schedule 3.9 hereto (any such certificate a "U.S. Tax Compliance
------------ -------------------
Certificate") and (B) two accurate and complete original signed
-----------
copies of Internal Revenue Service Form W-8, or successor
applicable form certifying to such Lender's legal entitlement at
the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the
Code with respect to payments to be made under this Credit
Agreement and its Notes (and to deliver to the Borrower and the
Agent two further copies of such form on or before the date it
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by
the Borrower or the Agent for filing and completing such forms),
and (iii) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower
(for the benefit of the Borrower and the Agent) such other forms
as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and its Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Agent. Each Person that shall
become a Lender or a participant pursuant to Section 11.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the
forms, certifications and statements required pursuant to this subsection,
provided that in the case of a Participant the obligations of such
--------
Participant pursuant to this subsection (b) shall be
42
determined as if the Participant were a Lender except that such Participant
shall furnish all such required forms, certifications and statements to the
Lender from which the related participation shall have been purchased.
(c) If the Borrower pays any additional amount under Section 3.9(a) to a
Lender and such Lender determines that it has received or realized in connection
therewith any refund or any reduction of, or credit against, its tax liabilities
in or with respect to the taxable year in which the additional amount is paid,
such Lender shall pay to the Borrower an amount that the Lender shall determine
is equal to the net benefit, after tax, which was obtained by the Lender in such
taxable year as a consequence of such refund, reduction or credit.
3.10 Indemnity. The Borrower agrees to indemnify each Lender and to hold
---------
each Lender harmless from any reasonable loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Competitive Loans or Committed
Revolving Loans which are Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Competitive Loan or a
Committed Revolving Loan which is a Eurodollar Loan after the Borrower has given
a notice thereof in accordance with the provisions of this Credit Agreement or
(c) the making of a prepayment of Competitive Loans or Committed Revolving Loans
which are Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto other than pursuant to Section 3.11(c). Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Competitive
Loan or a Committed Revolving Loan which is a Eurodollar Loan provided for
herein (excluding, however, the Applicable Percentage included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Credit Agreement
and the payment of the Loans and all other amounts payable hereunder.
3.11 Pro Rata Treatment. Except to the extent otherwise provided herein:
------------------
(a) Committed Revolving Loans. Each Committed Revolving Loan
-------------------------
advance, each payment or prepayment of
43
principal of any Committed Revolving Loan, each payment of interest on the
Committed Revolving Loans, each payment of the Commitment Fee, each
reduction of the Revolving Committed Amount, and each conversion or
continuation of any Committed Revolving Loan, shall be allocated pro rata
among the relevant Lenders in accordance with the respective applicable
Revolving Committed Amounts (or, if the Commitments of such Lenders have
expired or been terminated, in accordance with the respective principal
amounts of the outstanding Loans and Participation Interests of such
Lenders).
(b) [Intentionally Left Blank].
(c) Funding. Unless the Agent shall have been notified in writing by
-------
any Lender prior to a Committed Revolving Loan borrowing that such Lender
will not make the amount that would constitute its Revolving Commitment
Percentage of such borrowing available to the Agent, the Agent may assume
that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not made available to the Agent
by the required time on the borrowing date therefor, such Lender shall pay
to the Agent, on demand, such amount with interest thereon at a rate equal
to the Federal Funds Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Lender's Revolving Commitment Percentage of such borrowing is not made
available to the Agent by such Lender within three Business Days of such
borrowing date, (i) the Agent shall notify the Borrower of the failure of
such Lender to make such amount available to the Agent and the Agent shall
also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrower and (ii) the Borrower may, without waiving any rights it may have
against such Lender, borrow a like amount on an unsecured basis from any
commercial bank for a period ending on the date upon which such Lender does
in fact make such borrowing available, provided that at the time such
--------
borrowing is made and at all times while such amount is outstanding the
Borrower would be permitted to borrow such amount pursuant to Section 2.1
of this Credit Agreement.
3.12 Sharing of Payments. The Lenders agree among themselves that, in the
-------------------
event that any Lender shall obtain payment in respect of any Loan or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of,
44
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Lender shall promptly purchase from the other Lenders a participation in
such Loans and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Agent shall fail to remit to the Agent or any other Lender
an amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.12 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.12 to share in the benefits of any recovery on such secured claim.
3.13 Place and Manner of Payments. Except as otherwise specifically
----------------------------
provided herein, all payments hereunder shall be made to the Agent in Dollars in
immediately available funds, without offset, deduction, counterclaim or
withholding of any kind, at its offices specified in Schedule 2.1(a) not later
---------------
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Agent may (but shall not be obligated to) debit
the amount of any such payment which is not made by such time to any ordinary
deposit account of the Borrower maintained with the Agent (with notice to the
Borrower). The Borrower shall, at the time it makes any payment under this
Credit Agreement, specify to the Agent the Loans, fees or other amounts payable
by the Borrower hereunder to which such payment is to be applied (and in the
event that it fails so to
45
specify, or if such application would be inconsistent with the terms hereof, the
Agent shall distribute such payment to the Lenders in the manner set forth in
Section 3.3(f) for mandatory prepayments). The Agent will distribute such
payments to such Lenders, if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time) on a Business Day in like funds as received
prior to the end of such Business Day and otherwise the Agent will distribute
such payment to such Lenders on the next succeeding Business Day. Whenever any
payment 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
(subject to accrual of interest and fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension would cause the
payment to be made in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day. Except as expressly
provided otherwise herein, all computations of interest and fees shall be made
on the basis of actual number of days elapsed over a year of 360 days, except
with respect to computation of interest on Base Rate Loans which shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest shall
accrue from and include the date of borrowing, but exclude the date of payment.
3.14 [Intentionally Left Blank].
3.15 Replacement of Lenders. If any Lender either (i) becomes a Defaulting
----------------------
Lender, (ii) a Disapproving Lender or (iii) delivers a notice to the Borrower
pursuant to Sections 3.5 or 3.8, the Borrower shall have the right, if no
Default or Event of Default then exists, to replace such Lender (the "Replaced
--------
Lender") with one or more Eligible Assignees (collectively, the "Replacement
- ------
Lender"), provided that (A) at the time of any replacement pursuant to this
--------
Section 3.15, the Replacement Lender shall enter into one or more assignment
agreements substantially in the form of Schedule 11.3(c) pursuant to, and in
----------------
accordance with the terms of, Section 11.3(c) (and with all fees payable
pursuant to said Section 11.3(c) to be paid by the Replacement Lender) pursuant
to which the Replacement Lender shall acquire all of the rights and obligations
of the Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (a) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (b) all accrued but theretofore unpaid, fees and other amounts owing
to the Replaced Lender pursuant to Section 3.4, and (B) all obligations of the
Borrower owing to the Replaced Lender (including all obligations, if any, owing
pursuant to Section 3.5 or 3.8, but excluding those obligations specifically
described in clause (A) above in respect of which the assignment purchase price
has been, or is concurrently being paid) shall be paid in full by the Borrower
to such Replaced Lender concurrently with such replacement.
3.16 Change of Lending Office. Each Lender agrees that on the occurrence
------------------------
of any event giving rise to the operation of
46
Sections 3.5, 3.8 or 3.9 with respect to such Lender, it will, if requested by
the Borrower, use reasonable efforts to designate another lending office for any
Loans affected by such event, provided that such designation is made on such
--------
terms that such Lender and its lending office suffer no material economic, legal
or regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section.
SECTION 4
GUARANTY
--------
4.1 The Guarantee. Each of the Guarantors hereby jointly and severally
-------------
guarantees to each Lender and the Agent as hereinafter provided the prompt
payment of the Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors hereby
further agree that if any of the Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, in the event of a bankruptcy or other similar
insolvency proceeding of a Guarantor, the obligations of each such Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its Obligations hereunder subject to avoidance under
Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 Obligations Unconditional. The obligations of the Guarantors under
-------------------------
Section 4.1 are joint and several, absolute and unconditional, irrespective of
the value, genuineness, validity, regularity or enforceability of any of the
Credit Documents, or any other agreement or instrument referred to therein, or
any substitution, release or exchange of any other guarantee of or security for
any of the Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of the Guarantors
hereunder shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by law, the occurrence of any one or more of the
following shall
47
not alter or impair the liability of any Guarantor hereunder which shall remain
absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any Guarantor,
the time for any performance of or compliance with any of the Obligations
shall be extended, or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the
Credit Documents or any other agreement or instrument referred to therein
shall be done or omitted;
(iii) the maturity of any of the Obligations shall be accelerated, or
any of the Obligations shall be modified, supplemented or amended in any
respect, or any right under any of the Credit Documents or any other
agreement or instrument referred to therein shall be waived or any other
guarantee of any of the Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Obligations shall fail to attach or be
perfected; or
(v) any of the Obligations shall be determined to be void or voidable
(including, without limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any Person (including,
without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents
or any other agreement or instrument referred to therein, or against any other
Person under any other guarantee of, or security for, any of the Obligations.
4.3 Reinstatement. The obligations of the Guarantors under this Section 4
-------------
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Obligations is rescinded
or must be otherwise restored by any holder of any of the Obligations, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise, and
each Guarantor agrees that it will indemnify the Agent and each Lender on demand
for all reasonable costs and expenses (including, without limitation, reasonable
fees and expenses of counsel) incurred by the Agent or such Lender in connection
with such rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
48
4.4 Certain Additional Waivers. Without limiting the generality of the
--------------------------
provisions of this Section 4, each Guarantor hereby specifically waives the
benefits of N.C. Gen. Stat. Sec.Sec. 26-7 through 26-9, inclusive. Each of the
Guarantors further agrees that it shall have no right of subrogation,
reimbursement or indemnity, nor any right of recourse to security, if any, for
the Obligations so long as any amounts payable to the Agent or the Lenders in
respect of the Obligations shall remain outstanding and until all of the
Commitments shall have expired or been terminated.
4.5 Remedies. The Guarantors agree that, to the fullest extent permitted
--------
by law, as between the Guarantors, on the one hand, and the Agent and the
Lenders, on the other hand, the Obligations may be declared to be forthwith due
and payable as provided in Section 9.2 hereof (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 9.2) for purposes of Section 4.1 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Obligations
from becoming automatically due and payable) as against any other Person and
that, in the event of such declaration (or such Obligations being deemed to have
become automatically due and payable), such Obligations (whether or not due and
payable by any other Person) shall forthwith become due and payable by the
Guarantors for purposes of said Section 4.1.
4.6 Continuing Guarantee. The guarantee in this Section 4 is a continuing
--------------------
guarantee, and shall apply to all Obligations whenever arising.
4.7 Discharge of Guarantor. If all of the stock of any Guarantor or any
----------------------
of its successors in interest under this Section 4 shall be sold or otherwise
disposed of (including by merger or consolidation) in a transaction not
prohibited by this Agreement, or if a Guarantor shall no longer satisfy the
conditions for being a Guarantor under Section 7.12, the guaranty of such
Guarantor or such successor in interest, as the case may be, hereunder and the
pledge of the capital stock or other ownership interest in such Guarantor or
such successor in interest, as the case may be, pursuant to the Pledge Agreement
shall automatically be discharged and released without any further action by the
Agent, any Lender or any other Person effective as of the date of such
transaction or as of the date the Agent receives evidence reasonably
satisfactory to the Agent that such conditions are not longer satisfied. The
Borrower will give prompt notice to the Agent of any discharge and release
pursuant to this Section 4.7.
SECTION 5
CONDITIONS
----------
5.1 Conditions to Initial Extensions of Credit. The obligation of each
------------------------------------------
Lender to make its initial Extensions of
49
Credit to Embassy Suites, as the initial Borrower, is subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) Executed Credit Documents. Receipt by the Agent of executed
-------------------------
counterparts of this Credit Agreement, the Notes and the other Credit
Documents.
(b) Tranche A Credit Agreement. Receipt by the Agent of copies of
--------------------------
the executed Tranche A Credit Agreement, the promissory notes issued
thereunder and the other collateral, security and other documents relating
thereto.
(c) No Default; Representations and Warranties. As of the Closing
------------------------------------------
Date (i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects.
(d) Opinion of Counsel. Receipt by the Agent of an opinion, or
------------------
opinions, satisfactory to the Agent, addressed to the Agent and the Lenders
and dated as of the Closing Date, from legal counsel to the Credit Parties
and in form reasonably acceptable to the Agent and the Credit Parties.
(e) Corporate Documents. Receipt by the Agent of the following:
-------------------
(i) Charter Documents. Copies of the articles or
-----------------
certificates of incorporation or other charter documents of each
Credit Party certified to be true and complete as of a recent date by
the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of
the Closing Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party
------
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party and the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a
secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(vi) Good Standing. Copies of (a) certificates of good
-------------
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
50
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing would have a Material Adverse Effect and (b) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(f) Fees and Expenses. Provided the Borrower has received proper
-----------------
documentation and support therefor, payment by the Borrower of all fees and
expenses owed by it to the Lenders and the Agent, including, without
limitation, payment to the Agent of the fees set forth in the Agent's Fee
Letter.
(g) Distribution. Receipt by the Agent of evidence satisfactory to
------------
the Agent that (i) all conditions precedent to the consummation of the
Distribution have been satisfied and (ii) the Distribution will be
consummated immediately after the making of such initial Extensions of
Credit in the manner contemplated by the Proxy Statement.
(h) Other. Receipt by the Lenders of such other documents,
-----
instruments, agreements or information as reasonably requested by the Agent
or the Required Lenders.
5.2 Conditions to Assignment to Hotel Inc., Release of Embassy Suites and
---------------------------------------------------------------------
Promus Co. and Initial Extensions of Credit to Hotel Inc. The obligation of the
- ---------------------------------------------------------
Lenders to accept the assignment to and the assumption by Hotel Inc. of the
rights and obligations of Embassy Suites under this Credit Agreement and to
release Embassy Suites and Promus Co. of their respective obligations, direct
and indirect, present and future, under this Credit Agreement pursuant to
Section 11.3(b) and to make its initial Extensions of Credit to Hotel Inc. shall
be subject to satisfaction of the following conditions on or prior to the
Effective Date of Assignment:
(a) Assignment and Assumption Agreement. Receipt by the Agent of
-----------------------------------
executed counterparts of the Hotel Inc. Assignment and Assumption
Agreement.
(b) Pledge Agreement and Stock Certificates. Receipt by the Agent of
---------------------------------------
the executed Pledge Agreement and all of the stock certificates evidencing
the stock pledged to the Lenders pursuant to the Pledge Agreement, along
with duly executed undated stock powers executed in blank attached thereto.
(c) Reorganization Resolution. Receipt by the Agent of (i) a copy of
-------------------------
corporate resolutions of the directors of Promus Co. and Embassy Suites
approving the Reorganization, (ii) copies of the Reorganization Documents,
certified by a secretary or assistant secretary of Hotel Corp. and (iii)
such other information regarding the structure, tax
51
treatment, existing and projected tax liabilities and other matters
relating to the Reorganization as the Agent may reasonably request.
(d) Solvency Certificate. Receipt by the Agent of a certificate of
--------------------
the chief financial officer of Embassy Suites as of the Effective Date of
the Assignment stating that, immediately after giving effect to the
Reorganization, the Distribution and Hotel Inc. Assignment and Assumption
Agreement, Embassy Suites is Solvent.
(e) Reorganization. The Agent shall have received a certificate
--------------
executed by the chief financial officer of Hotel Corp. as of the Effective
Date of Assignment stating that (i) the terms of the Reorganization and the
final corporate organization and structure of Hotel Corp. and Hotel Inc.
are consistent in all material respects with the Proxy Statement; (ii) the
transactions described in clause (i) of the first recital hereof have been
consummated in a manner consistent in all material respects with the terms
of the Proxy Statement on or before the execution of the Hotel Inc.
Assignment and Assumption Agreement; (iii) no material adverse change has
occurred since December 31, 1994, with respect to the combined financial
condition of the Hotel Inc. Businesses; (iv) there does not exist any
order, decree, judgment, ruling or injunction which restrains the
consummation of the Reorganization or the Distribution in the manner
contemplated by the Proxy Statement, and there does not exist any action,
suit or proceeding, pending or threatened, in which there is a reasonable
possibility of an adverse decision, which would materially adversely affect
the ability of Hotel Inc. or any of the Guarantors (including Hotel Corp.)
to perform its obligations under the Credit Documents or the ability of the
Lenders to exercise their rights thereunder; and (v) immediately after
giving effect to the Reorganization, the Distribution and the Hotel Inc.
Assignment and Assumption Agreement, (A) no Default or Event of Default
shall have occurred and be continuing and (B) the representations and
warranties set forth in Section 6 will be true and correct in all material
respects.
(f) NYSE Listing. Receipt by the Agent of evidence satisfactory to
------------
it that the shares of Hotel Corp.'s common stock shall have been approved
for listing on the New York Stock Exchange.
(g) Form 10 Filing. Receipt by the Agent of evidence satisfactory to
--------------
it that the Form 10 shall have been filed with the Securities and Exchange
Commission together with a certification by the chief financial officer of
Embassy Suites that Embassy Suites has received no stop order regarding the
Form 10 from the Securities and Exchange Commission and that the Form 10
shall have become effective.
52
(h) Other Documents. Receipt by the Agent of all documents it and
---------------
the Required Lenders may reasonably request relating to the existence of
each of Hotel Corp., Hotel Inc. and the other Guarantors, the corporate
authority for and the validity of Hotel Inc. Assignment and Assumption
Agreement and any other matters relevant thereto, all in form and substance
reasonably satisfactory to the Agent.
(i) Legal Opinions. Receipt by the Agent of legal opinions addressed
--------------
to the Agent and the Lenders from (i) counsel to Embassy Suites and Promus
Co. satisfactory to Agent, dated as of the Effective Date of Assignment and
in a form reasonably acceptable to the Agent, Promus Co. and Embassy Suites
and (ii) counsel to Hotel Corp. and Hotel Inc. satisfactory to Agent, dated
as of the Effective Date of Assignment and in form reasonably acceptable to
the Agent, Promus Co. and Embassy Suites.
(j) Other Information. Receipt by the Agent of such other documents,
-----------------
agreements or information which may be reasonably requested by the Agent
and the Required Lenders.
The Agent's execution and delivery of the Hotel Inc. Assignment and
Acceptance Agreement shall constitute the agreement of the Agent binding upon
the Lenders that all of the conditions set forth in this Section 5.2 have been
either satisfied or waived.
5.3 Each Extension of Credit. The obligation of each Lender to make any
------------------------
Extension of Credit, including the conversion to or extension of any Eurodollar
Loan is subject to satisfaction of the following conditions in addition to (i)
with respect to any Extension of Credit to be made, converted or extended on a
date occurring prior to the Effective Date of Assignment, satisfaction on the
Closing Date of the conditions set forth in Section 5.1 and (ii) with respect to
any Extension of Credit to be made, converted or extended on a date occurring on
or after the Effective Date of Assignment, satisfaction on the Closing Date of
the conditions set forth in Section 5.1 and satisfaction on the Effective Date
of Assignment of the conditions set forth in Section 5.2:
(a) (i) In the case of any Committed Revolving Loan, the Agent shall
have received an appropriate Notice of Borrowing or Notice of Conversion;
and (ii) in the case of any Competitive Loan, the applicable Competitive
Loan Lender shall have received an appropriate notice of acceptance of its
related Competitive Bid;
(b) The representations and warranties set forth in Section 6 hereof
and in the Pledge Agreement shall be true and correct in all material
respects as of such date (except for those which expressly relate to an
earlier date);
53
(c) There shall not have been commenced against the Parent Company,
the Borrower or any Guarantor an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
any case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Parent Company, the Borrower or any Guarantor or for any
substantial part of its Property or for the winding up or liquidation of
its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto; and
(e) Since December 31, 1994, there shall not have been a material
adverse change in or event or condition materially adversely affecting the
financial condition, operations, business or prospects of the hotel
business of the Parent Company, the Borrower and their Subsidiaries, taken
as a whole.
The delivery of each Notice of Borrowing and each Notice of Conversion relating
to an extension of or conversion into Eurodollar Loans and each request for a
Competitive Bid pursuant to a Competitive Bid Request shall constitute a
representation and warranty by the Borrower of the correctness of the matters
specified in subsections (b), (c), (d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Agent and each Lender to make the Extensions of Credit
requested to be made by it on the Closing Date and on each Credit Date
thereafter, the Credit Parties hereby represent and warrant, on the Closing
Date, and on every Credit Date thereafter (except to the extent the following
representations warranties relate to a specific date), to the Agent and each
Lender that:
6.1 Financial Condition. (a) The audited consolidated balance sheet of
-------------------
Promus Co. and its consolidated Subsidiaries as of December 31, 1994 and the
audited consolidated statements of earnings and statements of cash flows for the
year ended December 31, 1994 have heretofore been furnished to the Agent. Such
financial statements (including the notes thereto) (i) have been audited by
Arthur Andersen LLP, (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby and (iii) (on the
basis disclosed in the footnotes to such financial statements) present fairly,
in all material respects, the consolidated financial condition, results
54
of operations and cash flows of Promus Co. and its consolidated Subsidiaries as
of such date and for such periods. The unaudited interim balance sheets of
Promus Co. and its consolidated Subsidiaries as at the end of, and the related
unaudited interim statements of earnings and of cash flows for, each fiscal
month and quarterly period ended after December 31, 1994 and prior to the
Closing Date have heretofore been furnished to the Agent. Such interim
financial statements for each such quarterly period, (i) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
and (ii) (on the basis disclosed in the footnotes to such financial statements)
present fairly, in all material respects, the consolidated financial condition,
results of operations and cash flows of Promus Co. and its consolidated
Subsidiaries as of such date and for such periods subject to year-end and audit
adjustments. During the period from December 31, 1994 to and including the
Closing Date, there has been no sale, transfer or other disposition by Promus
Co. or any of its Subsidiaries of any material part of the business or property
of Promus Co. and its consolidated Subsidiaries, taken as a whole, and no
purchase or other acquisition by any of them of any business or property
(including any capital stock of any other person) material in relation to the
consolidated financial condition of Promus Co. and its consolidated
Subsidiaries, taken as a whole, in each case, which, is not reflected in the
foregoing financial statements or in the notes thereto and has not otherwise
been disclosed in writing to the Lenders on or prior to the Closing Date.
(b) The pro forma balance sheet of Hotel Corp. and its consolidated
--- -----
Subsidiaries set forth in the Proxy Statement (the "Pro Forma Balance Sheet") is
-----------------------
the balance sheet of Hotel Corp. and its consolidated Subsidiaries as of
December 31, 1994 (the "Pro Forma Date"), adjusted to give effect (as if such
--------------
events have occurred on such date) to (i) the consummation of the Reorganization
and Distribution on the Closing Date and of the Assignment and Assumption, (ii)
the Extension of Credit under the Tranche A Credit Agreement and/or this
Agreement to be made on the Closing Date in an aggregate principal amount of not
more than $225,000,000, and (iii) the payment of estimated fees, expenses and
financing costs related to the transactions contemplated hereby and thereby.
The Pro Forma Balance Sheet was prepared on the same basis as the balance sheets
included in the financial statements described in the first sentence of
subsection 6.1(a), except as set forth in Schedule 6.1(b).
---------------
(c) On and as of the Closing Date, (i) the financial projections (the
"Projections") prepared by the Parent Company and the Borrower and contained in
-----------
the Confidential Offering Memorandum delivered to the Lenders by the Agent prior
to the Closing Date were prepared based upon the assumptions concerning various
industry trends described therein for the periods presented, (ii) the
Projections were based on good faith assumptions and estimates, and (iii)
although a range of possible different assumptions and estimates might also be
reasonable, the
55
Parent Company and the Borrower are not aware of any facts that would lead them
to believe that the assumptions and estimates on which the Projections were
based are not reasonable; provided that no assurance can be given that the
--------
projected results will be realized or with respect to the ability of the Parent
Company and the Borrower to achieve the projected results, and while the
Projections are necessarily presented with numerical specificity, the actual
results achieved during the periods presented in all likelihood will differ from
the projected results and such differences may be material.
6.2 No Change; Solvent. Since December 31, 1994, (a) there has been no
------------------
development or event relating to or affecting the Parent Company, the Borrower
or any of their Subsidiaries which has had or would be reasonably expected to
have a Material Adverse Effect and (b) except as permitted under this Credit
Agreement no dividends or other distributions have been declared, paid or made
upon the capital stock of the Borrower nor has any of the capital stock of the
Borrower been redeemed, retired, purchased or otherwise acquired for value by
the Borrower or any of its Subsidiaries. As of the Closing Date, after giving
effect to (i) the consummation of the Assignment and Assumption, (ii) the making
of the Extensions of Credit under the Tranche A Credit Agreement and/or this
Agreement to be made on the Closing Date in an aggregate principal amount of not
more than $225,000,000 and (iii) the payment of estimated fees, expenses and
financing costs related to the transactions contemplated hereby and thereby,
Hotel Corp., Hotel Inc. and each Guarantor is Solvent.
6.3 Corporate and Partnership Existence; Compliance with Law. Each of the
--------------------------------------------------------
Parent Company, the Borrower and their Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or partnership power and authority, and the
legal right, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged, except
to the extent that the failure to have such legal right would not be reasonably
expected to have a Material Adverse Effect, (c) is duly qualified and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
6.4 Corporate and Partnership Power; Authorization; Enforceable
-----------------------------------------------------------
Obligations. The Parent Company, the Borrower and each of the other Credit
- -----------
Parties has the corporate or partnership power and authority, and the legal
right, to make, deliver and perform the Credit Documents to which it is a party
and to borrow and accept Extensions of Credit hereunder or to issue the
56
guarantee or to pledge stock hereunder, and have taken all necessary corporate
or partnership action to authorize the borrowings and Extensions of Credit or
guarantee such borrowings and Extensions of Credit, as appropriate, on the terms
and conditions of this Credit Agreement and any Notes and to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of the Borrower or any Guarantor
in connection with the borrowings or guarantees hereunder or with the execution,
delivery, performance, validity or enforceability of the Credit Documents to
which the Borrower is a party, except for (i) consents, authorizations, notices
and filings described in Schedule 6.4, all of which have been obtained or made
------------
or have the status described in such Schedule 6.4. This Credit Agreement has
------------
been, and each other Credit Document to which it is a party will be, duly
executed and delivered on behalf of the Borrower and the Guarantors. This
Credit Agreement constitutes, and each other Credit Document to which it is a
party when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower and the Guarantors enforceable against them in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar. The execution, delivery and performance of the Credit
------------
Documents by the Borrower, the Parent Company and the other Credit Parties, the
borrowings and extensions of credit and the guarantees thereof hereunder and the
use thereof and the pledge of stock in connection therewith (a) will not violate
any Requirement of Law or Contractual Obligation of the Borrower, the Parent
Company or the other Credit Parties in any respect that would reasonably be
expected to have a Material Adverse Effect and (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created by
the Pledge Agreement) on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
6.6 No Material Litigation. No litigation, investigation or proceeding of
----------------------
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Parent Company, the
Borrower or any of their Subsidiaries or against any of its or their respective
properties or revenues which would be reasonably expected to have a Material
Adverse Effect.
6.7 No Default. Neither the Parent Company, the Borrower nor any of their
----------
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would
57
be reasonably expected to have a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.
6.8 Ownership of Property; Liens. Except as would not have a Material
----------------------------
Adverse Effect or as set forth in Schedule 6.8 hereto, the Parent Company, the
------------
Borrower and each of their Subsidiaries has good record and sufficient title in
fee simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other property. None of
such property is subject to any Lien, except for Permitted Liens.
6.9 Intellectual Property. The Parent Company, the Borrower and each of
---------------------
their Subsidiaries owns, or has the legal right to use, all United States
trademarks, tradenames, copyrights, service marks, technology, know-how and
processes necessary for each of them to conduct its business as currently
conducted (the "Intellectual Property") except for those the failure to own or
---------------------
have such legal right to use would not be reasonably expected to have a Material
Adverse Effect. Except as provided on Schedule 6.9, no claim has been asserted
------------
and is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any such claim, and the use of such
Intellectual Property by the Parent Company, the Borrower and their Subsidiaries
does not infringe on the rights of any Person, except for such claims and
infringements that in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
6.10 No Burdensome Restrictions. No Requirement of Law of the Borrower or
--------------------------
any of its Subsidiaries would be reasonably expected to have a Material Adverse
Effect.
6.11 Taxes. The Parent Company, the Borrower and each of their
-----
Subsidiaries that are corporations have filed or caused to be filed all United
States federal income tax returns and all other material tax returns which, to
the knowledge of the Borrower, are required to be filed, and have paid (a) all
taxes shown to be due and payable on said returns and (b) any assessments of
which it has received notice made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any (i) taxes, fees or other charges with
respect to which the failure to pay, in the aggregate, would not have a Material
Adverse Effect and (ii) taxes, fees or other charges the amount or validity of
which are currently being contested and with respect to which reserves in
conformity with GAAP have been provided on the books of the Parent Company, the
Borrower or such Subsidiaries, as the case may be).
6.12 Federal Regulations. No part of the proceeds of any Loans will be
-------------------
used in any manner which might cause the Loans or the application of such
proceeds to violate Regulation U of the Board of Governors of the Federal
Reserve System as now and from
58
time to time hereafter in effect. If requested by any Lender or the Agent, the
Parent Company, the Borrower and the other Credit Parties will furnish to the
Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U. The parties
hereto acknowledge that the use of proceeds of the Loans by the Borrower to
purchase $25,000,000 of shares in Felcor Suites Hotels, Inc. or units in Felcor
Suites Hotels Limited Partnership will not cause a violation of said Regulation
U.
6.13 ERISA. During the five year period prior to each date as of which
-----
this representation is made, or deemed made (or, with respect to (vi) or (viii)
below, as of the date such representation is made or deemed made), none of the
following events or conditions, either individually or in the aggregate, has
resulted or is reasonably likely to result in a liability to the Parent Company,
the Borrower or any of their Subsidiaries which would be reasonably expected to
have a Material Adverse Effect: (i) a Reportable Event with respect to any
Single Employer Plan; (ii) an "accumulated funding deficiency" (within the
meaning of Section 412 of the Code or Section 302 of ERISA) with respect to any
Single Employer Plan which has not been waived; (iii) any material noncompliance
with the application of ERISA or the Code with respect to any Plan; (iv) a
termination of a Single Employer Plan (other than a standard termination
pursuant to Section 4041(b) of ERISA); (v) a Lien in favor of the PBGC with
respect to any Single Employer Plan or a Plan pursuant to Section 4068 or
Section 302(f) of ERISA, respectively; (vi) Underfunding with respect to any
Single Employer Plan; (vii) a complete or partial withdrawal from any
Multiemployer Plan by the Parent Company, the Borrower or any Commonly
Controlled Entity; (viii) any liability of the Parent Company, the Borrower or
any Commonly Controlled Entity under ERISA if the Parent Company, the Borrower
or any such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the annual valuation date most closely preceding the
date on which their representation is made or deemed made; (ix) the Plan
Reorganization or Insolvency of any Multiemployer Plan; (x) the excess of the
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the aggregate liability of the Parent Company, the Borrower or any of their
Subsidiaries for post-retirement benefits to be provided to their current and
former employees (excluding benefits provided pursuant to Section 4980B of the
Code or Section 601 of ERISA), under Plans which are welfare benefit plans (as
determined in Section 3(1) of ERISA) over the assets under all such Plans; and
(xi) an event or condition with respect to which the Parent Company, the
Borrower or any Commonly Controlled Entity could incur any liability in respect
of a Former Plan.
6.14 Investment Company Act; Other Regulations. The Borrower is not an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is
59
not subject to regulation under any Federal or State statute or regulation which
limits its ability to incur Indebtedness as contemplated hereby.
6.15 Subsidiaries. Set forth in Schedule 6.15 is a complete and accurate
------------ -------------
list of all Subsidiaries of the Parent Company and the Borrower both immediately
prior to, and immediately after giving effect to, the Assignment and Assumption.
Information on the attached Schedule includes jurisdiction of incorporation or
organization; the number of shares of each class of capital stock or other
equity interest outstanding; the number and percentage of outstanding shares of
each class owned (directly or indirectly) by such Person; and the number and
effect, if exercised, of all outstanding options, warrants, rights of conversion
or purchase and similar rights. The outstanding capital stock of all such
corporate Subsidiaries is validly issued, fully paid and non-assessable and is
owned by such Person, directly or indirectly, free and clear of all Liens other
than Permitted Liens.
6.16 Purpose of Loans. The Extensions of Credit and the proceeds therefrom
----------------
shall be used for working capital and general corporate purposes (including,
without limitation, the support of commercial paper), to finance the costs and
expenses of the Reorganization, including the repayment of certain indebtedness
of Embassy Suites outstanding immediately prior to the Reorganization, and to
finance hotel development and other investments not prohibited hereunder.
6.17 Environmental Matters. (a) To the knowledge of the Borrower, the
---------------------
facilities and properties owned, leased or operated by the Parent Company, the
Borrower or any of their Subsidiaries (the "Subject Properties") and all
------------------
operations at the Subject Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the business operated by the Parent Company, the Borrower or any of
their Subsidiaries (the "Business"), and there are no conditions relating to the
--------
Business or Subject Properties that would be reasonably likely to give rise to
liability under any applicable Environmental Law, except for any failure so to
comply or violation or condition, or any aggregation thereof, that would not be
reasonably likely to result in the payment of a Material Environmental Amount.
(b) To the knowledge of the Borrower, the Subject Properties do not
contain any Materials of Environmental Concern at, on or under the Subject
Properties in amounts or concentrations that constitute a violation of, or could
reasonably give rise to liability under, Environmental Laws, except insofar as
the presence of any Materials of Environmental Concern is not reasonably likely
to result in the payment of a Material Environmental Amount.
(c) Neither the Parent Company, the Borrower nor any of their Subsidiaries
has received any written notice of, or inquiry
60
from any Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Subject
Properties or the Business, nor does the Borrower have knowledge that any such
notice will be received or is being threatened, except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in the payment of a Material
Environmental Amount.
(d) The Borrower has not, nor to the knowledge of the Borrower have any
other Persons, transported or disposed of Materials of Environmental Concern
from the Subject Properties, or generated, treated, stored or disposed of at, on
or under any of the Subject Properties or any other location, in each case by or
on behalf of the Parent Company, the Borrower or any of their Subsidiaries in
violation of, or in a manner that would be reasonably likely to give rise to
liability under, any applicable Environmental Law, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Parent Company, the Borrower or any of their
Subsidiaries is named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Parent Company, the Borrower, any of their Subsidiaries, the
Subject Properties or the Business, except insofar as such proceeding, action,
decree, order or other requirement, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(f) To the knowledge of the Borrower, there has been no release or threat
of release of Materials of Environmental Concern at or from the Subject
Properties, or arising from or related to the operations (including, without
limitation, disposal) of the Parent Company, the Borrower or any of their
Subsidiaries in connection with the Subject Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner that
would be reasonably likely to give rise to liability under Environmental Laws,
except insofar as any such violation or liability referred to in this paragraph,
or any aggregation thereof, is not reasonably likely to result in the payment of
a Material Environmental Amount.
(g) To the knowledge of the Borrower, neither the Parent Company, the
Borrower nor any of their Subsidiaries has voluntarily assumed any liability of
any Person under any Environmental Law that is not subject to indemnification
and is
61
reasonably likely to result in the payment of a Material Environmental Amount.
Notwithstanding any provision herein to the contrary, all references in Sections
6.1 through 6.17 to the "Parent Company" shall mean Hotel Corp., all references
--------------
in this Section 6 to the "Borrower" shall mean Hotel Inc. and all references in
--------
this Section 6 to "Credit Parties" or "Guarantors" shall mean only Hotel Corp.
-------------- ----------
and its Subsidiaries which are included in the definitions of such terms.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
Each Credit Party hereby covenants and agrees that commencing with the
Closing Date and so long as this Credit Agreement is in effect and until the
Obligations, together with interest, fees and other obligations hereunder, have
been paid in full and the Commitments hereunder shall have terminated:
7.1 Information Covenants. The Parent Company and the Borrower will
---------------------
furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within 120 days after the close of each fiscal year of the Parent
Company, a consolidated balance sheet and income statement of the Parent
Company and its consolidated subsidiaries (including the Borrower), as of
the end of such fiscal year, together with related consolidated statements
of operations and retained earnings and of cash flows for such fiscal year,
setting forth in comparative form consolidated figures for the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and audited by Arthur Anderson LLP or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the effect
that such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not be
limited as to the scope of the audit or qualified as to the status of the
Credit Parties as a going concern.
(b) Quarterly Financial Statements. As soon as available, and in any
------------------------------
event within 45 days after the close of each fiscal quarter of the Parent
Company (other than the fourth fiscal quarter, in which case 120 days after
the end thereof) a consolidated balance sheet and income statement of the
Parent Company and its consolidated subsidiaries (including the Borrower),
as of the end of such fiscal quarter, together with related consolidated
statements of operations and retained earnings and of cash flows for such
fiscal quarter in each case setting forth in comparative
62
form consolidated figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and reasonably acceptable to the Agent, and
accompanied by a certificate of the chief financial officer, treasurer or
controller of the Parent Company to the effect that such quarterly
financial statements fairly present in all material respects the financial
condition and results of operations of the Parent Company and its
consolidated subsidiaries (including the Borrower), and have been prepared
in accordance with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the financial
---------------------
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer, treasurer or controller of the Parent
Company substantially in the form of Schedule 7.1(d) attached hereto, (i)
---------------
demonstrating compliance with the financial covenants contained in Section
7.11 by calculation thereof as of the end of each such fiscal period and
(ii) stating that no Default or Event of Default exists, or if any Default
or Event of Default does exist, specifying the nature and extent thereof
and what action the Parent Company proposes to take with respect thereto.
(d) Accountant's Report. Within the period for delivery of the
-------------------
annual financial statements provided in Section 7.1(a), a report of the
accountants conducting the annual audit stating that they have reviewed
Section 7.11 and stating further whether, in the course of their audit,
anything came to their attention to cause them to believe that the Parent
Company and its consolidated Subsidiaries were not in compliance with
Section 7.11, in so far as such Section 7.11 relates to accounting matters,
on the date of such statements.
(e) Reports. Promptly upon transmission or receipt thereof, (a)
-------
copies of all registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalent) which the Parent Company or
any of its Subsidiaries shall file with the Securities and Exchange
Commission, or any successor agency, (b) copies of all financial
statements, proxy statements, notices and reports as the Parent Company,
the Borrower or any of their Subsidiaries shall send to its shareholders or
to a holder of any Indebtedness with a maximum principal amount exceeding
$25,000,000 owed by the Parent Company, the Borrower or any of their
Subsidiaries in its capacity as such a holder (other than reports of a
routine or ministerial nature which are not material) and (c) upon the
request of the Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for enforcement of
63
Environmental Laws (other than reports of a routine or ministerial nature
which are not material).
(f) Notices. Upon the Borrower obtaining knowledge thereof, the
-------
Borrower will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the occurrence of
any of the following (i) the pendency or commencement of any litigation,
arbitration or governmental proceeding against the Parent Company, the
Borrower or any of their Subsidiaries which is reasonably likely to have a
Material Adverse Effect, (ii) the institution of any proceedings against
the Parent Company, the Borrower or any of their Subsidiaries with respect
to, or the receipt of notice by such Person of potential liability or
responsibility for, violation, or alleged violation of any Environmental
Laws, the violation of which would likely have a Material Adverse Effect,
or (iii) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against the Parent Company,
the Borrower or any of their Subsidiaries or any of their Commonly
Controlled Entities, the determination that a Multiemployer Plan is, or is
expected to be, in a Plan Reorganization or the termination of any Plan in
a distress termination under Section 4041(c) of ERISA.
(g) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of the Parent Company, the Borrower or any of their
Subsidiaries as the Agent or the Required Lenders may reasonably request.
7.2 Preservation of Existence and Franchises. Each of the Credit Parties
----------------------------------------
will do all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority except as permitted under Section
8.4 or where failure to do so would not reasonably be expected to have a
Material Adverse Effect.
7.3 Books and Records. Each of the Credit Parties will, and will cause
-----------------
their Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).
7.4 Compliance with Law. Each of the Credit Parties will, and will cause
-------------------
their Subsidiaries to, comply with all laws, rules, regulations and orders, and
all applicable restrictions imposed by all Governmental Authorities, applicable
to it and its property if noncompliance with any such law, rule, regulation,
order or restriction would have a Material Adverse Effect.
64
7.5 Payment of Taxes and Other Indebtedness. Each of the Credit Parties
---------------------------------------
will, and will cause their Subsidiaries that are corporations to, pay and
discharge (i) all material taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its properties,
before a material penalty begins to accrue, (ii) all lawful claims (including
claims for labor, materials and supplies) which, if unpaid, might give rise to a
Lien upon any of its properties, and (iii) except as prohibited hereunder, all
of its other Indebtedness as it shall become due; provided, however, that there
shall be no requirement to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) would give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) would have
a Material Adverse Effect.
7.6 Insurance. Each of the Credit Parties will, and will cause their
---------
Subsidiaries to, at all times maintain in full force and effect insurance
(including worker's compensation insurance, liability insurance, casualty
insurance and business interruption insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice.
7.7 Maintenance of Property. Each of the Credit Parties will, and will
-----------------------
cause their Subsidiaries to, maintain and preserve its properties and equipment
material to the conduct of its business in good repair, working order and
condition, normal wear and tear excepted, except where failure to do so would
not have a Material Adverse Effect and will make, or cause to be made, in such
properties and equipment from time to time all repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto as may be needed or
proper, to the extent and in the manner customary for companies in similar
businesses except where failure to do so would not have a Material Adverse
Effect.
7.8 Performance of Obligations. Each of the Credit Parties will, and will
--------------------------
cause their Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements, indentures, mortgages,
security agreements or other debt instruments to which it is a party or by which
it is bound, except where failure to do so would not have a Material Adverse
Effect.
7.9 Use of Proceeds. The Extensions of Credit and the proceeds thereof
---------------
may be used solely for the purposes provided in Section 6.16.
7.10 Audits/Inspections. Upon reasonable prior notice, with reasonable
------------------
frequency and during normal business hours, each Credit Party will, and will
cause their Subsidiaries to, permit
65
representatives appointed by the Agent, including, without limitation,
independent accountants, agents, attorneys, and appraisers to visit and inspect
their property, including their books and records, their accounts receivable and
inventory, their facilities and their other business assets, and to make
photocopies or photographs thereof and to write down and record any information
such representative obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to the Lenders and
to discuss all such matters with the officers of the Credit Parties and their
Subsidiaries.
7.11 Financial Covenants.
-------------------
(a) Consolidated Net Worth. There shall be maintained at all times
----------------------
determined at the end of each fiscal quarter Consolidated Net Worth of at
least $125,000,000; provided, however, that the minimum Consolidated Net
-------- -------
Worth required hereunder shall be increased by (i) on the last day of each
fiscal quarter to occur after the Closing Date, an amount equal to 50% of
Consolidated Net Income for the fiscal quarter then ended (or if
Consolidated Net Income is a deficit, then zero), and (ii) immediately upon
receipt, 100% of the net proceeds received by the Borrower or any
Subsidiary pursuant to any Equity Transaction occurring after the Closing
Date.
(b) Leverage Ratio. The Leverage Ratio, as determined at the end of
--------------
each fiscal quarter for the four consecutive fiscal quarter period then
ended, shall not at any time exceed:
Period Ending
-------------
Closing Date through the last day
of fiscal year 1995 3.5:1.0
First day of fiscal year 1996 through
last day of fiscal year 1996 3.25:1.0
First day of fiscal year 1997 and
thereafter 3.0:1.0
(c) Consolidated Fixed Charge Coverage Ratio. The Consolidated Fixed
----------------------------------------
Charge Coverage Ratio, as determined at the end of each fiscal quarter for
the four consecutive fiscal quarter period then ended, shall be not less
than:
Period Ending
-------------
Closing Date through the last day
of fiscal year 1996 1.25:1.0
First day of fiscal year 1997 through
the last day of fiscal year 1997 2.0:1.0
66
First day of fiscal year 1998 and
thereafter 2.5:1.0
7.12 Additional Credit Parties. Where the Wholly Owned Subsidiaries of the
-------------------------
Parent Company or the Borrower (other than a Wholly Owned Subsidiary formed
solely to provide insurance to the Parent Company, its Subsidiaries and Joint
Ventures) which are not Guarantors hereunder (the "Non-Guarantor Subsidiaries")
--------------------------
shall at any time
(i) individually in any instance constitute more than either (A)
10% of Consolidated Legal Entity Assets of the Parent Company, the Borrower
and their Subsidiaries, or (B) 10% of Consolidated Legal Entity Gross
Revenues of the Parent Company, the Borrower and their Subsidiaries, or (C)
10% of Consolidated Legal Entity EBITDA of the Parent Company, the Borrower
and their Subsidiaries, the Parent Company and the Borrower will promptly
notify the Agent thereof, and promptly cause any such Non-Guarantor
Subsidiary to become a "Guarantor" hereunder by way of execution of a
Joinder Agreement; or
(ii) as a group constitute more than either (i) 25% of
Consolidated Legal Entity Assets of the Parent Company, the Borrower and
their Subsidiaries, or (ii) 25% of Consolidated Legal Entity Gross Revenues
of the Parent Company, the Borrower and their Subsidiaries, or (iii) 25% of
Consolidated Legal Entity EBITDA of the Parent Company, the Borrower and
their Subsidiaries (collectively, the "Threshold Requirement"), the Parent
---------------------
Company and the Borrower will promptly notify the Agent thereof, and
promptly cause one or more of the Non-Guarantor Subsidiaries to become a
"Guarantor" hereunder by way of execution of a Joinder Agreement, such that
immediately after the joinder of such Subsidiaries as Guarantors hereunder,
the remaining Non-Guarantor Subsidiaries shall not, as a group, exceed the
Threshold Requirement.
The Borrower may at any time, at its option, cause a Non-Guarantor Subsidiary to
execute a Joinder Agreement at which time such Subsidiary shall become a
Guarantor hereunder. The Borrower will cause to be delivered with any such
Joinder Agreement such other documentation as the Agent may reasonably request,
including specifically without limitation, certified corporate resolutions,
other corporate documentation and legal opinions (covering, among other things,
the legality, validity, binding effect and enforceability of the Joinder
Agreement) of or relating to such Additional Credit Party, all in form and
substance reasonably satisfactory to the Agent. With respect to any Non-
Guarantor Subsidiary that becomes a Guarantor pursuant to this Section 7.12, the
Borrower shall promptly cause all of the capital stock or other ownership
interest of such Non-Guarantor Subsidiary to be pledged to the Agent pursuant to
the Pledge Agreement.
67
SECTION 8
NEGATIVE COVENANTS
------------------
Each Credit Party hereby covenants and agrees that commencing with the
Closing Date and so long as this Credit Agreement is in effect and until the
Obligations, together with interest, fees and other obligations hereunder, have
been paid in full and the Commitments hereunder shall have terminated:
8.1 Indebtedness. Neither the Parent Company or the Borrower will, nor
------------
will they permit any of their Subsidiaries to, contract, create, incur, assume
or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness existing as of the Closing Date and disclosed in the
financial statements referenced in Section 6.1(a) or set forth in Schedule
--------
8.1 (and renewals, refinancings and extensions thereof in a principal
---
amount not in excess of the amount then outstanding on terms and conditions
no less favorable to such Person than such existing Indebtedness);
(c) purchase money Indebtedness (including Capital Leases) hereafter
incurred to finance the purchase of fixed assets provided that (i) the
--------
total of all such Indebtedness incurred after the Closing Date for the
Parent Company, the Borrower and their Subsidiaries taken together shall
not exceed an aggregate principal amount of $20,000,000 at any one time
outstanding; (ii) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (iii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;
(d) obligations in respect of Interest Rate Protection Agreements,
Currency Protection Agreements and commodity purchase or option agreements
entered into in order to manage existing or anticipated interest rate,
exchange rate or commodity price risks and not for speculative purposes;
(e) Intercompany Indebtedness; provided that all such Intercompany
--------
Indebtedness owed by any Credit Party to any Subsidiary of the Borrower or
the Parent Company which is not a Credit Party shall be subordinated in
right of payment to the payment in full of the Obligations pursuant to the
terms of an intercompany subordination agreement reasonably satisfactory to
the Agent;
(f) Indebtedness acquired in connection with mergers and acquisitions
permitted under Sections 8.4(a) or 8.4(c) and not incurred in contemplation
of their becoming
68
Subsidiaries (and renewals, refinancings and extensions thereof in a
principal amount not in excess of the amount then outstanding on terms and
conditions no less favorable to such Person than such existing
Indebtedness);
(g) Indebtedness arising under the Tranche A Credit Agreement and
other related agreements and documents issued or delivered thereunder or
pursuant thereto;
(h) accrued expenses and current trade accounts payable incurred in
the ordinary course of business;
(i) unsecured Indebtedness under performance bonds and completion
guarantees in respect of the construction of any properties in accordance
with the plans or standards as agreed with the obligee of such guarantee so
long as such bonds or guarantees are incurred in the ordinary course of
business;
(j) Indebtedness consisting of (i) reimbursement obligations on
letters of credit (other than Letters of Credit under the Tranche A Credit
Agreement), bankers acceptances or similar instruments, provided that the
--------
aggregate amount thereof at any one time outstanding shall not exceed
$5,000,000 and (ii) surety, performance or appeal bonds to the extent
permitted by Section 8.2;
(k) Non-Recourse Indebtedness of any Specified Subsidiary to finance
the development of hotel properties so long as the aggregate amount thereof
at any time outstanding does not exceed $100,000,000, it being understood
and agreed, however, that (i) a Specified Subsidiary which has incurred
outstanding Non-Recourse Indebtedness pursuant to this Section 8.1(k) may
guaranty the Non-Recourse Indebtedness incurred pursuant to this Section
8.1(k) by other Specified Subsidiaries, and (ii) such Non-Recourse
Indebtedness may be guaranteed by the Parent Company, the Borrower and
their respective Subsidiaries to the extent otherwise permitted under this
Section 8.1;
(l) Unsecured Guaranty Obligations in relation to Indebtedness of
Specified Subsidiaries, Joint Ventures and parties to management or
franchise agreements with the Borrower or its Subsidiaries or such Joint
Ventures engaged in each case primarily in the hotel business or other
reasonably related business, but only if, and to the extent, that the sum
of (i) the aggregate amount of such Guaranty Obligations under this
subsection (l) incurred after the Closing Date plus (ii) the aggregate
----
amount of cash Investments permitted under Section 8.5(g) made after the
Closing Date, shall not at any time exceed $150,000,000 at any time,
provided that the limitation set forth above shall be (A) increased (or
--------
decreased if Consolidated Net Income is negative) on the first day of each
fiscal year of the Parent Company (commencing with the first day of fiscal
year 1996)
69
by 100% of the Consolidated Net Income for the fiscal year last ended and
(B) decreased from time to time by the aggregate amount of cash Dividends
paid by the Parent Company on and after the Closing Date and prior to the
date of determination (such limitation, as increased and decreased from
time to time, herein referred to as the "Third Party Investment Basket
-----------------------------
Amount");
------
(m) Subordinated Debt with a final maturity beyond the Termination
Date under the Tranche A Credit Agreement which is subordinated in a
manner, and with subordination language, reasonably acceptable to the
Required Lenders;
(n) commercial paper borrowings of the Borrower supported by the
Hotel Facility in an amount not to exceed $100,000,000 in the aggregate at
any time outstanding;
(o) unsecured Guaranty Obligations of the Parent Company, the
Borrower or any of their respective Subsidiaries in relation to
Indebtedness (other than Non-Recourse Indebtedness) of Subsidiaries of the
Parent Company or the Borrower otherwise permitted under this Section 8.1;
(p) Indebtedness permitted under Section 3.11(c) of this Agreement or
the Tranche A Credit Agreement; and
(q) Indebtedness not otherwise permitted under this Section 8.1 in an
aggregate principal amount not to exceed $25,000,000 at any one time
outstanding.
8.2 Liens. Neither the Parent Company or the Borrower will, nor will they
-----
permit any of their Subsidiaries to, contract, create, incur, assume or permit
to exist any Lien with respect to any of their Property, whether now owned or
after acquired, except for Permitted Liens.
8.3 Nature of Business. Neither the Parent Company, the Borrower nor any
------------------
other Credit Party will substantively alter the character or conduct of the
business conducted by them as of the Closing Date other than to enter into other
reasonably related businesses.
8.4 Consolidation, Merger, Sale or Purchase of Assets. Except in relation
-------------------------------------------------
to the Reorganization and the Distribution, neither the Parent Company or the
Borrower will, nor will they permit any of their Subsidiaries to:
(a) dissolve, liquidate or wind up its affairs, or enter into any
transaction of merger or consolidation; provided, however, that, so long as
-------- -------
no Default or Event of Default then exists or would be directly or
indirectly caused as a result thereof,
(i) any Credit Party may merge or consolidate with another Credit
Party;
70
(ii) any Subsidiary of the Borrower or the Parent Company which
is not a Credit Party may merge or consolidate with another such
Subsidiary;
(iii) any Subsidiary of the Parent Company or the Borrower may
merge or consolidate with any other Person provided that either
(A) such Subsidiary is the surviving corporation,
(B) such Subsidiary is not the surviving corporation but
the surviving corporation is a Subsidiary of the Borrower or the
Parent Company, or
(C) such Subsidiary is not the surviving corporation and
the surviving corporation is not a Subsidiary of the Borrower or
the Parent Company, but no more than 25% of the gross
consideration received in connection therewith consists of Non-
Investment Grade debt or equity interests,
and subject to the additional conditions, (I) in the case of any
individual transaction (or series of related transactions) described
in subsections (A) or (B) above, where the acquisition price for such
transaction (whether a single transaction or a series of related
transactions) exceeds $75,000,000, then the Borrower must first
demonstrate compliance with the financial covenants under Section 7.11
on a Pro Forma Basis after giving effect to such transaction and (II)
after giving effect to such transaction, the Threshold Requirement set
forth in Section 7.12 shall not be exceeded; and
(iv) any Subsidiary of the Parent Company or the Borrower may
dissolve, liquidate or wind up its affairs at any time;
(b) sell, transfer or otherwise dispose of any of its Property
(including without limitation pursuant to any sale and leaseback
transaction) except that the following shall be permitted: (i) the sale of
inventory for fair value in the ordinary course of business, (ii) the sale
or disposition of machinery and equipment no longer useful in the conduct
of such Person's business, (iii) transfers of Property to Credit Parties,
(iv) non-cash Investments permitted under Section 8.5(d) and (e), and (v)
sales, transfers and dispositions for fair value in the reasonable
determination of the Borrower, so long as (A) no Default or Event of
Default then exists or would exist after giving effect thereto and (B) no
more than 25% of the gross consideration received in connection therewith
consists of Non-Investment Grade debt or equity interests. Sales,
71
leases, transfers and other dispositions constituting Material Asset Sales
will be subject to a mandatory reduction in the Commitments hereunder as
provided in Section 3.3(b).
(c) purchase or otherwise acquire (in a single transaction or a
series of related transactions) all or substantially all of the Property of
any other Person except where (i) no Default or Event of Default then
exists or would exist after giving effect thereto, (ii) the purchase or
acquisition does not require the solicitation of the consent of the
shareholders or other equity owners of the Person which is the subject
thereof against the recommendation of management, the board of directors or
other managing entity of such Person, (iii) the Person, division,
operations or Property which is the subject of the acquisition is in a
reasonably related line of business to that of the Parent Company and the
Borrower, and (iv) the acquisition price for such transaction (whether a
single transaction or a series of related transactions) shall exceed
$75,000,000, the Borrower must first demonstrate compliance with the
financial covenants under Section 7.11 on a Pro Forma Basis after giving
effect to such acquisition.
8.5 Investments. The Parent Company and the Borrower will not, and will
-----------
not permit any of their Subsidiaries to, directly or indirectly, make
Investments other than
(a) existing Investments set forth on Schedule 8.5,
------------
(b) Investments in the ordinary course of the hotel business (or other
reasonably related businesses) not otherwise described in Section 8.5
(specifically excluding for purposes hereof loans and advances to
Subsidiaries which are separately dealt with in this Section 8.5),
(c) Investments in Credit Parties,
(d) Investments in Wholly-Owned Subsidiaries of the Borrower or the
Parent Company,
(e) non-cash Investments in Subsidiaries which are not Wholly-Owned
Subsidiaries of the Borrower or the Parent Company or Credit Parties and in
Joint Ventures made after the Closing Date, provided that no such non-cash
--------
Investment shall individually (i) involve the transfer of assets (A) with a
book value in excess of 10% of the Consolidated Legal Entity Assets of the
Parent Company and its Subsidiaries at such time, (B) generating more than
10% of the Consolidated Legal Entity Gross Revenues of the Parent Company
and its Subsidiaries or (C) generating more than 10% of Consolidated Legal
Entity EBITDA for the Parent Company and its Subsidiaries or (ii) cause the
Subsidiaries and Joint Ventures in which non-cash Investments have been
made
72
pursuant to this clause (e) (including the subject non-cash Investment)
plus all Non-Guarantor Subsidiaries, as a group, to exceed the Threshold
Requirement,
(f) Investments received in connection with a merger or disposition
permitted by Sections 8.4(a) and 8.4(b), and
(g) cash Investments in Subsidiaries of the Parent Company or the
Borrower which are not Wholly-Owned Subsidiaries of the Parent Company or
the Borrower, Joint Ventures, parties to management or franchise agreements
with the Borrower or its Subsidiaries or such Joint Ventures engaged
primarily in the hotel business or other reasonably related business, but
only if, and to the extent, that the sum of (i) the aggregate amount of
such Investments under this subsection (g) made after the Closing Date plus
----
(ii) the aggregate amount of Guaranty Obligations permitted under Section
8.1(l) incurred after the Closing Date, shall not at any time exceed the
Third Party Investment Basket Amount.
8.6 Prepayments of Indebtedness. Neither the Parent Company or the
---------------------------
Borrower will, nor will they permit any of their Subsidiaries to,
(a) amend or modify, or permit the amendment or modification of, any
of the subordination provisions of any Subordinated Debt or any other
material term relating to any Subordinated Debt the amendment or
modification of which would be materially adverse to the interests of the
Lenders hereunder as the holders of indebtedness senior thereto, or
(b) make (or give any notice with respect thereto) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including without limitation, by way of depositing money or securities
with the trustee with respect thereto before due for the purpose of paying
when due) or exchange any Subordinated Debt permitted pursuant to Section
8.1.
As used herein, "Subordinated Debt" means any Indebtedness of the Parent
-----------------
Company, the Borrower or any of their Subsidiaries for borrowed money which by
its terms is subordinated in right of payment to the indebtedness hereunder and
other amounts owing hereunder or in connection herewith.
8.7 Transactions with Affiliates. Neither the Parent Company or the
----------------------------
Borrower will, nor will they permit any of their Subsidiaries to, enter into any
transaction or series of transactions, whether or not in the ordinary course of
business, with any officer, director, shareholder or Affiliate of the Parent
Company, the Borrower or any of their Subsidiaries other than on terms and
conditions substantially as favorable as would be obtainable in a comparable
arm's-length transaction with a Person other than an officer, director,
shareholder or Affiliate, except that the restriction contained in this Section
8.7 shall
73
not apply to (i) Investments permitted under Section 8.5, (ii) transactions and
transfers among and between the Parent Company, the Borrower and their Wholly-
Owned Subsidiaries, (iii) the payment of reasonable compensation and benefits
and reimbursement of reasonable expenses of officers and directors, (iv) the
Reorganization and the Distribution and (v) Dividends permitted hereunder.
8.8 Fiscal Year. Neither the Parent Company nor the Borrower will, nor
-----------
will they permit any of their Subsidiaries to, change its fiscal year.
8.9 No Dividend Restrictions. No Credit Party shall agree to or permit to
------------------------
exist, any restrictions or limitations on the declaration or payment of
Dividends.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 Events of Default. An Event of Default shall exist upon the
-----------------
occurrence of any of the following specified events (each an "Event of
--------
Default"):
- -------
(a) Payment. Any Credit Party shall
-------
(i) default in the payment when due of any principal
of any of the Loans, or the payment of any guaranty obligations
in respect thereof;
(ii) default, and such default shall continue for five
(5) or more days, in the payment when due of any interest on the
Loans or the payment of any guaranty obligations in respect
thereof; or
(iii) default, and such default shall continue for five (5)
or more days after notice from the Agent, in the payment when due of
any amounts hereunder or under any of the other Credit Documents other
than as provided in subsections (i) and (ii) above, or the payment of
any guaranty obligations in respect thereof; or
(b) Representations. Any representation, warranty or statement
---------------
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall prove
untrue in any material respect on the date as of which it was deemed
to have been made; or
74
(c) Covenants. Any Credit Party shall
---------
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.11 or 8.1
through 8.9, inclusive; or
(ii) default in the due performance or observance of any
term, covenant or agreement contained in Sections 7.1(g) or 7.10 and
such default shall continue unremedied for a period of at least 5
days; or
(iii) default in the due performance or observance by it
of any term, covenant or agreement (other than those referred to
in subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1)
contained in this Credit Agreement or any of the other Credit
Documents and such default shall continue unremedied for a period
of at least 30 days after notice thereof by the Agent; or
(d) Other Credit Documents. Any Credit Document shall fail to
----------------------
be in full force and effect or to give the Agent and/or the Lenders
the material liens, rights, powers and privileges purported to be
created thereby; or
(e) Guaranties. The guaranty given by the Credit Parties
----------
hereunder or by any Additional Credit Party hereafter or any material
provision thereof shall cease to be in full force and effect, or any
guarantor thereunder or any Person acting by or on behalf of such
guarantor shall deny or disaffirm such guarantor's obligations under
such guaranty, or any guarantor shall default in the due performance
or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any guaranty; or
(f) Bankruptcy, etc. The Parent Company, the Borrower or any
---------------
other Credit Party shall commence a voluntary case concerning itself
under the Bankruptcy Code; or an involuntary case is commenced against
the Parent Company, the Borrower or any other Credit Party under the
Bankruptcy Code and the petition 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 Parent Company, the Borrower
or other Credit Party; or the Parent Company, the Borrower or any
other Credit Party commences any other proceeding under any reorgani-
zation, arrangement, adjustment of the debt, relief of creditors,
dissolution, insolvency or similar law of any jurisdiction whether now
or hereafter in effect relating to the Parent Company, the Borrower or
any
75
other Credit Party; or there is commenced against the Parent Company,
the Borrower or other Credit Party any such proceeding which remains
undismissed for a period of 60 days; or the Parent Company, the Borrower
or any other Credit Party is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered; or the Parent Company, the Borrower or any other Credit Party
suffers appointment of any custodian or the like for it or for any
substantial part of its property to continue unchanged or unstayed for a
period of 90 days; or the Parent Company, the Borrower or any other Credit
Party makes a general assignment for the benefit of creditors; or any
corporate action is taken by the Parent Company, the Borrower or any other
Credit Party for the purpose of effecting any of the foregoing; or
(g) Defaults under Other Agreements. With respect to any
-------------------------------
Indebtedness (other than Non-Recourse Indebtedness and Indebtedness
outstanding under this Credit Agreement) for which there is recourse
against the Parent Company, the Borrower and their Subsidiaries in
excess of $10,000,000 in the aggregate, (i) the Parent Company, the
Borrower or any of their Subsidiaries shall (A) default in any payment
(beyond the applicable grace period with respect thereto, if any) with
respect to any such Indebtedness, or (B) default in the observance or
performance of any covenant relating to such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or condition
exist, the effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (ii) any
such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior
to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be
---------
entered against the Parent Company, the Borrower or any of their
Subsidiaries involving a liability of $5,000,000 or more in the
aggregate (to the extent not paid or covered by insurance) and any
such judgments or decrees shall not have been vacated, discharged,
satisfied or stayed or bonded pending appeal within 30 days from the
entry thereof; or
(i) ERISA. The Parent Company, the Borrower or any of their
-----
Subsidiaries shall engage in any "prohibited transaction" (as defined
76
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), which has not been waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan pursuant to Section 4068 or Section
302(f) of ERISA, respectively, shall arise on the assets of the Parent
Company, the Borrower or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence by the
PBGC to have a trustee appointed, or a trustee shall be appointed by the
PBGC, to administer or terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee
is reasonably likely to result in the termination of such Plan for purposes
of Title IV of ERISA (other than a standard termination pursuant to Section
4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA in a distress termination under Section
4041(c), (v) the Parent Company, the Borrower or any Commonly Controlled
Entity shall, or is reasonably likely to, incur any liability in connection
with a withdrawal by the Parent Company, the Borrower or any Commonly
Controlled Entity from, or the Insolvency or Reorganization of, a
Multiemployer Plan, or (vi) the occurrence or expected occurrence of any
event or condition which results or is reasonably likely to result in the
Parent Company's, the Borrower's or any Commonly Controlled Entity's
becoming responsible for any liability in respect of a Former Plan; and in
each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, would be
reasonably expected to result in liability which could have a Material
Adverse Effect; provided, however, that the fact that a Plan is underfunded
-------- -------
shall not by itself constitute an Event of Default unless and until another
event or condition described in clause (i) through (vi) affecting such
underfunded Plan occurs and has a Material Adverse Effect; or
(j) Change of Control. Either (i) a "person" or a "group" (within
-----------------
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended) hereafter becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
more than 25% of the then outstanding voting stock of the Parent Company or
(ii) a majority of the Board of Directors of the Parent Company shall
consist of individuals who are not Continuing Directors; "Continuing
----------
Director" means, as of any date of determination, (i) an individual who on
--------
the Closing Date or the
77
date two years prior to the date of determination was a member of the
Parent Company's Board of Directors and (ii) any new director whose
nomination for election by the Parent Company's shareholders was approved
by a vote of a majority of the directors then still in office who either
were directors on the Closing Date or the date two years prior to such
determination date or whose nomination for election was previously so
approved.
9.2 Acceleration; Remedies. Upon the occurrence of an Event of Default,
----------------------
and at any time thereafter unless and until such Event of Default has been
waived by the Required Lenders or cured to the satisfaction of the Required
Lenders (pursuant to the voting procedures in Section 11.6), the Agent shall,
upon the request and direction of the Required Lenders, by written notice to the
Borrower take any of the following actions without prejudice to the rights of
the Agent or any Lender to enforce its claims against the Credit Parties, except
as otherwise specifically provided for herein:
(i) Termination of Commitments. Declare the Commitments
--------------------------
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration of Loans. Declare the unpaid principal of and
---------------------
any accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the
Borrower to any of the Lenders hereunder to be due whereupon the same
shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrower.
(iii) Enforcement of Rights. Enforce any and all rights and
---------------------
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 Appointment. Each Lender hereby designates and appoints NationsBank,
-----------
N.A. (Carolinas) as administrative agent (in such capacity hereunder, the
"Agent") of such Lender to act as specified herein and the other Credit
-----
Documents, and each such Lender hereby authorizes the Agent, as the agent for
such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein
78
and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section (other than Section 10.9) are
solely for the benefit of the Agent and the Lenders, and the Borrower and the
other Credit Parties shall not have any rights as a third party beneficiary of
the provisions hereof. In performing its functions and duties under this Credit
Agreement and the other Credit Documents, the Agent shall act solely as agent of
the Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for the Borrower or any
other Credit Party.
10.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
hereunder or under the other Credit Documents by or through agents or attorneys-
in-fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of its 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 herewith or in connection with any of the other Credit
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any of the Credit
Parties contained herein or in any of the other Credit Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection herewith or in connection with
the other Credit Documents, or enforceability or sufficiency of any of the other
Credit Documents, or for any failure of the Borrower to perform its obligations
hereunder or thereunder. The Agent shall not be responsible to any Lender for
the effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party 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 Agent to the Lenders or by or on behalf of the Credit
Parties to the Agent or any Lender 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
79
or possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties.
10.4 Reliance on Communications. The 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, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it 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 or any of the other Credit Parties,
independent accountants and other experts selected by the Agent with reasonable
care). The Agent may deem and treat the Lenders as the owner of their
respective interests hereunder for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the Agent
in accordance with Section 11.3(b) hereof. The Agent (solely in its capacity as
the Agent) shall be fully justified in failing or refusing to take any action
under this Credit Agreement or under any of the other Credit Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders 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 Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
10.5 Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender or a Credit Party referring to the
Credit Document, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
---------------------------------------
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Agent or any affiliate thereof
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it
80
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 made its own decision to make
its Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Credit 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. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or creditworthiness
of the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in its
---------------
capacity as such (to the extent not reimbursed by the Borrower or another Credit
Party and without limiting the obligation of the Borrower or another Credit
Party to do so), ratably according to their respective Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, 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 Agent in its capacities as such in any way relating to or arising
out of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
--------
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the 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 shall
survive the payment of the Obligations and all other amounts payable hereunder
and under the other Credit Documents.
10.8 Agent in its Individual Capacity. The Agent and its affiliates may
--------------------------------
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower or any other Credit Party as though the Agent were not Agent
hereunder. With respect to the Loans made and all Obligations owing to it, the
81
Agent shall have the same rights and powers under this Credit Agreement as any
Lender and may exercise the same as though they were not Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
10.9 Successor Agent. (a) The Agent may resign from the performance of
---------------
all its functions and duties hereunder at any time by giving fifteen (15)
Business Day's prior written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the appointment of a successor Agent pursuant
to clause (b) or (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Borrower shall appoint a
successor Agent hereunder who shall be commercial bank or trust company
reasonably acceptable to the Required Lenders (it being understood and
agreed that any Lender is deemed to be acceptable to the Required Lenders),
provided that if a Default or an Event of Default exists at the time of
such resignation, the Required Lenders shall appoint such successor Agent.
(c) If a successor Agent shall not have been so appointed within such
fifteen (15) Business Day period, the Agent, with the consent of the
Borrower, shall then appoint a successor Agent who shall serve as the Agent
hereunder until such time, if any, as the Borrower or Required Lenders, as
the case may be, appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the thirtieth (30th) Business Day after the date such
notice of resignation was given by the Agent, the Agent's resignation shall
become effective and the Lenders shall thereafter perform all the duties of
the Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Agent.
(e) Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent, and the resigning Agent shall be discharged from its duties and
obligations as Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
-------------
11.1 Notices. Except as otherwise expressly provided herein, all notices
-------
and other communications shall have been duly
82
given and shall be effective (i) when delivered, (ii) when transmitted via
telecopy (or other facsimile device) to the number set out below, (iii) the day
following the day on which the same has been delivered prepaid to a reputable
national overnight air courier service, or (iv) the third Business Day following
the day on which the same is sent by certified or registered mail, postage
prepaid, in each case to the respective parties at the address, in the case of
the Borrower and the Agent, set forth below, and in the case of the Lenders, set
forth on Schedule 11.1, or at such other address as such party may specify by
-------------
written notice to the other parties hereto:
if to the Borrower or Guarantors:
Prior to the Effective Date of Assignment
-----------------------------------------
c/o Embassy Suites, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: William S. McCalmont
Telephone: (901) 762-8861
Telecopy: (901) 762-8695
After the Effective Date of Assignment
--------------------------------------
c/o Promus Hotels, Inc.
850 Ridgelake Boulevard
Memphis, Tennessee 38120
Attn: Carol G. Champion
Telephone: (901) 762-4052
Telecopy: (901) 680-7220
if to the Agent:
NationsBank, N.A. (Carolinas)
Independence Center, 15th Floor
NC1-001-15-04
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-9368
Telecopy: (704) 386-9923
83
with a copies to:
NationsBank, N.A. (Carolinas)
Corporate Bank
1 NationsBank Plaza
Nashville, Tennessee 37329-1697
Attn: J.E. Ball
Telephone: (615)749-3469
Telecopy: (615)749-4640
Christopher C. Kupec, Esq.
Moore & Van Allen, PLLC
NationsBank Corporate Center
47th Floor
100 North Tryon Street
Charlotte, North Carolina 28202-4003
Telephone: (704) 331-1046
Telecopy: (704) 331-1159
11.2 Right of Set-Off. 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 Lender is authorized at
any time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights 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 Lender (including,
without limitation branches, agencies or affiliates of such Lender which are at
least 50% owned by such Lender or its parent company wherever located) to or for
the credit or the account of the Borrower against obligations and liabilities of
the Borrower to such Lender hereunder, under the Notes, the other Credit
Documents or otherwise, irrespective of whether such Lender shall have made any
demand hereunder and although such obligations, liabilities or claims, or any of
them, may be contingent or unmatured, and any such set-off shall be deemed to
have been made immediately upon the occurrence of an Event of Default even
though such charge is made or entered on the books of such Lender subsequent
thereto. The Borrower hereby agrees that any Person purchasing a participation
in the Loans and Commitments hereunder pursuant to Section 11.3(c) or Section
3.12 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
--------------------
(a) Generally. This Credit 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, except for the assignment by
--------
Embassy Suites to Hotel Inc. contemplated by subsection (b) below, the
Borrower may not assign or transfer any of its interests without prior
written consent of the Lenders; provided further that the rights of each
-------- -------
Lender to transfer, assign
84
or grant participations in its rights and/or obligations hereunder shall be
limited as set forth in this Section 11.3, provided, however, that nothing
-------- -------
herein shall prevent or prohibit any Lender from (i) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank, or (ii) granting assignments or
participations in such Lender's Loans and/or Commitments hereunder to its
parent company and/or to any affiliate of such Lender which is at least
fifty percent (50%) owned by such Lender or its parent company. To the
extent required in connection with a pledge of Loans by any Lender to a
Federal Reserve Bank, the Borrower agrees that, upon request of any such
Lender, it will promptly provide such Lender a promissory note evidencing
the repayment obligations of the Borrower with respect to the principal of
and interest on the Loans of such Lender arising under Section 2.1 and/or
2.4, as applicable, such promissory note to be in a form reasonably
satisfactory to the Borrower and the applicable Lender.
(b) Assignment to the Hotel Inc.. At such time as the Agent shall
----------------------------
have determined that each of the conditions set forth in Section 5.2 shall
have been satisfied, then, at the request of Embassy Suites and Hotel Inc.,
the Agent, on behalf of the Lenders, shall execute and deliver the Hotel
Inc. Assignment and Assumption Agreement. Each Lender hereby (i)
irrevocably authorizes the Agent to execute and deliver the Hotel Inc.
Assignment and Assumption Agreement on behalf of such Lender on the terms
set forth in the immediately preceding sentence and (ii) acknowledges and
agrees that such execution and delivery by the Agent of the Hotel Inc.
Assignment and Assumption Agreement shall be binding upon and enforceable
against such Lender. Upon execution and delivery by the Agent of the Hotel
Inc. Assignment and Assumption Agreement (i) Hotel Inc. shall succeed to
all of the rights and obligations of Embassy Suites as "Borrower" under
this Credit Agreement, and all references to the "Borrower" in the Credit
Documents henceforth shall be deemed to refer to Hotel Inc. and (ii)
Embassy Suites and Promus Co. shall be released and discharged from any
obligation or liability arising under or relating to this Credit Agreement,
in each case on the terms more fully set forth in the Hotel Inc. Assignment
and Assumption Agreement. The date as of which the Agent executes and
delivers the Hotel Inc. Assignment and Assumption Agreement shall be
referred to herein as the "Effective Date of Assignment."
----------------------------
(c) Assignments by Lenders. Each Lender may assign all or a portion
----------------------
of its rights and obligations hereunder and under the Tranche A Credit
Agreement pursuant to an assignment agreement substantially in the form of
Schedule 11.3(c) to one or more Eligible Assignees, provided that any such
---------------- --------
assignment shall be in a minimum aggregate amount of $10,000,000 of the
Commitments and in integral multiples of
85
$1,000,000 above such amount, and that each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Credit Agreement and under the Tranche A
Credit Agreement; provided, however, that the Agent and its affiliates
-------- -------
which are at least 50% owned by the Agent or its parent company, as a
group, shall continue to hold Commitments hereunder and under the Tranche A
Credit Agreement in a minimum aggregate amount of $20,000,000 at all times.
Any assignment hereunder shall be effective upon delivery to the Agent of
written notice of the assignment together with a transfer fee of $5,000
payable to the Agent for its own account; provided that no such transfer
--------
fee shall be payable in connection with an assignment by any Lender to its
affiliates which are at least 50% owned by such Lender or its parent
company. The assigning Lender will give prompt notice to the Agent and the
Borrower of any such assignment. Upon the effectiveness of any such
assignment (and after notice to the Borrower as provided herein), the
assignee shall become a "Lender" for all purposes of this Credit Agreement
and the other Credit Documents and, to the extent of such assignment, the
assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. By executing
and delivering an assignment agreement in accordance with this Section
11.3(c), the assigning Lender thereunder and the assignee thereunder shall
be deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim; (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any of
the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto or the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of
its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such assignee
confirms that it has received a copy of this Credit Agreement, the other
Credit Documents and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
assignment agreement; (v) such assignee will independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem
86
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Credit Documents; (vi) such assignee appoints and authorizes the Agent to
take such action on its behalf and to exercise such powers under this
Credit Agreement or any other Credit Document as are delegated to the Agent
by the terms hereof or thereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Credit Agreement and the other Credit Documents are required to be
performed by it as a Lender.
(d) Participations. Each Lender may sell, transfer, grant or assign
--------------
participations in all or any part of such Lender's interests and
obligations hereunder to one or more Eligible Participants; provided that
--------
(i) such selling Lender shall remain a "Lender" for all purposes under this
Credit Agreement and the other Credit Documents (such selling Lender's
obligations under this Credit Agreement remaining unchanged) and the
participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement or any of the other Credit
Documents except with respect to any such amendment or waiver which would,
under the terms of Section 11.8, require the consent of all of the Lenders,
(iii) sub-participations by the participant (except to an affiliate, parent
company or affiliate of a parent company of the participant) shall be
prohibited and (iv) any such participations shall be in a minimum aggregate
amount of $5,000,000 of the Commitments and in integral multiples of
$1,000,000 in excess thereof. In the case of any such participation, the
participant shall not have any rights under this Credit Agreement or under
any of the other Credit Documents (the participant's rights against the
selling Lender in respect of such participation to be those set forth in
the participation agreement with such Lender creating such participation)
and all amounts payable by the Borrower hereunder shall be determined as if
such Lender had not sold such participation, provided, however, that such
participant shall be entitled to receive additional amounts under Sections
3.5 and 3.8 on the same basis as if it were a Lender (limited to the extent
that the selling Lender would be able to receive additional amounts under
Sections 3.5 and 3.8); provided, further, in the event such participant
-------- -------
exercises any rights under Sections 3.5 or 3.8, the Borrower shall be
permitted to exercise its rights pursuant to Section 3.15 with respect to
the selling Lender.
(e) Disclosure of Confidential Information. Any Lender may, in
--------------------------------------
connection with any assignment pursuant to paragraph (c) above or a
participation pursuant to paragraph (d) above, disclose to the assignee or
the proposed assignee or the participant or the proposed participant any
information relating to Embassy Suites, Hotel Corp., Hotel
87
Inc., any Subsidiary of Embassy Suites or the Hotel Corp., the
Reorganization or the Distribution furnished to such Lender by or on behalf
of Embassy Suites, the Hotel Corp., Hotel Inc. or any Subsidiary of Embassy
Suites or the Hotel Corp. in connection with this Credit Agreement,
provided that, prior to any such disclosure each such assignee or proposed
--------
assignee or participant or proposed participant shall execute an agreement
containing substantially the terms of all then existing confidentiality
agreements entered into by the assigning or selling Lender with respect to
the Borrower and its Subsidiaries, in each case whereby such assignee or
proposed assignee or participant or proposed participant shall agree to
preserve the confidentiality of any non-public, confidential or proprietary
information relating to Embassy Suites, the Hotel Corp., Hotel Inc., any
Subsidiary of Embassy Suites or the Hotel Corp., the Reorganization or the
Distribution.
11.4 No Waiver; Remedies Cumulative. No failure or delay on the part of
------------------------------
the Agent or any Lender in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the Borrower or
any Guarantor and the Agent or any Lender 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 provided herein are cumulative and not
exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower or any Guarantor to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Agent or the Lenders to any other or further action in any circumstances without
notice or demand.
11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all
------------------------
reasonable out-of-pocket costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery and administration (but as to
administration, only administration of the credit as among the Agent, the
Borrower, the other Credit Parties and the Lenders and not as to any internal
administration within the Agent) of this Credit Agreement and the other Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and expenses of Moore & Van Allen,
special counsel to the Agent) and any amendment, waiver or consent relating
hereto and thereto requested or required by the Borrower including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Borrower under this Credit Agreement and of the Agent and the Lenders in
connection with enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, in connection
with any such enforcement, the
88
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders) provided, that for the purposes of this Credit Agreement, "reasonable
--------
attorneys' fees" shall be limited by the actual attorneys' fees incurred by a
party without application of N.C. Gen. Stat. Sec. 6-21.2 and without any
presumption that such reasonable attorneys' fees shall be a fixed percentage of
the Commitments; (ii) pay and hold each of the Lenders harmless from and against
any and all present and future stamp, documentary and mortgage recording taxes
and other similar taxes with respect to the foregoing matters and save each of
the Lenders 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 Lender) to pay such taxes; and (iii) indemnify each Lender, its officers,
directors, employees, representatives and agents 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, any investigation, litigation or other proceeding (whether
or not any Lender is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, 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 gross negligence or willful misconduct on the part
of the Person to be indemnified).
11.6 Amendments, Waivers and Consents. (a) Neither this Credit Agreement
--------------------------------
nor any other Credit Document nor any of the terms hereof or thereof may be
amended, changed, waived, discharged or terminated unless such amendment,
change, waiver, discharge or termination is in writing signed by the Required
Lenders, provided that no such amendment, change, waiver, discharge or
--------
termination shall, without the consent of each Lender adversely affected, (i)
extend the Termination Date or reduce the rate or extend the time of payment of
interest or principal (other than as a result of waiving the applicability of
any post-default increase in interest rates) on any Loan or portion thereof or
fees hereunder or reduce the principal amount thereof, or increase the
Commitments of the Lenders over the amount thereof in effect (it being
understood and agreed that a waiver of any condition for an Extension of Credit,
Default or Event of Default or of a mandatory reduction in the total commitments
shall not constitute a change in the terms of any Commitment of any Lender),
(ii) release any Guarantor from its guaranty obligations hereunder except in
accordance with the provisions hereof, (iii) amend, modify or waive any
provision of this Section or of subsection (ii) of Section 3.3(d) (provided that
--------
any Lender to be terminated pursuant to Section 3.3(d) shall not be required to
consent to any such amendment, modification or waiver of subsection (ii) of
Section 3.3(d) necessary to effect such termination), (iv) reduce any percentage
specified in, or
89
otherwise modify, the definition of Required Lenders, (v) release all or
substantially all of the collateral subject to the Pledge Agreement or (vi)
consent to the assignment or transfer by the Borrower (or Guarantor) of any of
its rights and obligations under (or in respect of) this Credit Agreement except
as permitted hereunder. No provision of Section 10 may be amended without the
consent of the Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination of any of the provisions of this Agreement as contemplated by
subclauses (i) through (v), inclusive, of clause (a) above, the consent of the
Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, the Borrower shall have the
right (so long as all non-consenting Lenders whose individual consent is
required are treated as described in either clauses (A) or (B) below) to either
(A) replace each such non-consenting Lender or Lenders with one or more
Replacement Lenders pursuant to Section 3.15 so long as at the time of such
replacement, each such Replacement Lender consents to the proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Lender's
Commitment and repay all outstanding Loans of such Lender in accordance with
Sections 3.3(d) and 3.3(g), provided that, unless the Commitments terminated and
--------
Loans repaid pursuant to the preceding clause (B) are immediately replaced in
full at such time through the addition of new Lenders or the increase of the
Commitments and/or outstanding Loans of existing Lenders (who in each case must
specifically consent thereto), then in the case of any action pursuant to the
preceding clause (B), the Required Lenders (determined before giving effect to
the proposed action) shall specifically consent thereto, provided further, that
----------------
in any event the Borrower shall not have the right to replace a Lender,
terminate its Commitment or repay its Loans solely as a result of the
withholding of any required consent by such Lender to any increase in the
Commitment of such Lender.
11.7 Counterparts. This Credit Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Credit Agreement to produce or
account for more than one such counterpart.
11.8 Headings. The headings of the sections and subsections hereof are
--------
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.
11.9 Survival of Indemnification. All indemnities set forth herein,
---------------------------
including, without limitation, in Sections 3.5, 3.8, 3.9, 3.10, 10.7 and 11.5
shall survive the execution and delivery of this Credit Agreement, and the
making of the Loans, the repayment of the Obligations and other obligations and
the termination of the Commitment hereunder.
90
11.10 Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA. Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document may be brought in the courts of the State of North
Carolina in Mecklenburg County, or of the United States for the Western District
of North Carolina, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of such courts.
Each of the Credit Parties further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 11.1, such
service to become effective 30 days after such mailing. Nothing herein shall
affect the right of the Agent to serve process in any other manner permitted by
law or to commence legal proceedings or to otherwise proceed against the
Borrower in any other jurisdiction.
(b) Each of the Credit Parties 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
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof 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 AGENTS, EACH OF THE LENDERS AND EACH OF THE CREDIT PARTIES
HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability. If any provision of any of the Credit Documents is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
11.12 Entirety. This Credit Agreement together with the other Credit
--------
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
91
11.13 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the Borrower herein shall survive delivery of the Notes and
the making of the Loans hereunder.
11.14 Knowledge Standard. As used herein, the phrase "to the knowledge of
------------------
the Borrower" or any similar phrase shall mean the knowledge of any of the
following persons: Raymond E. Schultz, President and Chief Executive Officer;
David C. Sullivan, Executive Vice President and Chief Operating Officer; Donald
H. Dempsey, Senior Vice President and Chief Financial Officer; Ralph B. Lake,
Senior Vice President, General Counsel, and Secretary; Thomas L. Keltner, Senior
Vice President, Development; Carol G. Champion, Vice President, Treasurer; and
Jeffery M. Jarvis, Vice President and Controller; or any other person succeeding
to the responsibilities of any such individual.
11.15 Confidentiality. Each Lender agrees that it will use its best
---------------
efforts not to disclose without the prior consent of the Borrower (other than to
its employees, auditors or counsel) any information with respect to the Parent
Company, the Borrower or any of their respective Subsidiaries which is now or in
the future furnished pursuant to this Agreement or any other Credit Document and
which is designated by the Parent Company, the Borrower or any of their
respective Subsidiaries as confidential, provided that any Lender may disclose
--------
any such information (a) as has become generally available to the public, (b) as
may be required in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Lender (including bank examiners) or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar organi-
zations (whether in the United States or elsewhere) or their successors, (c) as
may be required in respect to any summons or subpoena or in connection with any
investigation by a Governmental Authority or litigation, (d) in order to comply
with any law, order, regulation or ruling applicable to such Lender, and (e) to
any prospective or actual transferee or participant of any rights and interests
hereunder provided such prospective transferee or participant executes an
agreement containing provisions substantially identical to those contained in
this Section.
11.16 Agent's and Lender's Covenant. The Agent and each Lender hereby
-----------------------------
covenants that neither any Extension of Credit nor any part of any Extension of
Credit constitutes assets of an "employment benefit plan" within the meaning of
Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Code.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
92
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Tranche B Credit Agreement to be duly executed and delivered as of the date
first above written.
BORROWER:
- --------
EMBASSY SUITES, INC.,
a Delaware corporation
By____________________________
Title_________________________
GUARANTORS: THE PROMUS COMPANIES INCORPORATED,
- ----------
a Delaware corporation
By____________________________
Title_________________________
PROMUS HOTEL CORPORATION,
a Delaware corporation
By____________________________
Title_________________________
PROMUS HOTELS, INC.,
a Delaware corporation
By____________________________
Title_________________________
HAMPTON INNS, INC.,
a Delaware corporation
By____________________________
Title_________________________
EMBASSY EQUITY DEVELOPMENT CORPORATION,
a Delaware corporation
By____________________________
Title_________________________
S-1
Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche B Credit Agreement
LENDERS:
- -------
NATIONSBANK, N.A. (CAROLINAS),
individually in its capacity as a
Lender and in its capacity as Agent
By_____________________________
Title__________________________
THE BANK OF NEW YORK
By_____________________________
Title__________________________
THE BANK OF NOVA SCOTIA
By_____________________________
Title__________________________
CIBC INC.
By_____________________________
Title__________________________
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
By_____________________________
Title__________________________
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By_____________________________
Title__________________________
S-2
Signature Pages to
Embassy Suites, Inc/
Promus Hotels, Inc.
Tranche B Credit Agreement
LTCB TRUST COMPANY
By_____________________________
Title__________________________
THE NIPPON CREDIT BANK, LTD. -
LOS ANGELES AGENCY
By_____________________________
Title__________________________
SOCIETE GENERALE, SOUTHWEST AGENCY
By_____________________________
Title__________________________
CREDIT LYONNAIS
By_____________________________
Title__________________________
FIRST AMERICAN NATIONAL BANK
By_____________________________
Title__________________________
FIRST NATIONAL BANK OF COMMERCE
By_____________________________
Title__________________________
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By_____________________________
Title__________________________
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY
By_____________________________
Title__________________________
THIRD NATIONAL BANK
By_____________________________
Title__________________________
U.S. NATIONAL BANK OF OREGON
By_____________________________
Title__________________________
S-3
Schedule 2.1(a)
---------------
Schedule of Lenders and
-----------------------
Commitments
-----------
Revolving Revolving
Committed Commitment
Lender Amount Percentage
------ --------- ----------
NationsBank, N.A. $5,000,000.00 10.00000000%
(Carolinas)
The Bank of New York $4,285,714.29 8.57142857%
The Bank of Nova Scotia $4,285,714.29 8.57142857%
CIBC Inc. $4,285,714.29 8.57142857%
The Sumitomo Bank, $4,285,714.29 8.57142857%
Limited, New York
Branch
First Union National $3,214,285.71 6.42857143%
Bank of North Carolina
LTCB Trust Company $3,214,285.71 6.42857143%
The Nippon Credit Bank, $3,214,285.71 6.42857143%
Ltd. - Los Angeles
Agency
Societe Generale, $3,214,285.71 6.42857143%
Southwest Agency
Credit Lyonnais $2,142,857.14 4.28571429%
First American National $2,142,857.14 4.28571429%
Bank
First National Bank of $2,142,857.14 4.28571429%
Commerce
First Tennessee Bank $2,142,857.14 4.28571429%
National Association
The Industrial Bank of $2,142,857.14 4.28571429%
Japan, Limited, Atlanta
Agency
Third National Bank $2,142,857.14 4.28571429%
U.S. National Bank of $2,142,857.14 4.28571429%
Oregon ------------- -----------
$50,000,000.00 100.00000000%
1
Schedule 2.1(b)(i)
------------------
TRANCHE B CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING
NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Ladies and Gentlemen:
The undersigned, EMBASSY SUITES, INC./PROMUS HOTELS, INC. (the "Borrower"),
--------
refers to the Tranche B Credit Agreement dated as of June 7, 1995 (as amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives notice that it requests a Committed Revolving Loan borrowing pursuant to
the provisions of Section 2.1(b) of the Credit Agreement and in connection
herewith sets forth below the terms on which such borrowing is requested to be
made:
(A) Date of Borrowing
(which is a Business Day) _______________________
(B) Principal Amount of
Borrowing1 _______________________
(C) Interest rate basis2 _______________________
(D) Interest Period and the
last day thereof3 _______________________
In accordance with the requirements of Section 5.3, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (ii) of such Section, and confirms that the matters
referenced in subsections (b), (c), (d) and (e) of such Section, are true and
correct.
Very truly yours,
EMBASSY SUITES, INC./PROMUS HOTELS, INC.
By:
-------------------------------------
Title:
----------------------------------
--------------------
1 In the case of Committed Revolving Loans, minimum of
$5,000,000 and $1,000,000 increments in excess thereof (or the
remaining available Revolving Committed Amount, if less).
2 In the case of Committed Revolving Loans, Eurodollar
and Base Rate Loans available.
3 Interest Periods of one, two, three and six months'
duration for Eurodollar Loans.
Schedule 2.1(e)
---------------
Form of Tranche B Committed Revolving Note
$_________________ June __, 1995
FOR VALUE RECEIVED, EMBASSY SUITES, INC./PROMUS HOTELS, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
--------
__________________________, its successors and assigns (the "Lender"), at the
------
office of NationsBank, N.A. (Carolinas), as Agent (the "Agent"), at 101 N. Tryon
-----
Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or
at such other place or places as the holder hereof may designate), at the times
set forth in the Tranche B Credit Agreement dated as of June 7, 1995 among
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
----------------
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Termination Date or, if
applicable, the Term Loan Maturity Date, in Dollars and in immediately available
funds, the principal amount of ________________________DOLLARS ($____________)
or, if less than such principal amount, the aggregate unpaid principal amount of
all Committed Revolving Loans made by the Lender to the Borrower pursuant to the
Credit Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at the
rates selected in accordance with Section 2.1(d) of the Credit Agreement.
Overdue principal and, to the extent permitted by law, overdue interest
owing hereunder shall bear interest as provided in Section 3.1 of the Credit
Agreement. Further, in the event the payment of all sums due hereunder is
accelerated under the terms of the Credit Agreement, this Note, and all other
indebtedness of the Borrower to the Lender shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower. In the event this Note is not paid
when due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition the principal and interest, all costs of collection, including
reasonable attorneys' fees; provided, that for purposes of this note,
--------
"reasonable attorneys' fees" shall be limited to actual attorneys' fees incurred
by a party without application of N.C. Gen. Stat. Sec. 6-21.2 and without any
presumption that such reasonable attorneys' fees shall be a fixed percentage of
the principal amount hereof.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on Schedule A attached hereto and incorporated
----------
herein by reference, or on a continuation thereof which shall be attached hereto
and made a part hereof; provided, however, that any failure to endorse such
-------- -------
information (or an error in such endorsement) on such schedule or continuation
thereof shall not in any manner affect the obligation of the Borrower to make
payments of principal and interest in accordance with the terms of this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
EMBASSY SUITES, INC./
PROMUS HOTELS, INC.
By____________________________
Title_________________________
1
SCHEDULE A TO THE
TRANCHE B COMMITTED REVOLVING NOTE
OF EMBASSY SUITES, INC./PROMUS HOTELS, INC.
DATED JUNE __, 1995
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- --------- --------
2
Schedule 2.4(b)-1
-----------------
Form of Tranche B Competitive Bid Request
NationsBank, N.A. (Carolinas)
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-005-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Ladies and Gentlemen:
The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche B Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives you notice pursuant to Section 2.4(b) of the
Credit Agreement it requests solicitation of Competitive Bids under the
Credit Agreement, and in connection herewith sets forth below the terms on
which such Competitive Loan borrowing is requested to be made:
(A) Date of Competitive Loan Borrowing
(which is a Business Day) __________________
(B) Principal Amount of
Competitive Loan Borrowing4 __________________
(C) Interest Period and the last
day thereof5 __________________
In accordance with the requirements of Section 5.3, the Borrower
hereby reaffirms the representations and warranties set forth in the Credit
Agreement as provided in subsection (ii) of such Section, and confirms that
the matters referenced in subsections (b), (c), (d) and (e) of such
Section, are true and correct.
Very truly yours,
PROMUS HOTELS, INC.
By:____________________________
Title:_________________________
--------------------
4 A minimum of $5,000,000 and $1,000,000 increments in
excess thereof.
5 Subject to the provisions and definitions of the Credit
Agreement, but generally not less than 7 days nor more
than 180 days.
3
Schedule 2.4(b)-2
-----------------
Form of Notice of Tranche B Competitive Bid Request
[Name of Lender]
[Address]
Attention:
Ladies and Gentlemen:
Reference is made to the Tranche B Credit Agreement dated as of June
7, 1995 (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), among Embassy Suites, Inc., as initial borrower, (the
----------------
"Borrower"), certain subsidiaries and related parties as guarantors, the
--------
Lenders and NationsBank, N.A. (Carolinas), as Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The Borrower made a
Competitive Bid Request on _____________, 19__, pursuant to Section 2.4(b)
of the Credit Agreement, and in that connection you are invited to submit a
Competitive Bid by 10:00 A.M. (Charlotte, North Carolina time)
______________, 19__ [Date of Proposed Competitive Loan Borrowing] Your
Competitive Bid must comply with Section 2.4(c) of the Credit Agreement and
the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Loan Borrowing __________________
(B) Principal amount of
Competitive Loan Borrowing __________________
(C) Interest Period and the last
day thereof __________________
Very truly yours,
NATIONSBANK, N.A. (CAROLINAS), as Agent
By________________________________
Title:____________________________
1
Schedule 2.4(c)
---------------
Form of Tranche B Competitive Bid
NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Tranche B Credit
Agreement dated as of June 7, 1995 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among Embassy Suites,
----------------
Inc., as initial borrower, (the "Borrower"), certain subsidiaries and
--------
related parties, the Lenders and NationsBank, N.A. (Carolinas), as Agent.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes a Competitive Bid pursuant to Section 2.4(c) of
the Credit Agreement, in response to the Competitive Bid Request made by
the Borrower on ________________, 19__, and in that connection sets forth
below the terms on which such Competitive Bid is made:
(A) Principal Amount6 ____________________
(B) Competitive Bid Rate ____________________
(C) Interest Period and last
day thereof ____________________
The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the
Borrower upon acceptance by the Borrower of this bid in accordance with
Section 2.4(e) of the Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By:______________________________
Title:___________________________
--------------------
6 Acceptance in a minimum principal amount of $1,000,000
and $500,000 increments in excess thereof.
1
Schedule 2.4(d)
---------------
Form of Tranche B Competitive Bid Accept/Reject Letter
NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Ladies and Gentlemen:
The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche B Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as
Agent.
In accordance with Section 2.4(d) of the Credit Agreement, we have
received Competitive Bids in connection with our Competitive Bid Request
dated ______________ and in accordance with Section 2.4(d) of the Credit
Agreement, we hereby accept the following bids for maturity on [date]:
Interest
Principal Amount Competitive Bid Rate Paid Lender
---------------- -------------------- -------- ------
$ [%]
$ [%]
We hereby reject the following bids:
Interest
Principal Amount Competitive Bid Rate Paid Lender
---------------- -------------------- -------- ------
$ [%]
$ [%]
The Competitive Loans accepted as provided above should be deposited
in the general deposit account maintained by the Borrower with NationsBank,
N.A. (Carolinas) on the date hereof in accordance with Section 2.4(e) of
the Credit Agreement.
Very truly yours,
PROMUS HOTELS, INC.
By:_____________________________
Name:________________________
Title:_______________________
1
Schedule 2.4(h)
---------------
Form of Tranche B Competitive Loan Note
$50,000,000 June __, 1995
FOR VALUE RECEIVED, PROMUS HOTELS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of
--------
__________________________, its successors and permitted assigns (the
"Lender"), at the office of NationsBank, N.A. (Carolinas), as Agent (the
------
"Agent"), at 101 N. Tryon Street, Independence Center, NC1-001-15-04,
-----
Charlotte, North Carolina 28255 (or at such other place or places as the
holder hereof may designate), at the times set forth in the Tranche B
Credit Agreement dated as of June 7, 1995 among Embassy Suites, Inc., as
initial borrower, certain subsidiaries and related parties as guarantors,
the Lenders and the Agent (as it may be amended, modified, extended or
restated from time to time, the "Credit Agreement"; all capitalized terms
----------------
not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date or, if
applicable, the Term Loan Maturity Date, in Dollars and in immediately
available funds, the principal amount of FIFTY MILLION DOLLARS
($50,000,000) or, if less than such principal amount, the aggregate unpaid
principal amount of all Competitive Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section
2.4(g) of the Credit Agreement and in the respective Competitive Bid
applicable to each Competitive Loan borrowing evidenced hereby.
Overdue principal and, to the extent permitted by law, overdue
interest owing hereunder shall bear interest as provided in Section 3.1 of
the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Borrower. In the event
this Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition the principal and interest, all costs
of collection, including reasonable attorneys' fees; provided, that for
--------
purposes of this note, "reasonable attorneys' fees" shall be limited by
actual attorneys' fees incurred by a party without application of N.C. Gen.
Stat. Sec. 6-21.2 and without any presumption that such reasonable
attorneys' fees shall be a fixed percentage of the principal amount hereof.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on Schedule A attached
----------
hereto and incorporated herein by reference, or on a continuation thereof
which shall be attached hereto and made a part hereof; provided, however,
-------- -------
that any failure to endorse such information (or an error in such
endorsement) on such schedule or continuation thereof shall not in any
manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
PROMUS HOTELS, INC.
By____________________________
Title_________________________
1
SCHEDULE A TO THE
TRANCHE B COMPETITIVE LOAN NOTE
OF PROMUS HOTELS, INC.
DATED JUNE __, 1995
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
---- ---- -------- --------- -------- -------- --------
2
Schedule 3.2
------------
Form of Notice of Tranche B Conversion or Extension
NationsBank, N.A. (Carolinas),
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, PROMUS HOTELS, INC. (the "Borrower"), refers to the
--------
Tranche B Credit Agreement dated as of June 7, 1995 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
----------------
Embassy Suites, Inc., as initial borrower, certain subsidiaries and related
parties as guarantors, the Lenders and NationsBank, N.A. (Carolinas), as
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives notice pursuant to Section 3.2 of the Credit
Agreement that it requests an extension or conversion of one or more
Committed Revolving Loans outstanding under the Credit Agreement, and in
connection herewith sets forth below the terms on which such extension or
conversion is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the _______________________
the applicable Interest Periods)
(B) Principal Amount of
Extension or Conversion7 _______________________
(C) Interest rate basis8 _______________________
(D) Interest Period and the
last day thereof9 _______________________
In accordance with the requirements of Section 5.3, except in the case
of extension of or conversion to Base Rate Loans, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit
Agreement as provided in subsection (ii) of such Section, and confirms that
the matters referenced in subsections (b), (c), (d) and (e) of such
Section, are true and correct.
Very truly yours,
PROMUS HOTELS, INC.
By:__________________________________
Title:_______________________________
--------------------
7 A minimum of $5,000,000 and $1,000,000 increments in
excess thereof (or the remaining available Revolving Committed
Amount, if less).
8 Eurodollar and Base Rate Loans available.
9 Interest Periods of one, two, three and six months'
duration for Eurodollar Loans.
1
Schedule 5.1(a)
---------------
Form of Pledge Agreement
1
Schedule 6.15
-------------
Subsidiaries
2
Schedule 7.1(d)
---------------
Form of Officer's Compliance Certificate
For the fiscal quarter ended _________________, 19___.
I, ______________________, [Title] of PROMUS HOTELS, INC. (the
"Borrower") hereby certify that, to the best of my knowledge and belief,
--------
with respect to that certain Tranche A Credit Agreement dated as of June 7,
1995 and that certain Tranche B Credit Agreement dated as of June 7, 1995
(each as may be as amended, modified, extended or restated from time to
time, collectively, the "Hotel Facility"; all of the defined terms in the
--------------
Hotel Facility are incorporated herein by reference) among Promus Hotels,
Inc., a wholly-owned subsidiary of Promus Hotel Corporation, as Borrower,
Promus Hotel Corporation, as Guarantor, the Lenders party thereto and
NationsBank, N.A. (Carolinas), as Agent:
a. The company-prepared financial statements which accompany this
certificate are true and correct in all material respects and have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, subject to changes
resulting from normal year-end audit adjustments; and
b. Since ___________ (the date of the last similar certification, or,
if none, the Closing Date) (i) the Credit Parties have kept,
observed, performed and fulfilled each and every agreement binding
on them contained in the Credit Documents and (ii) no Default or
Event of Default has occurred under the Hotel Facility.
Delivered herewith are detailed calculations demonstrating compliance by
the Credit Parties with the financial covenants contained in Section 7.11
of the Hotel Facility as of the end of the fiscal period referred to above.
This ______ day of ___________, 19__.
PROMUS HOTEL CORPORATION
________________________________
Title:
1
Attachment to Officer's Certificate
-----------------------------------
Computation of Financial Covenants
2
Schedule 7.12
-------------
Form of Joinder Agreement
THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________, 19__,
---------
is by and between _____________________, a ___________________ (the
"Subsidiary"), and NATIONSBANK, N.A. (CAROLINAS), in its capacity as Agent under
----------
that Tranche A Credit Agreement and that Tranche B Credit Agreement (as amended,
modified, extended or restated from time to time, the "Tranche A Credit
----------------
Agreement" and the "Tranche B Credit Agreement", respectively, and sometimes
- --------- --------------------------
hereafter referred to collectively as the "Credit Agreements"), in each case
-----------------
dated as of June 7, 1995 by and among EMBASSY SUITES, INC., as initial borrower,
certain subsidiaries and related parties as guarantors, the Lenders party
thereto and NationsBank, N.A. (Carolinas), as Agent. All of the defined terms
in the Credit Agreements are incorporated herein by reference.
The Subsidiary is an Additional Credit Party, and, consequently, the Credit
Parties are required by Section 7.12 of each of respective the Credit Agreements
to cause the Subsidiary to become a "Guarantor".
---------
Accordingly, the Subsidiary hereby agrees as follows with the Agent, for
the benefit of the Lenders:
1. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to each
of the Credit Agreements and a "Guarantor" for all purposes of the Credit
Agreements, and shall have all of the obligations of a Guarantor thereunder as
if it had executed the Credit Agreements. The Subsidiary hereby ratifies, as of
the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in each of the Credit Agreements, including without
limitation (i) all of the representations and warranties set forth in Section 6
of each of the Credit Agreements as they relate to such Subsidiary, (ii) all of
the affirmative and negative covenants set forth in Sections 7 and 8 of each of
the Credit Agreements and (iii) all of the undertakings and waivers set forth in
Section 4 of each of the Credit Agreements (subject to the limitations set forth
therein). Without limiting the generality of the foregoing terms of this
paragraph 1, the Subsidiary hereby (i) subject to the limitation set forth in
Section 4.1 of each of the Credit Agreements, jointly and severally together
with the other Guarantors, guarantees to each Lender and the Agent, as provided
in Section 4 of each of the Credit Agreements, the prompt payment and
performance of the Obligations in full when due (whether at stated maturity, as
a mandatory prepayment, by acceleration or otherwise) strictly in accordance
with the terms thereof and (ii) agrees that if any of the Obligations are not
paid or performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the Subsidiary will, jointly and
severally together with the other Guarantors, promptly pay and perform the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.
2. The undersigned Credit Party, being the parent company of the
Subsidiary, joins in the execution of the Joinder Agreement for purposes of (i)
acknowledging, and agreeing to be bound by the terms of, the Pledge Agreement as
a Pledgor thereunder as if it had been an original party thereto, (ii)
acknowledging, representing and affirming to the Collateral Agent that the
Pledged Securities (as such term is defined in the Pledge Agreement) hereby
delivered to the Collateral Agent and which are subject to the pledge and
security interest under the Pledge Agreement are as follows:
1
Nominal Certificate No. of Percentage
Issuer Owner No. Shares of Total
------ ------- -------- ------ Ownership
---------
and (iii) acknowledging that its notice address and the address of its chief
executive office for purposes of the Pledge Agreement is c/o Promus Hotels,
Inc., 850 Ridgelake Boulevard, Memphis, Tennessee 38120, Attn: Carol G.
Champion, Telephone: (901) 680-7201, Telecopy: (901) 680-7270.
3. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be
duly executed by its authorized officers, and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.
[SUBSIDIARY]
By____________________________
Title_________________________
PLEDGOR [PARENT COMPANY]
- -------
By____________________________
Title_________________________
Acknowledged and accepted:
NATIONSBANK, N.A. (CAROLINAS),
as Agent
By______________________________
Title___________________________
2
Schedule 8.1
------------
Existing Indebtedness
1
Schedule 8.2
------------
Existing Liens
1
Schedule 11.1
-------------
Schedule of Addresses
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
NationsBank, N.A. NationsBank, N.A. (Carolinas) NationsBank, N.A.
(Carolinas) 101 N. Tryon St. (Carolinas)
Independence Center Corporate Bank
NC1-001-15-04 1 NationsBank Plaza
Charlotte, NC 28255 Nashville, TN 37329-1697
Attn: Agency Services Attn: J.E. Ball
Phone: (704) 386-9368 Phone: (615) 749-3469
Fax: (704) 386-9923 Fax: (615) 749-4640
with a copy to:
Christopher C. Kupec,
Esq.
Moore & Van Allen, PLLC
NationsBank Corporate
Center, Floor 47
100 N. Tryon Street
Charlotte, NC 28202-4003
Phone: (704) 331-1046
Fax: (704) 331-1159
The Bank of New The Bank of New York The Bank of New York
York One Wall Street, 22nd Floor One Wall Street, 22nd Floor
New York, NY 10286 New York, NY 10286
Attn: Greg Batson Attn: Greg Batson
Phone: (212) 635-6898 Phone: (212) 635-6898
Fax: (212) 635-6434 Fax: (212) 635-6434
Credit Lyonnais Credit Lyonnais Cayman Branch Credit Lyonnais Cayman Branch
Cayman Branch 1301 Avenue of the Americas 1301 Avenue of the Americas
18th Floor 18th Floor
New York, NY 10019 New York, New York 10019
Attn: Alex Larrinaga Attn: Mischa Zabofin
Phone: (212) 261-7833 Phone: (212) 261-7872
Fax: (212) 261-7890 Fax: (212) 261-7890
The Sumitomo Bank, The Sumitomo Bank, Limited, New The Sumitomo Bank, Limited,
Limited, New York York Branch New York Branch
Branch 277 Park Avenue 277 Park Avenue
New York, NY 10172 New York, New York 10172
Attn: Christine Bonifacic Attn: Christine Bonifacic
Phone: (212) 224-4138 Phone: (212) 224-4129
Fax: (212) 224-5197 Fax: (212) 224-5188
The Bank of Nova The Bank of Nova Scotia The Bank of Nova Scotia
Scotia 1100 Louisiana 1100 Louisiana
Suite 3000 Suite 3000
Houston, TX 77002 Houston, Texas 77002
Attn: Paul Gonin Attn: Paul Gonin
Phone: (713) 759-3443 Phone: (713) 759-3443
Fax: (713) 752-2425 Fax: (713) 752-2425
CIBC Inc. CIBC Inc. CIBC Inc.
300 South Grand Avenue 300 South Grand Avenue
Suite 2700 Suite 2700
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Paul Chakmak Attn: Paul Chakmak
Phone: (213) 617-6226 Phone: (213) 617-6226
Fax: (213) 346-0157 Fax: (213) 346-0157
1
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
First Tennessee First Tennessee Bank National First Tennessee Bank National
Bank National Association Association
Association 165 Madison Avenue 165 Madison Avenue
National Department, 9th Floor National Department,
Memphis, TN 38103 9th Floor
Attn: Steve Wade Memphis, TN 38103
Phone: (901) 523-4118 Attn: Steve Wade
Fax: (901) 523-4267 Phone: (901) 523-4118
Fax: (901) 523-4267
First American First American National Bank First American National Bank
National Bank 4894 Poplar Avenue, 2nd Floor 4894 Poplar Avenue, 2nd Floor
Memphis, TN 38117 Memphis, TN 38117
Attn: David May/Beth Vaughn Attn: David May/Beth Vaughn
Phone: (901) 762-5688/762-5671 Phone: (901) 762-5688/762-5671
Fax: (901) 762-5665 Fax: (901) 762-5665
The Industrial Bank The Industrial Bank of Japan, The Industrial Bank of
of Japan, Limited, Limited, Atlanta Agency Japan, Limited, Atlanta Agency
Atlanta Agency 191 Peachtree Street, Suite 3600 191 Peachtree Street, Suite 3600
Atlanta, GA 30303 Atlanta, GA 30303
Attn: Jackie Brunetto Attn: Jackie Brunetto
Phone: (404) 420-3325 Phone: (404) 420-3325
Fax: (404) 524-8509 Fax: (404) 524-8509
LTCB Trust Company LTCB Trust Company The Long-Term Credit Bank
165 Broadway of Japan, Limited
New York, NY 10006 45 Peachtree Center Avenue
Attn: Winston Brown Suite 2801
Phone: (212) 335-4854 Atlanta, GA 30303
Fax: (212) 608-3081 Attn: Rebecca Sedlar
Silbert
Phone: (404) 659-7210
Fax: (404) 658-9751
The Nippon Credit The Nippon Credit Bank, Ltd. - The Nippon Credit Bank,
Bank, Ltd. - Los Los Angeles Agency Ltd. - Los Angeles Agency
Angeles Agency 550 South Hope Street Suite 2500 550 South Hope Street Suite 2500
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Helen Rhee/Jay Schwartz Attn: Helen Rhee/Jay Schwartz
Phone: (213) 243-5723/243-5722 Phone: (213) 243-5723/243-5722
Fax: (213) 243-892-0111 Fax: (213) 243-892-0111
2
Address
for Funding Address for
Lender and Payments Other Notices
------ ------------ -------------
Societe Generale, Societe Generale, Southwest Societe Generale, Southwest
Southwest Agency Agency Agency
4800 Trammell Crow Center 1111 Bagby Street
2001 Ross Avenue Suite 2020
Dallas, TX 75201 Houston, TX 77002
Attn: Terry Jones Attn: Paul Cornell/Thierry Namuroy
Phone: (214) 979-2777 Phone: (713) 759-6301/759-6313
Fax: (214) 979-1104 Fax: (713) 650-0824
with a copy to:
Societe Generale, Southwest
Agency
4800 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
Attn: Terry Jones
Phone: (214) 979-2777
Fax: (214) 979-1104
U.S. National Bank U.S. National Bank of Oregon U.S. National Bank of
of Oregon 555 SW Oak Street Oregon
Suite 400 555 SW Oak Street
Portland, Oregon 97204 Suite 400
Attn: Claire C. Jones Portland, Oregon 97204
Phone: (503) 275-3192 Attn: Claire C. Jones
Fax: (503) 275-5428 Phone: (503) 275-3192
Fax: (503) 275-5428
First Union First Union National Bank of First Union National Bank
National Bank of North Carolina of North Carolina
North Carolina One First Union Center One First Union Center
301 South College Street 301 South College Street
Charlotte, NC 28288 Charlotte, NC 28288
Attn: Leo Leitner Attn: Leo Leitner
Phone: (704) 383-5210 Phone: (704) 383-5210
Fax: (704) 374-2802 Fax: (704) 374-2802
First National Bank First National Bank of Commerce First National Bank of
of Commerce Suite 751 Commerce
210 Baronne Street Suite 751
New Orleans, LA 70112 210 Baronne Street
Attn: Louis Ballero New Orleans, LA 70112
Phone: (504) 561-1989 Attn: Louis Ballero
Fax: (504) 561-1738 Phone: (504) 561-1989
Fax: (504) 561-1738
Third National Bank Third National Bank Third National Bank
6000 Poplar 6000 Poplar
Suite 145 Suite 145
Memphis, TN 38119 Memphis, TN 38119
Attn: Carol Yochem/Saul Komisar Attn: Carol Yochem/Saul
Phone: (901) 766-7561 Komisar
Fax: (901) 766-7565 Phone: (901) 766-7561
Fax: (901) 766-7565
3
Schedule 11.3(b)
----------------
Form of Hotel Inc. Tranche B Assignment and Assumption Agreement
THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT, dated as of June __,
1995 (the "Agreement"), among EMBASSY SUITES, INC., a Delaware corporation
---------
("Embassy Suites"), PROMUS HOTELS, INC., a Delaware corporation (the "Hotel
-------------- -----
Inc."), THE PROMUS COMPANIES INCORPORATED, a Delaware corporation ("Promus Co.")
- ---- ----------
and NATIONSBANK, N.A. (CAROLINAS), in its capacity as Agent under the Credit
Agreement hereinafter described.
Embassy Suites and Promus Co. have agreed to transfer to Hotel Inc. certain
hotel related assets and liabilities in contemplation of the Reorganization and
the Distribution. In consideration therefor, the parties hereto agree as
follows:
SECTION 1. Definitions. Terms capitalized but not defined herein shall
-----------
have the meanings assigned thereto in that certain Tranche B Credit Agreement
dated as of June 6, 1995 (the "Credit Agreement") among Embassy Suites, as
----------------
initial borrower, certain subsidiaries and related parties as guarantors, the
Lenders party thereto and the Agent.
SECTION 2. Assignment and Assumption. Effective as of the date hereof,
-------------------------
Embassy Suites hereby irrevocably and unconditionally assigns to Hotel Inc. all
of its rights as "Borrower" under the Credit Agreement. Effective as of the
date hereof, Hotel Inc. hereby irrevocably and unconditionally agrees with the
Agent and the Lenders to be bound by all of the terms and conditions of the
Credit Agreement and to perform all of the obligations and discharge all of the
liabilities of the Borrower existing at or accrued prior to the date hereof or
hereafter arising under the Credit Agreement and (ii) and ratifies, and agrees
to be bound by, (A) the representations and warranties set forth in Section 6 of
the Credit Agreement and (B) all of the affirmative and negative covenants set
forth in Sections 7 and 8 of the Credit Agreement. Without limiting the
generality of the foregoing terms of this Section 2, Hotel Inc. hereby promises
to pay to each Lender the principal balance of, and accrued interest on, each
Loan outstanding (and to pay all other Obligations) at, or advanced on or after,
the date hereof.
SECTION 3. Release. The Agent, acting on behalf of the Lenders, hereby
-------
fully and unconditionally releases and forever discharges (i) Embassy Suites as
of the date hereof from any and all liabilities, claims, charges, choses in
actions, causes of action, damages, and other obligations, in each case whether
known or unknown, absolute or contingent, at law or in equity, now existing or
hereafter arising and whether arising under contract, by operation of law or
otherwise (collectively, "Claims") arising under and relating to the Credit
------
Agreement and (ii) Promus Co. from any Claims arising under or relating to its
guaranty obligations relating thereto under or relating to the Credit Agreement.
SECTION 4. References in the Credit Documents. From and after the
----------------------------------
Effective Date of Assignment, (a) Hotel Inc. shall have succeeded Embassy Suites
as the "Borrower" under the Credit Agreement, and all references to the
"Borrower" in the Credit Agreement shall refer to Hotel Inc. and not to Embassy
Suites and (b) all references to the "Credit Agreement" in any Credit Documents
shall refer to the Credit Agreement, as amended and modified by this Agreement.
Except as expressly amended and modified by this Agreement, all of the terms and
provisions of the Credit Agreement shall remain in full force and effect.
SECTION 5. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
1
SECTION 6. WAIVER OF JURY TRIAL. EACH OF THE AGENT, THE LENDERS, EMBASSY
--------------------
SUITES AND HOTEL INC. HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 7. Successors and Assignees. Subject to the terms of Section 11.4
------------------------
of the Credit Agreement, this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of Embassy Suites, Hotel Inc.,
the Agent and each of the Lenders.
SECTION 8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
EMBASSY SUITES, INC.
By:___________________________
Title:________________________
PROMUS HOTELS, INC.
By:___________________________
Title:________________________
THE PROMUS COMPANIES INCORPORATED
By:___________________________
Title:________________________
NATIONSBANK, N.A. (CAROLINAS),
as Agent as aforesaid for
the Lenders
By____________________________
Title_________________________
2
Schedule 11.3(c)
----------------
Form of Tranche B Assignment and Acceptance
THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered into
between ________________ ("Assignor") and ____________________ ("Assignee").
-------- --------
Reference is made to the Tranche B Credit Agreement dated as of June 6,
1995, as amended and modified from time to time thereafter (the "Credit
------
Agreement") among EMBASSY SUITES, INC., as initial borrower, certain
- ---------
subsidiaries and related parties as guarantors, the Lenders party thereto and
NationsBank, N.A. (Carolinas), as Agent. Terms defined in the Credit Agreement
are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
-----------------
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Commitments of the Assignor on the effective
date of the assignment designated below (the "Effective Date") and the Committed
--------------
Revolving Loans and Competitive Loans owing to the Assignor which are
outstanding on the Effective Date, together with unpaid interest accrued on the
assigned Loans to the Effective Date and the amount, if any, set forth below of
the fees accrued to the Effective Date for the account of the Assignor. Each of
the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 11.3(c) of the
Credit Agreement, a copy of which has been received by each such party. From
and after the Effective Date (i) the Assignee, if it is not already a Lender
under the Credit Agreement, shall be a party to and be bound by the provisions
of the Credit Agreement and, to the extent of the interests assigned by this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the interests (except
for its right to seek indemnification under the Credit Agreement) assigned by
this Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
2. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of North Carolina.
3. Terms of Assignment
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
(e) Revolving Loan Commitment
Percentage Assigned (expressed
as a percentage of the total
Commitment of the Lenders to
make Committed Revolving Loans and set
forth to at least 8 decimals) %
(f) Revolving Loan Commitment
Percentage of Assignor after
Assignment (set forth to at
least 8 decimals) %
(g) Total Committed Revolving Loans outstanding
as of Effective Date $_____________
1
(h) Principal Amount of Committed Revolving
Loans assigned on Effective
Date (the amount set forth
in (g) multiplied by the
percentage set forth in (e)) $_____________
The terms set forth above
are hereby agreed to:
____________________, as Assignor
By:_____________________________________
Title:__________________________________
_____________________, as Assignee
By:_____________________________________
Title:__________________________________
CONSENTED TO:
NATIONSBANK, N.A. (CAROLINAS),
as Agent
By:____________________________________
Title:_________________________________
PROMUS HOTELS, INC.
By:____________________________________
Title:_________________________________
2
Schedule 2.2(a)
Existing Letters of Credit
--------------------------
None.
Schedule 6.1(b)
Special Provisions Regarding Pro Forma Balance Sheets
-----------------------------------------------------
The pro forma adjustments made in the preparation of
the Pro Forma Balance Sheet are as set forth in the Proxy
Statement dated April 25, 1995 of Promus Co. describing the
Distribution and mailed to the shareholders of Promus Co. for
purposes of its May 26, 1995 shareholders meeting.
Schedule 6.4
Consents, Authorizations, Notices and Filings
---------------------------------------------
None.
Schedule 6.8
Excluded Assets
---------------
After giving effect to the Reorganization, Distribution
and the Hotel Inc. Assignment and Assumption Agreement, those
certain hotel-related assets of Promus Co. and its Subsidiaries
that will be retained by Promus Co. and its Subsidiaries but
which shall be managed by Hotel Inc. pursuant to that certain
Asset Management Agreement by and between Embassy Suites and
Hotel Inc. to be executed as of June 30, 1995.
Schedule 6.9
Claims Regarding Intellectual Property
--------------------------------------
None.
Schedule 8.1
Existing Indebtedness
---------------------
(as of March 31, 1995)
Capital Leases
- --------------
Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $ 1,773,302
Marketing Services Center $ 68,061
Notes
- -----
Embassy - DeBanks Henwood $ 917,641
Hampton - San Francisco land $ 296,724
Guarantees
- ----------
Meadowlands Land Lease $29,356,749
Chicago Lombard $ 500,000
Embassy Pacific Partner LP,
Embassy Atlanta Buckhead Partners LP
and Embassy LaJolla Partners LP $ 4,000,000
Executive Life Guarantee [Not to exceed $8,100,000]
Schedule 8.2
Existing Liens
--------------
(as of March 31, 1995)
Capital Leases
- --------------
Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $1,773,302
Marketing Services Center $ 68,061
Schedule 8.5
Existing Investments
--------------------
Name (percent ownership interest)
- ---------------------------------
ATM Hotels Pty Limited (75%)
Barshop-HII Joint Venture (50%)
Embassy Akers Venture (50%)
Embassy Atlanta Buckhead Partners Limited Partnership (5%)
Embassy/GACL Lombard Joint Venture (50%)
Embassy LaJolla Partners Limited Partnership (10%)
Embassy Pacific Partners Limited Partnership (10%)
Embassy/Shaw Parsippany Venture (50%)
Embassy/Shaw Rochester Venture (50%)
Embassy Suites Club No. Two, Inc. (49%)
EPT Atlanta-Perimeter Center Limited Partnership (50%)
EPT Austin Joint Venture (50%)
EPT Bloomington Joint Venture (50%)
EPT Covina Joint Venture (50%)
EPT Crystal City Land Limited Partnership (50%)
EPT Kansas City Joint Venture (50%)
EPT Meadowlands Limited Partnership (50%)
EPT Omaha Joint Venture (50%)
EPT Overland Park Limited Partnership (50%)
EPT Raleigh Limited Partnership (50%)
EPT San Antonio Joint Venture (50%)
ES/PA, L.P. (98%)
E.S. Philadelphia Airport Joint Venture (99.8%)
GOL (Texas) Inc. (49%)
Granada Royale Hometel-Tucson, a limited partnership (50.003%)
Granada Royale Hometel-West, a limited partnership (65%)
Hampton/GHI Associates #1 (20%)
Hampton/GHI Associates #2 (20%)
Hospitality Capital Group (33.3%)
Hospitality Capital Group II (33.3%)
King Street Station Hotel Associates, L.P. (50%)
MHV Joint Venture (50%)
Pacific Market Investment Company Joint Venture (50%)
Riverview/Embassy Joint Venture (50%)
SES/D.C. Venture (25%)
Existing Investments (Notes Receivable)
---------------------------------------
(as of March 31, 1995)
Embassy Suites
- --------------
El Paso $ 133,503
Richmond $ 1,000,000
LaJolla $ 687,970
Santa Clara $ 611,428
Crystal City $ 638,375
Charleston $ 682,461
Hampton Inn
- -----------
Secaucus $ 50,637
San Antonio - Downtown $ 1,000,000
San Diego $ 57,954
Hampton Inn & Suites
- --------------------
Newport News $ 1,000,000
Homewood Suites
- ---------------
Lane/Raymond/Smith $ 500,000
Santa Fe $ 1,500,000
San Antonio - Downtown $ 1,000,000
Harrisburg $ 939,105
Alexandria $ 529,588
Information Technology $ 750,000
- ----------------------
Marketing Services Center $ 125,725
- ------------------------- -----------
$11,206,746
===========
SCHEDULE 6.15
-------------
Subsidiaries
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
Ziwa Insurance Ltd. (to be formed) None
Promus Hotels, Inc.*/ Delaware 100% None
-
Buckleigh, Inc. Delaware 100% 100 (100) None
ATM Hotels Pty Limited Australia 50% 2 (1) None
Compass, Inc. Tennessee 100% 1000 (1000) None
EJP Corporation Delaware 100% 1000 (1000) None
Suite Life, Inc. Delaware 100% 1000 (1000) None
Embassy Development Corporation Delaware 100% 100 (100) None
Embassy Suites De Mexico, S.A., de C.V. Mexico 1% 10,000 (100) None
ES/PA, L.P. [Pennsylvania] 98% [Not Applicable] None
E.S. Philadelphia Airport Joint Venture Pennsylvania 10% [Not Applicable] None
Embassy Equity Development Corporation Delaware 100% 100 (100) None
Embassy Suites De Mexico S.A., de C.V. Mexico 1% 10,000 (100) None
Embassy Syracuse Development Corporation Delaware 100% 100 (100) None
<FN>
- --------------------------------
*/ Indicates Subsidiaries of the Parent Company and the Borrower immediately prior to the Assignment and Assumption.
- -
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
Embassy Suites De Mexico, S.A., de C.V. Mexico 1% 10,000 (100) None
Southfield Hotel Management, Inc. Florida 100% 1000 (1000) None
Embassy Memphis Corporation Tennessee 100% 100 (100) None
Embassy Pacific Equity Corporation Delaware 100% 100 (100) None
Embassy Suites Club No. 1, Inc. Kansas 100% 1000 (1000) None
Embassy Suites Club No. Three, Inc. Louisiana 100% 1000 (1000) None
Embassy Suites De Mexico, S.A., De C.V. Mexico 97% 10,000 (9,700) None
Embassy Suites (Isla Verde), Inc. Delaware 100% 1000 (1000) None
Embassy Suites (Puerto Rico), Inc. Delaware 100% 1000 (1000) None
Embassy Vacation Resorts, Inc. Delaware 100% 1000 (1000) None
EPAM Corporation Delaware 100% 100 (100) None
ESI Development, Inc. Tennessee 100% 1000 (1000) None
ESI Mortgage Development Corporation Delaware 100% 1000 (1000) None
ESI Mortgage Development Corporation II Delaware 100% 100 (100) None
E.S. Philadelphia Airport Joint Venture Pennsylvania 90% [Not Applicable] None
GOL Columbia Limited Partnership Maryland 1% [Not Applicable] None
GOL (Heathrow), Inc. Tennessee 100% 1000 (1000) None
2
# of Outstanding
# of Shares of Each Options, Warrants,
Class of Capital Stock Rights of
Jurisdiction of Percentage or Other Equity Conversion or
Incorporation or of Interest Outstanding Purchase and Similar
Name Organization Ownership (# Owned) Rights (Effect if
Exercised)
Granada Royale Hometel-West, a limited Arizona 50.003% [Not Applicable] None
partnership
Granada Royale Hometel-Tucson, a limited Arizona 65% [Not Applicable] None
partnership
Hampton Inns, Inc. Delaware 100% 1000 (1000) None
GOL Columbia Limited Partnership Maryland 99% [Not Applicable] None
Old Town Hotel Corporation Delaware 100% 1000 (1000) None
Pacific Hotels, Inc. Tennessee 100% 1000 (1000) None
ATM Hotels Pty Limited Australia 50% 2 (1) None
Promus Hotel Services, Inc. Delaware 100% 1000 (1000) None
Promus Hotels Florida, Inc. Delaware 100% 1000 (1000) None
3